1) Otkritie International Investment Management Ltd and Others v Mr George Urumov
| Jurisdiction | England & Wales |
| Judge | Lord Justice Longmore,Lord Justice Moore-Bick,Lord Justice Laws |
| Judgment Date | 14 October 2014 |
| Neutral Citation | [2014] EWCA Civ 1315 |
| Docket Number | Case No: A3/2014/1451 |
| Court | Court of Appeal (Civil Division) |
| Date | 14 October 2014 |
THE RIGHT HONOURABLE Lord Justice Laws
THE RIGHT HONOURABLE Lord Justice Longmore
and
THE RIGHT HONOURABLE Lord Justice Moore-Bick
Case No: A3/2014/1451
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
THE HONOURABLE MR JUSTICE EDER
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Paul Stanley QC and Mr Nathan Pillow (instructed by Steptoe & Johnson) for the Appellants
Mr George Urumov in person
Hearing dates: 30 th July 2014
Introduction
It is a basic principle of English law that a judge should not sit to hear a case in which "the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that [he] was biased", see Porter v Magill [2002] 2 AC 357 para 103 per Lord Hope of Craighead. It is an even more fundamental principle that a judge should not try a case if he is actually biased against one of the parties. The concept of bias includes any personal interest in the case or friendship with the participants, but extends further to any real possibility that a judge would approach a case with a closed mind or, indeed, with anything other than an objective view; a real possibility in other words that he might in some way have "pre-judged" the case.
This can give rise to potential difficulties in long running cases where a judge has been case-managing a case and has then to conduct the trial or in cases where a trial has occurred and the judge has then to consider consequential matters such as, in the present case, proceedings for contempt. It is obviously convenient for a single judge rather than different judges to deal with a complex case but the question can arise whether there comes a point where findings made by a judge pre-trial disqualify a judge from continuing with a case or findings made at trial disqualify a judge from hearing consequential matters. This is the question at the heart of this appeal.
The Facts
On 10 th February 2014 Eder J handed down a 559 paragraph judgment in which he found that numerous defendants had conspired to defraud and had actually defrauded the claimant companies (to which I shall compendiously refer as "Otkritie") in relation to two quite separate matters referred to as the Sign-On Fraud and the Argentinian Warrants Fraud. The first defendant in the trial was Mr George Urumov who was a senior employee and trader with Otkritie. The judge made numerous damaging findings about Mr Urumov's fraudulent deception of his employer and his conduct of the interlocutory proceedings and the trial itself and found him personally liable for US$23,000,000 in respect of the Sign-On Fraud and US$150,933,750 in respect of the Argentinian Warrants Fraud.
Otkritie have now launched proceedings against both Mr Urumov and other defendants for contempt. Those proceedings include an application for the committal of Mr Urumov to prison (or other relief) for
1) Knowingly and deliberately giving false information in response to and in breach of orders for disclosure of assets contained in or ancillary to a freezing order made against him;
2) Breaching the terms of the freezing order by dissipation of assets after having notice of the freezing order;
3) Making knowingly false statements in his statement of defence in contravention of the statement of truth contained in that document; and
4) Making a false disclosure statement in the lead-up to the trial, knowing that the relevant statement of truth signed by him was false.
Otkritie need the permission of the court to institute the proceedings under heads (3) and (4) but not the proceedings under (1) and (2). The findings of the judge in his trial judgment are much relied on.
The judge fixed 29 th April 2014 for the hearing of the application for permission to bring committal proceedings but on 24 th March Mr Urumov (who was represented by Mr Anthony Peto QC and Mr Jonathan McDonagh instructed by Messrs Farrer & Co throughout the trial, but was then and is now acting in person) applied to the judge to recuse himself from the hearing of the committal proceedings on the grounds
1) that a fair-minded and well-informed observer would think that the judge had already decided the committal application against Mr Urumov in the light of the many adverse findings in the judgment;
2) that the judge had unnecessarily expressed many of his findings in the judgment to a high level of certainty (e.g. by saying he "had no reasonable doubt") which again showed he had pre-judged the committal proceedings;
3) that the judge had not been even-handed in his criticisms because he had failed to hold that Otkritie had themselves been in breach of their disclosure obligations and had procured their witnesses (including their solicitor Mr Neil Dooley) to commit perjury;
4) that the judge had, in particular, been highly critical of Mr Urumov's failure to disclose that he had possession or control of documents and USB sticks found in what was called the Dunant box in December 2012 when, as the judge knew, it had by then been seized by the Swiss prosecutor in the course of criminal proceedings instituted by the claimants in Switzerland; and
5) that the judge had deliberately mistaken "centuries old principles and law governing early termination" of the trading instruments or financial derivatives which were at the heart of the allegations of fraud.
The judge treated grounds (1) and (2) as assertions of apparent (or imputed) bias and grounds (3) (4) and (5) as assertions of actual bias. He dismissed grounds (1) and (2) saying that no well informed or impartial observer would think he was biased against Mr Urumov in relation to the committal applications on the grounds of his adverse findings or the strength with which they were expressed.
He acceded, however, to the recusal application (albeit "with extreme reluctance") because, although he regarded the specific points relied on in support of actual bias as being "entirely groundless", the allegations were
"so serious that the appropriate course is that I should recuse myself."
He handed this judgment down on 29 th April 2014 and, on the same date, he gave Otkritie permission to appeal his decision saying not only that Otkritie had a real prospect of success but also that he would welcome his decision being overturned; no further steps have been taken in the committal applications meanwhile either against Mr Urumov or against other defendants.
The nature of the frauds found by the judge was as follows. The essence of the Sign-On Fraud was that Mr Urumov and others falsely represented that they each had a guaranteed income of US$5 million per annum with their previous employers, Knight Capital Ltd, where Mr Urumov had been executive director at the Emerging Markets Fixed Income Desk. As a result of this representation Otkritie paid Mr Urumov a "golden hello" of some US$25 million which Mr Urumov had falsely represented he intended to share with his other four team members. He did not in fact so intend and pocketed most of the US$25 million part of which he used as bribes or kickbacks paid to other defendants.
The Argentinian Warrants Fraud was a scheme whereby Otkritie were deceived into purchasing Argentinian warrants for US$213 million when they were only worth about US$62 million thus incurring a loss of about US$151 million. This fraud was achieved, at any rate in part, by pretending that the value of the warrants was about 15–16% in US dollars whereas their true value was the same percentage in Argentinian currency. It was also falsely represented that a company called Threadneedle was the ultimate vendor of the warrants and had agreed to re-purchase them at a higher price, when in fact no such agreement existed.
Application to set aside grant of permission to appeal
Mr Urumov feels strongly that Otkritie should not have been granted permission to appeal by the judge. He also submits that he was given no effective notice of the application for permission to appeal because he understood the hearing of 29 th April to relate to the question whether, in the light of the judge's decision to recuse himself (of which he had received notice in the draft judgment sent to him a few days earlier), contempt proceedings against other defendants should be heard and determined. In these circumstances and in the additional circumstance that his wife had a relapse of her auto-immune condition he had decided not to attend the hearing on 29 th April and had so informed the judge on 28 th April. He was then given notice "a few hours before" that hearing that Otkritie intended to apply for permission to appeal but he could not alter his decision not to attend and asked for an opportunity to make submissions on a later date.
The judge dealt with the matter in this way:-
"12. The position of Mr Urumov in relation to that application for permission to appeal as set out in an e-mail, was that he had had insufficient notice of that application and that I should adjourn that application for leave to appeal. He has not appeared today. A further e-mail, again received earlier this morning, was to the effect that he was having to look after his wife Miss Yulia Balk. In any event, he had previously indicated, quite apart from that, that he had taken the decision not to appear today.
13. In these...
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