Alfa-Bank v Reznik
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Popplewell |
| Judgment Date | 03 August 2016 |
| Judgment citation (vLex) | [2016] EWHC J0803-1 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 03 August 2016 |
| Docket Number | No. CL-2016-000249 |
[2016] EWHC J0803-1
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
No. CL-2016000249
Rolls Building
Mr. Justice Popplewell
No. CL-2016-000249
Mr. Patton (instructed by Herbert Smith Freehills LLP) appeared on behalf of the Claimant/Applicant.
THE DEFENDANT/RESPONDENT did not appear and was not represented.
This is an application by the Claimant ("the Bank"), originally issued on 10 June 2016 for the committal of the defendant, Mr. Reznik, on the grounds that he has failed to comply with the asset disclosure provisions in a worldwide freezing order, which was granted originally by Knowles J at a without notice hearing on 25 April 2015, and was, subsequently, continued by him on 9 May 2016 ("the WFO").
I remind myself that the standard of proof to be applied is the criminal standard, such that I must be sure on the evidence before me of the elements of contempt which the Bank is required to prove.
The background to the WFO is that Mr. Reznik is a Russian businessman. The Bank advanced lending facilities to a Russian company called CJSC Firma ANTA ("ANTA"), which is within a group of companies which Mr. Reznik is believed to own. In June 2014, Mr. Reznik provided a personal guarantee of ANTA's debt, which was governed by English law and subject to LCIA Arbitration in London. On 5 April 2016, the Bank purported to accelerate the whole of the outstanding debt owed by ANTA and, on 22 April 2016, it served a demand on Mr. Reznik pursuant to the guarantee.
The WFO was granted by Knowles J in aid of the claim by the Bank in an LCIA Arbitration, exercising the powers under s.4 of the Arbitration Act 1996. That arbitration was commenced by the Bank on 6 May 2016, pursuant to an undertaking given to Knowles J.
The WFO was in standard Commercial Court form. It bore a penal notice at the beginning of the order. Paragraph 4 contained the freezing injunction restraining any dealing with or disposal of Mr. Reznik's assets up to an aggregate value of US$15,462,228.40 and €2,270,846.62.
The asset disclosure provisions were in paras.8 and 9 of the WFO. Paragraph 8.1 provided:
"Unless paragraph 2 applies [the standard provision allowing a claim for the privilege against self-incrimination] the respondent must within 72 hours of service of this order, and to the best of his ability, inform the applicant's solicitors of all his assets worldwide exceeding $10,000, whether in his own name or not and whether solely or jointly owned, giving the value, location and details of all such assets."
Paragraph 9 provided
"Within five working days after being served with this order, the Respondent must swear and serve on the applicant's solicitors an affidavit setting out the above information."
Paragraph 20 provided
"The applicant is permitted to serve the arbitration claim form, this order and any other documents in the proceedings out of the jurisdiction on the respondent by internationally-recognised courier and/or by way of personal service at 4-Y Asmani Pera Urloc, Apartment 16, Moscow Russia, or elsewhere where the respondent may be found in Russia."
The WFO was personally served on Mr. Reznik on 29 April 2016. I can be sure that that is so on the basis of the evidence before me. In particular Mr. Keillor adopts Ms Fot's affidavit confirming such personal service. Although Ms Fot had not seen Mr. Reznik before, I can be sure that the individual on whom the order was served was Mr. Reznik, because service took place at an apartment at 19 Klimashkina Street, which is the location of the apartment which Mr. Reznik had given as a gift to his son. On the occasion of service, the doorkeeper had informed Ms Fot that apartments 33 and 34 belonged to Mr. Reznik and the service took place at one of those apartments. Before handing over the order, Ms Fot phoned up to one of the apartments and spoke to a man who confirmed that he was Mr. Ilya Arkadyevich Reznik, and Ms Fot recognised Mr. Reznik from a photograph she had seen of him in the newspapers. That conclusion is consistent with the finding recorded by Knowles J in a recital to his order of 9 May continuing the WFO, that he was satisfied that Mr. Reznik had been served with the WFO, albeit that he was only concerned with the civil rather than criminal standard of proof. The committal application was personally served in the presence not only of Ms Fot, but of a representative of the Bank who was familiar with Mr. Reznik's appearance. Ms Fot was again present when the committal application was re-served, as I shall explain. The affidavit of Miss Semanova strongly supports the conclusion that Mr. Reznik is well aware of the WFO.
Accordingly, that personal service, having taken place on 29 April 2016, the time limit for provision of information about his assets expired on 2 May 2016 or, possibly, at the latest on 3 May 2016. The time limit for the provision of the affidavit about his assets expired on 11 May 2016.
Mr. Reznik did not provide any of the information about his assets which was required by paragraph 8 of the WFO, nor any affidavit of assets as required by paragraph 9 of the WFO, within the time required. Indeed he still has not done so. Indeed, he has still failed to do so. I find that he was and remains in breach of paragraphs 8 and 9 of the WFO by reason of those failures.
As I have explained, on 9 May 2016 the WFO was continued. On June 2016 this committal application was issued. The committal application and the supporting evidence was personally served on Mr. Reznik in a parking lot near Dorogomilovsky market on 22 June 2016. Again, I have no doubt that what happened on that occasion was personal service and I have no doubt that Mr. Reznik is well aware of this committal application.
The committal application was, as the papers indicated, due to be heard on 8 July 2016 and came before Blair J on that day. Mr. Reznik did not attend. That may have been because he was subject to a restriction imposed by a Russian court as a result of unrelated litigation which restricted his ability to leave the country, at least until some date in September. Whether or not that was the reason for his personal absence, it is to be noted that he was not represented and had given no indication prior to that hearing of a desire to participate in it in any way.
In the light of that position, Blair J adjourned the application, so that Mr. Reznik could be served with a letter explaining that his imprisonment was being sought and so that a videolink facility could be provided for him to attend and participate in the reconvened hearing from Moscow.
In accordance with that order, the application and the evidence, together with the letter warning him of the consequences of failing to comply, were served again on Mr. Reznik on 22 July 2016, by leaving them on the table at which he was sitting and informing him that they constituted an application to commit him and that he could be imprisoned for up to two years.
That was a little less than 14 days prior to this hearing. That is because, despite the Bank's best efforts, Mr. Reznik appeared to be seeking to evade service and that was the earliest time at which the Bank had been able to effect service. That is not a reason why this hearing should not proceed: Mr. Reznik had previously been served with the same application on 22 June 2016; he had been sent a further copy of the application by email on 19 July 2016; and it is clear from the evidence that he is well aware of this hearing. Insofar as it is necessary, I will order an abridgement of the 14-day period.
At the hearing this morning, videolink facilities were in place, as Mr. Reznik was informed they would be. He has not taken advantage of them. He did not attend to give evidence. Nor did any representative attend either at the video link facility in Moscow or in court in London.
The first question which I have to address, therefore, is whether this committal application hearing should proceed in the absence of Mr. Reznik or whether there should be a further adjournment. The relevant principles are those set out by Roth J in JSC BTA Bank v. Stepanov [2010] EWHC 794 Ch. at para.12, and Briggs J, as he then was, in JSC BTA v. Solodchenko [2011] EWHC 1613 Ch. at 13.
Applying those principles, the first consideration is the reason for Mr. Reznik's absence. As I have...
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