Base Metal Trading Ltd v Shamurin
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Tomlinson,Mr Justice Tomlinson |
| Judgment Date | 22 October 2003 |
| Neutral Citation | [2003] EWHC 2419 (Comm) |
| Docket Number | Case No: 2000 Folio 362 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 22 October 2003 |
[2003] EWHC 2419 (Comm)
The Honourable Mrjustice Tomlinson
Case No: 2000 Folio 362
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand. London, WC2A 2LL
Charles Hollander QC and Brian Dye (instructed by Messrs Holman Fenwick and Willan) for the Claimant
John Jarvis QC and James Evans (instructed by Messrs Weightman Vizards) for the Defendant
Hearing dates : 4, 5, 9, 10, 11, 12, 16, 17, 18, 19, 23, 24, 25, 26 and 30 June, 2, 3 and 4 July 2003
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
In this judgment I shall refer to the Claimant Base Metal Trading Limited as "BMTL" and to the Defendant as Mr Shamurin. It will also be necessary to make frequent reference to the current beneficial owners of BMTL, the brothers Yuri and Mikhail Zhivilo, to whom I shall refer in this judgment as they were at trial simply as Yuri and Mikhail or, together, the Zhivilos.
This case concerns a falling-out between friends. The friends, Yuri, Mikhail and Mr Shamurin, were at the relevant times young Russian businessmen exploiting the opportunities which presented themselves to able entrepreneurs in that country after the collapse of the Soviet Union in October 1991. By way of a joint venture they set up a group of companies one purpose of which was to export metal, principally aluminium and titanium sponge, from Russia to the West. The events with which this case is concerned occurred in 1992, 1993 and 1994. The transactions conducted by Mr Shamurin of which BMTL in this action complains had ceased by 2 November 1994. The falling-out occurred either in the second half of 1994 or in 1995. Since October 1997 Mr Shamurin seems to have devoted much if not all of his time to pursuing a determined campaign against Yuri and Mikhail. He has made a series of criminal complaints against them in Russia, all of which, so far as I am aware, have ultimately been dismissed. In 1999 he began proceedings in Guernsey, where BMTL is incorporated, against the company itself, Yuri and Mikhail, claiming that he was deprived of his shareholding in the company by duress. In that action in Guernsey he claims that he remains entitled to a 50% share in the company. This action was begun by BMTL in March 2000 by way of a riposte to the Guernsey proceedings brought by Mr Shamurin. It was in part a spoiling tactic to divert and to deplete Mr Shamurin's resources. Whether it has been successful in that regard is a moot point, as Mr Shamurin evidently has backers, or, if it does not come to the same thing, the Zhivilo brothers have enemies, who have been prepared to fund Mr Shamurin in the defence of this litigation. It is a fair inference from the evidence given about the extent of their support in this and in other litigation that the generosity of this source or of these sources has so far amounted to a figure approaching or in excess of a million pounds. I rather doubt whether the Zhivilos expect to be able to recover from Mr Shamurin the amount of any judgment which they may obtain in this action, although the source of funding to which I have referred above was apparently prepared to meet a judgment given against Mr Shamurin by Cresswell J in December 2001 in Leadenhall Capital Management Ltd v. Shamurin. That was an action on a loan agreement, brought effectively by a Mr Kheifits, also once a friend of Mr Shamurin, with whom he had also once had a joint venture. Mr Shamurin says that the Zhivilos orchestrated the bringing of that action against him. Whether that is so or not, in the course of his judgment Cresswell J found:–
1. That Mr Shamurin relied upon the absence of the original document [the loan agreement] in circumstances where he had in fact himself removed it from the claimant company;
2. That when documents did appear they proved to be inconsistent with Mr Shamurin's case;
3. That Mr Shamurin tailored his evidence to suit his case; and
4. That Mr Shamurin denied having signed documents which obviously he had signed.
The judgment given by Cresswell J in that action was for the principal sum of US$120,000 which, together with interest, amounted to about US$243,000. The claim here by BMTL is for a far greater sum, approaching US$6 million, being a loss allegedly suffered in 1994. I am quite confident that this action (and this claim) would never have been brought against Mr Shamurin had he not in turn pursued his campaign against the Zhivilos, one and perhaps the principal object of which is to enable Mr Shamurin to share in the prosperity of BMTL which has enured to it in consequence of its successful takeover, after his departure, of the Novokuznetsk Aluminium Plant, a privatised aluminium smelter in the far eastern Kemerovo region of Russia. However even if the Zhivilos do not expect to make a significant recovery from Mr Shamurin, who says that he is without assets, a judgment in a significant sum would no doubt be of assistance to them in the overall campaign being waged between them and him in the various theatres.
As so often with friends, the extent of the falling-out is deep. The Zhivilos say that, just as in the Leadenhall case, so here Mr Shamurin has fabricated a fundamentally dishonest story. They say that he caused BMTL massive losses by unauthorised speculative trading in its name on the London Metal Exchange, hereinafter the "LME". They say that his defence to the effect that he was by these trades in large part pursuing an agreed hedging policy for the company, and that the Zhivilos were in any event regularly apprised of what he was doing, is pure invention. They say that he walked out on the joint venture rather than shoulder responsibility for his unauthorised activity, just as Mr Kheifits asserted he had done in relation to the joint venture the subject of the jLeadenhall action. The Zhivilos say that Mr Shamurin is an inveterate liar and that he has made a pastime of making outrageous allegations about them.
Mr Shamurin for his part says that Yuri and Mikhail are dangerous people, prepared to resort to threats or violence, who have amongst other things threatened to kill him. He has placed evidence before me to the effect that Mikhail is accused of complicity in a plot to assassinate a former Governor of the Kemerovo region. He has placed before me second hand hearsay evidence with a view to persuading me that the Zhivilos are infamous in Moscow circles for their criminal and other activities. Mr Shamurin says that at the behest of the Zhivilos and in their presence he was threatened on Admiral Ushakov Boulevard in Moscow by two large athletic men one of whom had a gun in a holster, plainly visible when the wind lifted the flap of his jacket.
The evidence ranged far and wide. It generated rather more questions than answers. It did however demonstrate conclusively that the dispute between these former friends has nothing of any substance to do with this jurisdiction. It is a dispute about a joint venture the plans for and of which were discussed in Russia between Russians. The joint venture operated in and from Russia. It is common ground, one of the very few things about which these parties could agree, that if the alleged conduct of Mr Shamurin said in this case to be actionable at the suit of BMTL is judged according to the law of Russia it discloses no cause of action known to Russian law. Even if it did the cause of action would under the Russian law of limitation have been time barred since November 1997. BMTL says that its claim against Mr Shamurin, or at any rate at least one way in which that claim can be formulated, is governed either by English law or by Guernsey law, Guernsey law not having been shown to be in this or any respect different from English law. There are two reasons why it has been possible to argue with any semblance of plausibility that the relationship between BMTL and Mr Shamurin is governed by English or Guernsey law. One is because the joint venturers chose to use as one of their vehicles BMTL, a company incorporated in Guernsey. By the same token they also used companies incorporated in the Isle of Man, Panama and the British Virgin Islands. The second reason is that the particular activity of Mr Shamurin about which BMTL complains is trading on the LME. The complaint would be in substance no different had Mr Shamurin been trading on the New York Metal Exchange, or indeed had the Moscow Exchange in the foundation of which Mr Shamurin was prominent been sufficiently developed to permit him to carry out the same volume of trading there.
Mr Hollander QC for BMTL pointed out in his written Closing Submissions that the contract upon which BMTL sues "is in substance a joint venture or quasi partnership between two individuals with equal rights and powers". The two individuals to whom he was referring were Yuri and Mr Shamurin. I agree entirely with this analysis, and it matters not for present purposes that Mr Shamurin maintains that Mikhail was also a partner, with the brothers representing 50% between them. The longer I have listened to the evidence in this case and the longer I have thought about it, the more it has become clear that this was a joint venture or partnership rooted in Russia, moulded by contemporary conditions there, and that any attempt to manufacture in BMTL a relevant cause of action against one or other of the joint venturers is artificial. The nature of the exercise is vividly illustrated by the manner in which the case is pleaded, to which I must shortly turn.
On any view of the case it is quite unnecessary to make findings...
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