Deutsche Bank AG v Sebastian Holdings Inc.

JurisdictionEngland & Wales
JudgeCockerill J.
Judgment Date21 December 2020
Neutral Citation[2020] EWHC 3536 (Comm)
CourtQueen's Bench Division (Commercial Court)
Docket NumberCase No: CL-2009-000709
Date21 December 2020
Between:
Deutsche Bank AG
Claimant
and
(1) Sebastian Holdings Inc
Defendant
(2) Mr Alexander Vik
Defendant for Costs purposes only

[2020] EWHC 3536 (Comm)

Before:

The Honourable Mrs Justice Cockerill

Case No: CL-2009-000709

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS

OF ENGLAND AND WALES

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice,

Rolls Building

Fetter Lane, London,

EC4A 1NL

Sonia Tolaney QC, James Macdonald, Andrew Lodder (instructed by Freshfields Bruckhaus Deringer LLP) for the Claimant

Duncan Matthews QC, Tony Beswetherick, Andrew Feld (instructed by Brecher LLP) for Mr Vik

Hearing dates: 18 March, 30 November, 1 December 2020

Draft Judgment sent to parties: 14 December 2020

Approved Judgment

I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Cockerill J.
1

I was scheduled to hear argument on this application over three days in mid-March, the first day of the hearing being 18 March 2020. After Mr Matthews QC completed his submissions on Day 1, I received a joint application by the parties to adjourn the hearing part heard, on the grounds of concern for the health of those involved arising from the coronavirus pandemic. As the matter was not by any means urgent and non-essential travel on the part of the legal teams was undesirable, I acceded to that application.

2

The parties agreed that the matter should come back “live”, to ensure equality of arms. As it transpired, the events of the pandemic combined with the diaries of those involved meant that we have been unable to reconvene for a live hearing until much later in the year – and that the ultimate resumed hearing (during the last days of “Lockdown 2.0”) was remote.

3

The hearing concerned two applications arising out of the long-standing litigation between the Claimant, Deutsche Bank AG (“DB”) and the Defendant, Sebastian Holdings (“SHI”) and its one time beneficial owner, the Respondent Mr Alexander Vik.

4

It is fair to say that the litigation is fiercely fought. The history of this case runs to 53 screens on the court's CE-Filing system. The claim form was issued in 2009. This hearing is but the latest outcropping of contention between the parties. It arises out of DB's application of 7 May 2019 to commit Mr Vik to prison for contempt of court (the “Committal Application” or the “Application”).

5

As often with post judgment committal applications in this court the litigation is somewhat high-temperature, and has been accompanied by a litany of complaints about the terms in which each side speaks of the other.

6

The applications before me have been:

i) DB's application dated 9 January 2020 to amend the Committal Application (“the Amendment Application”); and

ii) Mr Vik's cross-application dated 16 January 2020 (“the Strike Out Application”) by which he seeks to strike out the Committal Application in whole or in part, together with an Order for costs. Those costs are sought on the indemnity basis in relation to certain now abandoned allegations.

7

I should note here the not insignificant point that, during the hiatus in proceedings, the new regime as to contempt applications came into effect. As a result the new CPR 81 applies. I will however make reference to the earlier rules, as part of the argument addressed them and the parties were agreed both that the new Part 81 expressly does not alter the scope and extent of the Court's substantive powers in relation to committal (new Part 81.1(2)-(3)) and that the overarching principles applicable to civil contempts remain the same under new Part 81 as under its predecessor.

8

I shall come back to the procedural history shortly, but in essence the issues raised by these applications are whether, as Mr Vik contends:

i) The Committal Application should be struck out (originally under old PD 81, paragraph 16.1(3)), by reason of DB's failure to comply with the express obligation under old CPR 81.10(3) to provide particulars of the allegations of contempt.

ii) Alternatively, the Committal Application should be struck out (originally under old PD 81, paragraph 6.1(2)) because it is an abuse of the process of the Court.

iii) In the further alternative, insofar as it is based upon allegations that Mr Vik lied under oath (“the False Oral Testimony Allegations”), the Committal Application should be struck out: (1) as it discloses no reasonable grounds for alleging contempt; and (2) DB required permission (which it did not obtain) to make the application in respect of those allegations pursuant to old CPR 81.12(3) and 81.14.

9

The broad thrust of all these allegations is founded in the caution which this court must exercise in the context of committal proceedings and the importance of compliance with the strict procedural requirements of the process.

10

In essence therefore the focus is on Mr Vik's contentions; it is not in issue that if I do not accede to them it follows that the Amendment Application should be allowed and the Committal Application scheduled for a hearing. Accordingly, although in time the Amendment Application came first, it has made sense to hear the issues compendiously, with Mr Matthews for Mr Vik commencing.

The Background

The original litigation

11

In large measure this background is drawn from the previous judgments in this litigation.

12

SHI is a Turks & Caicos Islands offshore SPV which (until July 2015) was 100% owned and controlled by Mr Vik and used as his “ personal investment vehicle”.

13

This litigation commenced eleven years ago, in 2009, when DB commenced proceedings against SHI in this jurisdiction, claiming c. US$250m pursuant to loss-making derivatives trades. After a substantial jurisdiction dispute which went to the Court of Appeal ( [2009] EWHC 2132 (Comm), [2009] EWHC 3069 (Comm) [2010] EWCA Civ 998), SHI denied that claim and brought an US$8bn counterclaim against DB.

14

There was a 14-week trial before Cooke J in 2013. As the Court of Appeal, in a later judgment, noted it involved 29 witnesses of fact, 17 expert witnesses, hundreds of thousands of documents hosted on an electronic trial bundle, thousands of pages of closing submissions, and was conducted at a combined cost to both parties of around £100m, reflecting the vast sums at stake.” Parallel substantive proceedings were also conducted in New York.

15

The English trial resulted in a judgment ( [2013] EWHC 3463 (Comm)) substantially in favour of DB, with SHI's counterclaim being rejected in its entirety. The Judge held (again quoting from a summary in a later judgment by the Court of Appeal in [2014] EWCA Civ 1100):

“substantial parts of SHI's defence and counterclaim were based on dishonest evidence and fabricated documents put forward by Mr Vik, or by SHI's only other factual witness, Per Johansson. Mr Johansson was and apparently still is engaged as a litigation consultant to SHI. Amongst other things, Cooke J found that Mr Vik had invented the alleged oral agreements with DB, and that SHI's vast counterclaim was put forward on a dishonest basis by Mr Vik and Mr Johansson relying on fabricated documents. Cooke J was also critical of SHI's conduct of the proceedings in other respects, in particular its approach to disclosure, its pursuit of hopeless arguments, and as to the evidence of two of its main experts.”

16

The judgment marked the start of a series of clear negative findings about Mr Vik's conduct by these courts. Cooke J described SHI's and Mr Vik's conduct as “ reprehensible” and involving “ impropriety…and dishonesty on Mr Vik's part”. Other descriptions of him over the years have included the following:

i) “ The whole history of the proceedings …reveals attempts by Mr Vik …to avoid liability, to deceive the court and to conceal the true state of SHI's financial affairs… Mr Vik's conduct is all of a piece and that these actions are all intended to impede enforcement of the judgment against SHI. It is hard to come to any other conclusion.” (Cooke J in the CPR 71 challenge).

ii) Mr Vik “ is a man who will do what is necessary to prevent DB obtaining its judgment debt”: [2019] 1 WLR 1737 (CA), Gross LJ at [1].

17

This latter description arose against a background where, nearly 7 years on from the judgment on the merits, SHI has not paid any part of the sums due under this original judgment. Mr Vik asserts that SHI has no assets with which to pay. That is not consistent with findings made in this Court and the Court of Appeal namely that:

i) [2013] EWHC 3463 (Comm) [1461]: “ all these funds were available to SHI (some US$896 million) prior to transfer and that, moreover, Mr Vik could, at a moment's notice, procure the transfer of those funds back to SHI should he have chosen to do so.”;

ii) [2014] EWCA Civ 1100 at [36]–[37]: “ there is no evidence to suggest that Mr Vik is not still the sole owner and director of SHI as he was in 2008…. Given the judge's findings as to the manner in which Mr Vik treated SHI and its assets as his own, it is difficult to think that there can be a more appropriate case in which to take into account that he could, if minded to do so, pay the judgment debt. However, it is not in my judgment necessary to go that far. On the basis on which I approach the case SHI could itself pay the judgment debt into court if Mr Vik chose to procure it to do so. That does not involve Mr Vik funding SHI or paying the judgment debt on its behalf. It involves Mr Vik taking steps to restore to SHI what are rightfully its assets”.

18

It has been determined in earlier proceedings that as soon as Mr Vik became aware of...

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8 cases
  • Deutsche Bank AG v Sebastian Holdings Inc.
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 24 Febrero 2023
    ...spring 2016. Mr Vik complained that it was inadequately particularised, but this complaint was rejected by Mrs Justice Cockerill ( [2020] EWHC 3536 (Comm)). 18 The hearing of the committal application finally took place before Mrs Justice Moulder in May 2022. In its final form, the Bank al......
  • Robert McCarren v Paul Ireland
    • United Kingdom
    • Family Court
    • 10 Octubre 2022
    ...application to commit to set out succinct summary of the allegations with the detail should be set out in the evidence (see Deutsche Bank AG v Sebastian Holdings Inc [2020] EWHC 3536 (Comm) at [59]–[141] approved by the Court of Appeal in Ocado Group Plc v McKeeve [2021] EWCA Civ 145 at [......
  • Ocado Group Plc and Another v Raymond John McKeeve
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 8 Febrero 2021
    ...would be in any doubt as to the substance of the breaches alleged. As Cockerill J said at paragraph 80 of her judgment in Deutsche Bank AG v Sebastian Holdings Inc [2020] EWHC 3536 (Comm), after a thorough review of the authorities: “…. The Application Notice needs only to set out a succin......
  • Business Mortgage Finance 4 Plc v Rizwan Hussain
    • United Kingdom
    • Chancery Division
    • 2 Marzo 2022
    ...contempt proceedings, whether inherent, statutory or at common law.” I agree with the obiter views of Cockerill J in Deutsche Bank AG v Sebastian Holdings Inc [2020] EWHC 3536 (Comm), at [148] that the omission of an express power to waive defects should not be read as abolishing the exist......
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