Deutsche Bank AG v Sebastian Holdings Inc.
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henshaw |
| Judgment Date | 16 October 2023 |
| Neutral Citation | [2023] EWHC 2563 (Comm) |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2009-000709 |
[2023] EWHC 2563 (Comm)
THE HONOURABLE Mr Justice Henshaw
Case No: CL-2009-000709
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
Sonia Tolaney KC, James MacDonald KC and Andrew McLeod (instructed by Freshfields Bruckhaus Deringer LLP) for the Claimant
Tony Beswetherick KC and Rupert Hamilton (instructed by Brecher LLP) for Mr Vik
Hearing dates: 19 and 20 September 2023
Draft judgment circulated: 10 October 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 16 October 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
| (A) INTRODUCTION | 2 |
| (B) BACKGROUND | 4 |
| (1) Overview of events to July 2022 | 4 |
| (2) The committal application | 5 |
| (3) The sentencing process | 6 |
| (4) The Suspended Committal Order | 11 |
| (5) Appeal from the Suspended Committal Order and resulting deadlines | 13 |
| (6) Listing of the Further Examination | 14 |
| (7) Mr Vik's Variation Application | 14 |
| (8) The Remote Attendance Applications | 16 |
| (9) Issue raised as to expiry of the suspended sentence | 19 |
| (C) CONSTRUCTION OF THE SUSPENDED COMMITTAL ORDER | 19 |
| (1) Principles | 19 |
| (2) Application | 23 |
| (D) APPLICATION UNDER THE SLIP RULE | 28 |
| (1) Principles | 28 |
| (2) Application | 34 |
| (E) CORRECTION OR VARIATION OF THE ORDER UNDER CPR OR INHERENT POWERS | 37 |
| (F) ABUSE OF PROCESS AND COLLATERAL ATTACK | 42 |
| (1) Principles | 42 |
| (2) Application | 43 |
| (G) ESTOPPEL | 46 |
| (H) AGREEMENT TO VARY THE COMMITAL ORDER | 50 |
| (I) EFFECT OF BRYAN J ORDER | 51 |
| (J) CONCLUSION | 53 |
(A) INTRODUCTION
This judgment relates to the effect of a suspended committal order made by Moulder J on 15 July 2022 ( the “Suspended Committal Order”), arising from an order made in 2015 under CPR 71 in relation to the available assets of the Defendant company (“ SHI”), which company Mr Vik controlled.
The hearing before me was listed for a further examination of Mr Vik, pursuant to one of the conditions set out in the Suspended Committal Order. However, late in the preceding week Mr Vik raised a new argument, to the effect that the Suspended Committal Order had in fact been discharged according to its own terms, with the result that he was no longer obliged to attend a further examination.
The Claimant (“ DB”) responded by issuing an application on 15 September 2023 for orders that:
i) the issue of the status of the suspension imposed by paragraph 2 of the Suspended Committal Order be determined (if time permits) at the conclusion of the further examination of Mr Vik for which the hearing had been listed (the “ Further Examination”);
ii) for the avoidance of any doubt, Mr Vik is required to attend the Further Examination in person;
iii) on the proper construction of paragraph 2 of the Suspended Committal Order, the term of the suspension thereby imposed ends and only ends upon the conclusion of the Further Examination;
iv) in the alternative, paragraph 2 of the Suspended Committal Order be rectified under CPR 40.12 or varied under CPR 3.1(7); and
v) the suspension in paragraph 2 of the Suspended Committal Order be continued (on the same terms) until the date three months after the date on which the Further Examination (including any adjourned hearing) finally concludes.
DB also applied for orders to be made on the papers on Monday 18 September 2023, in advance of the hearing, on the terms indicated in subparagraphs (i) and (ii) above. I declined to do so, on the basis that it appeared inappropriate to make any order, on the papers and before hearing argument, that might prejudice one or more of the substantive issues that had arisen between the parties. I therefore heard argument on those issues at the hearing on 19 and 20 September. In the event, the argument, in which both sides were ably represented by leading and junior counsel, and on which some 48 pages of skeleton arguments were filed, occupied the whole of the two days and involved substantive issues of law and construction.
After consideration of those arguments, I have come to the conclusions that:
i) the Suspended Committal Order, by its terms, resulted in a suspended sentence which came to an end, absent any prior application by DB, on 24 August 2023;
ii) the Suspended Committal Order cannot be corrected under the ‘slip’ rule in the way DB proposes;
iii) the court lacks power to vary the Suspended Committal Order in the way DB seeks, because it would extend rather than ameliorate the suspended sentence;
iv) for the same reason, the court lacks power to continue the suspended sentence so as to expire three months after the Further Examination;
v) the principles of abuse of process and collateral attack do not preclude Mr Vik from arguing, or the court from concluding, that the suspended sentence imposed by Moulder J expired on 24 August 2023;
vi) Mr Vik is not estopped from advancing his present contention to that effect;
vii) the parties cannot have extended the period of the suspended sentence by agreement; and
viii) I do not construe Bryan J's order made on 1 September 2023, for Mr Vik to attend the Further Examination in person rather than remotely, as being a freestanding direction, independent of the Suspended Committal Order, for attendance at a further examination. Whether the court would have the power to make such an order may be a matter for another day.
My reasons are set out below.
(B) BACKGROUND
This is a long-running piece of litigation, commenced in 2009 following large losses incurred by SHI during the 2008 financial crash on transactions undertaken with DB. The background is set out in some detail in previous judgments, including (most pertinently for relevant purposes) Moulder J's judgment dated 24 June 2022 ( [2022] EWHC 1599 (Comm)) concluding that Mr Vik was guilty of contempt of court ( the “Contempt Judgment”) and her further judgment dated 15 July 2022 ( [2022] EWHC 2057 (Comm)) sentencing Mr Vik to a suspended term of imprisonment for those contempts (the “ Sentencing Judgment”). I do not aim to repeat the background in detail, but provide an overview of the earlier stages of the litigation and then focus on the events most directly relevant to the issues before me.
(1) Overview of events to July 2022
Mr Vik is a Monaco-resident billionaire. He formerly carried out high-value and complex equity and FX trading through SHI, which was (in Moulder J's words) Mr Vik's “ personal trading vehicle” and “ creature company”, using prime brokerage services provided by DB. In October 2008, SHI's trading became heavily loss-making and DB made margin calls. SHI paid some but not all of what was due, leading DB to commence proceedings in this jurisdiction for the outstanding sum of about US$250 million. SHI (acting through Mr Vik) brought a counterclaim against DB for US$8 billion.
The claim and counterclaim were heard over 14 weeks in a Commercial Court trial before Cooke J. Cooke J made a US$243m order in favour of DB against SHI, which was to be paid to DB by 22 November 2013 (the “ Judgment Debt”). Cooke J also awarded DB 85% of its costs, to be assessed on the indemnity basis, and ordered SHI to make an interim payment on account of costs of approximately £34.5 million by 22 November 2013.
Cooke J, whose judgment was upheld on appeal, found that starting in October 2008 Mr Vik stripped SHI of over US$1 billion of assets to impede recovery by DB. This court and the Court of Appeal have found that Mr Vik “ is a man who will do what is necessary to prevent [DB] obtaining its judgment debt” and who has attempted for years “ to avoid liability, to deceive the court and to conceal the true state of SHI's financial affairs”.
Following Cooke J's judgment, DB applied for a non-party costs order against Mr Vik on the grounds, inter alia, that he was personally responsible for SHI's dishonest conduct of the proceedings and that he had caused SHI to defend the proceedings and bring its counterclaim for his sole benefit. DB also applied for an order that SHI's proposed appeal against the Judgment Order be made subject to conditions. Both applications were successful.
Following DB's successful application for a non-party costs order against Mr Vik, Mr Vik paid the interim payment on account of costs. However, SHI failed to pay any part of the Judgment Debt (which now exceeds US$300 million including interest).
DB made a without notice application on 20 July 2015 seeking an order pursuant to CPR 71.2 against Mr Vik in his capacity as a (then) director of SHI. In July 2015, Teare J made an order under CPR 71 (the “ CPR 71 Order”). In summary, the CPR 71 Order required Mr Vik, in his capacity as (then) director of SHI:
i) to produce, by 14 October 2015, “all documents in [SHI's] control which relate to [SHI's] means of paying the amount due under the [Judgment] and the [Judgment Order]”, including certain specific categories of documents listed in a non-exhaustive Schedule to the CPR 71 Order; and
ii) to attend an examination before a judge on 28 October 2015 “to provide information about the judgment debtor's means and any other information needed to enforce the judgment or order”.
On 24 August 2015, Mr Vik applied to vary and/or strike out the CPR 71 Order. On 7 October 2015, Cooke J handed down judgment substantially upholding the CPR 71 Order but providing that the date for Mr Vik's oral examination should be put back to 11 December 2015.
On 14 October 2015, Mr Vik disclosed certain hard copy...
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