Dian AO v Davis Frankel & Mead (A Firm) and another
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE MOORE-BICK |
| Judgment Date | 11 October 2004 |
| Neutral Citation | [2004] EWHC 2662 (Comm) |
| Docket Number | Case No: 1994 Folio 1630 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 11 October 2004 |
[2004] EWHC 2662 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Moore-Bick
Case No: 1994 Folio 1630
The claimant did not appear and was not represented
MR SMITH Q.C., and MR R LEVY (instructed by Lovells) appeared on behalf of the applicant
MR C H JOSEPH (instructed by D F M Beckman) appeared on behalf of the Defendants
MR M MANN Q.C. (instructed by Winston & Strawn) appeared on behalf of IPOC International Growth Fund
This is an application by Alfa-Eco for permission to inspect and take copies of the documents on the court file in the case of Dian AO and Davis Frankel Mead & Tiller International Limited. A similar application has been made by IPOC International Growth Fund.
Alfa-Eco (to which I shall refer simply as "Alfa" for the purposes of this judgment) is a Russian company involved in the telecommunications industry. It forms part of a Russian conglomerate known as the Alfa group and together with other companies in the group, is currently involved in heavy litigation in the British Virgin Islands over the ownership of shares in Megafon, a Russian mobile telephone operator.
It is unnecessary to describe that litigation in any detail. It is sufficient to say that in 2003, three companies in the Alfa group, Santel Limited, Avenue Limited and Janow Properties Limited, acquired a shareholding in Megafon. Those shares had previously been owned by a company called LV Finance Group. After the acquisition was announced IPOC International Growth Fund ("IPOC") claimed that it had an option agreement with LV to purchase the shares. It is said that in disposing of the shares to Santel, Avenue and Janow Properties LV was in breach of that agreement and applied ex parte to the court in the British Virgin Islands, seeking interim relief, alleging that Santel, Avenue and Janow Properties had acquired the shares otherwise than as bona fide purchasers for value. The court in the British Virgin Islands granted relief by way of injunction and also appointed a receiver over the defendant's assets.
In addition to the proceedings in the Caribbean, IPOC also began two sets of arbitration proceedings against LV in Switzerland. One of these was conducted in Geneva; the other is currently going on in Zurich. Broadly similar allegations are being made in both sets of proceedings, including allegations of fraud against LV in seeking wrongly to deprive IPOC of its assets. LV is alleging that IPOC is nothing more than a vehicle for the laundering of money dishonestly obtained by Mr Leonid Reiman who is currently the Russian minister for telecommunications.
The defendants applied to set aside the court orders. On the hearing of the application IPOC was ordered to pay into court the sum of US$30 million as security for the cross-undertaking it had been obliged to give when obtaining the ex parte order and as security for the defendant's costs. IPOC duly paid that amount into court and it has since been increased to US$$40 million. The orders relating to Alfa were discharged immediately at the conclusion of the hearing in October 2003 and the orders in relation to the other companies were discharged in January 2004 following the delivery of a reserved judgment. Those decisions are currently under appeal to the Court of Appeal of the Eastern Caribbean.
Until about October 2003 the chairman of IPOC was a Mr Vidya Sharma. At some point one of the defendants to the proceedings in the Caribbean, discovered that Mr Sharma had been convicted in Germany of an offence of dishonesty and brought that to the attention of IPOC which thereupon dismissed him. Following his dismissal, Mr Sharma provided LV with information about IPOC, suggesting that it was being used as a vehicle for money-laundering and in due course he provided a statement with a view to giving evidence in the Geneva arbitration.
The present application arises out of an application made by Alfa and the other defendants in the Caribbean proceedings, for security for their costs of the appeal. When the question of security was first raised IPOC said that it was unnecessary to provide any further security in view of the fact that a very substantial sum was already being held in court. The defendants' response was that in view of the allegations of money-laundering the status of that money was uncertain, to say the least, and that it should therefore be disregarded for the purposes of security for costs.
In the event, Mr Sharma did not give evidence before the tribunal in Geneva. When the arbitrators were about to start hearing evidence LV left the hearing and took no further part in it. Although Mr Sharma's statement was before them, the arbitrators did not hear from him and he was not cross-examined. One of the witnesses called by IPOC was a Mr Jeffrey Galmond, a Danish lawyer who claimed to be a good friend of Mr Reiman. He told the tribunal that he, not Mr Reiman, was the beneficial owner of all IPOC's assets.
In August 2004 the tribunal published an award in favour of IPOC. In reaching their conclusions the arbitrators rejected the allegations of money-laundering, expressed the view that Mr Sharma was an unreliable witness and found that the defendants were not bona fide purchasers for value of the shares in Megafon. They recognised, however, that their findings were not binding on any of those who were not parties to the arbitration.
In September 2004, IPOC served its evidence in opposition to Alfa's application for security for its costs of the appeal. The allegation of money-laundering by IPOC had, by that time, become one of the central issues, if not the central issue, in the dispute over the provision of security. Alfa applied for and obtained disclosure of certain documents referred to in material that IPOC had put in evidence. It was in the course of preparing for that application that Alfa learnt of the proceedings in this country involving Dian.
Mr Galmond's evidence that he is the beneficial owner of IPOC is potentially of great significance in relation to the money-laundering allegations that were made against Mr Reiman. Understandably, therefore, Alfa would like to obtain any information that might enable it to undermine his account. The application for security has now been re-fixed for early November and I understand that Mr Galmond may be required to attend for cross-examination.
On 10 th September 2004, Alfa applied to this court without notice for permission
"to inspect and copy the court file in the matter of Dian AO and Davis Frankel and Mead and Tiller International Limited".
In other words, it sought permission to examine the whole of the court file and copy any documents it thought contained information that might be useful to it. I do not think it unfair to describe the application, therefore, as one for permission to trawl through the whole of the court file, to see what might be of assistance and to copy any documents it might think to be of any use.
The Dian action was commenced by writ issued on 20 th September 1994 and is currently stayed under the terms of a Tomlin order made on 29 th March 1996. It can safely be assumed, therefore, that the action has been compromised on terms agreed between parties.
The application came before Andrew Smith J, on 10 th September. He was clearly concerned by, among other things, the fact that the parties to the original action had not at that stage been informed of the application and therefore had not had an opportunity to be heard. He gave Alfa permission to make use of copies of some of the pleadings which had already been provided to them by the court staff in error, directed that notice of the application be given to those other parties and adjourned the application to 23 rd September when the matter came before me. On that occasion, I adjourned the hearing for a further 14 days, to enable Tiller, which had been served with notice of the application only a few days earlier, to serve evidence and instruct solicitors and counsel.
The present application was made under CPR rule 5.4 and the related practice direction. Rule 5.4(2) provides as follows,
"Any other person who pays the prescribed fee, may during office hours, search for, inspect and take a copy of the following documents, namely –
(a) a claim form which has been served;
(b) any judgment or order given or made in public;
(c) Any other document if the court gives permission."
The rule should be read in conjunction with paragraph 4 of the practice direction which deals with the manner in which an application of this kind is to be made. Paragraphs 4.2, 4.3 and 4.4 are particularly relevant. They provide as follows:
"4.(2) When the document searched for under CPR rule 5.42 is identified and upon payment of the prescribed fee, the document will be produced for inspection by a member of the court staff.
4.(3) If, in the course of a computer search, the computer identifies documents held on the court file, other than those which the person searching is entitled to inspect, that person may not, without the court's permission, inspect, take a copy or make a note of, or relating to, those documents.
4.(4) An application for inspection of a document under CPR rule 5.4(2)(c), even if made without notice, must be made under CPR Part 23 and the application notice must identify the document in respect of which permission is sought and the grounds relied upon."
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