Evgeny Korchevtsev v Martin Severa
| Jurisdiction | England & Wales |
| Judge | Mr Justice Leech |
| Judgment Date | 13 September 2022 |
| Neutral Citation | [2022] EWHC 2324 (Ch) |
| Docket Number | BL-2022-000594 |
| Court | Chancery Division |
[2022] EWHC 2324 (Ch)
Mr Justice Leech
BL-2022-000594
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (Ch D)
Ms Kendrah Potts (instructed by PCB Byrne LLP) appeared on behalf of the Claimant
Dr Sandy Joseph (instructed by CLK Legal Services) appeared on behalf of the First Defendant.
Hearing dates: 1 and 2 September 2022
APPROVED JUDGMENT
I. The Applications
By Application Notice dated 6 April 2022 the Claimant, Evgeny Korchevtsev, applies to continue a worldwide freezing injunction granted by Bacon J without notice on 25 March 2022 and continued until the return date by Fancourt J on 8 April 2022 (the “ Freezing Injunction”). By Application Notice dated 5 April 2022 he also applies for permission to continue the action as a double derivative claim and by Application Notice dated 19 August 2022, he also applies for a proprietary freezing injunction in relation to any funds traceable to the fraud which he alleges that the First Defendant has committed. Finally, the Claimant also seeks an order that the First Defendant should give further disclosure both to enable him to police the Freezing Injunction but also in aid of the proprietary freezing injunction.
Ms Kendrah Potts appeared for the Claimant instructed PCB Byrne LLP (“ PCBB”) and Dr Sandy Joseph appeared for the First Defendant instructed by CLK Ltd (“ CLK Legal”) at the hearing of those applications which took place on 1 and 2 September 2022. By Order made on 2 September 2022 I continued the Freezing Injunction until the date on which I handed down this reserved judgment.
II. Corporate Background
The Claimant and the First Defendant are directors and each own 50% of the issued share capital of Fassaden Architektur Technik Group Ltd (“ Group” or the “ Group”), which has four wholly owned subsidiaries: FATfacades Ltd (“ Facades”), the Second Defendant; F.A.T Structures Ltd (“ Structures”), the Third Defendant; Samuel Atkins Asset Management Ltd (“ Samuel Atkins”); and Vila Ozana d.o.o. (Croatia) (“ VO”). The Claimant and the First Defendant are the directors of each of the four subsidiaries except VO. The First Defendant is one of two directors of VO.
The Claimant is a dual Russian and British national and trained architectural technologist and he specialises in technical building design and construction services. In 2012 he incorporated Facades (then called Kortov Ltd). The First Defendant is a Czech national and in 2014 he joined the business to provide marketing and support services. In 2014 Facades opened a bank account at Barclays Bank plc (“ Barclays”) and in June 2015 the First Defendant became a director of the company. In November 2015 the Claimant also transferred 50% of the shares in Facades to the First Defendant. In November 2019 the parties incorporated Group as a holding company and in January 2020 they transferred their shares in Facades to Group.
In February 2018 the First Defendant incorporated Structures (which was then called FAT Facades London Ltd) and he opened a bank account in its name on Tide Platform Ltd (“ Tide”), a banking platform or portal. The company remained dormant until May 2020 when the First Defendant transferred the shares to Group as a vehicle for consultancy services on recladding projects. In March 2020 the First Defendant also transferred his shares in VO to Group. That company had been incorporated in October 2015 and the First Defendant had been the sole director and shareholder until July 2018 when Mr Goran Barada also became a director. VO has a bank account at the Raiffeisen Bank International AG (“ Raiffeisen Bank”) in Croatia.
III. Procedural Chronology
On 6 April 2022 the Claimant issued a Claim Form asserting a double derivative claim on behalf of Facades and Structures against the First Defendant for dishonest breaches of his duties as a director. It is the Claimant's case that in breach of sections 171 to 177 of the Companies Act 2006 the First Defendant misappropriated in excess of £1,136,000 from Facades and Structures. Subject to one point, concerned with VAT, this remains his case.
On 25 March 2022 Bacon J made the Freezing Injunction on a without notice basis restraining the First Defendant from removing his assets from England and Wales up to the value of £1,136,000 and restraining him from disposing of or otherwise dealing with his assets inside or outside the jurisdiction up to the same value. Paragraphs 8, 9 and 11 of the Freezing Injunction provided as follows:
“8(1) Unless paragraph (2) applies, the Respondent must, within 2 working days of service of this order and to the best of his ability inform the Applicant's solicitors of all his assets worldwide exceeding £5000 in value whether in his own name or not and whether solely or jointly owned, and whether the Respondent is interested in them legally, beneficially or otherwise, giving the value, location and details of all such assets. (2) If the provision of any of this information is likely to incriminate the Respondent, he may be entitled to refuse to provide it, but is recommended to take legal advice before refusing to provide the information. Wrongful refusal to provide the information is contempt of court and may render the Respondent liable to be imprisoned, fined or have his assets seized.
9. Within 7 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.
11. The Respondent must not take any steps as director of either FATfacades Limited and/or F.A.T. Structures Limited unless such step is explicitly authorised by a board resolution of FATfacades Limited (Co No. 07919190) or F.A.T. Structures Limited (Co No. 11188274) as the case may be, or as agreed in writing with the Applicant's solicitors; and, in particular: a. The Respondent must not contact any client or potential client of FATfacades Limited and/or F.A.T. Structures Limited by email, telephone or any other means without the prior written consent of the Applicant's legal representatives.”
On 29 March 2022 the First Defendant served an Excel spreadsheet (the “ Spreadsheet”) setting out a list of assets both above and below £5,000 in value. On 5 April 2022 CLK Legal served by email a photograph of the first page of an affidavit sworn by the First Defendant and on 6 April 2022 CLK Legal served another photograph of the first page together with a more detailed summary of the First Defendant's assets headed “ List of Assets” (which is how I will refer to it).
On 8 April 2022 Fancourt J adjourned the return date of the application to continue the Freezing Injunction until the first available date after 16 May 2022 and ordered that the application for permission to continue the double derivative claim should be listed at the same time. He continued the Freezing Injunction until the hearing of those applications. He also gave directions for an IT expert to carry out a forensic examination of seven board minutes (the “ Board Minutes”), which the First Defendant had produced shortly before the hearing and I will refer to that part of his order as the “ Forensic Examination Order” or “ FEO”. Finally, he ordered the First Defendant to comply with CPR PD 32 and serve a further affidavit in relation to the List of Assets. On 19 April 2022 the First Defendant swore that affidavit.
On 8 May 2022 Fancourt J varied the FEO. Ms Potts was critical of D1's conduct and submitted that he failed to perform his obligations under the FEO. A number of those criticisms are justified but, in my judgment, nothing turns on this because the First Defendant ultimately performed his obligations and the IT expert, Mr Patrick Madden of Right Click Forensic Ltd, was able to carry out his investigation and prepare his report. On 19 May 2022 Mr Madden made a report in which he considered the authenticity of the Board Minutes. I will refer to it as the “ IT Report”.
IV. The Evidence
In advance of the hearing I was asked by Ms Potts to read the first and second affidavits of Mr Jonothan Gould, a Senior Associate at PCBB, which I will call “ Gould 1” and “ Gould 2”. I add that the version of Gould 2 in the hearing bundle was unsworn but no point was taken by Dr Joseph and Ms Potts confirmed that it had been sworn. I was also asked to read the Fourth Affidavit of the Claimant which I will call “ Korchevtsev 4”, I was also asked to read the witness statement of the First Defendant dated 14 April 2022. I will call it “ Severa 1” although the First Defendant had already made a short witness statement before. I was also asked to read the Particulars of Claim, the Defence, the IT Report and the Board Minutes.
Dr Joseph confirmed that the First Defendant had not filed an Acknowledgement of Service and Ms Potts took the point that the Defence was dated 14 July 2022 and had been served out of time. She pointed out that no application had been made for an extension of time or for relief from sanctions and she reserved the Claimant's position in relation to late service. I had originally understood Dr Joseph to be challenging the jurisdiction of the Court. But on re-reading her Skeleton Argument, I appreciate that she was only asking me to recognise the multi-jurisdictional nature of the proceedings and in argument she submitted that because the First Defendant was in the Czech Republic and did not have access to documents, he could not provide extensive explanations. In the event, she did not challenge the Court's jurisdiction in her oral submissions and I do not consider this issue further.
On 31 August 2022, the day before the hearing began, CLK Legal served three further statements made by...
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