Ilyas Khrapunov v JSC BTA Bank
| Jurisdiction | England & Wales |
| Judge | Lord Justice Sales |
| Judgment Date | 24 April 2018 |
| Neutral Citation | [2018] EWCA Civ 819 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2016/2264 |
| Date | 24 April 2018 |
[2018] EWCA Civ 819
Lord Justice Sales
and
Lord Justice Newey
Case No: A3/2016/2264
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
THE HONOURABLE MR JUSTICE PHILLIPS
Royal Courts of Justice
Strand, London, WC2A 2LL
Charles Samek QC and Marc Delehanty (instructed by Hughmans Solicitors LLP) for the Appellant
Stephen Smith QC and Tim Akkouh (instructed by Hogan Lovells International LLP) for the Respondent
Hearing date: 27 March 2018
Judgment Approved
This is the judgment of the court to which we have both contributed. It concerns an appeal in respect of an order made for cross-examination of the appellant in relation to assets he owns or controls, with a view to ensuring the effectiveness of a worldwide freezing order made against him. He also appeals against a costs order made against him. The appellant is resident in Switzerland. He lives there with his wife and two young children.
This is the latest episode in the long running litigation between the respondent (“the Bank”) and Mukhtar Ablayzov, its former manager, and associates of his in relation to very large sums which the Bank claims were stolen by Mr Ablyazov and then concealed with assistance from his associates. The Bank has obtained judgments against Mr Ablyazov in respect of his fraud for sums in the order of US$4.6 billion. One of the alleged associates of Mr Ablyazov is the appellant, who is Mr Ablyazov's son-in-law. As observed by the Supreme Court, the litigation between the Bank, Mr Ablyazov and the appellant is on a large scale: see JSC BTA Bank v Khrapunov [2018] UKSC 19, at [1].
The worldwide freezing order in relation to the appellant was granted by Males J on 17 July 2015. It covered assets of the appellant and any assets of Mr Ablyazov under his control. It included, at para. 7, an obligation to provide full information about the appellant's assets and assets administered by him in accordance with instructions given him by Mr Ablyazov in the period from 1 January 2013, subject to the appellant's privilege against self-incrimination, where the assets in question were worth more than £10,000.
It is not necessary to set out the full procedural history thereafter. Suffice it to say that the appellant secured an extension of time for compliance with para. 7 of the freezing order in relation to his personal assets until 23 November 2015. He also objected to being sued by the Bank in England as part of its litigation against Mr Ablyazov, but the Supreme Court's recent decision has confirmed that he may be so sued, as Teare J had originally ruled.
By letter dated 23 November 2015 from the appellant's solicitors, shortly before the deadline set by the court for provision of information about the appellant's personal assets, the appellant invoked his privilege against self-incrimination as a reason for providing no information at all about his assets. He did not explain how the privilege covered these matters.
On 24 November 2015 the Bank issued an application for an order to compel the appellant to provide disclosure pursuant to the freezing order regarding his personal assets. At a hearing on 1 December 2015 an adjournment of the hearing of that application was ordered.
By letter dated 4 December 2015, the appellant purported to provide disclosure in relation to the other assets covered by para. 7 of the freezing order (“the non-personal assets”). This was confirmed by an affidavit dated 9 December 2015. The appellant maintains that he has not administered or dealt with any assets on Mr Ablyazov's instructions at any time since 1 January 2013.
However, the Bank does not accept this. As Teare J, who is a judge with great familiarity with this case, observed in his ruling on cross-examination on 23 March 2016 ( [2016] EWHC 901 (Comm)), “the Bank has a lot of evidence which suggests that [this cannot be true]”. Moreover, in the appellant's challenge to the jurisdiction of the English court for the claim against him, he did not seek to suggest that the Bank had failed to establish an arguable case against him that he had conspired with Mr Ablyazov to assist Mr Ablyazov to hide assets in breach of Mr Ablyazov's own obligations under a worldwide freezing order against him, including by acting on instructions given by Mr Ablyazov. Likewise, in the hearings before Phillips J below and before us, Mr Samek QC for the appellant has not sought to challenge this or to go behind Teare J's assessment of the effect of the evidence deployed by the Bank. Accordingly, we proceed on the footing that the Bank has, at the least, a good arguable case that the appellant has lied when purporting to provide information pursuant to the freezing order about the non-personal assets.
On 18 December 2015 the Bank issued an application for an order for cross-examination of the appellant in the High Court in relation to his disclosure obligations under the freezing order. Since that time the appellant has been on notice of the Bank's case that he should be subject to cross-examination in relation to relevant assets and that, if he wished to oppose that course or propose alternative arrangements, he should be preparing his case accordingly.
On 19 January 2016 the adjourned hearing of the Bank's application in respect of the appellant's disclosure in relation to his personal assets took place before Phillips J. He gave his ruling the following day: [2016] EWHC 289 (Comm). He held that in light of confidentiality club arrangements which could be put in place the appellant had failed to show he had a good claim to rely on the privilege against self-incrimination, as the risk of incrimination was “remote and indeed fanciful” ([36]); he also observed that “[The appellant's] changed stance in relation to the effectiveness of the [confidentiality club] regime he himself proposed [i.e. to argue that it would in fact be ineffective as a safeguard] suggests that his present motivation is to avoid giving proper disclosure to the Bank, not a genuine concern as to an increased risk of prosecution” ([38]). We have been shown nothing by Mr Samek which would call into question that assessment. Phillips J extended time for providing the disclosure in relation to personal assets to 22 January 2016.
On 22 January 2016, the appellant failed to provide the disclosure ordered by Phillips J. Instead, he issued a notice of appeal. But he took no steps to seek a stay of the disclosure order. Accordingly, he was in breach of it from that date. In due course, on 23 March 2016 Longmore LJ dismissed the appellant's application for permission to appeal at an oral hearing.
Also on 23 March, the Bank's application for an order for cross-examination of the appellant in respect of his disclosure regarding assets covered by the freezing order was heard by Teare J. Teare J held that this was an appropriate case for cross-examination. The Bank had shown there were objective grounds to suspect that the appellant had not been truthful in relation to his disclosure regarding the non-personal assets and he was in breach of the order that he give disclosure of his personal assets. After debate with the parties as to when the cross-examination should take place, and on application that it should take place on a date convenient to counsel on both sides and after appropriate dates were provided to the court after the hearing, the judge made an order for cross-examination in paras. 5 and 6 of his order of that date (“the 23 March order”), as follows:
“5. The Cross-Examination Application be allowed and the [Bank] shall be at liberty to cross-examine [the appellant] in respect of his purported compliance with paragraphs 7 and 8 of the Freezing Order granted by Mr Justice Males on 17 July 2015.
6. [The appellant] do attend before a Judge of this Court to be cross-examined as aforesaid. The hearing is to be listed (with a time estimate of one day) for 26 May 2016, being the earliest available date convenient for leading counsel for [the Bank] and leading counsel for [the appellant].”
When the terms of the order were being discussed, Mr Samek persuaded the judge to insert at para. 7 of the order a liberty to apply, as follows:
“7. [The appellant] has permission to apply to vary paragraph 6 above to provide that he attend for cross-examination by way of remote video-link instead.”
At that stage, the appellant did not have any worked out proposal as to how cross-examination via a video-link might be achieved, nor had he put any evidence before the court regarding the practicalities and any limitations in seeking to arrange this.
At the hearing of this appeal, an issue arose as to the meaning and effect of these paragraphs of the 23 March order. Mr Samek submits that para. 7 was intended to operate as a liberty to apply to postpone the date of the cross-examination from 26 May, if the appellant came forward before that date with proposals for giving evidence by way of video-link at some later time. We disagree. In our judgment, the clear intended effect of para. 7 of the 23 March order was simply to provide the appellant with a final opportunity to make an application which would have the effect that the cross-examination scheduled to take place in the High Court on 26 May should take place on that date by video-link instead. Indeed, we consider that this is the obvious reading of the order in circumstances where the cross-examination was intended to assist in the enforcement of the freezing order obtained by the Bank; the appellant had already had a long period of notice since 18 December 2015 of the Bank's case that he should be cross-examined; the court and the parties had been at pains to...
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