JCA BTA Bank v Mukhtar Ablyazov and Others Rocklane Properties Ltd and Another
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr. Justice Teare,Mr. Justice Teare |
| Judgment Date | 28 February 2014 |
| Neutral Citation | [2014] EWHC 455 (Comm) |
| Date | 28 February 2014 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2009 FOLIO 1099 |
[2014] EWHC 455 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, 7 Rolls Buildings
Fetter Lane, London EC4A 1NL
Mr. Justice Teare
Case No: 2009 FOLIO 1099
and
Tim Akkouh (instructed by Hogan Lovells) for the Claimant
Mr. Ablyazov, Rocklane Properties LimitedandIvan Terenov did not appear
Hearing date: 24 and 27 February 2014
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is an application by the Bank for a declaration that Mr. Ablyazov is "the beneficial owner of the property known as Flat 79, Elizabeth Court, 1 Palgrave Gardens, London NW1 6EJ ("Elizabeth Court") and the entirety of the issued share capital in Rocklane Properties, a company incorporated in the British Virgin Islands." The Bank wishes to enforce the judgments it has obtained against Mr. Ablyazov (see JSC BTA Bank v Ablyazov and others [2013] EWHC 510 (Comm)) on those assets.
Mr. Ablyazov has not appeared on the hearing of this application. His solicitors, Addleshaw Goddard, were notified of this application on 4 February 2014 and of the hearing date. By letter dated 7 February 2014 Addleshaw Goddard said that their client was not the owner of 79 Elizabeth Court and therefore the recovery and sale of the property did not concern him. However, they said he had a full interest in the matter to the extent that the Bank sought costs against him. By letter dated 10 February 2014 the Bank said that it would not be seeking a costs order against Mr. Abyazov. In the result there was no appearance on behalf of Mr. Ablyazov at the hearing although a representative of Addleshaw Goddard attended the hearing.
Mr. Terenov has also not appeared on the hearing of this application. He had caused Rocklane Properties to issue an application on 21 March 2013 seeking an order that the flat be removed from the Freezing Order, supported by evidence that he was the "ultimate beneficial owner" of the flat and that the shares in Rocklane Properties, the registered owner of the flat, were held on his behalf. But on 13 December 2013 he consented to an order staying his application, having sworn an affidavit in which he stated that "the truth is that I do not own and have never owned Elizabeth Court or Rocklane and the account I provided in support of the Release Application was untrue."
When seeking an order that Mr. Ablyazov be committed to prison for contempt of court in late 2011 the Bank had submitted that Mr. Ablyazov was the true beneficial owner of the shares in Rocklane Properties and was the UBO ("ultimate beneficial owner") of the flat of which Rocklane Properties was the registered owner. This was denied by Mr. Ablyazov. Mr. Ablyazov's case on the contempt application was supported by the evidence of the brothers Syrym and Salim Shalabeyev. Syrym gave evidence (in paragraphs 64 – 67 of his first affidavit dated 16 October 2011) that he had bought the shares in Rocklane Properties (and hence the flat) in 2003. He said that in October 2009 Salim was made the UBO ("ultimate beneficial owner") of Rocklane Properties because he, Syrym, had decided to sell the flat to Salim. However, Salim did not go through with the purchase and so Syrym sold it another buyer in December 2009. Salim gave evidence (in paragraph 28 of his Second Affirmation dated 24 November 2011) that in March 2010, after his brother had sold the flat, he, Salim, had agreed to rent the flat.
The Bank failed to persuade the Court to the necessary criminal standard of proof that Mr. Ablyazov was the beneficial owner of the shares in Rocklane Properties and that he had lied on oath when saying that he was only the short-term tenant of the flat; see JSC BTA Bank v Mukhtar Ablyazov [2012] EWHC 237 (Comm) at paragraphs 159–163. In my judgment on the contempt application I summarised my reasons for not being able to accept the Bank's case in these terms:
"159. The registered proprietor of the flat in Elizabeth Court is and has been Rocklane Properties Limited, a company incorporated in the BVI. The flat was purchased in January 2002 for £650,000. Rocklane was one of the companies administered by Mr. Udovenko and Syrym Shalabayev. It was one of the 102 companies mentioned in the email dated 9 October 2008 pursuant to which the UBO was changed from Mr. Udovenko to Syrym Shalabayev. Thus before October 2008 the UBO was Mr. Udovenko.
160. The case of the Bank is that the beneficial owner of the shares in Rocklane and hence of the flat in Elizabeth Court is and was Mr. Ablyazov. Mr. Ablyazov's case is that the beneficial owner from 2003 until December 2009 was Syrym Shalabayev. It was said that Syrym Shalabayev sold it in late 2009.
161. The Bank's case is supported by the fact that at first the apparent UBO was Mr. Udovenko and then, in October 2008, became Syrym Shalabayev when the UBO of (at least) some of Mr. Ablyazov's companies became Syrym Shalabayev. There was also evidence that on 15 October 2009 the UBO was again changed to Salim Shalabayev and on 3 March 2010 to Mr. Ivan Terenov. These changes in the UBO, apparently from one trusted associate to another, are suggestive of there having been a single true beneficial owner. (There was no documentary evidence of an arm's length sale of the shares at any stage.) The Bank's case that that owner was Mr. Ablyazov is supported by the fact that the occupants of the flat were variously the Shalabayev brothers and Mr. Aizhulov which suggests that it was available for use by what Mr. Smith called members of Mr. Ablyazov's entourage. Furthermore, a lease in favour of Mr. Ablyazov was sent for execution on 11 November 2009 which was also when the sham lease on Carlton House was sent for execution. The Bank also pointed to oddities in the evidence called by Mr. Ablyazov, namely, that Mr. Ablyazov should take out a lease on a (relatively) small flat when he was about to take out a lease on Carlton House, that when Salim Shalabayev moved in after May 2009 he paid rent into the account of Bensbourogh Trading, said to be owned by Salim Shalabayev and that, when in late 2009, the flat was (allegedly) sold by Syrym Shalabayev, Salim Shalabayev continued to pay rent to Bensbourogh Trading. These oddities cast considerable doubt on the evidence adduced by Mr. Ablyazov.
162. However, it is important to note that the Bank is not able to show that the funds used to purchase the flat came from other companies owned by Mr. Ablyazov or that Syrym Shalabayev lacked the means to purchase the flat (his evidence as to his business career in Kazakhstan was not challenged save as to his evidence with regard to the uranium business). Thus the evidence with regard to Carlton House and Oaklands Park is materially different in these two respects. Also, although the lease on the flat was sent for execution in November 2009 there is evidence, unchallenged by the Bank, that a rental payment and a deposit were paid by Mr. Ablyazov in April 2009, the start of the tenancy period, four months before the issue of WFO. For this reason the Bank had to say that Mr. Ablyazov, who had taken advice from Clyde and Co. with regard to freezing orders, was seeking to create the false impression that he had leased the property (though he must have overlooked the need for accompanying documentation and failed to take any steps at the same time to create an impression that he had leased Carlton House).
163. In these circumstances, I have considered whether the Court can be sure on the evidence presently available that Mr. Ablyazov was the owner of Rocklane and hence of the flat in Elizabeth Court. The evidence in favour of the Bank's case with regard to Elizabeth Court is...
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