JSC Bta Bank (Claimant Appellant) v Anatoly Ereshchenko (17th Defendant Respondent)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lloyd,Lord Justice Elias,Lord Justice Beatson |
| Judgment Date | 04 July 2013 |
| Neutral Citation | [2013] EWCA Civ 1961 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2012/1943 |
| Date | 04 July 2013 |
[2013] EWCA Civ 1961
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MR JUSTICE VOS
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Lloyd
Lord Justice Elias
and
Lord Justice Beatson
Case No: A3/2012/1943
Stephen Smith Q.C. and Emily Gillett (instructed by Hogan Lovells International LLP) for the Appellant
Paul Lowenstein Q.C. (instructed by Stewarts Law LLP) for the Respondent
Hearing dates: 5 and 6 June 2013
Introduction and summary
This judgment is given on a most unusual appeal. The order appealed was made by Mr Justice Vos on 10 July 2012. He dismissed the claimant Bank's application to commit the respondent, Mr Ereshchenko, to prison for contempt of court, which was made on the basis of a contention that Mr Ereshchenko had given false and dishonest evidence. He said that he was not satisfied beyond reasonable doubt that Mr Ereshchenko had been dishonest. The Bank contends that the judge should have been so satisfied. It is perhaps a tribute to the forensic skill of Mr Stephen Smith Q.C., for the Bank (leading Miss Emily Gillett), that he was able to persuade Lord Justice Rimer to give permission to appeal, and to persuade this court that we needed to hear oral submissions from Mr Lowenstein Q.C., for Mr Ereshchenko, on at least some of the allegations. Nevertheless, despite Mr Smith's advocacy I am in no doubt that the appeal should be dismissed.
The appeal arises in the course of a major process of litigation by which the Bank seeks to recover losses suffered by it as a result of a large scale fraud committed on it by a Mr Ablyazov, its former Chairman, and others. The Bank has recently secured judgment from Mr Justice Teare after a long trial of several claims in the Commercial Court which form part of this litigation: [2013] EWHC 510 (Comm). In the course of this fraud investments (AAA-rated and therefore known as the AAA Investments) worth around US$300 million which belonged to the Bank were misappropriated by transactions (referred to as the AAA Transactions) undertaken between June 2008 and January 2009, using two tiers of offshore entities: five companies incorporated in the BVI (thus, the BVI Defendants) and four other companies (the Further Recipients), with assistance from an English company, Eastbridge Capital Ltd (Eastbridge). Mr Ereshchenko was a director of Eastbridge from 2003, when it was incorporated, until May 2010. He is now a Defendant to the proceedings, but at first he was only the respondent to an application for relief of a Norwich Pharmacal nature, in the first place by way of a disclosure order made by Mr Justice Henderson on 3 November 2010 (the Disclosure Order). In response to this order Mr Ereshchenko made, first, a witness statement dated 10 December 2010 (the December witness statement), and then a confirmatory affidavit dated 15 December 2010 (the December affidavit). The Bank then applied for an order that he be cross-examined, having also added him as a Defendant. In response to the application for cross-examination Mr Ereshchenko made a witness statement dated 1 March 2011 (the March witness statement). Despite this he was ordered to attend for cross-examination, and he did so for three days on 28 to 30 June 2011 before Mr Justice Peter Smith. The cross-examination came to a sudden end, in circumstances described by the judge at paragraph 82 of his judgment, and the judge ordered Mr Ereshchenko to make a further affidavit, which he did on 19 July 2011 (the July affidavit).
The allegations of contempt of court on which the committal application was based centre on things said by Mr Ereshchenko in, first the December witness statement, secondly the December affidavit, thirdly the March witness statement, and last the July affidavit.
Mr Ereshchenko's cross-examination resumed before Mr Justice Henderson in November 2011. Immediately after it had finished the Bank's solicitors stated that they intended to apply for his committal, and they did so in December 2011. The trial of that application came on before Mr Justice Vos for eight days in June 2012, in the course of which Mr Ereshchenko was again cross-examined at length. The judge gave judgment on 10 July 2012 dismissing the application. His full and careful judgment has the reference [2012] EWHC 1891 (Ch). It sets out the nature of the Bank's case as to the fraud carried out upon it, as to the part said to have been played by Mr Ereshchenko, the course which the proceedings concerning him took, and the evidence given by him, as well as the judge's own conclusions. I can therefore be shorter than I would otherwise have to be in setting the scene for the issues on the appeal.
It is right to record that Mr Smith explained the Bank's motivation in pursuing the committal application, and this appeal, as being that a large sum, over $40 million, is unaccounted for out of the proceeds of the AAA Transactions, which the Bank has not yet been able to trace. The Bank considers that Mr Ereshchenko knows more about what happened than he has yet been prepared to admit, and hopes that, if faced with an order for his committal to prison, he would at last disclose what he does know about what happened to that money. As I understand it, it is not alleged that Mr Ereshchenko is in continuing breach of the Disclosure Order, so whether this avowed objective of the Bank could be achieved in this way is a matter of speculation in any event.
It is also appropriate to record that, on the one hand, the Bank has made extensive use of committal applications in relation to other persons involved, but that, on the other hand, we were told that all of those other persons have managed, in one way or another, to leave the jurisdiction of this court, so that the Bank has very limited, if any, recourse to any of them. Mr Ereshchenko, by contrast, is still here and has attended and been represented at all relevant hearings. He was present through the hearing of the appeal.
The allegations of contempt
The Bank set out its case as to Mr Ereshchenko's contempts in its application notice for committal, as required by the rules. Peter Smith J made an order on 20 March 2012 by which he directed pleadings as to the alleged contempts, so the Bank served Particulars of Contempt, identifying in some detail the material which it said supported its allegations of contempt, and Mr Ereshchenko served Points of Defence thereto.
The Bank alleges substantive claims against Mr Ereshchenko, having made him a Defendant, which are set out in Re-Amended Particulars of Claim in the main action. The judge set these out at paragraph 102 of his judgment and commented that some of the allegations are the same as those comprised in the committal application. In the light of this overlap, Peter Smith J in March 2012 ordered that any fact found at the committal hearing was to be conclusive as between the parties unless fresh material became available which the court concluded had the potential to undermine the relevant finding. By the same order he also required the Bank to give certain disclosure to Mr Ereshchenko for the purposes of the committal application.
Vos J had to consider eight allegations of contempt. Three of these were not pursued on appeal, so I need not mention them. The remaining five are as follows (see paragraph 9 of Vos J's judgment):
"The following statements are alleged to have been made without an honest belief in their truth:-
(1) That the respondent had attempted to comply with the Disclosure Order in full and had complied with the Disclosure Order so far as he was able (paragraph 24 of the December witness statement).
(2) That the respondent knew nothing about the AAA Transactions (paragraph 4 of the December affidavit).
(3) That the respondent had no more information relevant to the Disclosure Order and nothing further to add to the evidence provided in his December affidavit (paragraph 61 of the March witness statement).
(4) That the respondent had limited involvement in the AAA Transactions (paragraph 10(a) of the July affidavit).
(5) That the respondent's recollection of the AAA Transactions is and always has been very limited (paragraph 10(b) of the July affidavit)."
In essence the Bank contends that Mr Ereshchenko sought to distance himself from the AAA Transactions, and that his statements that he knew nothing about them could not have been made honestly.
The Disclosure Order made by Henderson J required Mr Ereshchenko to answer, to the best of his ability and after making all reasonable enquiries, a set of questions about each of the BVI Defendants, the Further Recipients and Eastbridge, and a series of questions about various accounts and movements of funds, namely those involved in the AAA Transactions. Mr Ereshchenko's answer was that he was unable to answer any of these questions except those concerning Eastbridge. At the beginning of the December witness statement he set out an explanation of his role and functions in Eastbridge. The bulk of the witness statement, including that which is said to have been a dishonestly false statement, is set out at length in the judge's judgment at paragraph 110.
As appears from that, Mr Ereshchenko said that he and a Mr Udovenko were principally active on behalf of Eastbridge, that he regarded Mr Udovenko as the real owner of Eastbridge, that Mr Udovenko was active in the field of corporate services, and was far more successful in that, as compared to his own activity seeking investment opportunities. He said that the BVI Defendants and the Further Recipients were dealt with by Mr Udovenko's side of the business, not by him.
The December witness statement is...
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