JSC Bta Bank v Mukhtar Ablyazov and Others
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Teare |
| Judgment Date | 10 May 2011 |
| Neutral Citation | [2011] EWHC 1136 (Comm) |
| Docket Number | Cases No: 2009 FOLIO 1099 and 2010 FOLIOS 93, 362 and 706 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 10 May 2011 |
[2011] EWHC 1136 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Justice Teare
Cases No: 2009 FOLIO 1099 and 2010 FOLIOS 93, 362 and 706
Stephen Smith QC and Anna Littler (instructed by Hogan Lovells International LLP) for the Claimant
Mark Howard QC, Anthony TraceQC andJames Sheehan (instructed by Stephenson Harwood) for the Defendants Mr. Ablyazov, Mr. Solodchenko and Drey Associates Limited
Paul Girolami QC and Hugh Norbury (instructed by Peters and Peters Solicitors LLP) for the Defendant Mr. Zharimbetov
Hearing dates: 18–20 April 2011
This is my second judgment concerning the Claimant's application to dismiss the Defendants' application to stay the Claimant's actions on the grounds of abuse of process. This judgment concerns the question whether it is arguable that the actions should be stayed on the grounds that they have been pursued for a collateral purpose and so are an abuse of the process of this court. The alleged collateral purpose is that the actions have been brought to assist the President of Kazakhstan in his scheme to eliminate Mr. Ablyazov as a political opponent. I refer to paragraphs 1–15 of my earlier judgment reported at [2011] EWHC 202 (Comm) for the background to this application.
The law as to abuse of process on the grounds of collateral purpose
It is first necessary to consider what needs to be established by Mr. Ablyazov if he is to obtain a stay of the claims against him. In modern times at least two Masters of the Rolls have confirmed the principle that the pursuit of a claim for a collateral or ulterior purpose may amount to an abuse of the process of the court.
Thus in In re Majory [1955] Ch. 600 at pp.623–624 per Sir Raymond Evershed MR said:
"The so-called "rule" in bankruptcy is, in truth, no more than an application of a more general rule that court proceedings may not be used or threatened for the purpose of obtaining for the person so using or threatening them some collateral advantage to himself, and not for the purpose for which such proceedings are properly designed and exist; and a party so using or threatening proceedings will be liable to be held guilty of abusing the process of the court and therefore disqualified from invoking the powers of the court by proceedings he has abused."
Similarly, in Goldsmith v Sperrings Ltd. [1977] 1 WLR 478 Lord Denning MR (who dissented on the result of the case) said at p.489:
"In a civilised society, legal process is the machinery for keeping and doing justice. It can be used properly or it can be abused. It is used properly when it is invoked for the vindication of men's rights or the enforcement of just claims. It is abused when it is diverted from its true course so as to serve extortion or oppression: or to exert pressure so as to achieve an improper end. When it is so abused, it is a tort, a wrong known to the law. The judges can and will intervene to stop it. They will stay the legal process, if they can, before any harm is done. If they cannot stop it in time, and harm is done, they will give damages against the wrongdoer."
However, there are, it seems, few cases in which proceedings have been stayed on this ground.
The question of what purpose may amount to an illegitimate collateral or ulterior purpose has arisen not only in the context of a stay on the grounds of abuse of process but also in the context of the tort of abuse of process. In the present case there is a particular dispute between the parties as to what the appropriate test is where a claimant has both a legitimate and an illegitimate purpose for commencing proceedings.
In Goldsmith v Sperrings Ltd. [1977] 1 WLR 478 an application was made to stay actions for defamation brought by Sir James Goldsmith against the distributors of Private Eye on the grounds that his purpose was not to protect his reputation but to destroy Private Eye by cutting off its retail outlets. The Court of Appeal, by a majority consisting of Scarman and Bridge LJJ, upheld the decision of Stocker J not to stay the actions. Scarman LJ explained what had to be shown in these terms:
"In the instant proceedings the defendants have to show that the plaintiff has an ulterior motive, seeks a collateral advantage for himself beyond what the law offers, is reaching out "to effect an object not within the scope of the process": Grainger v Hill (1838) 4 Bing.(NC) 212, 221 per Tindal C.J. In a phrase, the plaintiff's purpose has to be shown to be not that which the law by granting a remedy offers to fulfil, but one which the law does not recognise as a legitimate use of the remedy sought: see In re Majory [1955] Ch. 600, 623."
Bridge LJ addressed the question of what is meant by "collateral advantage". He said:
"……….what is meant by a "collateral advantage"? The phrase manifestly cannot embrace every advantage sought or obtained by a litigant which it is beyond the court's power to grant him. Actions are settled quite properly every day on terms which a court could not itself impose upon an unwilling defendant. An apology in libel, an agreement to adhere to a contract of which the court could not order specific performance, an agreement after obstruction of an existing right of way to grant an alternative right of way over the defendant's land — these are a few obvious examples of such proper settlements. In my judgment, one can certainly go so far as to say that when a litigant sues to redress a grievance no object which he may seek to obtain can be condemned as a collateral advantage if it is reasonably related to the provision of some form of redress for that grievance. On the other hand, if it can be shown that a litigant is pursuing an ulterior purpose unrelated to the subject matter of the litigation and that, but for his ulterior purpose, he would not have commenced proceedings at all, that is an abuse of process. These two cases are plain; but there is, I think, a difficult area in between. What if a litigant with a genuine cause of action, which he would wish to pursue in any event, can be shown also to have an ulterior purpose in view as a desired by-product of the litigation? Can he on that ground be debarred from proceeding? I very much doubt it. But on the view I take of the facts in this case the question does not arise and it is neither necessary nor desirable to try to lay down a precise criterion in the abstract."
Mr. Smith QC, counsel for the Bank, submitted that the final comments of Bridge LJ indicated that where a claimant had mixed purposes in bringing proceedings and one of them was legitimate then the proceedings would not be an abuse of process.
In Broxton v McClelland [1995] EMLR 485 an action for libel was brought and a stay was sought of the action on the grounds that the action was being maintained by a person whose ulterior or collateral purpose was to harass the defendant by any means available with the object of securing the financial ruin of the defendant. The Court of Appeal held that no stay should be granted and Simon Brown LJ (with whom the other two members of the court agreed) summarised the relevant principles as follows:
"(1) Motive and intention as such are irrelevant (save only where "malice" is a relevant plea): the fact that a party who asserts a legal right is activated by feelings of personal animosity, vindictiveness or general antagonism towards his opponent is nothing to the point. As was said by Glass JA in Champtaloup v Thomas (1976) 2 NSWLR 264, 271 (see Rajski v Baynton (1990) 22 NSWLR 125 at p 134):
To impose the further requirement that the donee [of a legal right] must be actuated by a legitimate purpose, thus forcing a judicial trek through the quagmire of mixed motives would be, in my opinion, a dangerous and needless innovation.
(2) Accordingly the institution of proceedings with an ulterior motive is not of itself enough to constitute an abuse: an action is only that if the Court's processes are being misused to achieve something not properly available to the plaintiff in the course of properly conducted proceedings. The cases appear to suggest two distinct categories of such misuse of process:
(i) The achievement of a collateral advantage beyond the proper scope of the action — a classic instance was Grainger v Hill where the proceedings of which complaint was made had been designed quite improperly to secure for the claimants a ship's register to which they had no legitimate claim whatever. The difficulty in deciding where precisely falls the boundary of such impermissible collateral advantage is addressed in Bridge LJ's judgment in Goldsmith v Sperrings Limited at page 503 D/H.
(ii) The conduct of the proceedings themselves not so as to vindicate a right but rather in a manner designed to cause the defendant problems of expense, harassment, commercial prejudice or the like beyond those ordinarily encountered in the course of properly conducted litigation.
(3) Only in the most clear and obvious case will it be appropriate upon preliminary application to strike out proceedings as an abuse of process so as to prevent a plaintiff from bringing an apparently proper cause of action to trial."
When referring to the facts of the case before him Simon Brown LJ observed that:
"a plaintiff is entitled to seek the defendant's financial ruin if that will be the consequence of properly prosecuting a legitimate claim."
In Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc. [1990] 1 QB 391 the question was whether adducing false evidence and presenting false case to sustain or defeat a claim in legal proceedings amounted to the tort of abuse of process....
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