JSC BTA Bank v (1) Mukhtar Kabulovich Ablyazov (First Defendant) (2) Salim Shalabayev (Intervener/Appellant)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Tomlinson,Lord Justice Christopher Clarke |
| Judgment Date | 10 February 2015 |
| Neutral Citation | [2015] EWCA Civ 70 |
| Court | Court of Appeal (Civil Division) |
| Date | 10 February 2015 |
| Docket Number | Case No: A2/2013/1529(B) |
[2015] EWCA Civ 70
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION, COMMERCIAL COURT
Mr Justice Teare
[2013] EWCH 1836 (Comm)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Tomlinson
and
Lord Justice Christopher Clarke
Case No: A2/2013/1529(B)
and
James Sheehan (instructed by Addleshaw Goddard LLP) for the Appellant
Stephen Smith QC and Emily Gillett (instructed by Hogan Lovells International LLP) for the Respondent
Hearing date: 16 October 2014
In this judgment I shall refer to the Appellant/Intervener as Mr Shalabayev, to the Claimant/Respondent as "the Bank" and to the First Defendant as Mr Ablyazov. It is to be noted that the Appellant is Mr Salim Shalabayev as opposed to his brother Mr Syrym Shalabayev. It will be well-known to most who read beyond the first paragraph of this judgment that the two Messrs Shalabayev are the brothers-in-law of Mr Ablyazov, who has been found to have defrauded the Bank of massive sums. The two brothers-in-law are alleged to have been his associates and nominees both in that venture and in frustrating the attempts of the Bank to locate assets against which the Bank might enforce its judgment against Mr Ablyazov.
On 17 May 2013 Teare J made a final charging order in favour of the Bank over the interest of Mr Ablyazov in Apartment 17, Alberts Court, 2 Palgrave Gardens, London, NW1 6EL. I shall call this property "Alberts Court." It stands charged with payment of two judgments in favour of the Bank against Mr Ablyazov in the sum of £1.52 billion.
The previous day, 16 May 2013, Mr Shalabayev issued an Application Notice in the Commercial Court seeking an order that he be added as a party to the Bank's application for a final charging order over Alberts Court, and that the Bank's application should be adjourned pending trial of the issue who owned Alberts Court. The registered proprietor of Alberts Court has at all material times been Bensbourogh Trading Inc, a company incorporated in the British Virgin Islands. It is and always has been the contention of Mr Shalabayev that he, and not Mr Ablyazov, is the ultimate beneficial owner of the shares in Bensbourogh Trading Inc and hence the beneficial owner of the flat at Alberts Court.
However in earlier proceedings between the Bank and Mr Ablyazov pursuant to which the Bank sought to commit Mr Ablyazov for contempt of court, Teare J had, in a judgment dated 16 February 2012, [2012] EWHC 237 (Comm), determined on the criminal standard of proof that Mr Ablyazov is and has at all material times been the true beneficial owner of the shares in Bensbourogh Trading Inc and hence of the flat in Alberts Court. Mr Shalabayev was not a named party to those proceedings. He did however attend the hearing in order to give evidence on this issue on behalf of Mr Ablyazov. His evidence was disbelieved.
Mr Ablyazov's appeal against his committal for contempt was dismissed. In relation to the ownership of Alberts Court Rix LJ observed:-
"89. As for Alberts Court: the points raised on behalf of Mr Ablyazov are a straightforward attempt to reargue the judge's assessment of the evidence of Salim and Syrym Shalabayev, witnesses who for the careful reasons given by the judge had no credibility with him. While the judge accepted that the case in respect of this property was not as strong as in the case of Carlton House and Oaklands Park (I would comment, if only because the purchase prices were not as outstandingly large), the facts show that there was nothing to tie Salim Shalabayev with this property other than the say-so of the two brothers. However, he never lived there, although Mr Ablyazov's driver and his wife had lived there. If, therefore, the property was not Salim's, it must have been Mr Ablyazov's. Syrym, who had selected it, and negotiated for and paid for it, did not say that he bought it for himself."
By his Order of 17 May 2013 Teare J also dismissed Mr Shalabayev's application to be joined as a party to the Bank's application for the charging order. The judge determined that it would be an abuse of process to permit Mr Shalabayev to challenge the finding as to ownership of Alberts Court made in the contempt proceedings because that challenge amounted to a collateral attack which would bring the administration of justice into disrepute.
On 14 August 2013 I granted Mr Shalabayev permission to appeal to this court against the order made by Teare J on 17 May 2013. More particularly, I granted Mr Shalabayev permission to appeal against the judge's conclusion that to permit him to challenge the finding made in the contempt proceedings would amount to an abuse of process. I directed that Mr Shalabayev furnish security for the Bank's costs of the proposed appeal, which he has subsequently done.
It was drawn to my attention in connection with the application for permission to appeal that Mr Shalabayev was himself in undoubted contempt of court in two respects to which I shall return shortly. However an application for committal had been made only on 28 May 2013 and remained to be resolved. There were therefore no formal findings of contempt against Mr Shalabayev. With some misgivings, I left this out of account in my consideration of the question whether permission to appeal should be granted.
On 18 October 2013 Eder J determined in Mr Shalabayev's absence, he having chosen shortly before the hearing neither to attend in person nor to be represented, that he is guilty of contempt of court in respect of breaches of several orders of the court, breaches aggravated by lying to this court in 2012 about his then whereabouts. Eder J imposed three concurrent sentences of 22 months imprisonment. So far as is known Mr Shalabayev has not been within the jurisdiction since March 2012. He has withdrawn an appeal against his sentence and has not sought to challenge the findings of contempt. No attempt has been made to purge his contempt and there is no suggestion that he intends to do so.
By a Respondent's Notice issued on 8 January 2014 the Bank invited this court to exercise its discretion not to hear Mr Shalabayev's appeal against the order of Teare J dated 17 May 2013 on the basis that he is now a committed contemnor whose contempts are unpurged. A hearing for directions was listed. We heard the Bank's application on 16 October 2014. At the conclusion of the hearing we announced that we would not exercise our discretion to decline to hear Mr Shalabayev's appeal and that the Bank's application in that regard was accordingly dismissed. These are my reasons for having joined in that decision.
Mr Shalabayev's contempt
Mr Shalabayev is not party to any substantive proceedings brought by the Bank. The Bank has not asserted any cause of action against him. Apart from this dispute over the ownership of Alberts Court, Mr Shalabayev's main involvement as a party in this vast litigation was as a respondent to a Norwich Pharmacal application made against him by the Bank in December 2011. He was served with that application on 6 December 2011 whilst temporarily in London to give evidence on the Bank's committal application against Mr Ablyazov, as I described in paragraph 4 above. In fact, he was served at the conclusion of his evidence with a Disclosure Order made by Andrew Smith J.
The Disclosure Order related to Mr Shalabayev's role as nominal ultimate beneficial owner of two companies in the Seychelles, Millennium and Proteus, a role he performed at the request of Mr Ablyazov. Mr Shalabayev was sole signatory on accounts held by these companies at banks in Cyprus. As a result he was involved in two transfers of large amounts of money from Millennium to Proteus in early 2011. The effect of the second transfer, made in suspicious circumstances so far as concerns its timing, was to remove US$23 million from Millennium to Proteus and thus out of the scope of protection ordered by the court through freezing and receivership orders over Mr Ablyazov's assets. It was that transfer which underlay the orders for disclosure made against Mr Shalabayev.
On 20 December 2011 Field J dismissed an application by Mr Shalabayev to discharge or set aside the Disclosure Order by reason of Mr Shalabayev's privilege against self-incrimination and/or material non-disclosures by the Bank in its application therefor. Field J remade the Disclosure Order and also imposed restrictions on the ability of Mr Shalabayev to leave the...
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