JSC BTA Bank v Ablyazov
| Jurisdiction | England & Wales |
| Judge | The Hon Mr Justice Flaux,The Honourable Mr Justice Flaux |
| Judgment Date | 24 June 2014 |
| Neutral Citation | [2014] EWHC 2019 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2009 FOLIO 1099 |
| Date | 24 June 2014 |
[2014] EWHC 2019 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Flaux
Case No: 2009 FOLIO 1099
Stephen Smith QC and Tim Akkouh (instructed by Hogan Lovells LLP) for the Claimant
John Machell QC (instructed by Boodle Hatfield LLP) for the Respondent
Hearing dates: 11 April and 13 June 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.
Introduction
The claimant bank applies by Application Notice dated 30 January 2014 to vary the Order made by Eder J on 28 October 2013 that, subject to further Order of the Court, the costs of compliance by the respondent with a Norwich Pharmacal disclosure Order be paid by the claimant, to provide that the respondent should pay those costs himself. At the end of the second day of the hearing of this matter, I indicated that the application would be allowed in substance and that I would give my reasons for that decision at a later date. This judgment sets out those reasons.
The present application is the latest round in the litigation being pursued by JSC BTA Bank ("the bank") against its former chairman, Mr Ablyazov, in respect of vast sums which the bank contends he stole from it and invested in a maze of corporate structures designed to frustrate the bank's efforts to trace its monies and to enforce a series of judgments it has obtained in this court against Mr Ablyazov for in excess of US$3.7 billion, none of which has been paid. The bank initially obtained a Worldwide Freezing Order against Mr Ablyazov in August 2009 and on 6 August 2010, a further Order was made appointing receivers over his assets. Each of those Orders has been extended from time to time to cover the myriad of additional companies and assets through which Mr Ablyazov operates.
The respondent to the present application is Mr Tyschenko, a Ukrainian businessman, whose Factor and Fortuna groups of companies have interests in banking, oil and gas, real estate and logistics companies. The bank's case is that Mr Tyschenko is an associate of Mr Ablyazov and has assisted him in seeking to put assets outside the reach of the bank.
By the Order of 28 October 2013, Mr Tyschenko was ordered to file and serve affidavits setting out "to the best of his ability all Relevant Information [defined as including information as to the ownership and location of certain assets and businesses and all dealings or attempted dealings with them since 12 August 2009, instructions given or received by him in relation to them since that date and communications between his wife and/or himself and Mr Ablyazov in relation to them since that date] within his own knowledge (without being under any obligation to make inquiries) [in relation to certain identified assets and businesses and any other asset with a value exceeding US$5 million]. The Order also obliged him to exhibit to the affidavits such documents evidencing the matters set out "as he may reasonably be able to collate in the available time (without being under any obligation to undertake electronic searches)".
Mr Tyschenko did file and serve two affidavits, one relating to the identified assets on 22 November 2013 and another relating to other assets with a value over US$5 million on 9 December 2013. The bank contended that those affidavits were deficient and did not comply with the Order and indicated that it wished to cross-examine Mr Tyschenko. In the event, he attended voluntarily for cross-examination on two occasions, on 13 December 2013 before Mr Robin Knowles QC (sitting as a Deputy High Court Judge) and on 28 March 2014 before Males J.
The bank now seeks to invoke the provision in the Order of Eder J that, subject to further Order of the Court, the bank should pay the reasonable costs of compliance with the Norwich Pharmacal Order and set aside that Order, essentially on two grounds: (i) that Mr Tyschenko has not engaged in good faith in the disclosure process pursuant to the Order and, particularly in his cross-examination (to the detail of which I return below) that he gave dissembling and evasive evidence and/or (ii) that the information that he did give showed that he was closely mixed up with Mr Ablyazov's wrongdoing, intermeddling with his assets and assisting him to move assets around in breach of the freezing Order. Mr Stephen Smith QC for the bank recognised from the outset of his submissions that the so-called Babanaft proviso would protect Mr Tyschenko from committal for contempt if the assistance he provided to Mr Ablyazov was provided overseas, even if (which Mr Tyschenko denies) he knowingly assisted Mr Ablyazov in breaching the freezing Order. However Mr Smith QC submits that the bank does not need to go so far as establishing what would (but for the Babanaft proviso) be contempt. The Court has a discretion as to costs and if it is satisfied as to one or both of the grounds relied upon, it should conclude that the bank should not have to pay for the privilege of the disclosure process.
Mr John Machell QC for Mr Tyschenko resists the application on a number of grounds. He emphasised at the outset that Mr Tyschenko is not a defendant to the proceedings and whatever suspicions the bank may have about him and however sceptical the court may be about some of the matters in relation to which he has given evidence (as to which see below), nothing has been proved against him at any trial. His involvement so far as the present application is concerned has been only as a respondent to a Norwich Pharmacal Order.
Mr Machell QC submitted that, however sceptical the Court might be about some of Mr Tyschenko's evidence, apparent evasiveness might be explained by the complexity of the matters about which he was being asked and the fact that he was a busy businessman with many companies and he had not been required to make all reasonable enquiries about the various assets and businesses identified in the Order before he gave his evidence, whether in his affidavits or in cross-examination, (Eder J having removed that requirement originally imposed in the Order made ex parte when the matter was argued inter partes at the return date). He submitted that in those circumstances, it would be wrong in principle for the Court to reach the conclusion at this interlocutory stage that Mr Tyschenko was knowingly implicated in Mr Ablyazov's wrongdoing.
Recognising that in certain respects the evidence Mr Tyschenko gave was unsatisfactory and contradictory, Mr Machell QC submitted that, nonetheless, there had been substantial compliance by Mr Tyschenko with the Norwich Pharmacal Order and, in those circumstances, it would not be appropriate for the Court to deprive Mr Tyschenko of his costs of providing evidence. Furthermore, since in the case of each of the two cross-examinations, they had taken place pursuant to Consent Orders of the Court each of which continued the costs regime imposed by Eder J (namely that, subject to further Order of the Court, Mr Tyschenko should be entitled to the costs of the exercise), the Court should only set aside these Orders if the bank could demonstrate, in each case, that there had been a material change of circumstances after the date of the relevant Order, which Mr Machell QC submitted the bank could not do.
Detailed background to the application
Mr Ablyazov fled the jurisdiction in early 2012 in breach of Court Orders. He refused to comply with an Order made by Teare J on 29 February 2012 that he return to the jurisdiction and surrender himself to the tipstaff. He has failed to cooperate with the receivers and is clearly intent on frustrating the bank from obtaining any monies from him.
Since fleeing the jurisdiction, Mr Ablyazov has engaged in concerted efforts to prevent the bank from enforcing against his assets and to put those assets beyond the bank's reach. Part of his modus operandi in that regard appears to be to "park" his assets with third parties such as Mr Tyschenko. Disclosure Orders have been made against various third parties, including Mr Salim Shalabayev, his brother in law, whose compliance with the Order was so deficient that cross-examination of him was ordered, after which Cooke J held that he should pay the bank's costs of the cross-examination, a departure from the normal rule that the applicant for a Norwich Pharmacal Order should pay the reasonable costs of compliance by the third party with the Order.
Having been on the run since early 2012, Mr Ablyazov was arrested towards the end of July 2013 at a villa near Cannes by the French authorities. The bank's enquiry agents were led to that address by Ms Olena Tyschenko (to whom Mr Tyschenko was married until 24 July 2013) who is a Russian lawyer who, at least from December 2012 until July 2013, acted for Mr Ablyazov in a professional capacity, but who at some stage became romantically involved with him. On 22 July 2013 she had attended a hearing in this Court, acting on behalf of one of his companies included in the Receivership Order. She left Court and went to France to see Mr Ablyazov and the enquiry agents followed her, after which he was arrested. Mr Ablyazov remains in prison in France awaiting the outcome of an extradition request by the Ukrainian authorities.
In early September 2013, this Court granted a search order which was executed at the Tyschenko's former family home in Weybridge and at an office used by Mr Tyschenko in the City of London. By that stage, Ms Tyschenko had returned to...
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