JSC BTA Bank v Ablyazov [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Teare J. |
| Judgment Date | 11 December 2009 |
| Date | 11 December 2009 |
| Court | Queen's Bench Division (Commercial Court) |
[2009] EWHC 3267 (Comm)
Queen's Bench Division (Commercial Court).
Teare J.
Stephen Smith QC and Robert Levy (instructed by Lovells LLP) for the claimant.
Brian Doctor QC, Adam Tolley and Alexander Milner (instructed by Clyde & Co LLP) for the first to fourth defendants.
The following cases were referred to in the judgment:
Collier v WilliamsWLR[2006] 1 WLR 1945.
Congentra AG v Sixteen Thirteen Marine SAUNK[2008] EWHC 1615 (Comm); [2008] 2. CLC 51.
Cretanor Maritime Co Ltd v Irish Marine Management LtdWLR[1978] 1 WLR 966.
Fourie v Le RouxWLR[2007] 1 WLR 320.
Iraqi Ministry of Defence v Arcepey Shipping Co SA (The Angel Bell)ELR[1981] QB 65.
Lloyds Investment (Scandinavia) Ltd v Ager-HanssenUNK[2003] EWHC 1740 (Ch).
Motorola Credit Corp v UzanUNK[2003] EWCA Civ 752; [2003] 2 CLC 1026.
Z Ltd v A-Z and AA-LLELR[1982] 1 QB 558.
Freezing order Form of order Order prevented defendants from dealing with assets anywhere in the world whilst value of assets in England and Wales did not exceed 175 million Real risk that liberty provided in standard form of freezing order to deal with overseas assets might be used by first defendant to put assets out of reach of claimant Any prejudice to first defendant could be alleviated by application for liberty to deal with any particular asset Just and convenient to amend freezing order in manner requested.
These were applications to correct or vary a freezing order which had been granted ex parte or without notice and continued by the court (see [2009] EWHC 2840 (Comm)).
The order made without notice followed the standard form of freezing order in the Commercial Court Guide and provided, inter alia, that if a respondent had other assets outside England and Wales, he could dispose of or deal with those assets outside England and Wales so long as the total unencumbered value of all his assets whether in or outside England and Wales remained above 175 million.
The order as continued provided that a respondent with other assets outside England and Wales could dispose of or deal with those assets outside England and Wales so long as the total unencumbered value of all his assets in England and Wales remained above 175 million. That amendment was not brought to the attention of the court. The effect of the change was that where, as was said to be the case here, the defendants' assets in England and Wales were valued at less than 175 million, the defendants were restrained from dealing with assets outside England and Wales even to the extent that they exceeded 175 million.
The defendants applied for the order to be corrected or varied so that it accorded with the order made without notice. The claimant made its own application supporting the variation to the order.
The claimant argued that the wording of the standard form gave a defendant free rein to deal with his foreign assets, so long as the total value of his assets remained above 175m, thus enabling a defendant to move assets from a relatively secure location from the point of view of the enforcement of an English judgment at trial to an entirely insecure location without the consent of the claimant or the court.
The first defendant submitted that the risk of dealing with assets so as to put them out of reach of the claimant was common to any freezing order application and could not be regarded as a special circumstance making the present case extraordinary, and that where the defendant had assets abroad which could not be moved to England and Wales so as to bring the value of assets here up to 175 million the amended order was unfair.
Held, granting the defendants' application to correct the order and the claimant's application to vary it:
1. The court had been innocently misled on the continuation application into thinking that there were no material changes to the original form of order. In the circumstances the amendment was not one which the court intended to make and the court could and should correct or vary the order. Where good practice had not been followed and as a result the court had been misled it was appropriate to correct or vary the order.
2. There were two features of the amendment requested by the claimant in this case that ran counter to the principles underlying a freezing order. The first was that the effect of the amendment was to restrain the defendants from dealing with assets above the sum equal to the claimant's claim plus interest and costs. The second feature was that the effect of the amendment was to put pressure on the defendants to bring assets to England and Wales so that the value of the assets in England and Wales reached the maximum sum thereby enabling the defendants to deal with their other assets abroad. (Z Ltd v A-Z and AA-LLELR[1982] 1 QB 558considered.)
3. Nevertheless, the conduct which the claimant wished to restrain was conduct which a freezing order was designed to restrain, namely, the removal of assets to a jurisdiction where enforcement of a judgment was difficult. The claimant had established on the application to continue the freezing order that there was a real risk of dissipation and it appeared that most of the first defendant's assets were overseas. (Congentra AG v Sixteen Thirteen Marine SAUNK[2008] EWHC 1615 (Comm); [2008] 2 CLC 51applied.)
4. There was a real risk that the liberty provided in the standard form of freezing order to deal with overseas assets might be used by the first defendant to put his assets out of reach of the claimant. That was what freezing orders were designed to prevent. Any prejudice to the first defendant caused by the amended form could be avoided or at any rate alleviated by his ability to apply to the court for liberty to deal with any particular asset. There was no evidence that he wished to deal with a particular asset abroad in such a way as would breach the amended form of freezing order and that to be restrained from doing so would cause him prejudice. On such an application the court would have power to release certain assets from the injunction although any such application would need to be supported by satisfactory evidence of the value of the asset in question and of those other assets which combined to produce a value of $175 million, the maximum stated in the freezing order. Until then the claimant's interests should be protected in the manner requested. (Motorola Credit Corp v UzanUNK[2003] EWCA Civ 752; [2003] 2 CLC 1026[146] considered.)
Teare J:
1. There are before the court two applications. The first is made by the First to Fourth Defendants. It is to correct an accidental slip in an order made by this court dated 12 November 2009 pursuant to CPR 40.12 or to vary that order pursuant to CPR 3.1(7). The Claimant opposes that application but if the order is corrected or varied it makes its own application to vary the order as corrected or varied.
2. The order dated 12 November 2009 was a Mareva or freezing order. It was made following an application by the Claimant to continue a freezing order granted ex parte or without notice and an application by the Defendants to discharge that order. My judgment on those applications is reported at [2009] EWHC 2840 (Comm). The nature of the case against the Defendants and the nature of the Defence of the First to Third Defendants is summarised in that judgment.
3. The order made without notice followed the standard form of freezing order in the Commercial Court Guide and provided as follows:
4. Until after judgment on the next return date (see paragraph 16 below), the Respondents must not, except with the prior written consent of the Applicant's solicitors
a. Remove from England and Wales any of their assets which are in England and Wales up to the value of 175,000,000 (one hundred and seventy five million pounds);
b. In any way dispose of, deal with or diminish the value of any of their assets whether they are in or outside England and Wales up to the value of 175,000,000 (one hundred and seventy five million pounds).
7. a. If the total value free of charges or other securities (unencumbered value) of each of the Respondents' assets in England and Wales exceeds 175,000,000 (one hundred and seventy five million pounds) then that Respondent may remove any of those assets from England and Wales or may dispose of or deal with them so long as the total unencumbered value of the Respondent's assets still in England and Wales remains above that amount.
b. If the total unencumbered value of the Respondents' assets in England and Wales does not exceed 175,000,000 (one hundred and seventy five million pounds) then that Respondent must not remove any of those assets from England and Wales and must not dispose of or deal with any of them. If that Respondent has other assets outside England and Wales, he may dispose of or deal with those assets outside England and Wales so long as the total unencumbered value of all his assets whether in or outside England and Wales remains above 175,000,000 (one hundred and seventy five million pounds).'
4. After I had provided a copy of my judgment to the parties in draft on 10...
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