JSC BTA Bank v Ablyazov (No 10)
| Jurisdiction | England & Wales |
| Date | 2014 |
| Year | 2014 |
| Court | Court of Appeal (Civil Division) |
Injunction - Freezing order - Assets - Freezing order in standard form prohibiting defendant from disposing of, dealing with or diminishing value of assets - Defendant entering into unsecured loan facility agreements and directing payments to third parties - Whether right to borrow under facility “asset” for purpose of order - Whether exercise of right constituting disposal of or dealing with assets - Admiralty and Commercial Courts Guide, Appendix 5
The claimant bank brought a series of claims against the defendant, in support of which the court made a worldwide freezing order in the standard Commercial Court form set out in Appendix 5 of the Admiralty and Commercial Courts GuideF1. Paragraph 4 of the order provided that the defendant should not in any way “dispose of, deal with or diminish the value of his assets” to a particular value. Paragraph 5 provided that for the purpose of the order the defendant’s assets included any asset which he had power, directly or indirectly, “to dispose of, or deal with as if it were his own”. Paragraph 9 provided that paragraph 4 did not prohibit the defendant from spending up to a specified amount on living expenses and a reasonable amount on legal advice and representation. After the order was made, the defendant entered into a number of unsecured loan agreements, which provided for large sums to be made available to him. Under the agreements any undrawn portion of the loan facility could be cancelled by the lender and the defendant could not assign or transfer any of his rights thereunder without the lender’s consent. At the defendant’s direction, the lenders made payments of the entire sums to third parties. The defendant maintained that the money was being used to fund his legal expenses and those of others and his living expenses. The claimant applied for a declaration that, if the loan agreements constituted valid contracts, the defendant’s rights under them could only be exercised in accordance with the provisions of paragraph 9 of the order. The judge dismissed the application, holding that, while the rights under the loan agreements were choses in action and that some choses in action were “assets” for the purpose of a freezing order, given the terms of the loan agreements, the purpose of a freezing order and that the order at issue did not use the term “chose in action”, the contractual rights to draw down thereunder did not qualify as “assets” and their exercise by directing the lender to pay the sum drawn down to a third party did not constitute disposing of or dealing with an asset.
On the claimant’s appeal—
Held, dismissing the appeal, that, while there might be no fundamental objection of principle to the recognition of choses in action such as a borrower’s right to draw down under a loan agreement from qualifying as an “asset” for the purpose of a freezing order, such orders had to be construed strictly and, in determining their ordinary meaning, account should be taken of their background, context and purpose; that, where the words used clearly and unequivocally led to the conclusion that the term “asset” included that which could not be the subject of execution, effect should be given to them, but, where they did not, the purpose of such orders would be a significant factor in determining the meaning of the term and a pointer against inclusion of the particular right at issue; that the wording of the freezing order in the present case did not identify all choses in action as falling within the scope of the term “asset” with as much precision as was reasonably practicable and, if the order was to treat the right to draw down on a loan agreement as an “asset”, despite its unamenability to enforcement and the inability to place a value on it, then additional words were needed; and that, accordingly, the contractual right to draw down under the loan agreements did not qualify as an “asset” and thus in exercising that facility the defendant did not “dispose of” or “deal with” his assets (post, paras 33, 40, 45, 60, 64, 73, 75, 90, 91, 96, 97, 100).
The following cases are referred to in the judgment of Beatson LJ:
Algosaibi v Saad Investments Co Ltd
Anglo Eastern Trust Ltd v Kermanshahchi
C Inc plc v L [
CBS United Kingdom Ltd v Lambert [
Camdex International Ltd v Bank of Zambia (No 2) [
Cantor Index Ltd v Lister [
Coutts & Co v Stock [
Deputy Comr of Taxation v Hickey
Derby & Co Ltd v Weldon (Nos 3 and 4) [
Federal Bank of the Middle East Ltd v Hadkinson [
Group Seven Ltd v Allied Investment Corpn Ltd
Haddonstone Ltd v Sharp [
Hollicourt (Contracts) Ltd v Bank of Ireland [
International Credit & Investment Co (Overseas) Ltd v Adham [
Investors Compensation Scheme Ltd v West Bromwich Building Society [
JSC BTA Bank v Ablyazov
JSC BTA Bank v Ablyazov
JSC BTA Bank v Ablyazov (No 8)
JSC BTA Bank v Solodchenko
Linsen International Ltd v Humpuss Sea Transport Pte Ltd
Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [
Mareva Cia Naviera SA v International Bulkcarriers SA [
Mercedes Benz AG v Leiduck [
Nippon Yusen Kaisha v Karageorgis [
Parbulk II A/S v PT Humpuss Intermoda Transportasi TBK (The Mahakam)
R v Kohn (
Revenue and Customs Comrs v Egleton
Sans Souci Ltd v VRL Services Ltd
Searose Ltd v Seatrain UK Ltd [
Sigma Finance Corpn, In re
Slough Estates Ltd v Slough Borough Council (No 2) [
TSB Private Bank International SA v Chabra [
Templeton Insurance Ltd v Thomas
Z Ltd v A-Z and AA-LL [
The following additional cases were cited in argument:
Bank of China v NBM LLC
Darashah v UFAC (UK) Ltd The Times, 30 March 1982,
Derby & Co Ltd v Weldon [
JSC BTA Bank v Ablyazov
JSC BTA Bank v Ablyazov (No 9)
JSC BTA Bank v Ablyazov
Loxton v Moir (
Perotti v Watson
Transport for London v Griffin
The following additional case, although not cited, was referred to in the skeleton arguments:
Gray’s Inn Construction Co Ltd, In re [
APPEAL from Christopher Clarke J
By an application notice dated 14 October 2011 the claimant, JSC BTA Bank, sought a declaration that if certain loan agreements entered into by the defendant, Mukhtar Ablyazov, and others constituted valid agreements then the defendant’s rights thereunder were assets for the purposes of a freezing order made against him on 21 August 2009 by Teare J and continued on 12 November 2009 and any drawings under the agreements could only lawfully be made pursuant to paragraph 9 of the freezing order, which permitted the expenditure of £10,000 per week on personal expenses, reasonable amounts on legal advice and dealing with assets in the ordinary and proper course of a business.
On 4 July 2012 Christopher Clarke J held [2012] 2 All ER (Comm) 1243 that the contractual rights to draw down under the loan agreements did not qualify as “assets” for the purpose of the standard form of freezing order and that their exercise by directing the lender to pay the sum drawn down to a third party did not constitute “disposing of” or “dealing” with an asset, and by order dated 27 July 2012 dismissed the claimant’s application.
By an appellant’s notice filed on 17 August 2012, the claimant appealed on the ground that, inter alia, the judge had erred in finding that it was not clear that exercising a chose in action to borrow money constituted “dealing with” or “disposing of” that chose in action.
The facts are stated in the judgment of Beatson LJ.
Stephen Smith QC and Tim Akkouh (instructed by
Duncan Matthews QC and Charlotte Tan (instructed by
The court took time for consideration.
25 July 2013. The following judgments were handed down.
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