JSC BTA Bank v Mukhtar Ablyazov and Another
| Jurisdiction | England & Wales |
| Judge | Sir Andrew Smith |
| Judgment Date | 06 November 2017 |
| Neutral Citation | [2017] EWHC 2702 (Comm) |
| Docket Number | Case No: CL-2015-549 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 06 November 2017 |
[2017] EWHC 2702 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
7 Rolls Building, Fetter Lane, EC4A 1NL
Sir Andrew Smith
(sitting as a Deputy High Court Judge)
Case No: CL-2015-549
Mr Stephen Smith QC and Mr Tim Akkouh (instructed by Hogan Lovells International LLP) for the Claimant
Mr Marc Delehanty (instructed by Hughmans Solicitors LLP) for the Second Defendant
Hearing dates: 21 and 22 September 2017
Judgment Approved
These are my reasons for my decisions on two applications that were before me at the second management conference in this case on 21 and 22 September 2017. It is convenient to refer to them as the "stay application", an application made by the second defendant, Mr Ilyas Khrapunov, and the "amendment application", an application by the Bank, as I shall refer to the claimant. The applications were contentious between the Bank and Mr Khrapunov: the first defendant, Mr Mukhtar Ablyazov, takes no part in the proceedings.
I said at the hearing that:
i) I would refuse the stay application, but would direct that witness statements of fact and hearsay notices be exchanged by 4.30pm on 30 June 2018 (rather than by 4.30pm on 30 April 2018, as previously ordered); and
ii) I would permit the proposed amendment (subject to a minor and uncontroversial change in the draft pleading).
I said that I would give my reasons later.
On 27 September 2017, before I had done so and before my order was perfected, Mr Khrapunov's representatives told me that on 25 September 2017 there had been a "significant development" concerning the amendment application and applied for me to "revisit and reverse" my decision on it. The parties agreed that I should deal with that application on paper and without oral submissions. In the event, the further evidence and submissions did not lead me to change my decision.
There is no need for me to describe in any detail the proceedings, or the related proceedings brought in this court by the Bank over the last eight years or so: they have been explained in other judgments to which reference can be made. It is sufficient to say that in this action the Bank brings a claim against Mr Ablyazov and Mr Khrapunov, his son-in-law, alleging a conspiracy by unlawful means: the Bank has judgments for over $4.6 billions against Mr Ablyazov, and it alleges that he and Mr Khrapunov acted together to deal with assets in breach of court orders made against Mr Ablyazov so as to prevent it from enforcing the judgments.
The stay application
The background to the stay application is a challenge by Mr Khrapunov to the Court's jurisdiction to entertain the claim against him. His challenge was partly successful before Teare J, who held that the Court has jurisdiction only over the claim for damage caused by wrongful dealings before 16 February 2012. The Court of Appeal allowed the Bank's appeal and determined that the Court has jurisdiction over the whole of the claim. It refused Mr Khrapunov's application for permission to appeal to the Supreme Court and also his application to postpone the date to serve his defence until after the Supreme Court had determined an application by him for permission to appeal.
The case was before me for a case management hearing on 20 June 2017, and on that occasion I ordered, inter alia, that:
i) The parties make disclosure by 15 December 2017;
ii) Witness statements be served by 30 April 2018; and
iii) The trial be fixed to start not before 1 November 2018.
In the event, the trial has been fixed to start on 21 January 2019, the first "reading day" being 16 January 2019.
On 8 August 2017 the Supreme Court granted Mr Khrapunov permission to appeal against the Court of Appeal's judgment on jurisdiction. I was told that it is expected that the Supreme Court will hear the appeal in January or February 2018, and give its decision by May 2018. This timing is, of course, not certain, but both parties made submissions to me on the basis that this was probable and accepted that I should deal with the stay application accordingly.
By his notice of application dated 8 September 2017 Mr Khrapunov applied for an order to stay "the substantive proceedings". Its basis is that if his appeal to the Supreme Court is wholly successful, the proceedings against him will be dismissed, and even if it succeeds only in that the decision of Teare J is restored, the scope of the proceedings, and so trial preparations, will be significantly reduced. However, Mr Khrapunov does not seek to have the proceedings stayed entirely: in particular, he wants to proceed with applications that he has made to discharge a worldwide freezing order ("WFO") against him and an order that he be cross-examined on his response to it: they have been fixed for hearing in November 2017. At the hearing of the stay application Mr Marc Delehanty, who represented Mr Khrapunov, put before me draft orders in which he sought to state more precisely what stay is sought. As I understand it, essentially Mr Khrapunov seeks by whatever form of order to defer until after the Supreme Court's decision procedural steps by way of preparation for the trial of this action, including in particular disclosure and inspection of documents, service of witness statements, pleadings (and pleading amendments) and issuing any Part 20 proceedings. Accordingly, he seeks amendments to the timetable ordered in June 2017 and consequently that the trial be deferred by a few months, Mr Delehanty suggested perhaps by only some three months.
There was some debate during the hearing about whether the order sought was really a "stay" such as is contemplated in CPR 3.1(2)(f), but it would not be fruitful for me to consider that question further. The proper approach to applications for a stay has been explained as follows: "a stay is the exception rather than the rule, solid grounds have to be put forward by a party seeking a stay, and, if such grounds are established, then the court will undertake a balancing exercise weighing the risks of injustice to each side if a stay is or is not granted", per Sullivan LJ in DEFRA v Downs, [2009] EWCA Civ 257 at para 8. Accordingly, an applicant for a stay normally has to identify that he will be exposed to some form of irremediable harm if no stay is granted, and it is not enough to demonstrate "temporary inconvenience that any applicant is bound to face because he has to live, at least temporarily, with the consequences of an unfavourable judgment": DEFRA v Downs, cit sup, at para (See too Mahrani v Sippy, [2013] Civ 1820 per Aikens LJ.) These principles were invoked by Mr Stephen Smith QC, who represented the Bank, and Mr Delehanty did not seek to distinguish them on the basis that the application was not truly for a stay. His argument was that Mr Khrapunov satisfies the test enunciated by Sullivan LJ: that, if the proceedings continue towards trial pending the decision of the Supreme Court, he would suffer serious prejudice or at least that he would be exposed to a real risk of serious prejudice.
As I have said, I acceded to Mr Khrapunov's application only in that I adjusted the date for service of witness statements to 30 June 2018. To my mind, this change, which the Bank hardly resisted, is consistent with maintaining the trial date: after all, the timetable had been laid down to allow for a trial in November 2018, and it is in fact fixed to begin two and a half months later.
It is convenient next to explain why I have referred to Part 20 proceedings. Pursuant to an order made at the June Case Management Conference, on 31 July 2017 the Bank served particulars about what recoveries it had made in respect of its judgments against Mr Ablyanov. It stated that "entities" under the ultimate beneficial ownership of Mr Kenges Rakishev, who is the Bank's Chairman and has had a major beneficial interest in it since 2014, (the "Rakishev entities") had taken steps in respect of assets of Mr Ablyazov. It was denied that these steps were taken by "the Bank, its agents or entities under its control". Mr Khrapunov says that in view of the Bank's particulars he intends, if his appeal to the Supreme Court does not result in the proceedings against him being dismissed, to apply to join as third party defendants Mr Rakishev and the so-called Rakishev entities. According to the skeleton argument served on his behalf, he contemplates claims described as follows: "Assuming the truth of the Bank's position expressed in its [particulars] … Mr Rakishev has been interfering in the asset recovery process and/or taking advantage of the knowledge that he has by virtue of his position at the Bank in effect to feather his own nest. On the face of it, his or his nominees' acquisition of assets otherwise available to the Bank suggests the commission by him of wrongs/breaches of duty which have contributed to the same loss and damage to the Bank in respect of which it brings the present claim against Mr Khrapunov. Moreover, Mr Rakishev's actions will have caused loss and damage to Mr Khrapunov – not least in finding himself subject to these proceedings and the WFO against him".
I am sceptical about the threat of Part 20 proceedings, and not persuaded that this threat need or should significantly disrupt the progress to trial of the Bank's claim. It is not clear to me what the nature of the cause(s) of action would be or that Mr Khrapunov has a proper basis to bring such claims against Mr Rakishev and the entities referred to, not least because if the information in the Bank's pleading is correct – and it is said to be on the basis of that information that Mr Khrapunov is contemplating the Part 20...
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