JSC VTB Bank v Pavel Valerjevich Skurikhin and Others

JurisdictionEngland & Wales
JudgeMr Justice Simon
Judgment Date13 February 2014
Neutral Citation[2014] EWHC 271 (Comm)
Docket NumberClaim No: 2012-1105
CourtQueen's Bench Division (Commercial Court)
Date13 February 2014
Between:
JSC VTB Bank
Claimant
and
(1) Pavel Valerjevich Skurikhin
(2) Pikeville Investments LLP
(3) Perchwell Holdings LLP
Defendants

[2014] EWHC 271 (Comm)

Before:

The Hon Mr Justice Simon

Claim No: 2012-1105

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Commercial Court

Royal Courts of Justice

Strand, London, WC2A 2LL

Mr Stephen Auld QC and Mr Tim Penny (instructed by PCB Litigation LLP) for the Claimant

Mr Graham Dunning QC and Mr Iain Quirke (instructed by Messrs Fried, Frank, Harris, Shriver and Jacobson LLP) for the First Defendant

Hearing dates: 18–19 December 2012

Judgment Approved by the court for handing down

Mr Justice Simon

Introduction

1

This is the Claimant's application for summary judgment under CPR Part 24.2 against the First Defendant, Mr Skurikhin.

2

The Claimant (VTB) is the second largest bank in Russia. Mr Skurikhin is a Russian citizen, resident and domiciled in Russia. As Gloster J noted at an earlier hearing, VTB Bank v. Skurikhin and others [2012] WHC 3116 (Comm), at [4]:

He is the founder and apparent controller of a group of companies called Siberian Agrarian Holding Group ('SAHO', which he established approximately 12 [now, 13] years ago. SAHO is a large group with a complex corporate structure. It operates in a variety of agricultural businesses including: pesticide production, grain production and processing, bread baking … and the manufacture of bread making machinery.

SAHO also owns large tracts of agricultural land.

3

During the period 2007–2009, VTB made loans to 9 companies within SAHO ('the SAHO group borrowers') which were secured by guarantees from Mr Skurikhin. Both the loan agreements and the guarantees were subject to Russian law and to the jurisdiction of the Russian Courts.

4

Between December 2011 and February 2012 VTB began proceedings against the SAHO group borrowers for sums due under the loan agreements, and subsequently during 2012 against Mr Skurikhin under the guarantees.

5

Before any final and conclusive judgments had been obtained in the Russian Courts, VTB made a 'without notice' application for a freezing order in the Commercial Court against Mr Skurikhin and 2 English Limited Liability Partnerships (the Second and Third Defendants). On 16 August 2013, Hamblen J granted a domestic freezing order against Mr Skurikhin and a world-wide freezing order in support of the Russian proceedings against the 2nd and 3rd Defendants, pursuant to s. 25 of the Civil Jurisdiction and Judgments Act 1982. He also made disclosure orders. On 3 and 4 October 2012 Gloster J heard various applications by VTB, and in a judgment of 8 November 2012 (see above), so far as is material to the present application, she ordered Mr Skurikhin to give further disclosure.

6

Among her reasons for making the order, she noted [27(vii)]:

In the exercise of my discretion I also take into account the fact that Mr Skurikhin has not in his evidence to date suggested that either he, or the relevant SAHO companies has any defence to VTB's claims under the guarantees or loans respectively. When asked during the course of argument what, in headline terms, were Mr Skurikhin's defences to the guarantee claims, [his then counsel] said he was unable to provide any explanation as to what such defences might be …

7

There was a further hearing before Burton J in November 2012 to decide whether the freezing orders should continue. For the purposes of that hearing, Mr Skurikhin made his first witness statement, dated 2 November 2012. Although the primary purpose of the evidence was to address the extent of his beneficial ownership of the companies in SAHO, he also referred to matters relevant to a potential defence, which it will be necessary to return to later in this judgment.

8

In his judgment dated 4 December [2012] EWHC 3916 Comm at [12], Burton J noted:

The following is common ground or, at any rate, was not disputed before me.

(i) Russian judgments can be enforced in the English courts when they are final …

9

There were 40 loan agreements in all. VTB has secured 16 separate judgments under the guarantees against Mr Skurikhin in the Russian Courts, which it now wishes to enforce against him by way of common law action.

10

On 28 June 2013, Flaux J gave VTB permission to amend the Claim Form to include claims against Mr Skurikhin based on final and binding judgments in existence as at that date; and on 22 August 2013, Andrew Smith J gave VTB permission to issue an application for summary judgment before the service of Mr Skurikhin's Defence.

11

On 13 September VTB issued the present Part 24 application, supported by the 3rd witness statement of Alevtina Guzanova (Head of the Project Group within VTB). Her evidence was that the 16 judgments were 'final, binding and conclusive' (see §§13 and 16); and that Mr Skurikhin had never suggested that the judgments were not final binding and conclusive (see §19). She also argued that, although the Russian judgments referred to 'penalties or fines', these were in fact recoverable and enforceable contractual penalties.

12

The defence to the claim was raised for the first time, at least in broad outline, in the witness statement of Mr Michaelson (of Fried, Frank) dated 15 August 2013 at §7.

… this case involves an acceleration of loan commitments by state-owned bank, VTB, over a valuable, strategically important business … It bears all the hallmarks of similar activities of other state-owned banks in the Russian Federation involving strategically important businesses with valuable assets.

13

It was not until Mr Skurikhin's 2nd witness statement (dated 21 October 2013) that his defence was put before any Court. The witness statement runs to 50 pages and 169 paragraphs, and concludes:

For the reasons set out above, I believe that the Russian judgments were obtained against me as part of a fraudulent scheme to seize control of the SAHO group of companies by illegitimate means, in proceedings opposed to natural justice and/or that their enforcements would be contrary to public policy.

Summary Judgement

14

CPR Part 24 .2 provides:

The court may give summary judgment against a claimant or defendant on the whole or part of a claim or on a particular issue if —

(a) it considers that —

(ii) that defendant has no real prospect of successfully defending the claim or issue; and

(b) there is no other compelling reason why the case or issue should be disposed of at a trial.'

15

The principles which apply have been set out in many cases, are summarised in the editorial comment in the White Book Part 1 at 24.2.3 and have been stated by Lewison J in Easyair Limited v. Opal Telecom Limited [2009] EWHC 339 (Ch) at [15], approved subsequently (among others) by Etherton LJ in A C Ward & Son v. Caitlin (Five) limited [2009] EWCA Civ 1098 at [24]. For the purposes of the present application it is sufficient to enumerate 10 points.

(1) The Court must consider whether the defendant has a 'realistic' as opposed to a 'fanciful' prospect of success, see Swain v Hillman [2001] 2 All ER 91, 92. A claim is 'fanciful' if it is entirely without substance, see Lord Hope in Three Rivers District Council v Bank of England [2001] UKHL 16 at [95].

(2) A 'realistic' prospect of success is one that carries some degree of conviction and not one that is merely arguable, see ED & F Man Liquid Products v. Patel [2003] EWCA Civ 472.

(3) The court must avoid conducting a 'mini-trial' without disclosure and oral evidence: Swain v Hillman (above) at p.95. As Lord Hope observed in the Three Rivers case, the object of the rule is to deal with cases that are not fit for trial at all.

(4) This does not mean that the Court must take everything that a party says in his witness statement at face value and without analysis. In some cases it may be clear that there is no real substance in factual assertions which are made, particularly if they are contradicted by contemporaneous documents, see ED & F Man Liquid Products v. Patel (above) at [10]. Contemporary activity or lack of activity may similarly cast doubt on the substance of factual assertions.

(5) However, the Court should avoid being drawn into an attempt to resolve those conflicts of fact which are normally resolved by a trial process, see Doncaster Pharmaceuticals Group Ltd v. Bolton Pharmaceutical Co 100 Ltd [2006] EWCA Civ 661, Mummery LJ at [17].

(6) In reaching its conclusion, the court must take into account not only the evidence actually placed before it on the application for summary judgment, but the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No. 5) [2001] EWCA Civ 550, [19].

(7) Allegations of fraud may pose particular problems in summary disposal, since they often depend, not simply on facts, but inferences which can properly drawn from the relevant facts, the surrounding circumstances and a view of the state of mind of the participants, see for example JD Wetherspoon v Harris [2013] EWHC 1088, Sir Terence Etherton Ch at [14].

(8) Some disputes on the law or the construction of a document are suitable for summary determination, since (if it is bad in law) the sooner it is determined the better, see the Easyair case. On the other hand the Court should heed the warning of Lord Collins in AK Investment CJSC v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 at [84] that it may not be appropriate to decide difficult questions of law on an interlocutory application where the facts may determine how those legal issues will present themselves for determination and/or the legal issues are in an area that requires detailed argument and mature consideration, see also at [116].

(9) The overall burden of proof remains on the claimant,

… to establish, if it can, the negative proposition that the defendant has no real prospect of success (in the sense mentioned...

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