Kazakhstan Kagazy Plc and Others v Baglan Abdullayevich Zhunus and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Leggatt |
| Judgment Date | 20 February 2015 |
| Neutral Citation | [2015] EWHC 404 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2013 FOLIO 1055 |
| Date | 20 February 2015 |
[2015] EWHC 404 (Comm)
Mr Justice Leggatt
Case No: 2013 FOLIO 1055
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr M Brindle QC, Mr S NathanQC andMr J Miller (instructed by Zaiwalla & Co LLP) for the Claimants
Mr P Lowenstein QC and Mr D Head (instructed by Peters & Peters Solicitors) for the First Defendant
Mr M Howard QC, Mr P McGrathQC, Ms A DilnotandMr K Rodgers (instructed by Cleary Gottlieb Steen & Hamilton LLP) for the Second, Third and Fifth Defendants
Hearing dates: 20–21 January 2015
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.
This judgment gives my ruling on applications for payments on account of costs pursuant to CPR 44.2(8). The applications have been dealt with in writing in accordance with orders dated 21 January 2015 following a hearing 0n 20–21 January 2015.
The claimants are a group of companies previously owned and controlled by the first and second defendants, Mr Zhunus and Mr Arip, who are alleged in these proceedings to have defrauded the claimants of substantial sums of money. A worldwide freezing injunction has been granted over assets of Mr Zhunus and Mr Arip in an amount of £72 million. The claimants subsequently applied to amend their particulars of claim to allege a further fraud by which Mr Zhunus and Mr Arip are alleged to have misappropriated another US$45 million or thereabouts in breach of their fiduciary duties to the first claimant, with the dishonest assistance of the third defendant (Ms Dikhanbayeva). The application was heard on 20 and 21 January 2015. The main focus of the proposed amendments was a proprietary claim seeking to trace the proceeds of the alleged fraud into the hands of the fourth defendant (a Cyprus trust company) and the fifth defendant (Mrs Arip).
The amendment application was a heavy application which occupied one and a half days of court time (including the time taken to give judgment) and required a day of pre-reading. A further half day was available, if necessary, to deal with an application by Mrs Arip to vary the freezing order to clarify that the freezing order does not apply to her assets, including money standing in a bank account in her name in Switzerland. As the claimants did not in the event contend that the freezing order did apply to those assets, that application was dealt with shortly.
The claimants' application to amend the particulars of claim was unsuccessful and they were ordered to pay the defendants' costs of the application. They were also ordered to pay Mrs Arip's costs of her application to amend the freezing order, which they had unreasonably opposed. Both orders made provision for an application to be made in writing for an interim payment on account of costs. Under the terms of the orders the defendants were to provide the claimants with details of the total costs claimed within seven days and the parties were then to endeavour to agree an interim payment. The orders provided that, if the interim payment was not agreed within seven days, the parties were to submit brief written submissions to the court, "following which the award and amount of any interim payment shall be dealt with on paper by the Judge".
The defendants have provided statements of their costs of the applications in the form applicable for summary assessment. The costs claimed are extremely large and no interim payments have been agreed. Indeed the claimants' solicitors have not even attempted to engage in the process of endeavouring to agree interim payments, contrary to the terms of the court's orders.
The total costs claimed in the statements of costs (including VAT) are as follows:
i) Costs of Mr Zhunus for the amendment application —£183,739;
ii) Costs of Mr and Mrs Arip and Ms Dikhanbayeva for the amendment application —£583,145; and
iii) Costs of Mrs Arip for her application to amend the freezing order —£178,569.
Thus it can be seen that for a two day hearing the total costs claimed by the defendants are around £945,000.
The claimants' approach has not been constructive. Instead of making sensible proposals for suitable interim payments, they have made none at all and instead wrote a letter to the court dated 12 February 2015 accusing the defendants of abusive litigation tactics and of attempting to "bleed the claimants dry". This complaint might have carried more credence if the claimants had not themselves on a previous occasion submitted a schedule of costs in a sum of £809,000 for their costs of resisting an application by the defendants to discharge the freezing injunction.
The claimants' letter makes three requests, none of which is reasonable.
First, the letter enclosed a copy of an application which the claimants have made to the Court of Appeal for permission to appeal from the order dismissing their amendment application. In their skeleton argument in support...
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