Kazakhstan Kagazy Plc and Others v Baglan Abdullayevich Zhunus and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Baker |
| Judgment Date | 30 January 2020 |
| Neutral Citation | [2020] EWHC 128 (Comm) |
| Date | 30 January 2020 |
| Docket Number | Case No: CL-2013-000683 |
| Court | Queen's Bench Division (Commercial Court) |
[2020] EWHC 128 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London EC4A 1NL
Mr Justice Andrew Baker
Case No: CL-2013-000683
Robert Howe QC and Daniel Saoul QC (instructed by Hogan Lovells International LLP) for the Claimants
Dominic Chambers QC and Joe-Han Ho (instructed directly) for the Charging Order Respondents
The Defendants and Additional Party did not appear and were not represented
Hearing date: 17 January 2020
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.
Introduction
In this judgment, where I refer to ‘the claimants’, I refer to the first to fourth claimants (there were originally seven claimants), they being the active claimants now pursuing enforcement of a judgment dated 28 February 2018 against Maksat Askaruly Arip (‘Mr Arip’) for US$298,834,593 (plus £8,000,000 by way of payment on account of costs). Whilst their respective precise corporate titles may have been different and may have varied over time, in substance Mr Arip was CEO of the Kazakhstan Kagazy group until his departure from Kazakhstan in 2009 and Shynar Dikhanbayeva was the group's CFO. She was Mr Arip's primary co-defendant in this Claim (CL-2013-000683).
Upon the final trial herein, Picken J held that the claimants had been defrauded by Mr Arip and Ms Dikhanbayeva on a massive scale in the years prior to Mr Arip's departure from Kazakhstan: see [2017] EWHC 3374 (Comm). Mr Arip's wife, Sholpan Arip (‘Mrs Arip’), and his mother-in-law, Larissa Asilbekova (‘Mrs Asilbekova’), are now also judgment debtors for the £8,000,000 costs payment pursuant to s.51 Senior Courts Act 1981: see [2019] EWHC 2630 (Comm) (Jacobs J); and Mr Arip stands sentenced to two years' imprisonment for contempt of court because of his failure to deliver up a valuable collection of wristwatches in part satisfaction of his judgment debts: see [2019] EWHC 2319 (Comm) (Phillips J, as he was then).
The subject matter of the current phase of proceedings in this Claim is valuable residential property in Central London, legal title to which is held in each case by one of the charging order respondents. The claimants obtained interim charging orders in respect of each of the properties in question on their claim that it was held for and on behalf of Mr Arip as true beneficial owner. After various case management efforts, a trial of the issue whether Mr Arip has any and if so what beneficial interest in any of the properties was listed to commence on 23 July 2019. The claimants would have sought upon that trial, if successful, final charging orders with a view to realising the value of the properties in part satisfaction of Mr Arip's judgment debts. It is suggested that the properties may be worth, collectively, approaching £60 million.
The properties, and their associated charging order respondents, are:
i) Four apartments (with associated parking spaces) in Burlington Place, Mayfair, one each owned by Fablink Ltd, Waychem Ltd, Standcorp Ltd and Permafast Ltd, Cypriot companies owned 100% by Cooperton Management Ltd (‘Cooperton’), also a Cypriot company.
ii) 19 Wycombe Square, Kensington, owned by Dencora Ltd (‘Dencora’), a BVI company. The Wycombe Square property was the Arip family home in London between 2009 and 2018.
iii) Flat 9, 10 Montrose Place, Belgravia, owned by Unistarel Corp (‘Unistarel’), a BVI company.
The respondents' case, stated very broadly, is that each of the properties is owned indirectly by or held on behalf of a discretionary trust the beneficiaries of which are members of Mr Arip's family. Thus, they say that:
i) Cooperton owns the owners of the Burlington Place properties in its capacity as trustee of the Jailau Trust, founded by Mrs Asilbekova in April 2014 for the benefit of Mr and Mrs Arip's children, Rabiga, Talal and Khadisha.
ii) Dencora, the owner of the Wycombe Square property, is the only asset of Carabello Holdings Inc (‘Carabello’), another BVI company, which is owned in turn by the Wycombe Settlement, founded by Mr Arip in April 2009 for the benefit of Mr and Mrs Arip, their parents and issue. The current trustee of the Wycombe Settlement is Pilatus Trustees Ltd (‘Pilatus’) in Cyprus.
iii) The owner of the Montrose Place property, Unistarel, is owned by Drez Investments Corp (‘Drez’), another BVI company, and Drez is owned in turn by the RaTalKha Settlement, founded by Mrs Asilbekova in January 2013 for the benefit of herself and Mr and Mrs Arip's children (hence, presumably, RaTalKha). Pilatus is also the current trustee of the RaTalKha Settlement.
I shall refer compendiously to the Jailau Trust, the Wycombe Settlement, the RaTalKha Settlement and the WS Settlement (said to be another family trust of indirect relevance to these charging order claims) as ‘the Settlements’.
Thus, the respondents say that Mr Arip has no interest of any kind in or in connection with the Burlington Place properties or the Montrose Place property, and that as regards the Wycombe Square property he is but one of several discretionary beneficiaries under the Wycombe Settlement with no interest of his own in the property itself, and potentially no valuable interest of any kind depending on what (if any) distributions are made by the trustee.
The sole current director of both Cooperton and Pilatus, and thus the individual responsible in practice for the administration of the Settlements, is Andreas Georghiou, who is a Cypriot lawyer practising as principal of A A Georghiou LLC to provide inter alia legal and trustee services.
Stated equally broadly, the claimants' case in the charging order proceedings within this Claim is that despite the apparent ownership structures involving the various corporate vehicles and the Settlements, the true position is that all this valuable real property is beneficially owned by and held for Mr Arip.
There are also now interim charging orders over five properties on Ilford High Street owned by Xyan Holdings Ltd (‘Xyan’), another BVI subsidiary of Drez, that are said by Xyan/Drez to be held ultimately for the RaTalKha Settlement and are said by the claimants to be in truth held beneficially for Mr Arip. The Ilford properties are said to be worth more than £10 million. This judgment does not deal with the charging order applications in respect of the Ilford properties and Xyan is not before the court, but the existence of those further charging orders is said to be relevant to the application for relief from sanctions by the charging order respondents who are before the court.
The claimants have commenced a further Claim, CL-2019-000494, against all of the charging order respondents before me, plus Mr and Mrs Arip, Ms Dikhanbayeva, Mrs Asilbekova, Carabello, Drez and Pilatus (‘the 2019 Claim’). There is an application pending to join Xyan to the 2019 Claim and to amend accordingly to extend the claimants' claims therein to cover also the Ilford properties. The 2019 Claim Form identifies that as regards the real properties owned by the charging order respondents, the claimants' claims in the 2019 Claim are for:
i) first, declarations that the properties belong in equity to the claimants, being (the claimants allege) the traceable proceeds of Mr Arip's frauds;
ii) second, in the alternative, charging orders and/or orders for sale of the properties if they belong in equity to Mr Arip;
iii) third, in the further alternative, relief under sections 423 to 425 of the Insolvency Act 1986 to reverse the transactions pursuant to which the respective respondents own the properties, those transactions having been (the claimants allege) transactions to defraud Mr Arip's creditors.
The first claim is inconsistent with the second (which is therefore indeed strictly in the alternative); the second claim appears entirely to replicate (as against the charging order respondents) the charging order proceedings in this Claim that give rise to the applications now before me; and the third claim appears to be a different way of possibly breaking through the structure under which the properties appear to be held so as to make their value available for the part-discharge of Mr Arip's judgment debts in this Claim, although I shall not claim to have understood fully what asset(s) the Insolvency Act relief, if granted, would cause to become available, or how, in that regard.
The 2019 Claim was commenced on 6 August 2019. Mr and Mrs Arip, Ms Dikhanbayeva and Mrs Asilbekova are not participating; the other defendants have been represented since the end of October 2019 by Mr Chambers QC on a direct instruction. They filed and served a Defence dated 26 November 2019, in response to which the claimants filed and served a Reply dated 23 December 2019. At this hearing, I directed that there be a joint CMC before the end of this Hilary Term (but not before 9 March 2020) in the 2019 Claim and these charging order proceedings, unless rendered moot by this judgment, with the application to join Xyan and amend to be dealt with also then; and that has now been fixed for 26 March 2020.
The Present Applications
That somewhat lengthy introduction now enables me to identify and explain the applications determined by this judgment. By paragraphs 5 and 6 of an Order of Jacobs J dated 28 June 2019 (‘the June Order’), the charging order trial was adjourned three working weeks before it was due to commence, and associated deadlines for service of witness...
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