Kazakhstan Kagazy Plc v Baglan Abdullayevich Zhunus (formerly Baglan Abdullayevich Zhunussov)
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Jacobs |
| Judgment Date | 27 June 2019 |
| Neutral Citation | [2019] EWHC 1693 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2013-000683 |
| Date | 27 June 2019 |
[2019] EWHC 1693 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice,
The Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Jacobs
Case No: CL-2013-000683
and
Robert Howe QC and Daniel Saoul QC (instructed by Allen & Overy LLP) for the First, Second, Third and Fourth Claimants.
Stephen Auld QC and Stephanie Wood (instructed by Gresham Legal) for the Fourth Defendant
Hearing dates: 26 June 2019
Judgment Approved by the court
A: Factual background
The Claimants apply for an order that the Fourth Defendant (“Mrs. Arip”) attends court to be cross-examined on her asset disclosure which has been provided under paragraph 7 of a Worldwide Freezing Injunction (“WFO”) made against her on 12 October 2018 by Mr. Justice Teare, as varied by Richard Salter QC (sitting as a Judge of the High Court) on 7 December 2018 and Mr. Justice Andrew Baker on 22 January 2019.
The background to the case is well-known to the parties, and it is not necessary to describe it in detail. In summary, the Claimants were successful in a very substantial fraud claim made against a number of defendants, including Maksat Askaruly Arip, who is the husband of Mrs. Arip. Picken J handed down a lengthy judgment in December 2017 following a 13 week trial. On 28 February 2018, he handed down a further judgment on consequential matters. The Claimants thereby obtained final judgment against Mr Arip and the third defendant for a total of US$298,834,593.00; together with a further order for £8,000,000.00 as an interim payment on account of the costs, to be paid by 4pm on 14 March 2018. No part of that judgment has yet been paid.
The Claimants are now attempting to enforce that judgment against Mr. Arip by various means. They are pursuing several charging order applications in relation to the properties in London which are owned by a number of trusts which are, or alleged to be, Arip family trusts; specifically trusts known as the “Wycombe Settlement”, the Jailau Trust and the Ratalkha Trust. They are also applying, consequential to the judgment which they have obtained, to commence a tracing claim, to identify the proceeds of the sums misappropriated by Mr Arip. The applications for charging orders are currently due to be tried over 6 days in the Commercial Court commencing on 23 July 2019, although it presently seems likely that this application will be adjourned. The application to commence the tracing enquiry was heard by Waksman J. in the Commercial Court last week (21 June 2019). He decided to adjourn the application so that it could be heard by the trial judge (Picken J). At the time of that adjournment, it was understood that Picken J. would be available for a hearing on 16 July 2019; since this was the date fixed for the hearing of an application, pursuant to s.51 of the Senior Courts Act (“the s.51 application”), against Mrs. Arip and her mother Mrs. Larissa Asilbekova (“Mrs. Asilbekova”), in relation to the costs of the original action. However, it is now clear that no such hearing will take place on 16 July, although there is a prospect, somewhat uncertain, that it might take place in the week commencing 22 July.
Mrs. Arip was not a defendant to the original action, and indeed an attempt to join her to that action was dismissed. She therefore has no liability under the judgment. However, she did provide funds for her husband's defence to that action in the sum of approximately £ 13.8 million, and it is this funding which creates a potential liability to the Claimants (in respect of their costs of around £ 13.2 million) under s.51. It is this potential liability which led to the WFO, the procedural history of which is as follows.
On 27 September 2018, at a hearing without notice and held in private, Mr Justice Andrew Baker granted a worldwide freezing injunction against Mrs Arip in support of the Section 51 application against her. The Judge declined to make an equivalent order against Ms Asilbekova. The WFO contained provisions for the prompt disclosure of information as to Mrs. Arip's assets, followed by a confirmatory Affidavit to be sworn by 15 October 2018.
On 9 October 2018, Mrs. Arip's English solicitors provided disclosure of those assets. This amounted to approximately US$ 25 million, although the Claimants contend that this is a generous estimation.
The return date of the WFO application was 12 October 2018, and the matter came before Teare J. The injunction was continued without substantial opposition.
On 15 October 2018, Mrs. Arip provided the confirmatory Affidavit in relation to her worldwide assets.
The Claimants considered that the disclosure which she had provided was inadequate, in particular in failing to explain what had become of very substantial distributions (around US$ 300 million) which had been made from a trust known as the WS Settlement. This led to an application being made by the Claimants, on 30 October 2018, for a variation to the WFO; so as to require Mrs. Arip to provide information concerning distributions from the WS Settlement, and also to remove exceptions for ordinary living expenses and reasonable legal expenses, unless and until Mrs. Arip complied with her disclosure obligations.
The matter came on for hearing before Richard Salter QC on 7 December. He made an order for the provision of further information. He also removed, subject to one exception, the exception for reasonable legal expenses. This meant that the relevant order as to provision of information read as follows:
PROVISION OF INFORMATION
7.
1) The Fourth Defendant must by 5pm on 15 October 2018 swear and serve on the Claimants' solicitors an affidavit setting out:
(a) All her assets worldwide exceeding £5,000.00 in value whether in her own name or not and whether solely or jointly owned, giving the value, location and details of all such assets; and any bank, building society or similar account to which the Fourth Defendant is a signatory either in the Fourth Defendant's own name alone or with someone else. In the case of any bank, building society or similar account, whether or not it has a balance in excess of £5,000.00, the Fourth Defendant must provide:
(i) The name or names in which it is held;
(ii) The name of the bank, building society or other similar institution;
(iii) The address of the branch;
(iv) The number of the account; and
(v) The approximate balance in the account; and
(b) The details of any trust, discretionary or otherwise, or any similar structure (herein referred to as the “ trust”), of which she is or was at any time the beneficiary, settlor, or protector, giving the names and addresses of the trustees, the location of the trust, details of her relationship to the trust and the value, location and details of the Trust's assets.
2) The Fourth Defendant must by 5pm on 11 January 2019 swear and serve on the Claimants' solicitors an affidavit setting out a full and frank explanation of what has happened to any funds distributed to her (or anyone else on her behalf) from the WS Settlement, including full details of the following and exhibiting relevant bank statements and all other relevant supporting documents:
(a) How much was paid to her and when, from each distribution, including in particular (but without limitation) the following distributions (or any part of any of them):
(A) The sum of approximately £16,559,620, distributed by the WS Settlement on or after 25 June 2010.
(B) The sum of approximately £81,252,000, distributed by the way of WS Settlement on or after 29 March 2011.
(C) The sum of US $181,911,000 distributed by the WS Settlement to the Fourth Defendant on or shortly after 18 December 2013
(b) If she claims that any part of any of the distributions was paid to anyone other than her, how much, and to whom;
(c) Precisely what she did with each distribution, setting out all the banks and accounts through which the monies have passed;
(d) If and to the extent that she claims to have spent or transferred any of the monies:
(A) When, how and on what she spent any of the monies;
(B) When, how and to whom she transferred any of the monies; and
(e) Where the monies or their proceeds are now located.
3) If the provision of any of this information is likely to incriminate the Fourth Defendant, she may be entitled to refuse to provide it, but is recommended to take legal advice before refusing to provide the information. Wrongful refusal to provide the information is contempt of Court and may render the Fourth Defendant liable to be imprisoned, fined or have its, her or his assets seized.
The provision of the further information led to further hearings before Hildyard J. and Andrew Baker J. It is not necessary to describe these in detail. Suffice it to say that the Claimants did (following the hearing before Andrew Baker J) receive and read the Second Affidavit of Mrs. Arip, which had originally been served in a sealed envelope.
In March 2019, some of the Claimants obtained an order, made on a without notice basis, for non-party disclosure from a bank, Julius Baer International Ltd. (“JBIL”) which had provided banking services to the Arip family.
The position at the beginning of April, in summary, was that the Claimants had received evidence as to Mrs. Arip's assets at different times and from different sources. They had by that time received three Affidavits from Mrs. Arip which were...
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