Leibson Corporation v TOC Investments Corporation
| Jurisdiction | England & Wales |
| Judge | Lord Justice Singh,and,Lady Justice Gloster,Sir Jack Beatson |
| Judgment Date | 17 April 2018 |
| Neutral Citation | [2018] EWCA Civ 763 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2016/1743 |
| Date | 17 April 2018 |
[2018] EWCA Civ 763
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
IN THE MATTER OF BEPPLER & JACOBSON LIMITED
AND IN THE MATTER OF THE COMPANIES ACT 2006
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
MR JUSTICE HILDYARD
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice Gloster,
Vice-president of the Court of Appeal, Civil Division
Lord Justice Singh
and
Sir Jack Beatson
Case No: A2/2016/1743
Mr David Wolfson QC and Mr Matthew Cook (instructed by Mishcon de Reya LLP) for the Appellants
Mr Robin Hollington QC and Mr Adrian Pay (instructed by Bryan Cave) for the First and Second Respondents
Hearing dates: 12 December 2017
Lady Justice Gloster, Vice-President of the Court of Appeal, Civil Division:
Introduction
This is an appeal against the order of Hildyard J dated 13 April 2016 (“the Order”) declaring that Beppler & Jacobson Limited (“BJUK”), which is owned by the appellants, is liable to reimburse the first respondent to the appeal, TOC Investments Corporation (“TOC”), in the sum of £2,685,206.81. TOC (a company originally registered in the British Virgin Islands, but which we were informed had re-registered in Cyprus) is and was at all material times a wholly-owned subsidiary of the Russian oil company, TNK-BP International Limited (“TNK-BP”) 1. TOC paid that sum to BJUK pursuant to the terms of a funding agreement dated 27 July 2012 (“the funding agreement”) in order to fund the costs of the provisional liquidators appointed in relation to BJUK. The funding agreement was made between TOC, the provisional liquidators of BJUK and BJUK, acting by the provisional liquidators.
Factual and procedural background
In summary, the key features of the factual background, which I have taken from Hildyard J's judgment (“the judgment”) 2 as well as from the witness statements before the judge, are as follows.
The application is the final chapter in a petition for the winding-up of BJUK or for relief pursuant to section 994 of the Companies Act 2006 in relation to it. The petition was presented on 3 May 2012 by the second respondent to the appeal, Caldero Trading Limited (“Caldero”), the beneficial owner of which was a Mr Zoran Becirovic, a Montenegrin. A critical feature of the factual matrix of the funding agreement is that at all material times Caldero was substantially funded in its conduct of the petition by TOC/TNK-BP and that the conduct of the provisional liquidation was similarly funded.
BJUK and its Montenegrin subsidiary, Beppler & Jacobson Montenegro d.o.o. (“BJM”), own two hotels in Montenegro. When it presented the petition, Caldero was one of three then shareholders in BJUK: it owned 25% plus one share. The other shareholders were: Leibson Corporation, the first appellant, a company incorporated in the BVI (“Leibson”), which owned 70% minus one share; and Belinda Capital Limited, the second appellant, a company incorporated in Nevis, (“Belinda”) which owned 5% of the shares.
The participation of TNK-BP/TOC in the petition stemmed from the involvement of Mr Igor Lazurenko, the third appellant, in BJUK. At all material times Mr Lazurenko owned Belinda and he was also the owner (or perhaps rather the agent for an unidentified principal) of Leibson. Mr Lazurenko is a Russian citizen and a former employee of TNK-BP. Mr Lazurenko was employed by TNK-BP, latterly as director
of its Logistic Department, from September 2003 until April 2012. Until April 2012, Mr Lazurenko and his family lived in Russia. He claimed 3 (although it was not necessary for the judge to reach any findings on these matters) that, in April 2012, due to the severity of threats made against him and his family by Mr German Khan (who at the time was the Executive Director and major shareholder of TNK-BP) to persuade him to cover up corrupt conduct, he resigned from his employment and was forced to leave Russia with his family.TNK-BP, for its part, made counter-allegations of fraudulent embezzlement and misappropriation against Mr Lazurenko amounting to tens of millions of U.S. dollars. Again, it was not necessary for the judge to determine these matters in the current proceedings; the evidence relating to the respective claims of both sides was adduced simply as factual matrix material. These allegations led to TNK-BP issuing two sets of proceedings in the Chancery Division against Mr Lazurenko in July and August 2012. I summarise them briefly because I regard the background as relevant factual matrix:
The documents claim
i) The first set of proceedings was issued in July 2012 for an injunction to restrain Mr Lazurenko on grounds of alleged breach of confidence from disclosing certain documents in his possession which he claimed evidenced the corrupt payment of hundreds of millions of US Dollars by TNK-BP to Russian state agencies and officials, with the direct involvement of Mr Khan (“the documents claim”). In summary:
a) On 10 July 2012 Roth J duly made the without notice interim injunction sought by TNK-BP. On the return date, 17 July 2012, TNK-BP sought from Vos J the continuation of the order made by Roth J and an additional order for delivery up of the documents. Subsequently, Vos J varied the order made by Roth J so as to permit disclosure of the documents to law enforcement agencies in the UK, US or Russia and copies of the documents were supplied to the solicitors for TNK-BP on 31 July 2012.
b) On 29 August 2012 Mr Dougans, TNK-BP's solicitor, made a witness statement expressing the view, on the instructions of TNK-BP, that the documents did not contain prima facie evidence of any wrong-doing but that their disclosure “may prove damaging” to TNK-BP.
c) On 14 September 2012 Mr Lazurenko issued an application for a declaration pursuant to CPR 11(1) that the English court had no jurisdiction or should not exercise any jurisdiction it might have over him and for orders to set aside service of the claim on him and the orders of Roth and Vos JJ.
d) The Chancellor, Sir Terence Etherton, gave judgment on this application on 16 October 2012, which is to be found at [2012] EWHC 2781 (Ch). He acceded to Mr Lazurenko's jurisdictional application without considering the merits of TNK-BP's application to continue the injunctions. Accordingly, he discharged the orders made by Roth and Vos JJ and dismissed the applications for their continuance made by TNK-BP; he also summarily struck out or dismissed the document claims of TNK-BP. However, in so doing, he said at paragraph 6:
“[The] application is supported by a witness statement of Mr Lazurenko. He asserts in paragraph 3 that:
“The Documents contain the details of wrongdoing between TNK-BP and companies beneficially owned and controlled by the most senior officers of Transneft and officials of the Ministry of Energy responsible for regulating and monitoring the oil industry in Russia.”
In subsequent paragraphs he elaborates on that allegation in considerable detail. In paragraph 125 he denies that any of the Documents contains any information of any possible commercial use to a third party or of any detriment to TNK-BP. Although TNK-BP filed a good deal of evidence in reply no one, with actual knowledge of the facts, denied the detailed allegations made by Mr Lazurenko.”
e) The Chancellor ordered TNK-BP to pay indemnity costs and refused permission to appeal, although he granted a stay pending TNK-BP's application for permission to appeal to the Court of Appeal. TNK subsequently withdrew its application for permission to appeal. On 21 February 2013 Lewison LJ ordered that TNK-BP pay Mr Lazurenko's costs on the indemnity basis of opposing TNK-BP's applications for permission to appeal and for a stay of discharge of the injunction.
The fraud claim
ii) The second set of proceedings was a claim brought in August 2012 by TNK-BP against BJUK, Mr Lazurenko, the appellants and others allegedly connected with Mr Lazurenko, alleging fraudulent conspiracy in relation to which TNK-BP initially obtained without notice worldwide freezing injunctions (“the fraud claim”). In summary:
a) In response to the fraud claim, Mr Lazurenko and certain of the appellants made an application to the Court seeking: (i) a declaration pursuant to CPR 11.1 that the English Court had no jurisdiction over Mr Lazurenko and the others in relation to the fraud claim, (ii) an order setting aside the worldwide freezing injunction, and (iii) an order setting aside service out of the jurisdiction of the claim form and particulars of claim.
b) Mr Sutcliffe QC, sitting as a deputy judge of the Chancery Division, in a judgment which was handed down on 20 November 2012, OJSC TNK-BP Holding v Beppler & Jacobson Ltd and others [2012] EWHC 3286 (Ch), granted that application and struck out the claim on jurisdictional grounds. He was also critical of various aspects of the fraud claim against Mr Lazurenko and ordered TNK-BP to pay the costs of the proceedings on the indemnity basis. He refused TNK-BP's application for permission to appeal, which was likewise rejected by the Court of Appeal on 21 January 2013.
TNK-BP also instigated a criminal investigation against Mr Lazurenko in Russia in relation to the same alleged events. Mr Lazurenko also claims that TNK-BP instigated a criminal investigation against his young son for allegedly failing to attend military service, which was subsequently dropped.
It was against this background that TNK-BP decided to fund the Caldero petition and the appointment of...
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