Madison Pacific Trust Ltd v Sergiy Mykolayovch Groza and Volodymyr Serhiyovch Naumenko

Hearing date: 30 August 2024

APPROVED JUDGMENT

A. INTRODUCTION

There are before me today the hearing of two applications (previously ordered by the Court to be heard on an expedited basis on this date in August 2024):

(1) The application of Madison Pacific Trust Limited (the “Claimant”), dated 25 June 2024 (the “Contempt Application”) to sanction the Defendants, Sergiy Mykolayovch Groza (“D1”) and Volodymyr Serhiyovch Naumenko (“D2”), collectively “the Defendants”, for contempt of court, namely deliberate non-compliance with, and breach of a Disclosure Order made by, Jacobs J on 19 April 2024 (sealed on 24 April 2024), and endorsed with a penal notice in the usual form (the “Disclosure Order”); and

(2) The Defendants' (responsive) applications dated 6 August 2024 for a declaration that the Court has no jurisdiction in respect of the Contempt Application because, in particular, permission to serve out of the jurisdiction was not obtained by the Claimant (the “Jurisdiction Application”).

Pursuant to the direction of the Court, the Defendants' Jurisdiction Application is to be considered first. If successful, the Contempt Application would not, of course, proceed. It is the Claimant's case, however, that the Court does have jurisdiction to determine the Contempt Application and that the Jurisdiction Application should be dismissed.

The Contempt Application is made in relation to what the Claimant says are the Defendants' deliberate and contumacious breaches of the Disclosure Order which was made ancillary to a worldwide freezing order (“WFO”) granted by His Honour Judge Pelling KC (sitting as a Judge of the High Court) on 13 January 2023. The Disclosure Order was made largely to enforce compliance with the standard form disclosure obligations in the WFO. It required the Defendants to disclose categories of information and documents relating to their assets, including nominee arrangements, the recipients of some US$97 million in dividends, and the identity of lenders to D1's corporate holding vehicle since the granting of the WFO.

The Claimant says that the Defendants have not complied with the Disclosure Order in any respect at all; nor have they ever purported to do so. To the contrary, on 13 May 2024 at 4.20 pm (20 minutes after the deadline for compliance had passed), the Defendants wrote (via their representatives in Ukraine) explaining to the Claimant that they would not be complying with the Disclosure Order. That letter enclosed a Draft Application to set aside both the WFO (again a prior application to discharge the WFO having been dismissed by Jacobs J in February 2024) and the Disclosure Order, or to suspend them pending an award in an underlying arbitration (the “Draft Application”). In the event, the Draft Application has never been served or fixed for hearing, and does not fall for determination at this hearing.

B. THE POSITION OF THE DEFENDANTS AT THIS TIME

The position of the Defendants at the present time is that they are formally litigants in person. Whilst the evidence before me in the Fourth Affidavit of Oliver Humphrey (“Humphrey 4”, filed in support of the Claimant's Contempt Application), and in the Fourth Witness Statement of D2 (“Naumenko 4” — filed in support of the Jurisdiction Application) is that they have had legal assistance, they no longer have English solicitors on the record. They are not represented before me today (nor have they appeared before me today). However, the details provided in their various Notices of Change are relevant to the issues that arise before me in relation to service and they are as follows:

(1) The Defendants were most recently represented by Hill Dickinson LLP (having originally been represented by Kobre & Kim). They were represented by leading and junior counsel at the hearing before Jacobs J in February 2024 when they applied, unsuccessfully, to discharge the WFO.

(2) Hill Dickinson purported to come off the record shortly thereafter, on 15 March 2024. However, their Notice of Change was non-compliant in failing to set out an address in the jurisdiction at which the Defendants could be served (see CPR 6.23(3) and PD 42, para 2.4). Instead it gave the address in Kyiv of Pavlenko Legal Group LLC (“Pavlenko”), a Ukrainian law firm.

(3) Following a series of letters between Hogan Lovells International LLP (“Hogan Lovells”) (representing the Claimant) and Hill Dickinson, an updated Notice of Change was filed on 15 April 2024. That Notice properly gave an address for service in the jurisdiction at the UK address of Fortior Law SA (“Fortior”), the Swiss law firm representing the Defendants in the underlying arbitration proceedings – along with the Defendants' personal email addresses.

(4) The Claimant issued the Contempt Application on 25 June 2024. It is apparent that the Defendants took legal advice in relation to the Contempt Application (and which they were therefore clearly aware of), because a matter of days thereafter on 1 July 2024, Fortior Law UK LLP (“Fortior UK”) wrote to the Court noting that it had been instructed to act for the Defendants albeit “… solely for the purposes of challenging the Court's jurisdiction in the committal proceedings and seeking to set aside service of the same.” Fortior UK then filed the Defendants' purported Acknowledgments of Service dated 9 July 2024 before a further Notice of Change was served on 11 July 2024, stating that Fortior UK had ceased to act for the Defendants, and again providing an address of Fortior in London (and the Defendants' personal email addresses) for service. That remains the position as at the date of today's hearing.

In terms of the evidence before the Court, at least until late yesterday, the Defendants had not served any written evidence dealing with the Contempt Application. On 22 August 2024, D1 sent an email to Hogan Lovells stating that “D2 will be submitting evidence to the Court.” It appears therefore that D1 was associating himself with the evidence which it was contemplated would be served by D2 in due course. That is consistent with previous evidence served by D2 with which D1 associated himself. No date was given as to when that evidence would be served and none was received until an eighty-page fifth statement of D2 (“Naumenko 5”), was filed yesterday, to which I will need to return in due course. The Claimant's solicitors had asked the Defendants whether they intended to give oral evidence at the hearing of the Contempt Application and offer themselves for cross-examination, but no response was received.

In an email on 22 August — that is the one in which D1 sent an email to Hogan Lovells stating D2 will be submitting evidence to the Court — D1 also stated that he was being admitted to hospital in Switzerland and would be unable to attend the hearing. He asked that Hogan Lovells “invite the Court to postpone the hearing for at least a month to ‘allow me an opportunity to respond substantively’”.

That email was not accompanied by any application to adjourn, any witness evidence, or any document substantiating D1's alleged hospital admission, the reasons for it, or its timing. Further, D1 did not explain (i) why he was only informing the Claimant of this one week before the hearing and, (ii) why he had not by this point responded substantively to the Contempt Application at all, despite the fact that it had been sent to the Defendants on 25 June 2024, almost 2 months earlier – in response to which the Defendants had in the meantime issued their Jurisdiction Application.

In correspondence, the Claimant has repeatedly told the Defendants that they could file their substantive evidence in response to the Contempt Application without prejudice to the Jurisdiction Application, but until Naumenko 5 yesterday they had not filed any evidence. I proceeded to facilitate the hearing on a hybrid basis so that the Defendants could, if they wished, attend by video link. I am satisfied that in advance of the hearing they were provided with details of the hearing to their email addresses and that they have also been provided with a Microsoft Teams link so as to be able to join the hearing.

Neither D1, nor D2 has attended by video link this morning.

The first substantive issue that arises for determination therefore is whether I should proceed in their absence in relation to either the Jurisdiction Application or the Contempt Application. The applicable principles in relation to those applications are different.

So far as the Jurisdiction Application is concerned, the applicable provision of the CPR is CPR23.11, which provides:

“(1) Where the applicant or any respondent fails to attend the hearing of an application, the Court may proceed in their absence.

(2) Where –

(a) the applicant or any respondent fails to attend the hearing of an application and

(b) the Court makes an order at that hearing the Court may, on an application or of its own initiative, re-list the application.”

The Jurisdiction Application is, of course, the application of the Defendants themselves, which they have issued and pursued. No reason, still less any good reason, has been given as to why D2 has not attended the hearing today. The most recent correspondence from D2 was on 29 August, by email at 15.40, in which he says: “Dear sirs, please see the...