Mr Rustem Magdeev v Mr Dimitry Tsvetkov

Hearing date: 7 May 2019 Draft judgment supplied to the parties: 10 June 2019

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 is an application, made in relation to proceedings in which a trial has been fixed for early next year, by the First Additional Party (‘Mr Gaynulin’) for all or part of the Additional Claim brought against him by the Defendant (‘Mr Tsvetkov’) to be struck out, alternatively for summary judgment to be given dismissing Mr Tsvetkov's Additional Claim against him.

The Claimant (‘Mr Magdeev’), the Second Additional Party (‘EK Diamonds’) and the Third Additional Party (‘EKLG’) have not taken part in the proceedings arising from this application.

Background

Mr Magdeev, Mr Tsvetkov and Mr Gaynulin are businessmen operating in multiple jurisdictions. In or around 2011, Mr Tsvetkov started a business trading in jewellery manufactured by Graff Diamonds Ltd (‘the Graff Business’). For the purpose of carrying out the Graff Business, in 2014, Mr Tsvetkov incorporated EK Diamonds in Dubai and EKLG in Cyprus.

Mr Magdeev has brought proceedings against Mr Tsvetkov (‘the Primary Claim’) on the basis of two written agreements. The first of those agreements (‘the First Agreement’) was concluded in Cyprus on 9 October 2014 between Mr Magdeev and EK Diamonds with Mr Tsvetkov acting as the guarantor of EK Diamonds' obligations. It provides that:

“ Within 3 (Three) working days from the date the Present Agreement is signed by all Parties the Investor [Mr Magdeev] shall initiate a bank transfer from his personal bank account in the amount of 10,000,000.00 (Ten million) US Dollars … to the following bank account of the Trading Company [EK Diamonds] … .”

The First Agreement goes on to state that this amount is provided to EK Diamonds for a period of three calendar years, without interest, and exclusively for the purpose of giving a deposit to Graff Diamonds Ltd. As regards Mr Tsvetkov's liability as the guarantor of EK Diamonds' obligations the agreement provides that:

“ The Guarantor [Mr Tsvetkov] shall be fully liable in the (sic) favor of the Investor [Mr Magdeev] for the responsibilities of the Trading Company [EK Diamonds] as per the terms and conditions of the present Agreement”.

Less than a year after the First Agreement was concluded, on 21 August 2015, Mr Magdeev and Mr Tsvetkov concluded a second agreement (‘the Second Agreement’). On its face, the Second Agreement concerns a loan of €5 million from Mr Magdeev to Mr Tsvetkov. It provides that:

“ In accordance with the terms and conditions of the present Agreement the Lender [Mr Magdeev] shall provide the borrower [Mr Tsvetkov] with the loan … in the total amount of €5,000,000.00 (Five Million Euro ONLY) by transferring the said funds to the following bank account of the Borrower [Mr Tsvetkov] … .”

According to the terms of the Second Agreement, this sum was to be returned by Mr Tsvetkov in two tranches. The first tranche (amounting to €2,545,000 including interest) was due on or before 31 October 2015 and the second tranche (US$2,965,000 including interest) was due on or before 28 February 2016. As described in more detail below, Mr Tsvetkov alleges that the Second Agreement formed part of a wider transaction and that it cannot be understood solely by reference to the written agreement.

The First Agreement is expressed to be subject to “ UK precedent law” whereas the Second Agreement does not contain an express choice of law provision. For the purposes of the present application, the parties have invited me to proceed on the basis that both agreements are governed by English law, and I will do so.

In the Primary Claim, Mr Magdeev alleges that Mr Tsvetkov failed to repay the sums due under the First Agreement (Mr Tsvetkov's obligation to do so having accrued upon EK Diamonds' failure to repay the loan) and under the Second Agreement. Mr Tsvetkov asserts a number of defences in response.

In response to Mr Magdeev's claim based on the First Agreement, Mr Tsvetkov alleges that:

(1) Mr Magdeev received several payments that cumulatively discharged the loan under the First Agreement;

(2) an oral agreement concluded between Mr Magdeev, Mr Tsvetkov and Mr Gaynulin in Moscow on 7–8 December 2015 (‘the December 2015 Oral Agreement’) had the effect of terminating the First Agreement;

(3) Mr Magdeev represented to Mr Tsvetkov in December 2015 that he would not enforce the payment obligations under the First Agreement and, consequently, he is estopped from doing so; and

(4) Mr Magdeev's resignation from the board of EK Diamonds in early 2016 and the termination of his employment contract with EK Diamonds had the effect of discharging Mr Tsvetkov's guarantee under the First Agreement.

In response to Mr Magdeev's claim based on the Second Agreement, Mr Tsvetkov alleges that:

(1) it was an implied term of the Second Agreement, in the form of a condition precedent to Mr Tsvetkov's liability, that Mr Magdeev would not do anything to prevent or obstruct the sale of a certain diamond by EKLG;

(2) even if it did not amount to a condition precedent, there was an implied term to this effect and the non-repayment of the loan under the Second Agreement was caused by Mr Magdeev's breach of that implied term;

(3) the December 2015 Oral Agreement had the effect of terminating the Second Agreement; and

(4) Mr Magdeev represented to Mr Tsvetkov that he would not enforce the payment obligations under the Second Agreement and he is, consequently, estopped from doing so.

Mr Tsvetkov also has a counterclaim against Mr Magdeev and an Additional Claim against Mr Gaynulin (‘the Conspiracy Claim’). In broad terms, the Conspiracy Claim alleges that, from the second half of 2017 onwards, Mr Magdeev and Mr Gaynulin conspired to injure Mr Tsvetkov by depriving the Graff Business of its assets. The Conspiracy Claim is formulated on the basis of the tort of unlawful means conspiracy, alternatively on the basis that the conspiracy had the predominant purpose of injuring Mr Tsvetkov.

I should explain that the above sets out the position as it appears at present on the pleadings. That must be the focus for present purposes, not least because it is the basis on which the application has been made and was argued at the hearing which took place on 7 May 2019. However, after circulation of the draft judgment and just two days before formal hand down, the Court was informed that Mr Tsvetkov has located a document which purports to show that Mr Magdeev assigned the Second Agreement to his son, Mr Ernest Magdeev, on 16 November 2015. This document was apparently located by Mr Tsvetkov on 19 May 2019 and provided to his solicitors the next day. It was not, however, provided to the Court or to Mr Gaynulin (or, indeed, to Mr Magdeev) until a month after this, on 18 June 2019, accompanied by the suggestion that this judgment should be altered to take account of an (as yet necessarily) unpleaded defence on Mr Tsvetkov's part that the Primary Claim is not a claim which Mr Magdeev has any entitlement to assert because he no longer has any rights in respect of the Second Agreement. I am clear that this would not only be inappropriate, given that the purpose of circulating a judgment in draft form is merely to enable any typographical or similar errors to be identified and not to enable a party to seek to re-argue the case (see, e.g., R (Mohamed) v Secretary of State for Foreign and Commonwealth Affairs[2011] QB 218 per Lord Judge at page 315C-D), but that it is also unnecessary in circumstances where, as matters stand, that new potential defence has not yet been pleaded. The application and so this judgment are concerned with the issues as currently identified (including, as I shall explain, certain proposed amendments previously indicated by Mr Tsvetkov), not an issue which has emerged so very belatedly — after the hearing and after production of the draft judgment.

In order to provide context to the parties' submissions on this application, it is necessary to describe the particulars of Mr Tsvetkov's Conspiracy Claim in a little more detail. In substance, Mr Tsvetkov alleges that Mr Magdeev induced Mr Gaynulin to act in concert with him by threatening him “ with reprisals”. As a result, at a meeting of the “ respective organised-crime patrons of Mr Magdeev and Mr Gaynulin” in July 2017, it is alleged, Mr Magdeev and Mr Gaynulin agreed to cooperate with each other in order to extort money from Mr Tsvetkov.

The conspiracy is alleged to have had the effect of depleting the assets of EK Diamonds and EKLG.

In relation to the assets of EK Diamonds, Mr Tsvetkov alleges that Mr Gaynulin had effective control over EK Diamonds' bank account. In May 2017 (and so before the alleged conspiracy was hatched), it is alleged that Mr Gaynulin procured the withdrawal of almost all the funds from EK Diamonds' account leaving it with only a token balance. Subsequently, following the July 2017 meeting described above, Mr Gaynulin is alleged to have acted in concert with Mr Magdeev in...