New Media Distribution Company Sezc Ltd (formerly known as New Media Distribution Company Ltd) v Konstantin Grigoryevich Kagalovsky
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Davis-White |
| Judgment Date | 26 September 2017 |
| Neutral Citation | [2017] EWHC 2334 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC-2015-004673 |
| Date | 26 September 2017 |
[2017] EWHC 2334 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Rolls Building
7, Rolls Buildings, Fetter Lane,
London, EC4A 1NL
His Honour Judge Davis-White QC
(SITTING AS A JUDGE OF THE CHANCERY DIVISION)
Case No: HC-2015-004673
Ms Barbara Dohmann QC and Mr Ajay Ratan (instructed by GSC Solicitors LLP) for the Claimant
Mr James Ramsden QC, Mr Adrian BriggsQC(Hon)andMr James Potts (instructed by Bird & Bird LLP) for the Defendant
Hearing dates: 25, 26 May 2017
His Honour Judge Davis-White QC:
Introduction
I have before me a preliminary issue as to whether the defendant is estopped from making various allegations in his defence or whether the same amount to an abuse of process (and should accordingly be struck out). A direction for the hearing of a preliminary issue was sought by application notice dated 28 November 2016. By consent order dated 5 December 2016 the determination of the preliminary issue was directed to be heard.
I also have before me an application by the defendant to amend his defence, dated 15 May 2017. In large part the proposed amendments are not opposed. They largely concede the case on issue estoppel and effectively abandon large parts of the defendant's case. However, there is one aspect in which they are opposed. As regards that, the main submission is that the proposed amendments relating to that aspect should not be permitted because they too are matters that the defendant is estopped from asserting or which would amount to an abuse of the court's process were they to proceed and/or which, in light of matters upon which the defendant is estopped, are matters that there is no real prospect of him establishing at trial.
The basis of the asserted estoppel/abuse of process is that relevant issues are said to have already been determined by, and as a result of, proceedings in New York. Those proceedings took place, at first instance, in the Commercial Division of the Supreme Court of the State of New York, County of New York. There were in fact two sets of proceedings. The presiding Judge was, in each case, the Hon. Charles Edward Ramos, JSC (" Justice Ramos"). By order of Justice Ramos the two sets of proceedings were consolidated for discovery and trial (the " NY Proceedings").
Justice Ramos set out his conclusions of fact and of law in a decision in writing dated 10 August 2012. For convenience, I shall refer to these conclusions and the reasoning contained therein as the " Ramos Judgment" or " RJ". Technically the decision in writing was given effect to by two judgments (or as they might be described in this jurisdiction, orders) in the NY Proceedings. One judgment was given in each set of proceedings. Each judgment was dated 29 August 2012.
I also have the benefit of a judgment dated 6 September 2016 in these proceedings of Mr Clive Freedman QC sitting as a Deputy Judge of the Chancery Division, [2016] EWHC 2221 (Ch) (the " Freedman Judgment" or " FJ")). I have drawn on those judgments as indicated below in setting out the facts and history of the disputes which has led to the proceedings and the applications before me. So far as the RJ is concerned, it is also necessary to do this to identify what matters have been determined in those proceedings.
Before me, NMDC was represented by Ms Barbara Dohmann QC and Mr Ajay Ratan. Mr Kagalovsky was represented by Mr James Ramsden QC, Mr Adrian Briggs QC (Hon) and Mr James Potts. I am grateful to Counsel for their assistance in this case.
The underlying disputes
The underlying disputes in the relevant proceedings are really between the defendant, Mr Kagalovsky and a Mr Gusinski.
The following is taken from the RJ (additions by me are in square brackets). In this judgment I gratefully adopt the definitions used by Justice Ramos below, save that in the extract I have replaced two of his definitions. First, I have replaced his definition of Iota Ventures LLP as the "Partnership" with the definition " IVL". Secondly, I have replaced his definition of New Media Holding Company LLC as "New Media" with the definition " NMHC". This is to bring the definitions into line with those used in the English proceedings and in the hearing before me.
"[1] Vladimir Gusinski and Konstantin Kagalovsky, two former friends, each a remarkable and successful businessman, agreed to form a partnership to create and operate a television network in Ukraine, to be known as the TVi Channel.
[2] The plaintiff New Media Holding Company LLC [incorporated in Delaware] (" NMHC"), is Mr Gusinski's nominee to a partnership, Iota Ventures LLP [a Delaware limited liability partnership operating in Jersey] (" IVL"), that in turn, owned TVi. NMHC filed suit alleging that Mr Kagalovsky and his nominee to IVL, Iota LP [a Jersey limited partnership] (" Iota") breached contractual and fiduciary obligations by transferring, without Mr Gusinski's and NMHC's knowledge or consent, ownership of TVi and its trademarks from IVL to entities owned and controlled by Mr Kagalovsky…. NMHC originally sought the return of TVi and its trademarks, but following this Court's decision on summary judgement to strike that requested relief from the Complaint, the plaintiff is only pursuing monetary damages.
[3] Separately, New Media Distribution Company Limited (" NMDC"), which licensed programming content to IVL, filed suit alleging that IVL owed $3,681,870 in unpaid licence fees due under licence agreements dated January 1, January 14, and April 10, 2009 (the " License Agreements"). NMDC seeks payment of those fees, plus interest, in damages.
[4] In response, Mr Kagalovsky, Iota, and IVL filed counterclaims alleging that Mr Gusinski, NMHC, and NMDC mismanaged TVi in breach of fiduciary and contractual obligations, and fraudulently induced the formation of IVL and the execution of the Licence Agreements. Each seeks rescission of the agreements that they are a party to, and monetary damages.
[5] These actions were consolidated for discovery and for trial. Trial took place over 24 days from December 7, 2011 to April 26, 2012. 13 witnesses testified, including Mr Gusinski and Mr Kagalovsky. The parties also submitted designated depositions transcripts for 10 individuals, moved over 250 exhibits into evidence, and supplied experts reports.
[6] Mr Gusinski currently owns 85 per cent of NMDC, through NMHC….
[7] NMDC is a producer of Russian language media and owns a large Russian language media library.
[8] NMDC has another investor: in August 2008, AIG Investments (" AIG") acquired 13.5 per cent of NMDC through AIG GEM Viaduct Media Holdings, L.P……
[9] Mr Gusinski is a Russian national currently residing in Israel. He serves as NMDC's Chairman and CEO, and as NMHC's Manager.
[10] Mr Kagalovsky is a Russian and British national currently residing in London, United Kingdom since 2004.
…….
[14] Mr Kagalovsky owns and controls defendants Iota, Aspida Ventures Ltd (" Aspida"), and Seragill Holdings Limited (" Seragill"). He does so through various trusts that he settled and of which he is a beneficiary.
….
[16] Mr Kagalovsky has complete and unfettered control over Iota, Aspida, and Seragill, through the trusts…..
[20] In early 2007, Mr Gusinski decided to create a television channel in Ukraine. He believed that the Ukrainian television market was promising.
[21] Mr Gusinski shared his plans for a Ukrainian television channel with Mr Kagalovsky, whom Mr Gusinski had known socially for years. Mr Kagalovsky expressed an interest and a desire to become involved. Over the next several months, the two discussed the project.
….
[23] Their meetings culminated in the formation of IVL and the execution of a Partnership Agreement on April 14, 2008. The purpose of this Partnership and the Partnership Agreement was to develop, own, and operate a Ukrainian television network, later named TVi. Mr Gusinski and Mr Kagalovsky would own and control TVi equally.
[24] The partners understood that it would take several years after TVi began broadcasting before the network would break even financially.
…..
[29] On April 14, 2008, NMHC, Mr Gusinski's nominee, acquired a 50% interest in IVL. Mr Kagalovsky's initial nominee to IVL, Petal Capital Holdings Limited [was later replaced by Mr Kagalovsky] with Iota LP, his current nominee to IVL. As a result, through the equal ownership interests in IVL of their respective nominees NMHC (Mr Gusinski), and Iota (Mr Kagalovsky), Mr Kagalovsky and Mr Gusinski owned and controlled the entirety of TVi. [TVi was in fact the name under which a Ukrainian entity operated. That entity was Teleradiocompany TeleRadioSvit LLC (" TRS")].
…..
[31] On April 14, 2008, contemporaneous with NMHC's acquisition of a 50% interest in IVL, Mr Kagalovsky and Mr Gusinski entered into an Amended and Restated Partnership Agreement of Iota Ventures LLP …..through their respective nominees.
…..
[65] Mr Kagalovsky understood from the start that IVL would be licensing content from NMDC.
[66] Mr Gusinski and Mr Kagalovsky agreed that the availability of rights to substantial content owned and produced by NMDC would provide a major competitive advantage to a new channel in the Ukrainian market……
[67] In 2009, NMDC and IVL executed the Licence Agreements. These agreements were dated January 1, January 14, and April 10, 2009, respectively.
….
[73] By the spring of 2009, Mr Kagalovsky and Mr Gusinski began to have serious disagreements over TVi's operations. It became apparent that they needed a resolution mechanism in the IVL Agreement to resolve their disputes, but all attempts failed.
[74] In the summer of 2009, Mr Kagalovsky invited Mr Knyazhitsky [the CEO of TVi, at least in name, but whose...
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New Media Distribution Company Sezc Ltd (formerly known as New Media Distribution Company Ltd) v Konstantin Grigoryevich Kagalovsky (acting by his next friend, Natasha Kagalovsky)
...the New York Judgment, thus rendering the making of such allegations an abuse of process. At this hearing (Neutral Citation Number [2017] EWHC 2334 (Ch)), His Honour Judge Davis-White concluded that there were a number of findings made by Justice Ramos which Mr Kagalovsky was prevented fro......