North Shore Ventures Ltd v Anstead Holdings Inc. and Others

JurisdictionEngland & Wales
JudgeLord Justice Toulson
Judgment Date18 January 2012
Neutral Citation[2012] EWCA Civ 11,[2010] EWCA Civ 1634,[2011] EWCA Civ 230
Docket NumberCase No: A3/2010/2540,Case No: A3/2010/1673(A),Case No: A3/2010/1673/A
CourtCourt of Appeal (Civil Division)
Date18 January 2012
North Shore Ventures Limited
(1) Anstead Holdings Inc
(2) Ruslan Fomichev
(3) Vasily Peganov

[2010] EWCA Civ 1634

Mr Justice Newey

Before: Lord Justice Patten


Lady Justice Black

Case No: A3/2010/1673/A



Mr Francis Tregear QC and Mr Paul Sinclair (instructed by Cooke Young and Keidan LLP) appeared on behalf of the Appellant.

Mr John Machell (instructed by Addleshaw Goddard LLP) appeared on behalf of the Respondents.

Lord Justice Patten

Lord Justice Patten:


This is an application by North Shore Ventures Limited, who were the claimants in these proceedings and are the respondents to the forthcoming appeal by the second and third defendants, against the judgment of Newey J for an order lifting a stay of execution which was granted until after the effective disposal of the appeal.


The stay was granted by Mummery LJ as part of his order granting permission to appeal after a consideration of the papers, and it was applied for in the usual way in the appellant's notice on the grounds that they did not have, or do not have, sufficient assets to pay the amounts due under the judgment, those sums being some US $52,508,000 and a further £900,000 on account of the costs of the trial.


The claim by North Shore is for the balance of monies due under a loan that was made to the first defendant, Anstead Holdings Inc, a company controlled by the second and third defendants, Mr Fomichev and Mr Peganov. Newey J gave judgment for the claimants in relation to the sums claimed in the amounts that I have mentioned. At the same time he continued a freezing order which had been granted earlier on 25 March 2009 by Blackburne J in the amount of the judgment. The judge refused permission to appeal against his order but the second and third defendants successfully, as I have indicated, obtained permission from the Court of Appeal on a number of grounds. Firstly, they say that the judge was wrong to reject their defence that the guarantee was voidable for non-disclosure; secondly, they contend that the judge was wrong to find that an agreement made in November 2004 to vary the loan agreement was not contractually binding as it was unsupported by any consideration. Had that agreement been enforceable it would have reduced the judgment from some US $52 million to about $32 million. I should mention that the second and third defendants are guarantors of the loan.


The second and third defendants sought and obtained a stay of execution. Mummery LJ granted that order, simply taking at face value the statement contained in the appellant's notice, namely that they were unable to meet the judgment debt and that execution was would therefore stifle the appeal. The claimant in making this application disputes the basis on which the stay was granted and, in short, maintains that the defendants are either able themselves, perhaps through assets currently held in trust but otherwise with the assistance of members of their families, to meet the amount of the judgment, and, putting their application at its highest, they seek an order not merely that we should lift the stay of execution but that we should also make the payment of the judgment debt and the interim costs order, conditions of the defendants being entitled to proceed with the appeal.


As an alternative to that, they ask us simply to lift the stay and enable them to take whatever steps are available to them to levy execution against the defendants' assets, or—and I think this point really developed during argument—to grant some form of limited stay which would leave them free at least to pursue certain of the defendants' assets.


They also seek, as a condition of the defendants being entitled to prosecute the appeal, the payment of the sum of £10,200 that was ordered by Floyd J to be paid in relation to the costs of an application on 7 October last plus security for costs of the appeal. So far as the last matter is concerned, there is really no dispute between the parties that there ought to be some form of security for costs; the conditions specified in the rules are satisfied and the only issue is that of quantum. I can say at the outset that I have formed the view that it is appropriate to order security for the costs of the appeal in the sum of £100,000, and to make that order on the basis that the evidence before the court, whatever may be the position in relation to the defendants' own assets, is that members of their family and other associates have funded their costs thus far in sums which make it impossible to contend that they would be unable to provide security in the amounts that I have indicated.


Subject to hearing submissions, I would order security for costs in the sum £100,000. It will be on the usual terms that the appeal is stayed until payment and we will hear counsel in due course as to how long the defendants should have to raise the money.


That leaves the more difficult matter of whether we should stay the execution of the judgment and, if so, on what terms.


The principles on which the discretion of this court on a reconsideration of the issue of a stay should proceed are not, I think, in dispute. It is common ground that the grant of permission to appeal does not carry with it an automatic stay of execution and that the court in deciding whether or not to stay execution of the judgment pending the outcome of an appeal, or conversely in deciding whether or not to lift a stay that has been granted on a consideration of the papers as here, has to consider which of the two possible orders—that is to say, either the grant of a stay of execution or its refusal—would cause the least injustice to the parties affected by the order. In most cases (and this is no different) the critical issues are likely to be whether the immediate execution of the judgment would stifle the prosecution of the appeal or whether the refusal of a stay of execution would make it more difficult for the successful claimant to enforce his judgment were the appeal to fail.


So against that background I proceed to consider those two issues. The first is the question of whether the immediate execution of the judgment, and in particular the payment of the judgment debt and the interim costs as a condition of prosecuting the appeal would stifle the appeal.


This question on the evidence before the court raises two discrete issues. The first is whether the defendants are able to pay, whether themselves or with the assistance of others, and the second is whether there is any impediment in them so doing as a result of an order which is said to have been made in Russia on 8 November.


In order to understand how the second of those two issues comes to bear upon our decision it is necessary, very briefly, to refer to one or two developments which have occurred since Newey J gave judgment in the action. He handed down his judgment on 21 June 2010 in the sums that I have indicated. On 25 June he made a further order that the claimant, North Shore, should be at liberty to cross-examine the second and third defendants in relation to their affidavits of 15 April relating to their assets, and in relation indeed to any other information necessary in order to enforce the judgment. A hearing for the purposes of that cross-examination was fixed for 20 July and took place on that date. Mr Fomichev attended and was cross-examined, but Mr Peganov was unable to attend due to visa problems. The additional complication was that prior to the hearing on 20 July an injunction had been obtained in Nevis (which is the country in which various offshore trusts in which assets originally belonging to the defendants have been placed) preventing the defendants from answering certain questions in relation to the trust assets. The cross-examination of Mr Fomichev was therefore limited by the effect of that order, but it did nonetheless result in confirmation by him that the value of the assets originally placed into what was described as the Jirehouse Resettlement Foundation back in March 2008 was in the region of $100 million. There is certainly no evidence one way or another to indicate that the value of the trust's assets today is significantly different.


The relevance of the trust and the trust assets is that the Jirehouse Resettlement Foundation does look to have been the recipient of very significant assets belonging to the second and third defendants. The totality of the value of those assets is not available to the court, but, as I have already indicated, Mr Fomichev himself has placed a value of them at least as of March 2008 in the sum of $100 million.


However, the complication about those assets, which I will come to in slightly more detail in a moment, is that, in their witness statements in opposition to this application, both defendants say that the trust assets put into Jirehouse were subsequently transferred to a Peganov family settlement and a Fomichev family settlement and that neither of the defendants is the settlor in relation to those two settlements. What is more, whilst they were originally discretionary beneficiaries in relation to those settlements, that position has now changed and at the beginning of September this year the trustees exercised a power under the relevant settlements removing the defendants as beneficiaries. We do not have a copy of the relevant trust instruments; the defendants say they do not have copies; they are not settlors in respect of them, and the trustees are unwilling to disclose those documents. The result is that neither we...

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