North Shore Ventures Ltd v Anstead Holdings, Inc. and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Floyd,MR JUSTICE NEWEY,Mr Justice Newey,THE HON MR JUSTICE FLOYD |
| Judgment Date | 13 April 2011 |
| Neutral Citation | [2010] EWHC 1485 (Ch),[2011] EWHC 910 (Ch),[2011] EWHC 178 (Ch) |
| Docket Number | Case No: HC08CO2375,Case No: HC08C02375 |
| Court | Chancery Division |
| Date | 13 April 2011 |
[2010] EWHC 1485 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Before: MR JUSTICE NEWEY
Case No: HC08C02375
Mr Francis Tregear QC and Mr Paul Sinclair (instructed by Addleshaw Goddard) for the Claimant
Mr Michael Swainston QC and Mr John Machell (instructed by Cooke, Young & Keidan) for the Second and Third Defendants
Hearing dates: 19, 22–26, 29 and 30 March and 14–16 and 19–20 April 2010
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.
Mr Justice Newey:
This case concerns a $50 million loan made by the Claimant (“North Shore”), a company associated with Mr Boris Berezovsky, the well-known Russian businessman and politician, to the First Defendant (“Anstead”), a company owned by the Second and Third Defendants (respectively “Mr Fomichev” and “Mr Peganov”). The loan was made pursuant to a written agreement dated 14 March 2003 (“the Loan Agreement”), and Mr Fomichev and Mr Peganov entered into a written guarantee of the same date (“the Guarantee”) in respect of Anstead's liabilities to North Shore.
Although amounts somewhat in excess of the original $50 million have been repaid, it is North Shore's case that large sums remain outstanding under the Loan Agreement. The total now owed is put at some $47 million.
The disputes between the parties relate to a considerable extent to money which was frozen by the Swiss authorities for upwards of four years. A sizeable proportion of the $50 million lent by North Shore (for most of the period, $18 million) was the subject of a sequestration order made in Switzerland in September 2003, and the money was not all finally released until the end of 2007. The sequestration order was made because of perceived links with Mr Berezovsky, who, at the time, was the subject of investigation in Switzerland in connection with suspected money-laundering offences. The Swiss investigations stemmed, in particular, from dealings relating to Aeroflot, the Russian airline.
The parties
North Shore, the Claimant, was incorporated in the British Virgin Islands on 2 January 2003. FG Services Limited, a Manx company, was appointed as North Shore's first director, and North Shore's issued shares were initially held by another Isle of Man company, FG Management Limited, as nominee for a daughter of Mr Berezovsky, Mrs Ekaterina Berezovskaya. The director of North Shore is now Mainstay Services Limited, and the shares have since 2006 been held by another Mainstay company.
Anstead, the First Defendant, was incorporated in the British Virgin Islands in 2000. A Mrs Beverly Hunt and a Mrs Darlene Bayne were appointed as the company's directors, but it was Mr Fomichev and Mr Peganov who were effectively responsible for decision-making.
Mr Fomichev, the Second Defendant, was born in 1969 and so is now aged 40. His father, Mr Berezovsky said, is (or was) a general in the Russian Federal Security Service (or FSB). After graduating from Moscow State University in 1993, Mr Fomichev worked for a time for Guta-Bank in Moscow. He first worked for Mr Berezovsky and his business partner, Mr Arkadi (or “Badri”) Patarkatsishvili at Consolidated (or, in the original Russian, “Objedinenny”) Bank, which he joined in 1995 or 199He was successively Deputy Chairman and Chairman of the Executive Board, and also became Chief Executive Officer, before leaving in about August 2000.
I was told that Mr Berezovsky and Mr Patarkatsishvili would use Consolidated Bank to invest in projects of theirs. Other companies associated with Mr Berezovsky were shareholders in Consolidated Bank. These included the LogoVAZ, Andava and Forus groups of companies. Members of the LogoVAZ group of companies also had accounts with Consolidated Bank, as did Aeroflot.
Mr Fomichev continued to work for Mr Berezovsky and Mr Patarkatsishvili after his departure from Consolidated Bank. The witnesses diverged to an extent in their descriptions of Mr Fomichev's role. Mr Fomichev himself said that he assisted Mr Berezovsky and Mr Patarkatsishvili in 2001 with the sale of their holdings in Sibneft, the Russian oil company. He said, too, that he had dealt with Mr Berezovsky's properties in France for a period: “[f]rom 2001 until 2002, for one year, when Mrs Nosova was not in England and she was waiting for her visa to be done to enter UK”. His position is encapsulated in the following passage:
“I knew the projects that they were delegating to me to do, and about these projects I knew everything. I was not aware about some other businesses ….”
However, Mr Fomichev accepted that he was “very close” to Mr Berezovsky and Mr Patarkatsishvili, and he referred to having a desk in Mr Berezovsky's offices in London. For his part, Mr Berezovsky described Mr Fomichev as having been his right-hand man for a number of years. He said that, in the period after he left Russia in 2000, Mr Fomichev was for a period the “only person who know everything and who managed my money, my business and so” (Mr Patarkatsishvili being at the time in Georgia and unable to travel to London and “a big group of [his] people stay[ing] in Russia”).
Mr Berezovsky said that Mr Fomichev's role diminished only when Mrs Natalia Nosova (who he termed his “right hand woman”) moved to London in about September 2002. Mr Berezovsky said that Mr Fomichev and Mrs Nosova worked together for “maybe half a year, maybe a year”, following which Mr Fomichev gave up the room he had until then had in Mr Berezovsky's London offices. However, “it never happened,” Mr Berezovsky said, “that Ruslan Fomichev just one day jumped from my office to his personal office”; Mr Fomichev, Mr Berezovsky said, “continued to be informed and participate in discussion almost every day, even after he left the physical space”.
Despite the events which have given rise to the present litigation, Mr Fomichev continued to undertake work for Mr Berezovsky up to 2008. Mr Berezovsky said that Mr Fomichev worked for him and Mr Patarkatsishvili in one capacity or another until 2008. Mrs Nosova, too, spoke of Mr Fomichev working for Mr Berezovsky and Mr Patarkatsishvili in one capacity or another until 2008. Mr Fomichev himself said that he had a very good relationship with Mr Berezovsky until February 2008.
I shall return below (see paragraphs 148–175) to Mr Fomichev's role in, and knowledge of, Mr Berezovsky's affairs.
In its original form, the Defence and Counterclaim referred to Mr Fomichev's English as poor. However, a curriculum vitae for Mr Fomichev describes him as “a native Russian speaker with fluent written and spoken English”. Although Mr Fomichev said that he did not remember who had drawn up this document, it will surely have been prepared either by Mr Fomichev or at least with his endorsement; he accepted in cross-examination that he was the “beneficial owner” of the information. Similarly, Mrs Berezovskaya said that Mr Fomichev's English “is and was perfectly good”, and in October 2003 Mr Fomichev was interviewed in English in Switzerland (see paragraph 71 below). Whilst Mr Fomichev's English may well have improved since 2003, it seems to me that Mr Fomichev's spoken and written English must already have been good by 2003, albeit that, as Mr Fomichev said in cross-examination, he will doubtless have been less familiar with “legal English”.
Mr Fomichev settled in London in April 2002.
Mr Peganov, the Third Defendant, was born in 1975 and so is slightly younger than Mr Fomichev.
By the time he came to give evidence, Mr Peganov spoke English very well indeed. Mr Peganov said, and I accept, that his English was rather less good when the loan was made in 2003.
Mr Fomichev and Mr Peganov first met in 1997, and they went into business together a year or so later, becoming involved in trading oil and meat products and in real estate development. Anstead was set up in 2000 to pursue the trading side of the business.
Mr Peganov reckoned that the businesses had a turnover of $120–150 million in 2002. The business had offices in Moscow and Ufa, a city in the southern Ural mountains, at the time the loan was made. Mr Peganov's role was akin to that of a managing director, and he dealt with operational issues in Russia. Mr Fomichev handled matters of financing and liaison with Western counterparties.
Mr Fomichev and Mr Peganov are close friends.
The Claimant's witnesses
Mr Boris Berezovsky's first substantial business venture was LogoVAZ, which ran a car dealership business. He was elected as a member of the Russian Duma in December 1999, but he resigned from the Duma in mid-2000 because, he said, he “didn't want to be puppet by Kremlin”. In October 2001, Mr Berezovsky left Russia for the south of France, and in October of the following year he moved to London. He has lived in England since then, and he has been granted political asylum.
Mr Berezovsky said that his priority “after the first billion [became] politics”. Mr Fomichev said that when he first met Mr Berezovsky the latter told him that he was “doing politics” and that all business questions should be referred to Mr Patarkatsishvili. Mr Peganov commented that in the late 1990s Mr Berezovsky was “somewhere not on the ground” but “in space”, reflecting the obvious reality that Mr Berezovsky's life was outside ordinary experience.
Mr Berezovsky maintained that the allegations which have been made against him by the Russian authorities were politically motivated. In similar vein, he said:
“If I have secrets, it's just because I'm...
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