Oleg Rostislavovich Kolyada v Ilya Sergeevich Yurov
| Jurisdiction | England & Wales |
| Judge | Mr S Rainey |
| Judgment Date | 01 July 2014 |
| Neutral Citation | [2014] EWHC 2575 (Comm) |
| Date | 01 July 2014 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Claim No: 2012 Folio 1372 |
[2014] EWHC 2575 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Rolls Building,
110 Fetter Lane,
London EC4 1NL
Mr S Rainey QC
(Sitting as a Judge of the High Court)
Claim No: 2012 Folio 1372
Mr J Wardell QC (instructed by DWF LLP) appeared on behalf of the Claimant.
Mr S Elliot (instructed by Mishcon De Reya) appeared on behalf of the Defendant.
Approved Judgment
Tuesday, 1 July 2014
THE JUDGE:
This is an application for security for costs made by the defendant, Mr Ilya Yurov, against the claimant, Mr Oleg Kolyada, The matter was previously to be heard on 6 June 2014, but was adjourned in circumstances of some confusion, where at least both parties had given the very clear impression to the court and the Registry that the matter was stood out by consent. However that is, it comes on today for hearing. The defendant's application was brought under CPR 25.13(2)(g), which provides that the court may order for security for costs if, in addition to it being satisfied, having regard to all the circumstances of the case, that it is just to order security, "the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him".
The circumstances in which the defendant's application is made can be briefly summarised, and it is necessary to set out in a little bit of detail the changes in the evidence that led to the evidential position as it stands today.
The application for security for costs was issued as long ago as 26 February 2014. As originally issued, the draft order sought further security in the sum of £300,755, being security up to the stage of the witness evidence. Security had already been provided by Mr Kolyada voluntarily in stages in a sum exceeding £300,000. However, in January 2014, in circumstances to which I will come, the claimant declined to provide any further security. The ground of opposition in January 2014 to the provision of further security was that the claimant had now changed residence to Latvia and, therefore, there was no proper basis for security for costs on the ground of residence of the Claimant. That objections has not subsequently been maintained.
As at that time, the position deposed to by Mr Libson of Mishcon de Reya for the defendant was effectively that, despite enquiries which had been made of the claimant, Mr Kolyada had given no details of his assets, although he did not contest that he had substantial assets and was wealthy and that he was able to pay the costs of the proceedings, should the proceedings be decided against him. In his second witness statement, Mr Libson, on 26 February 2014, accordingly relied on the following matters, which I summarise. Firstly, Mr Kolyada's assets in Russia had been frozen in 2006 by Russian investigatory authorities in respect of with the prosecution of a claim against Mr Kolyada in connection with an alleged fraud on Tomskneft. Secondly, judgment had been entered against Mr Kolyada by a Russian court on 15 March 2010 in the sum of some 5.93 billion roubles (approximately £133 million or US$200 million). Thirdly, the Russian authorities had not succeeded in attaching, seizing or enforcing against a sum of US$40 million, which had been paid by Mr Yurov, the defendant, to Mrs Kolyada, the wife of the claimant, either on the instructions of Mr Kolyada, or at least for Mr Kolyada's benefit and account. Fourthly, Mr Kolyada declined to answer any question as to the fate or disposal of the US£40 million paid to Mrs Kolyada, or as to any assets held outside Russia, or as to the source of funds being used by him to finance the litigation. Those requests were made by a letter dated 5 February 2014 and 17 February 2014, and no response was given to them in answer at that stage. The defendant relied upon the very steps taken in 2007 in relation to the payment of the US$40 million sum to Mr Kolyada's wife outside Russia and Latvia and in tranches, being to prevent those funds from being attached or enforced against for the purposes of the Tomskneft judgment, as putting it within the CPR gateway to which I have referred.
What was also relied upon by the defendant, which is not without some significance in the light of the evidence as it has panned out, was that Mr Kolyada, apart from his failure to make any answer to the request for information as to the fate and whereabouts of the US$40 million and as to his other assets, had actually advanced a defence to Mr Yurov's counterclaim in the action for the repayment of the US$40 million on the grounds of a change of position. In relation to that came, in paragraph 76 of his reply and defence to counterclaim, Mr Kolyada averred that it was not possible to repay the $40 million at all " inter alia as a result of steps taken by the Russian authorities in relation to his assets", although no details of the Russian authorities having actually taken the monies were given. Particulars of that case which had been sought by the defendant were ordered by this court by Leggatt J, on 3 February 2014, but, at that time, had not been provided nor were forthcoming.
Essentially, therefore, as originally mounted, this application was on the basis, first, that Mr Kolyada had had, or had had the benefit of, US$40 million at least, in relation to which he had taken steps to render it difficult to enforce orders against him in respect of those monies by having transferred them away to his wife in Latvia. Secondly, he was unwilling to give any particularisation of what had, since the transfer in 2007, happened to those monies and indeed other assets of his outside Russia. Following the order of Leggatt J on 3 February 2014 (to which I have referred), Mr Kolyada elected not to pursue the defence of change of position and was accordingly relieved of his obligation to provide particulars as to what had happened to the US$40 million which made it impossible to repay the same to Mr Yurov as had been pleaded. That is not without significance, because no explanation has ever been given of how it was that that case came to be run. It is plainly inconsistent with the submission now being made as to the fate of the US$40 million and of the evidence which has now been put in by Mr Kolyada. A change in case of this sort in an important aspect relating to Mr Kolyada's asserted asset position is perhaps unfortunate.
At this stage Mr Kolyada's evidence in reply to, and Mr Libson's evidence, (to which I have referred), was contained in two witness statements: one by a Russian lawyer, Miss Larissa Mollet, her second witness statement of 10 April 2014, and the other by Mr Richard Stewart of Bryan Cave, solicitors then acting for Mr Kolyada. Miss Mollet's evidence can be summarised as setting out her belief that the claim against Mr Kolyada was part of an improper campaign by the Russian State in the Yukos related litigation other and proceedings to regain control of the oil and gas sector. She identified various reasons why she contended that Russian procedure did not properly apply in Mr Kolyada's case, which led to his improper conviction, sentence and imprisonment and civil judgment for 8.93 million roubles. She also set out her contention that, properly analysed, the facts as a matter of Russian law gave rise to no proper case of damage or loss to Tomskneft, that being an essential ingredient of the offence charged against Mr Kolyada under Article 160 of the Criminal Code and Article 174.1 of the Criminal Code of the Russian Federation.
Mr Stewart's evidence referred to these matters also and to the fact that Mr Kolyada had a pending application to the European Court of Human Rights concerning the conviction and that he had been granted political asylum in Latvia, with the Latvian authorities having accepted his assertion of "wrongful criminal charges" and "unfounded sentence". In addition, Mr Stewart took the following points. Firstly, the transaction relating to the $40 million and the payment to Mr Kolyada in Latvia was one in which Mr Yukov himself had been a party and, therefore, by his own conduct, Mr Yukov had debarred himself from being entitled to security by relying on the $40 million transaction in any way. Secondly, Mr Kolyada had substantial assets in a property in Switzerland, which he declined to identify in case that information should lead to the Russian authorities "launching enforcement proceedings against my client in Latvia and Switzerland to enforce an unjust conviction and civil judgment" – see paragraph 38. Thirdly, Mr Stewart said that in that connection there were factual matters which "suggested" that Mr Yurov, the defendant, had "closer than usual contacts with the Russian prosecuting authorities" and a "capacity to influence the Russian investigation". It was also said that, being resident in Russia, Mr Yurov could be forced to give details of Mr Kolyada's assets which were learned of by him. Fourthly, Mr Stewart said that only loans from Swiss lenders could be made in relation to Swiss real estate owned by Swiss persons, and the appetite for lending on the Swiss real estate was effectively non existent at present compared with what it had been earlier times – see paragraph 45. That, as I read Mr Stewart's witness statement, was the principal reason given as to why there could be no borrowing against the Swiss property which was not identified. Lastly, an undertaking was given to transfer the proceeds of sale from the unidentified Swiss property to Mr...
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