Otkritie International Investment Management Ltd and Others v Georgy Urumov (Also Known as George Urumov) and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eder |
| Judgment Date | 14 March 2014 |
| Neutral Citation | [2014] EWHC 755 (Comm) |
| Docket Number | Case No: 2011 Folio 1182 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 14 March 2014 |
[2014] EWHC 755 (Comm)
Mr Justice Eder
Case No: 2011 Folio 1182
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Steven Berry QC, Mr Nathan Pillow and Mr Anton Dudnikov (instructed by Hogan Lovells) for the Claimants
Mr Antony Peto QC and Mr Jonathan McDonagh (instructed by Cartier & Co) for the Nineteenth Defendant
Mr Ian Smith for the Thirteenth Defendant
Hearing date: 14 March 2014
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.
Introduction
1. On 10 February 2014 I delivered my Judgment in this case. On 14 March 2014 I had a further hearing dealing with various consequential matters arising from that Judgment. In the course of that hearing I indicated my decision on a large number of discrete points. This Judgment sets out my reasons for the main points which arose for decision.
Representation
2. At the outset, I should mention that since delivering the Judgment there have been certain changes in the representation of the parties. The claimants continue to be represented by Mr Berry QC and his team. Mr Peto QC and his team continue to represent Ms Kovarska. Mr Pinaev, Rossmore and Pleator were not represented before me and did not participate in this hearing. So far as the Urumov defendants are concerned, they are no longer represented by solicitors. Mr Urumov appeared before me as a litigant in person. Ms Balk did not appear before me. I was told by Mr Urumov that she was not well; and given the circumstances, I permitted him to address me on certain points on her behalf. Denning was not represented. The Gersamia defendants are no longer represented by solicitors. The Gersamia defendants did not appear before me although I had previously received an email from Mr Vladimir Gersamia raising certain points. As to the Jemai defendants, Jecot was not represented and did not appear before me. Mr Jemai continued to be represented by Mr Ian Smith who appeared today on a pro bono basis. Ms Jemai continues to be a litigant in person. She was unable to attend the hearing for medical reasons. She had previously applied to me for an adjournment of the hearing so far as she was concerned. I acceded to that request in relation to some but not all points.
3. I deal first with a number of points concerning the content of my Judgment.
Denning – quantum
4. First, with regard to paragraph 397 of my Judgment, the quantum of the claim against Denning has now been clarified. I now confirm that the relevant figure for the quantum of the claim against Denning is US$ 2,675,000. That is the headline figure for the purposes of paragraph 556(ii) of my Judgment and, for the avoidance of doubt, is subject to the specific point referred to in paragraph 557 of my Judgment. For the purposes of drawing up an order and subject to the points that follow in relation to credit for recoveries, I should confirm that the remainder of the relevant "headline figures" are those referred to in paragraph 556 of my Judgment.
Tess
5. Second, with reference to paragraph 543 of my Judgment, I need to clarify an outstanding point with regard to the sum of US$ 1.475m received by Fanteks from an account at ABLV Bank in Latvia held by Tess. As there stated, I refrained from making any final determination at that stage with regard to those monies pending further submissions because of a point raised by Mr Smith in his list of suggested errata when I circulated the Judgment in draft viz that it had never been part of the claimants' case that these monies represented the proceeds of fraud. That point has now been addressed further by Mr Jemai in a written Note and by Mr Smith orally in the course of his further submissions. In addition, I have had the benefit of further submissions on behalf of the claimants. In the event, I am persuaded that Mr Smith's initial submission that it had never been part of the claimants' case that these monies represented the proceeds of fraud was wrong: that was clearly the claimants' case, as set out in their written Opening and Closing Submissions, and again in their written Hinduja Submissions. Further, the point was put squarely to Mr Jemai in cross-examination. Mr Pillow accepted before me that it was true that the claimants had not been able to trace the monies in order to found a proprietary claim to them; but, as he submitted, it is clear that the claimants' case was indeed that this was a payment organised by Mr Kondratyuk to be made to Mr Jemai on account of the latter's share of the fraud proceeds. On the evidence before me, I am satisfied on a balance of probability that these monies did indeed form part of the fraud proceeds. However, I accept Mr Smith's further submissions to this extent viz that consistent with my other findings, on a balance of probability I remain unpersuaded that such fraud proceeds represented a further share for Mr Jemai.
Credit for recoveries?
6. Third, it is necessary to address specifically the further point referred to in paragraph 557 of my Judgment as to what if any deduction should be made to take account of recoveries already received by the claimants. The relevant recoveries which have been made by the claimants are as follows:
i) Approximately US$ 21.4m, the value of 42 Avenue Road as at the date when the claimants recovered the property and elected to retain and develop it.
ii) Approximately US$ 2.2m and securities from Dunant, following the default judgment entered on 1 March 2012.
iii) Approximately US$ 22.9m, the sum of money recovered to date from Mr Kondratyuk pursuant to the Deed of Agreement dated 25 January 2013.
iv) US$ 550,000, the total sum recovered from Belux.
v) Approximately US$ 5m, the total sum recovered from Mr Gherzi and his company, Airdale, pursuant to the Deed of Agreement dated 12 September 2012.
vi) €300,000 remitted by Farrer & Co, representing payments received from Dalberg.
vii) £271,245 remitted by S C Andrew, representing payments received from M Oil & other proprietary sums.
viii) US$ 65,000 from S C Andrew and US$ 15,000 from Mishcon representing proprietary funds held by those solicitors received from the eleventh defendant Mr Teimuraz Gersamia.
7. I should mention that Mr Urumov submitted that the claimants had also received further recoveries from Bordier in Switzerland. There was no direct evidence of this before me. However, Mr Berry informed me that although the claimants had indeed received further monies from Bordier in Switzerland, such monies were allocated in respect of costs incurred by the claimants in Switzerland and did not overlap with any of the claims which the claimants advanced in the present proceedings. On that basis, I do not consider that such recoveries are relevant in the present context.
8. The main issues which have arisen are (i) whether credit for these recoveries should be given upon Judgment or later at execution; and, if so (ii) how such recoveries should be allocated or appropriated as between the different defendants.
9. The point does not appear to be considered in any of the textbooks. However, Mr Berry submitted that the relevant legal principles can be summarised as follows:
i) First, as a matter of principle, where C sues D1 and D2 for the same loss (whether or not they are jointly and severally liable), he is entitled to judgment for the full amount against both or either of D1 and D2.
ii) Second, while C is entitled to enter judgment against both Ds, he is not entitled to execution for more than the total loss suffered: Townsend v Stone Toms & Partners (1984) 27 BLR 32, 56 per Waller LJ and the cases he cites.
iii) Third, if C recovers from D1, he must give credit for that sum as against D2. However, C has a choice as to how the settlement monies are to be appropriated:
" If one has paid in satisfaction or settlement of the claim, the other is entitled to credit in respect of the payment. If a claimant receives payment from one defendant who is liable both for claims overlapping with those of another defendant and for other claims against him alone, the claimant is entitled (by the settlement agreement or otherwise) to appropriate any settlement monies either to the overlapping claims or to the other claims and, if the appropriation is made bona fide and without collusion, it conclusively determines in respect of which claims the settlement monies have been received."
Fiona Trust v Privalov [2010] EWHC 3199 (Comm)
at §1547 per Andrew Smith J.
iv) Fourth, the merits threshold to be met by the claim to which C seeks to appropriate settlement monies is a low one: so long as it is not "obviously unsustainable", C is entitled to make the appropriation: Barings plc v Coopers & Lybrand [2003] PNLR 34 at §1116–1119 per Evans-Lombe J.
v) Fifth, if C who receives payment from D1 establishes an...
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