Public Joint Stock Company Vseukrainskyi Aktsionernyi Bank v SERGEY MAKSIMOV & others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hamblen |
| Judgment Date | 19 December 2014 |
| Neutral Citation | [2014] EWHC 4370 (Comm) |
| Docket Number | Case No: 2013-FOLIO 57 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 19 December 2014 |
[2014] EWHC 4370 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building,Fetter Lane, London, EC4A 1NL
Mr Justice Hamblen
Case No: 2013-FOLIO 57
The Claimant was not represented at the hearing
Mr Davies (instructed by McGuireWoods London LLP) for the First Defendant
Hearing date: 19 December 2014
This judgment concerns the appropriate costs order to make following my judgment of 17 November 2014.
The full background is set out in my judgment. In summary, the Claimant Bank ("the Bank") applied to commit the First Defendant ("Mr Maksimov") to prison for contempt of court in breaching worldwide freezing orders made by Cooke J dated 16 January 2013 ("the Cooke Order") and Field J dated 2 May 2013 ("the Field Order"). By the time of the hearing the Bank relied on the following alleged Grounds of Contempt:
(1) Ground (1)— Mr Maksimov's admitted failed to provide disclosure of his assets and an affidavit verifying that disclosure in accordance with paragraphs 10and 11 of the Cooke Order.
(2) Grounds and (3)– Mr Maksimov caused or procured the 22 nd Defendant, United Overseas Sales Corporation ("United"), to deal with its assets by transferring its shareholding in the 6 th Defendant, Bauman Trade LLC ("Bauman") in breach of paragraph 6(3) of the Cooke Order and/or thereby knowingly assisted in or permitted a breach of the order by those companies in breach of paragraph 17 of the Field Order.
(3) Ground (4)—Mr Maksimov caused the shares owned by United and the 26 th Defendant, Davidson Distribution Ltd ("Davidson") in the 9 th Defendant, Kyivrichport PJSC ("KRP") to be disposed of or dealt with and thereby knowingly assisted in or permitted a breach of the order by those companies in breach of paragraph 17 of the Field Order.
(4) Ground (5)– Bauman, United, Davidson, the 15 th Defendant, Dyrect Investment LLC ("Dyrect"), the 20 th Defendant, Citilink Distribution Ltd ("Citilink"), and the 23 rd Defendant, Inmodal Company Ltd ("Inmodal") failed to provide disclosure of their assets and Mr Maksimov, thereby knowingly assisted in or permitted a breach of the order by those companies in breach of paragraph 17 of the Field Order.
(5) Ground (7)– Mr Maksimov failed to disclose his shares in the 25 th Defendant, Cascade Ventures Ltd ("Cascade") in breach of paragraphs 10(1) and/or 11 of the Cooke Order.
In my judgment I rejected all the alleged Grounds of Contempt other than Ground (1), which had already been admitted in January 2014, and Ground (5). I also made various findings relating to the admitted contempt under Ground (1).
The hearing of consequential matters was adjourned since it was considered by the parties that there would be insufficient time to deal with them at the time of hand down. At that time the Bank was still represented by Mr Samek QC and Mr D'Cruz instructed by Eversheds LLP. On 17 December 2014 Eversheds came off the record and the Bank has not been represented at the resumed hearing. There is some evidence that the Bank has been classified as insolvent and is under temporary administration.
The costs incurred in relation the Banks' contempt proceedings are very considerable. The Bank's own costs schedule for costs up to 22 October 2014 shows total costs of £733,638.03, of which £600,864.53 relate to costs incurred after 14 January 2014. Mr Maksimov's total costs for the period after 14 January 2014 are £514,999.02. The case has also occupied significant periods of court time during that period, including hearings before Andrew Smith J on 14 March 2014; Teare J on 12 May 2014; Andrew Smith J on 4 August 2014; myself on 23 September 2014 followed by the four day hearing on 20–23 October 2014.
Leaving aside the already admitted contempt under Ground (1), the end result of that considerable expenditure of time and cost has been a single finding of contempt under Ground (5), which I described as being a "technical" contempt in paragraph 129 of the judgment in which I said as follows:
"Although I have found Mr Maksimov to be in contempt, the contempt may be said to be of a technical nature in that the Bank has had disclosure of these companies' assets through Mr Maksimov's own asset disclosure, as confirmed in Mr Maksimov's 7 th witness statement. What is lacking is a separate asset disclosure statement by the companies."
In these circumstances Mr Maksimov submits that he should be paid 90% of his costs since 14 January 2014.
The vast bulk of the time and costs since 15 January 2014 has been taken up by:
(1) The Bank's two major disputed allegations of dealings in breach of the freezing order (in relation to Bauman and the Kiev River Port shares) which were both rejected in the judgment;
(2) The Bank's unsuccessful efforts to persuade the court that Mr Maksimov's admitted breach of the Cooke Order in failing to provide asset disclosure on time was dishonest (and therefore meriting a severe and immediate custodial sentence).
(3) The question of adjournment and whether the hearing could properly go ahead without Mr Maksimov's attendance and cross examination by video link.
As to (1), Mr Maksimov was successful on this issue. Further, the Bank aggressively pursued a case of dishonesty in relation to the transfer of the legal interest in the Bauman shares in circumstances where the objective facts, which were well-known to the Bank, did not support an inference of dishonesty. In particular, Mr Maksimov openly disclosed his interest in the Bauman shares in his asset disclosure on 13 January 2014 and it was inherently unlikely that, had he been engaged in a dishonest plan to conceal that interest, he would have done so. It is also the case that information as to the ownership of Bauman is publicly available in the Ukraine, meaning that there would be little purpose served by any such dishonest concealment.
As to (2), Mr Maksimov was successful on this issue also. Mr Maksimov admitted contempt in relation to Ground 1 shortly after instructing English solicitors in January 2014. Since that time, the Bank aggressively pursued a case that the reasons given by Mr Maksimov for not complying with the asset disclosure obligations in the Cooke Order were false and dishonest and that Mr Maksimov had been in deliberate and flagrant breach of the court's orders. This was no doubt done in order to persuade the court to impose a lengthy term of imprisonment on Mr Maksimov. In its September 2014 skeleton argument, the Bank argued that:
"… it is legitimate to infer from Mr Maksimov's misconceived reliance on the privilege against self-incrimination that he was attempting to rely on the same in order deliberately to seek to avoid giving disclosure and to seek also to conceal assets in breach of the Court's orders…
(paragraph 105(3))
That was also the thrust of the case put to Mr Maksimov in his cross-examination.
As to (3), it was legitimate and proper for Mr Maksimov to insist on his right to participate in the hearing and to give oral evidence in his own defence. Further, as set out in my judgment, for the purposes of resolving the contempt application I have to proceed on the basis that there has been a threat to Mr Maksimov's life as set out in his evidence. I accept that significant costs in this case have been incurred because the Bank wished to force the...
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...the breach to be technical or disproportionate by reference to Sectorguard and to PJSC Vseukrainskyi Aktsionernyi Bank v Maksimov [2014] EWHC 4370 (Comm) but I cannot consider that a breach of this kind, where there was a specific order restraining communication and an agreement scheduled ......
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...counsel has sent me a copy of Patel v Patel [2017] EWHC 1588 (Ch). The respondent's counsel responded with a copy of PJSC Vseukrainskyi Aktsionernyi Bank v Maksimov [2014] EWHC 4370 (Comm). I am grateful for these, and all earlier submissions and authorities, but I do not consider that they......
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...and v) In all the circumstances, the Contempt Application was disproportionate (see PJSC Vseukrainskyi Aktsionernyi Bank v Maksimov [2014] EWHC 4370 (Comm) (“ Maksimov”) at [21] to [22]). 76 As for Ground 2 and breach, Mr Deripaska emphasises at the outset the (criminal) standard of proof ......