Public Joint Stock Company and Another v Sergey Maksimov & others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hamblen |
| Judgment Date | 17 November 2014 |
| Neutral Citation | [2014] EWHC 3771 (Comm) |
| Docket Number | Case No: 2013-FOLIO 57 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 17 November 2014 |
[2014] EWHC 3771 (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
Mr C Samek QC and Mr D'Cruz (instructed by Eversheds LLP) for the Claimant
Mr Davies (instructed by McGuireWoods London LLP) for the First Defendant
Hearing dates: 23 September, 20,21,22,23 October 2014
Introduction
The Claimant Bank ("the Bank") applies 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")..
The Cooke and Field Orders (and subsequent confirmatory return date orders) were granted pursuant to Section 44 of the Arbitration Act 1996 in support of the Bank's LCIA arbitral claim against Mr Maksimov for approximately US$ 200 million for alleged breach of a Framework Agreement. A full arbitration hearing on the merits took place over 3 days in January 2014, final submissions were completed in May 2014 and an award is awaited.
The Cooke Order was made against Mr Maksimov (as First Defendant/Respondent). The alleged breaches are of paragraphs 6(2), 6(3), 10(1) and 11 of the order, which provided as follows:
(1) (Paragraph 6) "Until the return date or further order of the court, the Respondent must not—
(1) remove from England and Wales any of his assets which are in England and Wales up to the value of US $80 million; or
(2) in any way dispose of, deal with or diminish the value of any of his assets whether they are in or outside England and Wales up to the same value;
(3) (in the case of the First Respondent only, and without prejudice to this order insofar as it affects the Second, Third and Fourth Respondents) cause or procure that any of the companies listed in Schedule 2 to this order (i) dispose of, deal with or diminish any assets which they hold or control other than in the ordinary course of business; or (ii) cause or procure that they enter into any agreements or obligations other than in the ordinary course of business."
(2) (Paragraph 10 (1)) "… the Respondent must within no later than 72 hours after service of this order and to the best of his ability inform the Applicant's solicitors of all his assets worldwide exceeding US $50,000 in value whether in his own name or not and whether solely or jointly owned, giving the value, location and details of all such assets."
(3) (Paragraph 11) "Within 7 working days after being served with this order, the Respondent must swear and serve on the Applicant's solicitors an affidavit setting out the above information."
The Field Order was made against the Fifth to Twenty Ninth Defendants (companies registered in the Ukraine and multiple off-shore jurisdictions) pursuant to the Chabra jurisdiction on the grounds that there was good reason to suppose that they were all companies owned and controlled by Mr Maksimov and that their assets in truth belonged to him. The alleged breaches are of paragraph 17 of the order, which provided as follows:
(Paragraph 17) "Effect of this order – It is a contempt of court for any person notified of this order knowingly to assist in or permit a breach of this order. Any person doing so may be imprisoned, fined or have their assets seized."
Mr Maksimov failed to provide disclosure of his assets until his 2 nd affidavit served on 14 January 2014. He has admitted that was a breach of paragraphs 10(1) and 11 of the Cooke Order. However, the Bank alleges further grounds of contempt and also wishes to draw to the Court's attention facts and matters said to be relevant to sentence for Mr Maksimov's admitted contempt.
The allegations of contempt on which the Bank's application is based are set out in the Amended Grounds of Contempt dated 13 March 2014, not all of which are now pursued. The Grounds still relied upon are as follows:
(1) Ground (1)— Mr Maksimov failed to provide disclosure of his assets and an affidavit verifying that disclosure in accordance with paragraphs 10(1) and 11 of the Cooke Order (now only relevant to sentence).
(2) Grounds (2) 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 (6)— Mr Maksimov failed to inform the Claimants to the best of his ability of (a) the value or detail of his shares in United; (b) the value of his shares in Inmodal, Davidson, X Inc. and Citilink; (c) the details of his assets, namely the shares he holds in Inmodal, Davidson, X Inc., Citilink and BudShluakhMash PJSC ("BSM") in breach of paragraph 10(1) and/or 11 of the Cooke Order.
(6) 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.
Procedural history
The Bank's committal application was issued on 12 September 2013. A hearing was fixed for 6 December 2013. As the result of Mr Maksimov's letter to the court dated 29 November 2013 that hearing was adjourned to 14 January 2014.
At that hearing a finding of contempt (based on the original Ground (1)) was made by consent by Walker J on 14 January 2014 as follows:
"1. It is declared that the First Defendant was in contempt of Court in failing to provide disclosure of his assets as required by and within the meaning of paragraphs 7, 10(1) and 11 of the Freezing Order [i.e. the Cooke Order] until Monday 13 January 2014. This declaration is without prejudice to the question of whether the First Defendant is in continuing contempt or has purged his contempt."
The balance of the committal application, namely consideration of whether the contempt was continuing or had been purged as a result of Mr Maksimov's disclosure of assets in his 2 nd affidavit, and the issue of sentence, was adjourned for the first available date after 3 March 2014.
The committal application came back on before Andrew Smith J on 14 March 2014 but the hearing was again adjourned upon Mr Maksimov's application, to a date after 12 May 2014 and the Bank was ordered to serve Amended Grounds of Contempt. These were meant to particularise the ways in which the Bank claimed that Mr Maksimov had still not complied with his disclosure obligations under the Cooke Order and also to set out the ways in which it claimed that he had also procured or caused breaches of the Field Order.
The hearing of the committal application was again adjourned upon Mr Maksimov's application by Teare J on 22 May 2014. By his order, Teare J directed that the hearing of the committal application take place on an expedited basis in September 2014, with a 5-day time estimate. He also gave directions regarding the service of evidence as to the feasibility of Mr Maksimov giving evidence by video link from Ukraine and directed that there be a case management conference before the hearing.
At the case management conference before Andrew Smith J on 4 August 2014 Mr Maksimov confirmed that he no longer sought an adjournment of the hearing of the committal application and accepted the feasibility of his giving evidence by video link from the Ukraine from a secret location. To that end the parties entered into a consent order as approved by Andrew Smith J.
On 12 September 2014 Eder J made an order directing that PCB Litigation cease to act as Mr Maksimov's solicitors in these proceedings immediately.
On 23 September 2014, the first day of the expedited hearing ordered by Teare J, McGuireWoods London LLP came on the record for Mr Maksimov and sought a further adjournment through leading counsel. I ordered that the Bank should open the case and that the hearing would then be adjourned part heard to be completed at a 3 day hearing from 20 October to 22 October 2014. That hearing duly took place and Mr Maksimov gave evidence by video link.
Aside from Mr Maksimov's oral evidence there was a substantial volume of evidence before the court. Chronologically, the principal witness evidence was as follows:
(1) 8 th witness statement of Mr Hyde of Eversheds dated 25 May 2013 in support of the application.
(2) 10 th witness statement of Mr Hyde dated 3 December 2013 dealing with service of the application on Mr Maksimov.
(3) 1 st affidavit of Mr Maksimov dated 31 January 2013 addressing the Cooke Order.
(4) 2 nd affidavit of Mr Hyde dated 22 May 2013 dealing with service of the Field Order on the 5 th to 29 th Defendants.
(5) 5 th affidavit of Mr Kodunov dated 20 September 2013 dealing with service of HHJ Mackie QC's orders whereby permission was given to enforce the Cooke and Field Orders...
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