Verlox International Ltd v IGOR Antoshin
| Jurisdiction | England & Wales |
| Judge | Mr Justice Picken |
| Judgment Date | 25 October 2022 |
| Neutral Citation | [2022] EWHC 2667 (Comm) |
| Docket Number | Case No: CL-2016-000831 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 2667 (Comm)
Mr Justice Picken
Case No: CL-2016-000831
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
The First Claimant was not represented.
Mr Igor Sychev on his own behalf.
Mr Michael Swainston KC and Mr Richard Eschwege (instructed by Simmons & Simmons LLP) for the First Defendant.
Mr Anton Dudnikov (instructed by PCB Byrne LLP) for the Fourth Defendant.
Hearing date: 11 October 2022.
Judgment provided in draft: 17 October 2022.
Approved Judgment
This judgment was handed down remotely at 09.45am on 25 October 2022 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
This is an application by the First and Fourth Defendants for security for costs in respect of their respective jurisdiction challenges, and an application by the Claimants for an amendment to the Claim Form. As will become apparent and in line with what I indicated to the parties at the close of the hearing, this judgment does not, in the event, address the security for costs applications. It focuses, instead, on the amendment application and the consequences of that application not succeeding.
Background
These proceedings were issued in late December 2016. The First Claimant (‘Verlox’) claimed against the First Defendant (‘Mr Antoshin’), the Fourth Defendant (‘PhosAgro’) and the Fifth Defendant (‘Mr Guryev’) in respect of an alleged oral agreement (the ‘Share Agreement’), made on or around 16 May 2011 and governed by Russian law.
Verlox is a Belize shell company with no apparent assets of its own. It is controlled entirely by the Second Claimant (‘Mr Sychev’), who is its sole director.
From 2002 until 2013 Mr Sychev was employed by entities affiliated with PhosAgro, which is a large phosphate-based fertilizer producer. From August 2003 he was head of the tax department at PhosAgro's subsidiary, RBC PhosAgro LLC (‘RBC’), which provided services to companies in the PhosAgro group.
The First Defendant, Mr Antoshin, is a Russian national. When the events giving rise to the claims occurred, he was at different times connected to the PhosAgro companies. Mr Antoshin currently owns a 6.3% shareholding in PhosAgro.
At its core, these proceedings concern remuneration in respect of work which Mr Sychev allegedly carried out beyond what was in his employment contract with PhosAgro. Mr Sychev argues, in particular, that he provided additional services by undertaking and assisting with the defence of contentious tax claims made against PhosAgro companies. In exchange, he alleges, he entered into a Share Agreement which was to pay him US$13 million and give him a 1% shareholding in PhosAgro.
The Share Agreement is said to have been concluded orally by Mr Sychev and Mr Antoshin in a Moscow restaurant in May 2011. Mr Antoshin, PhosAgro, and Mr Guryev are each said to be parties to the alleged Share Agreement.
Mr Sychev originally asserted an entitlement to US$4.013 million, which is alleged to be the unpaid balance out of the US$13 million total and the value of 1% of the shares in PhosAgro. As described below, he assigned this claim to Verlox. Verlox also claimed declarations against the Second and Third Claimants that certain loan agreements between the Second and Third Defendants and Verlox were invalid because they represented part performance of the alleged Share Agreement. Those loan agreements referred to “UK law”.
The amendment application
The Claim Form named Mr Sychev as the Second Claimant. Verlox had acquired its right to sue from Mr Sychev by an assignment executed in 2016. That assignment allowed Verlox to engage the Court's jurisdiction through the ‘necessary or proper party’ gateway in CPR PD 6B 3.1(3), as will be outlined in more detail below.
On 17 July 2022 Verlox re-assigned the claim back to Mr Sychev. This second assignment was executed in a deed between Verlox and Mr Sychev. Recital (K) of that deed stated:
“[…] Verlox International Limited (Assignor) has agreed to assign to Igor Sychev (the Assignee) all its rights, title, interest and benefit in and to contractual arrangements referred to in the Deed of Assignment dated 25 December 2016[…] in particular, but not limited to (i) any and all rights vested in Verlox International Limited under the Deed of assignment dated 25 December 2016 and (ii) all causes of action and rights of action vested in Verlox International Limited arising under, in respect of, or in connection with such rights on the terms of this deed with effect from the date of this Deed.”
Clause 1.1 of this second assignment stated:
“The Assignor assigns to the Assignee for good and valuable consideration of GBP 1 with effect from the Effective Date all his rights, title, interest, and benefit in and to the contractual arrangements relating to the Share Agreement (in the context of the court case CL-2016-000831), in particular, but not limited to, (i) any and all rights vested in Verlox International Limited under the Share Agreement and (ii) all causes of action and rights of action vested in the Verlox International Limited arising under, in respect of, or in connection with such rights.”
Shortly afterwards, on 20 July 2022, the Claimants issued an application to amend the Particulars of Claim so as to change the reference to Verlox making the claim to Mr Sychev doing so instead in line with the 17 July 2022 re-assignment. This application was then amended on 2 August 2022. The application requested that:
“The Claim Form and Particulars of Claim be amended (under CPR 17.1(2)(b)) or (alternatively) the Second Claimant shall substitute for the First Claimant in the claim against the First, Fourth, and Fifth Defendants (under CPR 19.2(4))”.
Procedural background
There have been several different hearings during the course of these proceedings.
Leave to serve out
On 23 June 2017, the Claimants (then represented by Fieldfisher LLP) applied for permission to serve out, and for an extension of time to effect service.
An ex parte hearing in front of Teare J took place on 29 June 2017. In respect of the alleged Share Agreement claim, Verlox relied on CPR PD 6B para. 3.1(3), which provides:
“(3) A claim is made against a person (‘the defendant’) on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and –
(a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and
(b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.”
Teare J expressed certain reservations regarding the connection of the matter with England, describing the connection with this jurisdiction as “tenuous”. He nonetheless granted permission to serve out and an extension of time for service until 30 June 2018.
This was followed by a period of protracted delays, the reasons for which are not material. Suffice to say that, after being granted a series of further extensions, the Claim Form was ultimately served on Mr Antoshin, Mr Guryev and PhosAgro in late December 2020.
Jurisdiction challenges and security for costs
On 16 April 2021, Mr Antoshin lodged a jurisdiction application, challenging the jurisdiction of the English Court. PhosAgro and Mr Guryev also lodged jurisdiction challenges.
These jurisdiction applications have been listed for 4 days, beginning on 27 March 2023.
In June and July 2021, Mr Antoshin and PhosAgro (as well as Mr Guryev) applied for security for costs in respect of their jurisdiction challenges.
Those security for costs applications were originally listed to be heard on 25 July 2022.
Directions hearings
It was against this background that a directions hearing took place before Jacobs J on 8 October 2021, at which Mr Sychev sought to represent Verlox.
Jacobs J decided at that hearing to allow Mr Sychev to represent Verlox's interests at that hearing only.
I should mention in this context that, in the course of these proceedings, Mr Sychev has engaged four different firms of solicitors, all of which have now come off the record. Mr Sychev has accused his most recent representatives, Candey LLP (as well as their predecessors, Signature Litigation LLP) of taking bribes from, and colluding with, the Defendants.
Jacobs J was not prepared, however, to grant permission to represent Verlox at future hearings. Instead, he gave the Claimants permission to apply pursuant to CPR 39.6 at least 6 weeks prior to any hearing for which permission was to be sought.
An application of that nature was refused on 27 May 2022 at a hearing which took place before Mr Adrian Beltrami KC, sitting as a Deputy High Court Judge.
Mr Beltrami KC decided that the circumstances of the case did not meet the high bar set by CPR 39.6 for allowing an individual to represent the interests of a company. He further decided that Mr Sychev had not produced sufficient or adequate evidence that he was unable to engage lawyers.
Mr Beltrami KC also doubted whether Mr Sychev had the ability to run the case fairly and efficiently, having noted in the hearing that he was “troubled” by the scale and gravity of the allegations that have been made and repeated throughout the litigation by Mr Sychev.
Subsequent to that decision, Mr Sychev accused Mr Beltrami KC of bias.
Other applications
The Claimants sought permission to appeal against Mr Beltrami KC's...
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