VTB Capital Plc v Nutritek International Corporation
| Jurisdiction | England & Wales |
| Judge | Lord Justice Tomlinson,Lord Justice Lloyd |
| Judgment Date | 20 June 2012 |
| Neutral Citation | [2012] EWCA Civ 76,[2012] EWCA Civ 808 |
| Docket Number | Case No: A3/2011/3093, 3270 and 3306,Case No: A3/2011/3270 |
| Court | Court of Appeal (Civil Division) |
| Date | 20 June 2012 |
[2012] EWCA Civ 76
Lord Justice Tomlinson
Case No: A3/2011/3270
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
MR JUSTICE ARNOLD
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Clive Freedman QC, Mr Paul McGrath QC, Mr David Peters and Mr Iain Pester (instructed by PCB Litigation LLP) appeared on behalf of the Appellant.
Mr Stephen Rubin QC Mr Cyril Kinsky QC, Mr Daniel Toledano QC, Mr Alexander Brown, Mr Michael Lazarus and Mr James McClelland (instructed by Weil Gotshal and Manges and SJ Berwin LLP) appeared on behalf of the Respondent.
This is an application for permission to appeal. I do not need to set out the circumstances in which it arises since those are in part set out in the judgment of the court which I delivered on 5 December 2011, and in any event this is only a brief ruling on the application for permission to appeal. The backdrop, however, and it is an important backdrop, is that the judge himself, Arnold J, has already granted permission to appeal to the claimant, VTB, in respect of what I will call broadly the contract point; that is to say whether or not, as a result of the relationship between Mr Malofeev and the second and third defendants and other corporate entities involved, the claimants are in a position to bring home a contractual liability to Mr Malofeev and indeed to the second and third defendants.
I will come back to that in just a moment. The application for permission to appeal relates therefore to the balance of the causes of action asserted by the claimant against the four defendants, those being causes of action in tort. I have concluded that, whilst the court is always reluctant to entertain an appeal in respect of a jurisdictional matter, particularly where the judge's conclusion below is made after a detailed and careful consideration which amounts to the judge's evaluation of various factors and in particular the weight which is to be accorded to those factors, nonetheless, notwithstanding that inevitable reluctance that the parties should be condemned to yet further expenditure in deciding where their case is to be tried rather than deciding its merits, I am persuaded that the points which Mr Friedman wishes to make have a real prospect of success, which is the test which he has to surmount, and accordingly that it is appropriate to grant permission to appeal.
Putting it very broadly, so far as concerns the law applicable to the claims in misrepresentation, the argument which is put forward by Mr Friedman and which is relevant to the evaluation required under Section 11 of the Law Reform (Miscellaneous Provisions) Act 1995 is that the judge has failed to have regard to the circumstance, or alternatively has given insufficient weight to the circumstance, that the tort here is a tort which was practised on the claimant itself, which is an English bank notwithstanding its Russian ownership, and that in such circumstances he has failed to give sufficient weight to the circumstance that the representations relied upon were, as he said, received in England and acted upon in England and gave rise to a loss which was suffered in England. Indeed in that last respect Mr Freedman reminds me that the judge heard a lively argument as to whether or not the English bank could demonstrate that it had suffered a loss in respect of which it could bring an action and that he concluded at paragraph 160 of his judgment that the loss suffered by VTB was an immediate and direct loss and that its cause of action was complete at the moment it credited tranche A to RAB's account pursuant to the facility agreement.
The judge approached his evaluation of the factors relevant to the Section 11 exercise upon the basis that to all intents and purposes all the relevant decisions were made in Russia and indeed the loss was ultimately suffered in Russia, but Mr Freedman says that that fails to have regard to the significant elements of the actual tort which was here practised which was a tort upon the English bank. As I have already indicated, I cannot rule at this stage that that argument has no prospect of success; it seems to me that it is an argument which Mr Freedman is entitled to pursue in this court and it is an argument that has at any rate a prospect of success which is more than fanciful.
In the event that Mr Freedman were to succeed in his argument under Section 11, that would in my judgment cast into a wholly different light the discussion which is the appropriate forum in which this claim should be brought, because one would then be in the territory of considering a tort committed in England, the effect of which is to be determined by reference to English law and there are statements of high authority, particularly in the Albaforth [1984] 2 Lloyd's Rep, to the effect that England would ordinarily be regarded as the natural forum in which such a claim should be brought. I need say no more than that.
So too in my judgment if Mr Freedman is successful under Section 11 his claim in conspiracy will likewise fall to be looked at in a different light, bearing in mind the characterisation of the unlawful means which, on that hypothesis, would have been used to further the conspiracy.
However, an overarching point, albeit an independent point, is the significance to be attached to the circumstance that the judge has already granted permission to appeal on the contract point. As Mr Freedman points out, in the event that this court comes to a different conclusion from that of the judge on that matter then it will follow that the trial will focus upon all of the events which are said to give rise to a tortious cause of action, and if the claim in contract proceeds in this court but the claim in tort or its Russian equivalent has to be pursued elsewhere there arises the unfortunate spectre of a multiplicity of proceedings and, worse still, inconsistent outcomes. Mr Freedman is, I think, right to submit that if I were to decline to grant him permission to appeal in respect of the tortious causes of action at this stage I would have foreclosed the options of the court in the event that on the hearing of the appeal it takes the view that the claim in contract ought to be permitted to proceed to trial whether on the basis that it is satisfied that if the facts alleged are proved then a cause of action will exist, or upon the basis that the court is satisfied that the claimants have demonstrated that they have a sufficiently arguable case to be permitted to go to trial with it being determined once the facts have been found whether or not a cause of action exists. It would be most unfortunate if the court were to be placed in the position of regretting its inability in those circumstances to ensure that all that is in dispute between the parties were litigated in the single forum.
Finally, the position of the second defendants stands in a slightly different light in that the second defendants allege that there is no basis upon which this court should entertain an appeal against the judge's finding that there is no serious issue to be tried as between VTB and themselves, the Marcap BVI company, which was they say a finding to which the judge was entitled to come bearing in mind the paucity of the evidence as to the involvement of Marcap BVI or as to any agency relationship between that company and Mr Malofeev. Mr Freedman has demonstrated by reference to an organogram that was in evidence before the judge that it is sufficiently shown for present purposes that Mr Malofeev controlled D2, that is the Marcap BVI company, and, furthermore, that the inference is overwhelming that as an offshore company and, as the indirect owner of the seller of the shares, Nutritek, it played a most significant role in the transaction. Had this application for permission concerned simply the position of the second defendant it may be that it would have been necessary to look at the evidence upon which the judge relied and upon which Mr Freedman now relies in a little more detail, but in my judgment it would in fact be wholly artificial and indeed possibly fraught with danger to draw a distinction at this stage, that is to say when permission to appeal is being considered, between the position of the second defendant and that of the third and fourth defendant.
For all those reasons, therefore, and I stress that this is only an application for permission to appeal on which it is probably better that I say less rather than more, I am satisfied that the claimant/appellant should have permission to appeal as asked.
Order: Application granted
[2012] EWCA Civ 808
Lord Justice Lloyd
Lord Justice Rimer
and
Lord Justice Aikens
Case No: A3/2011/3093, 3270 and 3306
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MR JUSTICE ARNOLD
Royal Courts of Justice
Strand, London, WC2A 2LL
Clive Freedman Q.C., Richard Snowden Q.C., Paul McGrath Q.C., Andrew Burrows Q.C. (Hon), Iain Pester, David Davies and David Peters (instructed by PCB Litigation LLP) for the Appellant
Nigel Jones Q.C. and David Lewis (instructed by Kearns & Co) for the...
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