WWRT Ltd v Serhiy Tyshchenko
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Bacon |
| Judgment Date | 21 April 2021 |
| Neutral Citation | [2021] EWHC 939 (Ch) |
| Docket Number | Case No: BL-2020-001416 |
| Court | Chancery Division |
| Date | 21 April 2021 |
[2021] EWHC 939 (Ch)
Mrs Justice Bacon
Case No: BL-2020-001416
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Rolls Building
Fetter Lane
London
EC4A 1NL
Andrew Ayres QC, Thomas Munby and James Mitchell (instructed by Rosling King LLP) for the Claimant
John Machell QC and James Mather (instructed by Clarion Solicitors) for the First Defendant The Second Defendant appeared in person
Hearing dates: 10–12 March 2021
Approved Judgment
I direct that 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
These proceedings are brought by WWRT Limited ( WWRT) against Mr Serhiy Tyshchenko and his ex-wife, Mrs Olena Tyshchenko. The claim is founded on an allegation that the Defendants carried out an extensive fraud on the Ukrainian bank, JSC Fortuna Bank ( Fortuna Bank), between 2011 and 2014, during which time the bank was (it is claimed) ultimately owned by Mr Tyshchenko. The fraud is said to have been carried out through the grant of multiple loans to borrowing companies that did not engage in substantial commercial activity and who had no intention of repaying the loans. The bank was subsequently declared insolvent and was liquidated, in the course of which a package of its assets, including the disputed loans, was sold to a Ukrainian company called Star Investment One LLC ( Star). Star in turn sold those rights and assets to WWRT in March 2020. WWRT's case is that following those two assignments it has now acquired the rights to bring the claim relied upon in the present proceedings.
At a without notice hearing on 4 September 2020 I granted a worldwide freezing order in the sum of £65 million against the Defendants, in support of the claim that was then about to be filed in these proceedings: [2020] EWHC 2409 (Ch). WWRT's claim was filed later on 4 September 2020, with the Particulars of Claim following on 1 October 2020. The claim is pleaded as a claim in tort under Article 1166 of the Ukrainian Civil Code.
The freezing order was served personally on the Defendants on 5 September 2020. Mrs Tyshchenko was served at the family house, Tanglewood Villa, in Surrey. Mr Tyshchenko was served at his nearby golf club later in the day.
The return date had been listed for 18 September 2020, but was adjourned by consent to this hearing. On 16 October 2020 the Defendants filed and served an acknowledgement of service indicating an intention to contest jurisdiction. They subsequently applied for an extension of time to issue their application to contest jurisdiction and to file and serve their evidence opposing the continuation of the freezing order. At the hearing of that application before Meade J, the Defendants applied for the trial of a preliminary issue in relation to a range of Ukrainian law defences. That was rejected by Meade J, who instead gave directions for the Defendants to issue their jurisdiction application and to file their evidence in relation to the freezing order.
Following those developments the applications before me now are:
i) Mr Tyshchenko's challenge to the jurisdiction of the court in these proceedings (Mrs Tyshchenko does not challenge jurisdiction).
ii) WWRT's application to continue the worldwide freezing orders against both Defendants, which is opposed by both Defendants although on different grounds. Mr Tyshchenko opposes the continuation of the order primarily on the grounds of lack of jurisdiction, as well as making allegations of non-disclosure at the without notice hearing. Mrs Tyshchenko's opposition is mainly based on challenges to the merits of the claim against her, but she also says that inaccurate statements were made in the evidence for the without notice hearing.
iii) WWRT's application for orders that both Defendants be cross-examined as to their assets as well as the source of funds for their living and legal expenses, and that they provide further documents in advance of that cross-examination. Again, that is opposed by both Defendants.
At the hearing of these applications, Mr Ayres QC and Mr Munby appeared for WWRT (neither of them having appeared at the original without notice hearing before me); Mr Machell QC and Mr Mather appeared for Mr Tyshchenko; and Mrs Tyshchenko made submissions as a litigant in person. The hearing was conducted remotely using Microsoft Teams.
PRELIMINARY COMMENTS
Before turning to the specific applications before me, it is necessary to make some preliminary comments on the evidence, the approach to Ukrainian law for the purposes of this hearing, and the status of various related proceedings.
The factual and expert evidence
There is a considerable volume of evidence before me in relation to these three applications:
i) Ms Olga Gutovska, who is the managing partner of the Ukrainian law firm Gutovska and Partners and the ultimate owner of 80% of the shares in WWRT, provided an affidavit for the purpose of the without notice application and has provided a second affidavit for the purposes of the present application to continue the freezing order. She has also made a witness statement in relation to the jurisdiction application.
ii) Ms Georgina Squire, a partner in the firm of Rosling King LLP, solicitors for WWRT, and the ultimate owner of 20% of the shares of WWRT, provided an affidavit for the purpose of the without notice application, and has made two witness statements in support of the cross-examination application.
iii) Mr Tyshchenko provided an affidavit regarding his assets, as required by the freezing order, and has also made two witness statements in support of his jurisdiction application and opposing the continuation of the freezing order.
iv) Mrs Tyshchenko likewise provided an affidavit regarding her assets, as required by the freezing order, and has made three witness statements opposing the continuation of the freezing order and the cross-examination application.
v) Mr Richard Pughe, a forensic accountant at BTG Advisory LLP, provided a report for the purposes of the without notice application, which analysed the banking records of seven of the borrowing companies who received loans from Fortuna Bank and the pattern of loans granted to those companies.
vi) Dr Vadim Tsiura, a practising attorney and Professor of Civil Law at Taras Shevchenko National University in Kyiv, provided an expert report on issues of Ukrainian law for the purposes of the without notice application, and has provided a further report responding to the various reports of the Defendants' Ukrainian law experts.
vii) The Defendants rely on a total of four expert reports on issues of Ukrainian law, from (in turn): Dr Anatolii Selivanov, a Professor at the National Academy of Legal Sciences of Ukraine; Dr Serhiy Berveno, a Professor of Civil Law at V.N. Karazin National University of Kharkiv and the Academy of Sciences of the Higher School of Ukraine; Mr Oleh Hontar, a Ukrainian lawyer; and Mr Serhiy Moroz, the managing partner of the Ukrainian law firm Moroz and Partners. The reports of Dr Selivanov and Dr Berveno were already before Meade J in support of the Defendants' application for a trial of preliminary issues of Ukrainian law; the reports of Mr Hontar and Mr Moroz have been provided since that hearing. All four expert reports are written in Ukrainian, with English translations provided for the court.
The order of Meade J did not formally give permission for any expert evidence to be relied upon for the purposes of the present applications. That was rectified by a consent order which I approved on the first day of the hearing, giving permission for WWRT to rely upon the BTG report and Dr Tsiura's two reports, and for the Defendants to rely upon the reports of Dr Selivanov, Dr Berveno, Mr Hontar and Mr Moroz.
The recitals to the order recorded, however, that this was without prejudice to any submissions that would be made as to the admissibility or weight of any of the expert reports. Submissions were duly made at the hearing by Mr Ayres (for WWRT), Mr Machell (for Mr Tyshchenko) and Mrs Tyshchenko objecting to the evidence set out in the various expert reports on specific grounds. It is therefore appropriate to make some preliminary comments about the expert evidence.
Starting with the BTG report, the only objection to this came from Mrs Tyshchenko, and was that the forensic accounting analysis described in that report had been carried out on the basis of banking records that had been “stolen” from Fortuna, since there was no legal basis under Ukrainian law for the provision of those records to WWRT. That objection can readily be dismissed. As explained in the two affidavits of Ms Gutovska, the banking records in question were obtained from Star upon the assignment from Star to WWRT. Star had itself obtained those records on the original assignment to it of the disputed loans. Dr Tsiura's second report explains that this was expressly permitted by Article 62(6) of the Ukrainian Banks Law, which permits a bank to disclose confidential records to an assignee of the bank's assets during liquidation. The Defendants have not disputed that analysis of Article 62(6), nor have the Defendants advanced any other objection to the BTG report.
Both Defendants did, however, take issue with the evidence of Dr Tsiura on numerous grounds. Their procedural objection was that Dr Tsiura previously acted as a consultant to Ms Gutovska's law firm G&P between October 2019 and March 2020. I do not consider that this taints Dr Tsiura's independence. The fact of his consultancy arrangement with G&P was disclosed openly in Dr Tsiura's CV which accompanied his first report; the consultancy arrangement was for a limited...
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