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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> JSC Mezhdunarodniy Promyshlenniy Bank & Anor v Pugachev & Ors [2017] EWHC 1972 (Ch) (26 July 2017) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2017/1972.html Cite as: [2017] EWHC 1972 (Ch) |
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CHANCERY DIVISION
B e f o r e :
____________________
| (1) JSC MEZHDUNARODNIY PROMYSHLENNIY BANK | ||
| (2) STATE CORPORATION "DEPOSIT INSURANCE AGENCY" | Claimants | |
| - and - | ||
(1) SERGEI VICTOROVICH PUGACHEV | ||
| (2) KEA TRUST COMPANY LIMITED | ||
| (3) FINETREE COMPANY LIMITED | ||
| (4) BRAMERTON COMPANY LIMITED | ||
| (5) BLUERING COMPANY LIMITED | ||
| (6)MARU LIMITED | ||
| (7) HAPORI LIMITED | ||
| (8)MIHARO LIMITED | ||
| (9) AROTAU LIMITED | ||
| (10) LUXURY CONSULTING LIMITED | ||
(11) VICTOR PUGACHEV | ||
(12) ALEXIS SERGEEVICH PUGACHEV | ||
(13) IVAN SERGEEVICH PUGACHEV | ||
(14) MARIA SERGEEVNA PUGACHEV | Defendants |
____________________
HODGE MALEK QC AND PAUL BURTON (instructed by DEVONSHIRES SOLICITORS LLP) appeared on behalf of the Twelfth to Fourteenth Defendants.
____________________
Crown Copyright ©
MR JUSTICE BIRSS:
Pugachev,
who was the former, I think, owner of the bank. Among other parties are his infant children by their mother Alexandra Tolstoy who represents them as their litigation friend.
Pugachev
ultimately set up. They are discretionary trusts of which the three children are at least some of the discretionary beneficiaries. What I have said as a summary is without prejudice to many of the detailed arguments that arise on the trusts claim.
Pugachev,
who had hitherto played no part in this aspect of the proceeding, although he has been involved in many other aspects of the general dispute which has been going through the courts in this jurisdiction and elsewhere, instructed solicitors and counsel to appear to make what became two applications before the court.
Pugachev's
behalf that the court had no jurisdiction over him, because no application for leave to serve the proceedings out of the jurisdiction at the relevant time had been made, and no permission had been given to serve Mr
Pugachev
out of the jurisdiction. At that time he was in France.
Pugachev's
counsel and the counsel in the case. That happened and I ultimately decided that the applications would be dealt with to come on today, 26 July, but there were conditions attached to that order.
Pugachev
(1) would pay into his solicitors' client account a sum to essentially stand as security for the costs of the claimants and of the 12th to 14th defendants in relation to those applications, and (2) would produce an affidavit stating the source of the funding for his legal expenses in this jurisdiction.
Pugachev
is the subject of a worldwide freezing order, which includes provisions which provide that if he is to spend money on legal expenses, he should disclose the source of that funding.
Pugachev's
solicitors. That explained that, based on the instructions Mr Jenkins had received, Mr
Pugachev
had only become aware of this Trusts Claim in the last few weeks, or possibly a month or so; I think the date of May 2017 was mentioned. The importance of that evidence was to justify the extreme lateness of the applications.
Pugachev
had given to his solicitors were dishonest – the natural inferences were that they were untrue and were made in order to, among other things, try and disrupt these proceedings. That was because there was clear evidence that Mr
Pugachev
and those working with him had been given full notice of these proceedings over a year before, including an acknowledgement of service by Natalia Dozortseva, which happened in June of 2016. Ms Dozortseva was one of the people instructing Hughmans, on Mr
Pugachev's
behalf.
Pugachev
to inquire why, and discovered that Mr
Pugachev's
lawyers, that is to say Hughmans and counsel, were in front of Norris J in the applications court.
Pugachev,
and his junior counsel and Hughmans, were not going to be appearing for Mr
Pugachev
on the applications today.
Pugachev's
jurisdiction application is not well-founded. So it certainly is not the case that the merits of Mr
Pugachev's
jurisdiction application are all one way in his favour.
Pugachev
had had the money paid into Hughmans' client account as required by the order, the claimants contended that he had not produced the affidavit of the source of funds and therefore was in breach of the order. Therefore the submission from the claimants was that these applications should be declared as standing struck out on the basis of the order I made on 13 July.
Direct communication from Mr
Pugachev
Pugachev
directly, which included various documents. Those documents included a letter to me from Mr
Pugachev
himself, a witness statement from Mr
Pugachev
dealing with the matters, and a copy of a French notary's letter with a translation from the French into English, and a notarised copy of an affidavit which sets out, or purports to set out, the source of funding in accordance with the order that I made.
Pugachev
and decide what to do with it. I also needed time to digest some further materials which the parties had sensibly produced in relation to the hearing. So the hearing was adjourned until 2pm.
Pugachev's
material and see that in it, he essentially puts forward the following submissions. He says that he tried to comply with the order that I made in order to provide the evidence setting out the source of the funds, but his explanation for why it did not happen in time, or at least did not happen within a very short time of the deadline that was ordered, is to be laid at the door of his UK solicitors, Hughmans. I do not need to go into the detail, but that is essentially the point that Mr
Pugachev
is making.
Pugachev's
material, he seems to assume that I have read a witness statement of his former solicitor, Mr Jenkins, which in fact would have been the witness statement that Hughmans were using on their application before Mr Justice Norris to come off the record. That is what had happened before Mr Justice Norris yesterday. I should say Mr Justice Norris granted the application and made a declaration that Hughmans and counsel were no longer instructed by Mr
Pugachev.
I have not read or seen that witness statement.
Pugachev's
material included, as I say, references to that evidence, and it did seem to me that it was at least possible that some of what he had put to me was privileged material, although nothing very surprising was said.
Pugachev
had asked that the material be disseminated only on that basis. In his materials he had asked me to institute a confidentiality club of that kind, he says revealing the identity of the sources of funds would put those people at risk from the Russian state.
Pugachev's
contempt of court and sentencing the maximum period of imprisonment for contempt, which held that Mr
Pugachev's
fear of a risk of violence was genuinely held by him. That puts into context his points to me about a fear of violence.
Pugachev
cannot be described as an unsophisticated litigant in person. He clearly wanted me to take the material into account. Therefore I decided, bearing in mind the overriding objective and that given that his opponents had not seen this material, the right course was to provide it to them on that limited basis, and that is what I did at about 2 o'clock today.
Communication from Mr
Pugachev's
French lawyer
Pugachev's
French lawyer, a Ms Faure, telling me that she wished to send further material on Mr
Pugachev's
behalf to me. After that message came I decided to delay providing the material I had received from Mr
Pugachev
directly to the parties until I had seen what Ms Faure wanted to say, in case she said anything about that.
Pugachev
had provided directly, to the other parties in this case. Instead it contains further material which is all intended, as far as I can see from the very short time I have had to look at it, to support Mr
Pugachev's
complaints about the conduct of Hughmans solicitors.
Mr
Pugachev
needs proper advice from a UK lawyer
Pugachev
needs to take proper advice from UK qualified lawyers. I am not criticising his French lawyers, but the English legal system and the French legal system are not the same, and I suspect that Mr
Pugachev
would do much better if he had the advice of UK lawyers as to what he needs to do. It may be that from the point of view of a French lawyer, to send the material that they have sent to me in the manner they have is not something which is as unusual as it is in an English court.
What to do?
Pugachev
provided to me. The essential reason for that is, he says, that there are allegations which are scurrilous and untrue, and his clients should have the opportunity to rebut those allegations, which would require them to take instructions.
Pugachev.
However either way, there no application before me to make that order. I do not say that as a criticism, bearing in mind the speed with which events have been moving. However that application raises some important issues. An application of that kind needs proper consideration, and I am in no position to deal with it now.
Pugachev
does not wish to respond to an application of that sort or make submissions relating to it, it may be that Hughmans themselves might wish to make submissions in response to that application.
Pugachev.
That is a matter of great importance to the claimants, bearing in mind the worldwide freezing order and all the circumstances. I recognise that, but that is not a justification for making this order at this stage in these proceedings.
Pugachev
is in breach of the 13 July order on the basis that he has not complied with paragraph 3. Mr Akkouh submits that I should make that declaration, but at the same time provide that it is without prejudice to any application for a relief from sanction. In addition I should set a time limit for any application by Mr
Pugachev
for relief from sanction.
Pugachev
is on the one hand clearly a highly sophisticated individual who has the wherewithal to instruct lawyers and take legal advice. On the other hand, sometimes Mr
Pugachev
operates as a litigant in person and does things which naïve litigants in person often do. I bear in mind another common feature of some litigants is that they try to manipulate events by instructing and de-instructing their lawyers but for all the difficulties in this case I do not believe that Hughmans coming off the record was an event engineered by Mr
Pugachev
for his benefit.
Pugachev
has already sent to me. One could interpret it as an attempt to comply with the order at paragraph 3, and essentially nothing more than an application for an extension of time, or one could interpret it as an application for relief against sanction. On any case what is really going on is that Mr
Pugachev
is clearly trying to communicate with the court and regards these applications as important.
Pugachev's
materials is none of it makes any effort at all to face up to the observation that I made in my judgment on 13 July, that the evidence in support of this application that Mr
Pugachev
had only just become aware of the Trust Claim was not just false, but dishonestly so. That is relevant to what I should do now.
Pugachev
has now had a full opportunity if he wished to do so to put material before me to rebut this -- that Mr
Pugachev
has known about this Trust Trial for a very significant length of time and could, if he had wished, have taken steps much earlier to get involved in any way or apply to adjourn it or anything else.
Pugachev
is in breach of the order. It is clear that the order was not complied with within the time that it provided for, but it is also clear that there is a lot to be said on Mr
Pugachev's
behalf about why it is that an affidavit was not served in that time. I cannot prejudge what the court would do in those circumstances.
Pugachev,
the other defendants, the claimants, Hughmans, and I cannot think of anybody else, but if they wish to come to court and explain why something else needs to be done, they have that permission.
Pugachev
feels ultimately that he has been prejudiced by the fact that his applications were not resolved before the end of the Trust Trial, then as I have said, the explanation for that is that I am satisfied on the evidence as best I can be, and Mr
Pugachev
has now had a chance to rebut it and he has not done so, that he has known about this Trust Trial for a quite sufficient time whereby he could have made applications of this kind much sooner.
Pugachev
out. He will have an opportunity to say what he wants to say to me one way or another in relation to these applications. It may be that ultimately part or all of them are successful. I will not make a declaration that he is in breach of the order, and I am not going to prejudge whether the right way of looking at this is as a belated extension of time or an application for relief from sanction.
Pugachev
was a litigant in person, and I think at about 11 o'clock, he was then using French lawyers to make his applications before this court, that is the right and fair way of proceeding. I do this, I am probably repeating myself, to emphasise that it is important in this court that even someone like Mr
Pugachev,
who is an unpurged contemnor, will be listened to if he makes appropriate applications and behaves in a proper way in these proceedings.
Pugachev
has asked me to produce that material with those restrictions on it.
Pugachev,
he is entitled still to the due process of the court. As I said before, Rose J accepted that his fear was a genuine belief on his part, whether it was well-founded is another matter. However in those circumstances, since there is no reason I am aware of why it is urgent that I resolve any issue of the confidentiality club, I should not do so at this stage without having a chance to hear from Mr
Pugachev.