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Cite as: [2018] EWHC 482 (Ch)

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Neutral Citation Number: [2018] EWHC 482 (Ch)
Claim No: BL-217-000065

IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)

The High Court of Justice
Rolls Building
Fetter Lane
London EC4A 1NL
12 March 2018

B e f o r e :

Miss Joanna Smith QC
sitting as a Deputy Judge of the High Court

____________________

IN THE MATTER OF
PSJC COMMERCIAL BANK PRIVATBANK

Claimant/Applicant

-v-


(1) IGOR VALERYEVICH KOLOMOISKY
(2)
GENNADIY BORISOVICH BOGOLYUBOV
(3) TEAMTREND LIMITED
(4) TRADE POINT AGRO LIMITED
(5) COLLYER LIMITED
(6) ROSSYN INVESTING CORP
(7) MILBERT VENTURES INC
(8) ZAO UKRTRANSITSERVICE LTD










Defendants

____________________

MR TIM AKKOUH (instructed by Hogan Lovells International LLP represented the Claimant.
MR THOMAS PLEWMAN QC and MR MARC DELEHANTY (instructed by Pinsent Masons LLP) represented the Third to Eighth Defendants

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    DEPUTY JUDGE JOANNA SMITH QC:

    Introduction

  1. Further to a worldwide freezing order dated 19 December 2017 the claimant bank by its application dated 13 February 2018 now seeks disclosure of information from the sixth to eighth defendants on the grounds that those defendants have not complied with the worldwide freezing order's disclosure provisions, alternatively on the grounds that it would be just and convenient to order disclosure.
  2. Originally the bank also sought an order in relation to the provision of information as to the identity of beneficial owners referred to in the disclosure letters and disclosure affidavits. However, this application has been resolved and no longer troubles the court.
  3. Background Facts

  4. The worldwide freezing order ("WFO") was granted against the background of allegations by the bank of fraud on the part of the defendants involving the transfer of circa 1.9 billion US dollars by the bank to 46 Ukrainian borrowers pursuant to sham loan agreements. It is said that money was then transferred to the third to eighth defendants pursuant to further sham agreements for the supply of vast quantities of commodities and industrial equipment.
  5. Mr Akkouh, acting on behalf of the bank, showed me extracts from the particulars of claim but for the purposes of this application I need not concern myself with the underlying merits of this case. I am aware that directions have been given for the hearing of applications on the part of the defendants, first contesting the jurisdiction of the English court and, second, to challenge the WFO, and hearing dates for those applications have been fixed.
  6. The WFO granted by Mr Justice Nugee precluded removal of assets from this jurisdiction up to the relevant maximum sum, which for each of the third to eighth defendants was defined as the sum of 2.6 billion US dollars. It contained familiar disclosure provisions including the following:
  7. "[8(a)] the respondent must by 4 pm on the 10th working day after service of this order and to the best of his ability inform the applicant solicitors in writing of all his assets exceeding 25,000 in value as at the date of this order, giving the value, location and detail of all such assets."
  8. Paragraph 6 of the WFO makes it clear that the term "assets" includes a chose in action.
  9. Paragraph 8(b) sets out various classes of asset to which the order applies, together with the information required in respect of those assets, to satisfy the requirement for information as to "value, location and details". This list does not include a chose in action such that there is no guidance to be found in the order itself as to what is to be provided by way of information in relation to a chose in action.
  10. Paragraph 9 of the order provides that:
  11. "By 4 pm on the 15th working day after service of this order the respondent must swear and serve on the applicant's solicitors an affidavit confirming (and if necessary updating) the information to be provided pursuant to paragraph 8 above."
  12. Since the WFO was made, the third to eighth defendants have provided disclosure letters pursuant to paragraph 8(a) of the WFO dated 12 January 2018. The letters from the sixth to eighth defendants, with which I am concerned for this application, are all in very similar form. In particular, they all record that "our investigations are continuing" and they then set out details of the respective assets of each of these defendants exceeding 25,000 US dollars. In summary, and insofar as is relevant for the purposes of this application:
  13. The sixth defendant identifies nine loans receivable in the total sum of circa [] US dollars and six trade receivables in the total sum of circa [] US dollars. The identity of the debtors and the counterparties in respect of the trade receivables is identified or has since been identified. However, the dates of the various transactions identified are not specified nor are the dates on which the sums will become due and owing to the sixth defendant.
  14. The seventh defendant identifies seven loans receivable in the total sum of circa [] US dollars. The identity of the debtors is identified or has since been identified. However, the dates of the various transactions identified are not specified nor are the dates on which the sums will become due and owing to the seventh defendant.
  15. The eighth defendant identifies nine loans receivable in the total sum of circa [] US dollars and five trade receivables in the total sum of circa [] US dollars. The identity of the debtors in respect of the trade receivables is identified or has since been identified. Again, the dates of the various transactions identified are not specified nor are the dates on which the sums will become due and owing to the eighth defendant.
  16. On 14 January Mr Stuart McNeill, a partner at Pinsent Masons LLP, solicitors for the third to eighth defendant, provided a witness statement in support of an application to extend time for service of affidavits verifying the asset disclosure. In paragraph 6.3 Mr McNeill explained the steps that his firm needed to take in order to ensure that each defendant was accurately disclosing its asset position. Amongst other things, he explained that his firm "wished to determine whether there are any qualifications that need to be made to any of the asset disclosures in respect of liabilities that operate to reduce the value of the assets, as well as qualifications on the likely recovery of the same. For example, I have been told that a number of counterparties to Milbert transactions have been placed in liquidation." Milbert Ventures Inc is the seventh defendant.
  17. Following a short extension of time the sixth to eighth defendants filed and served disclosure affidavits pursuant to paragraph 9 of the WFO on 26 January 2018. Again, these affidavits are all in very similar form. Each individual providing the affidavits confirms that the asset disclosure given in the disclosure letters and in the affidavits has been provided to the best of his/her ability within the time permitted, that it is true to the best of his/her knowledge and belief, and that it has not been the subject of comprehensive audit and the disclosed assets have not been professionally valued.
  18. Each affidavit goes on to say that "the realisable values of the disclosed assets, including any disputes and rights of set off and the financial capacity of the debtors, remain under investigation". Further, the affidavit sworn on behalf of the sixth defendant makes it clear that "by way of example" the director of the sixth defendant swearing the affidavit is aware that one of the debtors has filed for bankruptcy. The affidavits sworn on behalf of the seventh and eighth defendants make it clear that "by way of example" the directors of those defendants swearing those affidavits are aware that one of the debtors common to them both is subject to proceedings under chapter 15 of the United States Code in the New York Southern Bankruptcy Court.
  19. The bank's solicitors were unhappy with the disclosure letters and the disclosure affidavits and sent letters criticising those documents on 18 January and 31 January 2018 respectively. Those letters set out various categories of information which the bank maintained it was entitled to pursuant to the provisions of the asset disclosure order in the WFO and which now form the basis for the categories of information sought in this application.
  20. By a letter dated 7 February 2018 the defendants' solicitors responded, providing some additional information. In particular, the sixth and eighth defendants provided additional information in schedule form in respect of the various transactions identified in the disclosure letters.
  21. Insofar as the sixth defendant is concerned, the schedule (i) identified the date of two out of nine of the loan agreements (apparently so as to differentiate between those agreements which involved the same counterparty); (ii) identified the full name of each counterparty to the loans and the trade receivables transactions; (iii) identified the jurisdiction for each of these transactions; (iv) identified the sum involved; and (v) in a column headed "Repayment date" identified the relevant repayment date for some but not all of the transactions.
  22. The repayment date for six of the transactions had already passed (four, worth together approximately [] US dollars on [] and two, worth together approximately [] US dollars, on [] and [] respectively). One of the loans due on [] in the sum of just over [] US dollars was due to the sixth defendant from the seventh defendant. The repayment date for seven transactions was said to be "not specified" and for the remaining transaction "not available". Only one transaction has a repayment date that is said to fall in the future.
  23. Insofar as the eighth defendant is concerned, the schedule (i) now identified 14 (as opposed to 9) loans receivable, apparently because loans to the same entity had been separated out; (ii) identified the full name of each counterparty to the loans and the trade receivables transactions; (iii) identified the jurisdiction for each of these transactions; (iv) identified the sum involved; and (v) in a column headed "Repayment date" identified the relevant repayment date for some but not all of the transactions. In respect of three transactions, the repayment date had already passed (in one case, a loan of [] US dollars, the date had passed on [], some [] years earlier). The repayment dates for ten of the transactions, including a trade receivable in the amount of over [] US dollars said to be due from the sixth to the eighth defendant, were recorded as "not specified" and the repayment date for four of the transactions was recorded as "not available". Only two transactions have payment dates said to fall in the future, one of which (a loan for over [] US dollars) is said to be due on []. As at the date of this judgment that loan has also become due.
  24. Mr Plewman QC, acting on behalf of the defendants, sought to suggest that the obvious reading of the reference to "not specified" was that the relevant contract document did not refer to the repayment date (perhaps because the contract was for payment on demand or on notice) and that the obvious reading of the reference to "not available" was that the relevant contract document was not available. However, he accepted that no evidence had been served on behalf of the sixth and eighth defendants to this effect. I have no explanation from the sixth and eighth defendants as to why the dates of repayment under the loans and trade receivables contracts are unknown and no attempt has been made in evidence to explain the distinction between "not specified" and "not available".
  25. As for the seventh defendant, the letter of 7 February 2018 said this:
  26. "The seventh defendant is in the process of preparing a second affidavit updating its asset disclosure, which will include the same items of information."
  27. As at the date of the hearing on 27 February 2018 no such affidavit had been served, although a reasonable inference from what had been said in the letter seems to me to be that the seventh defendant has available to it information which it believes it needs to provide to the bank in order to update its asset disclosure.
  28. The 7 February 2018 letter also recorded that:
  29. "Our clients have advised us that they are not aware of any other debtors who have filed for bankruptcy apart from [the two identified in the disclosure affidavits]."
  30. The bank was unhappy with the limited additional disclosure provided by the defendants and it issued this application on 13 February 2018.
  31. The draft order attached to the application notice requests that each of the sixth to eighth defendants should file and serve an affidavit:
  32. (1) Exhibiting the loan agreements and trade receivables contracts identified; and

    (2) To the extent that the following information is not contained in the various contracts provided under the first heading, that certain information is provided as follows: (i) the date on which each of the defendants' contracts was entered into; (ii) the nature of the goods sold or services provided under the defendants' trade receivables contracts; (iii) why certain repayment dates are said by the schedule to the 7 February letter to be not specified or not available. That of course relates specifically to the sixth and eighth defendants; (iv) whether repayment of monies due under the defendants' contracts is secured and, if so, the nature and estimated value of the said security; (v) the estimated realisable value of each of the defendants' contracts; (vi) details of each of the bank accounts under which payments under the various contracts will be made; and (vii) in relation to the sixth defendant, insofar as not answered by (i) to (vi) above, whether payments of the sum of [] US dollars, [] US dollars, [] US dollars and [] US dollars due on [] were made and, if so, the current whereabouts of the said sums. If the said payments were not made, an explanation as to why they were not made and whether and, if so, when they are expected to be receivedThere is no equivalent seventh paragraph in relation to the seventh defendant but in relation to the eighth defendant there is a paragraph (vii), which says "Insofar as not answered by 1 to 6 above, whether the payment of [] US dollars due on [] was made and, if so, the current whereabouts of the said sum."

  33. That appears to be a typo. I think that should say [].
  34. The application is supported by the first witness statement of Mr Lewis, a partner at Hogan Lovells International LLP. In paragraph 46 of his statement Mr Lewis refers to the letter of 7 February 2018 and points out that it raises serious concerns and demonstrates why the bank requires further information in relation to the assets. In particular, in relation to the transactions that have already become due and owing he says in paragraph 47 that there is no explanation as to how the value of these receivables has been attributed. He points out in paragraph 48 that if funds have been paid over under any of these transactions, the location of such assets has not been disclosed and he says that in fact no account details, save for Pinsent Masons' client account, have been disclosed by any of the third to eighth defendants.
  35. As for the repayment that was due on [], he says in paragraph 51 that the eighth defendant has not disclosed the account into which this money will be paid and that the bank is therefore unable in any way to monitor such repayment.
  36. In paragraphs 59 and 60 of his statement Mr Lewis says this:
  37. "The bank is entitled to investigate what has happened to the funds received by the corporate defendants, and in circumstances where they appear no longer to be in possession of such assets, to investigate what was received in return for such assets and where any further assets are being held by these companies. In relation to the assets which have been disclosed by the sixth to eighth defendants, the bank is entitled to receive information sufficient to police compliance with the freezing order and, if so advised, to take further steps to prevent the dissipation of such assets. Such steps may, for example, involve seeking the court's permission to apply for the freezing order to be recognised in other jurisdictions. On the basis of the limited information so far provided in relation to the sixth to eighth defendants' assets however, the bank is unable to determine whether such course would be desirable or even possible."
  38. In paragraph 64 of his statement Mr Lewis says that the information sought should be capable of being provided in short order.
  39. The sixth to eighth defendants have served no evidence designed to address or dispute the facts and matters dealt with by Mr Lewis in his statement. In the circumstances it seems to me that I should accept Mr Lewis's evidence, as I have been invited to do by Mr Akkouh, and in particular the evidence in paragraph 60 of his statement to the effect that on the basis of the limited information provided to date the bank is unable to determine whether further steps designed to police compliance with the freezing order should be taken.
  40. The law

  41. The parties are agreed as to the relevant law but they are not entirely agreed as to its application to the facts of this case. The key principles appear to me to be as follows:
  42. (1) The purpose of a freezing order is to stop the injuncted defendant from dissipating or disposing of property which could be the subject of enforcement if the claimant goes on to win the case it has brought: see JSC BTA Bank v Ablyazov (No 10) [2015] 1 WLR 4754 at paragraph 20 per Lord Clarke.

    In Gee On Commercial Injunctions, sixth edition, under the heading "The legitimate purposes of the order" the author states at 23-003 that:
    "An order can be made if the purpose is to identify and preserve assets of the defendant which might otherwise be dissipated notwithstanding the injunction."

    (2) The power to make a freezing order under section 37.1 of the Senior Courts Act 1981 also carries with it the power to make whatever ancillary orders are necessary to make the freezing order effective. See Gee On Commercial Injunctions at 23-001 and 23-013 to this effect:

    "It has become the usual practice of the court to order disclosure of information about assets as an ancillary order in aid of a freezing injunction. The justification for this is that once the claimant has shown a real risk of dissipation of assets it will usually be appropriate to grant relief to assist the claimant make the injunction effective."
    See also JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev in the Court of Appeal [2016] 1 WLR 160 per Lord Justice Lewison at paragraph 47 as follows:
    "So far as judicial precedent is concerned, we can say with some confidence that the jurisdiction to make a freezing order also carried with it the power to make whatever ancillary orders are necessary to make the freezing order effective. AJ Bekhor & Co Ltd v Bilton [1981] QB 923."
    Furthermore, the court has the power to make ancillary orders on the grounds that it is just and convenient to do so in order to ensure the effectiveness of an earlier order. See JSC BTA Bank v Solodchenko & ors (No 3) [2011] EWHC 2163 (Ch) per Mr Justice Henderson at paragraphs 23 to 26.

    (3) An asset disclosure order is an ancillary order to a freezing order which, in the words of Lord Woolf, CJ in Motorola Credit Corporation v Uzan,[2002] EWCA Civ 989, "gives the teeth which are critical to a freezing order", paragraph 37.

    (4) However, an asset disclosure order should only be made for the purpose of policing the injunction or, put another way, to give effect to the freezing order. See Motorola again per Lord Justice Waller at paragraphs 27 to 28, citing a lengthy extract from the unreported judgment of Lord Justice Steyn in Grupo Torras SA v Sheikh Fahad Mohammed Al-Sabah [1994] in the Court of Appeal, unreported. In particular the words:

    "When rarely and in exceptional cases a worldwide Mareva is granted a disclosure order will usually follow. On the other hand, I would emphasise that a disclosure should only be made for a purpose for which the power exists, namely to police the Mareva injunction."
    And also Lord Woolf, CJ, at paragraph 37: "The disclosure order where there is a freezing order is intimately involved in the effectiveness of the freezing order."
    None of the authorities I have been shown appears to qualify this requirement.

    (5) The corollary of the previous paragraph is that a disclosure order should not be made if it extends beyond information that is necessary for the purposes of policing the injunction. In particular, it should not be made for the purposes of enabling a claimant to investigate the issues in the substantive claim.

    (6) The fact that the information sought by way of disclosure is confidential, as will often be the case in commercial contracts, does not on its own entitle a litigant to withhold disclosure. See again Motorola per Lord Justice Waller at paragraph 29:

    "Although it is an invasion of privacy to force any party to disclose assets, a freezing order in normal circumstances simply cannot be effective without that disclosure."
    And see also Pugachev in the Court of Appeal per Lord Justice Lewison at paragraph 55.

    (7) What is within the scope of a disclosure order is a question of interpretation of the order. See Gee On Commercial Injunctions at 23-016 and Ablyazov in the Supreme Court at paragraph 16 per Lord Clarke.

  43. Key to this case is the meaning of the words "value, location and details" in the WFO. As to the interpretation of these words, the parties agree that I must apply the strict construction identified by Lord Justice Beatson in Ablyazov in the Court of Appeal and adopted by Lord Clarke in the Supreme Court in that case at paragraph 19 as follows:
  44. "I further agree that orders of this kind are to be restrictively construed in accordance with Lord Justice Beatson's strict construction principle, which he described in this way in paragraph 37:

    "'The third principle follows from the 'fundamental requirement of an injunction directed to an individual that it shall be certain': Z Limited v A-Z and AA-LL [1982] QB 558, 582 per Lord Justice Eveleigh. It is that because of the penal consequences of breaching a freezing order and the need of the defendant to know where he/she or it stands, such orders should be clear and unequivocal and should be strictly construed: Haddonstone Limited v Sharp [1996] 767, 773 and 775 per Rose and Lord Justice Stuart-Smith; Federal Bank of the Middle East Limited v Hadkinson [2001] 1 WLR, 1695 at 1705C and 1713C to D per Lord Justices Mummery and Nourse. In Anglo Eastern Trust Limited v Kermanshahchi [2002] EWHC 1702 (Ch) Mr Justice Neuberger stated: 'A freezing order which has been referred to as a nuclear weapon should be construed strictly because the court is concerned with an order which has a potentially draconian effect on the commercial and economic freedom of an individual against whom no substantive judgment has yet been granted'."

    He added at paragraph 66 that strict construction is also an aspect of the "great circumspection" with which Lord Mustill in Mercedes Benz v Leiduck [1996] AC 284, 297 stated that the jurisdiction should be exercised. I agree."

  45. Mr Plewman QC points out that Lord Clarke made it clear in the same paragraph that one of the reasons for this principle is the risk of oppression.
  46. As to the true construction of the word "value" Mr Akkouh draws my attention to Gee On Commercial Injunctions at paragraph 21-035 under the heading "What is meant by the words 'up to the value in the order', how is the value of an asset to be assessed?"
  47. It reads as follows:
  48. "On the second question the issue is what is the value of the asset? The purpose of the order is to safeguard sufficient assets so that a future order of the court will not go unsatisfied. For this purpose what matters is the value which can be realised from the asset on execution or, in the case of a worldwide injunction, enforcement of a judgment against assets abroad. This is part of the background for interpretation of the order. Given this context, the word 'value' means the value of the assets which will be available to satisfy a future judgment contained in the proceedings."
  49. He also refers to paragraph 23-016 of Gee under the heading "Form of disclosure order and what has to be done in order to comply with it" to this effect "The question of how the value of an asset is to be assessed is considered in chapter 21, paragraph 21-034 and following".
  50. As to the true construction of the word "details" both parties pray in aid the recent decision of Mr Justice Bryan in Gerald Metals SA v Timis & ors [2017] EWHC 3381 (Comm).
  51. In that case the claimants sought disclosure of two documents from the fifth defendant, FPC Management Inc, as trustee of the FPC Capital Trust, which was subject to a worldwide freezing order.
  52. In circumstances where FPC had originally disclosed its only asset as a 100 per cent ownership of shares in Dorchester Overseas Limited but it had subsequently come to light that FPC only had a beneficial interest in those shares and that the legal title was held by another entity known as CP Nominees SA, the claimant sought disclosure of the FPC trust instrument. It argued that the terms of that trust document constituted details within the terms of the standard form commercial court asset disclosure order in the worldwide freezing order, essentially because the claimant and the court were entitled to know the nature and the scope of the interest held by FPC in the Dorchester shares.
  53. Mr Justice Bryan permitted the application for disclosure of the trust document on the grounds that it was required as part of the policing of the injunction so that the nature and extent of FPC's interest is identified and so that assets which might otherwise be dissipated can be preserved. However, he refused an application by the claimant for disclosure of documents evidencing indemnities said to have been given by FPC to Safeguard Management Inc at the time of its assignment of the Dorchester shares to FPC pursuant to a declaration of trust. In his judgment the indemnity documents were not relevant to the assets of FPC.
  54. Both parties also drew my attention to an unreported decision of Mr Justice Henderson in the Pugachev litigation, in which the question arose as to whether "information already given to the effect that Mr Pugachev is one of a class of discretionary beneficiaries under the following New Zealand based trusts", which then went on to list five trusts without further explanation, was sufficient for the purposes of a disclosure order or whether he should supplement the original order by ancillary directions which would enable the nature of the trust interest to be ascertained and policed by the bank.
  55. In support of his decision to order Mr Pugachev to give further details, which included disclosure of the trust deeds, Mr Justice Henderson said this:
  56. "It seems to me therefore on balance that there is nothing to prevent me today in the exercise of my discretion from giving directions which are intended to flesh out the very bare details given in the disclosure letter, with a view to enabling the bank, as I have said, to take a view on the true nature of Mr Pugachev's interest under them and to examine the question of whether any further steps need to be taken to safeguard the position." (emphasis added)

  57. As to Gerald Metals and Pugachev, Mr Plewman QC argues that on the facts of both cases the court was prepared, effectively, to extend the principle of asset disclosure in the sense of ordering disclosure of the trust documents themselves because the nature of the interest pursuant to a trust is inherently so unclear that it is necessary to see the trust document in order to comprehend it. However, he says that is manifestly not true of transactions involving loans and trade receivables.
  58. He points to the refusal on the part of Mr Justice Bryan in Gerald Metals to order disclosure of the indemnity documents at paragraphs 59 to 61 and he says that this was because the indemnity documents were not relevant to the nature of the asset or, in that case, the nature of the interest in the asset. He maintains that there are no authorities in which disclosure of contracts of the type with which I am concerned has been ordered consequent upon the asset disclosure provisions of a freezing order.
  59. Mr Akkouh takes a different approach to these two cases. He says they were disputed where they concerned trust documents but that the principles applied are also applicable in the circumstances of this case. He relies upon paragraphs 51 to 55 of the decision of Mr Justice Bryan in Gerald Metals and he prays in aid Mr Justice Bryan's statement in paragraph 51 that the words "value, location and details" should be construed purposefully and that this may include the nature and extent of those assets.
  60. He goes on to point out that Mr Justice Bryan recognises in paragraph 52 that on one level this might include very basic information, but that such basic information may not facilitate an understanding of the nature and extent of the defendants' interest in the assets. It certainly did not do so, in his judgment, on the facts of that case. He found that disclosure of the trust documents was required as part of the policing of the injunction at paragraph 57.
  61. As to the refusal on the part of Mr Justice Bryan to order disclosure of the indemnity documents, Mr Akkouh says this was because the indemnity was not part of the asset; it was a separate liability not disclosable under the terms of the freezing order.
  62. Mr Akkouh also relies on the final words of Mr Justice Henderson in the passage that I have referred to above from Pugachev, pointing out that these words encapsulate the reasons why the bank in this case seeks disclosure, namely for the very purpose of examining the question of what further steps need to be taken to safeguard the position. I do not understand the decision in the Court of Appeal in Pugachev to throw any doubt on this proposition, although the point was not directly relevant to the issues before the court.
  63. Before I go on to consider the other submissions made on behalf of the parties I should make it clear that I am not persuaded that I should treat the dicta in Gerald Metals and Pugachev, insofar as they support an order for disclosure of documents, as falling into a category of its own, relevant only to a case involving assets held in a trust. Of course the decisions in those cases were made by reference to their particular facts and I accept that where a complex trust structure has been created it is more likely to be necessary to have sight of the trust documents themselves in order properly to understand the interests they create than will be the case where simpler forms of contractual arrangement are concerned. But I reject any suggestion that it will never be appropriate, subject of course to the particular facts of the case, for disclosure of documents to be ordered in cases which do not involve trust assets.
  64. I accept Mr Akkouh's submissions that the court has jurisdiction to make an order for asset disclosure, which might include disclosure of documents, where such an order is required to enable a claimant, first, to identify the nature and extent of a defendant's interest in assets, and second, to decide whether and, if so, what further steps it should take to protect its position, such steps being an important aspect of its ability to police the freezing order.
  65. I am somewhat fortified in that latter view by Gee On Commercial Injunctions at 23-003, which points out by reference to authority that in principle it is a legitimate use of a disclosure order to obtain disclosure about assets to enable the claimant to decide whether to take steps in relation to his undertakings in damages, which I apply by analogy to the decision on whether or not to take steps to police the freezing order, and at 23-004, again by reference to authority, that it is proper to seek information for the purpose of initiating proceedings abroad to preserve assets there.
  66. Against that background the key issue in this case is whether the disclosure sought by the bank goes beyond what is necessary. I shall return to the parties' submissions on Gerald Metals in the context of considering that issue.
  67. The submissions on behalf of the bank

  68. In general terms Mr Akkouh submits that the asset disclosure provided to date by the sixth to eighth defendants is inadequate, that it fails to provide the most basic information as to the various chose in action identified in limited terms to date, and that the bank is unable to decide on the strength of that inadequate information whether it needs to take further steps to police the worldwide freezing order. He points to paragraphs 23 and 24 of the order, which I shall return to later, which make it clear that the order has limited effect on third parties outside the jurisdiction and he says that, not unnaturally, the bank does not wish to throw good money after bad in commencing proceedings in up to five other jurisdictions if to do so would be fruitless.
  69. Insofar as the seventh defendant is concerned, he says the position is particularly egregious because, notwithstanding the letter of 7 February 2018 confirming that the seventh defendant was in the process of preparing an updating affidavit, no such affidavit has been served.
  70. Mr Akkouh says that the categories of disclosure of information sought by the bank, including the requirement for disclosure of the transactional documents themselves, are all capable of falling within the terms of the existing WFO at paragraph 8, in other words, that they are all capable of falling within the words "value, location and details", even on a strict construction, and he says that the word "details" must mean something over and above the other two words. He argues that the best way of explaining the nature and extent of the sixth , to eighth defendants' interest in the chose in action (and also the most practical way) is to order disclosure of the transactional documents themselves. Alternatively, he says, the information sought should all be provided on the just and convenient grounds.
  71. He is not interested in inviting me to find a specific breach of the WFO with the possible consequences that may entail, but rather he invites me to take a pragmatic approach similar to that adopted by Mr Justice Bryan in Gerald Metals at paragraph 56 and to order that the information is appropriate by way of clarification or by way of addition to the WFO.
  72. He says that the jurisdiction to make a disclosure order is broad enough to cover the categories sought by the bank, which are all required for the purpose of policing the freezing order. He also says that insofar as the defendants seek to pray in aid confidentiality in the transactional documents, that is not something they have referred to in the disclosure affidavits and in any event, as is clear from the authorities, confidentiality is not an answer to an application for disclosure. He points out that the bank is under a duty pursuant to the undertaking at schedule B, paragraph 9 of the WFO to use the material disclosed only for the purpose of these proceedings.
  73. Insofar as he makes specific points on the individual paragraphs in the proposed draft order I address these further below.
  74. The submissions on behalf of the sixth to eighth defendants

  75. Mr Plewman QC emphasises that the only legitimate reason for an application of this sort is that the information requested is necessary in order properly to police the freezing injunction. He points to the statement of Mr Lewis and says that it contains no explanation as to how or why policing is proving difficult absent the requested information. He says that sufficient disclosure has already been provided identifying the relevant debtors, the jurisdiction in which the debtors reside and the amount due. This, he submits, is all the bank is entitled to by way of disclosure and it is all that is required for the bank to identify the asset and to commence proceedings in a foreign jurisdiction to seek further protection should it wish to do so.
  76. There is no evidence from the bank to suggest that it has written to debtors to ask for further information and no evidence that any debtor has refused to cooperate with any such request. There is also no evidence to indicate a possible breach of the provisions of the WFO.
  77. In essence, he submits that the bank is seeking, inappropriately, to use this application to extract wide ranging disclosure from the sixth to eighth defendants which goes to the substance of the claim that monies were received by the sixth to eighth defendants pursuant to sham contracts.
  78. Insofar as the seventh defendant is concerned, Mr Plewman QC points out that the bank has not applied for an order that the seventh defendant provide the updating information referred to in the letter of 7 February 2018 and he says that when information is available to the seventh defendant, and indeed to the other defendants, updating information will be provided.
  79. Mr Plewman QC drew my attention to the list of assets at paragraph 8(b) of the WFO and, in particular, to the information that was required in respect of personal property, which he said was the closest category to a chose in action:
  80. "The information required in relation to personal property is the nature and estimated value of the property and the address or location at which it is to be found."
  81. I notice for present purposes that reference to "estimated value".
  82. There is no requirement for any information as to how the asset came into existence or what was paid for it and no requirement for information of the type that is now sought. Indeed, Mr Plewman QC says the application for disclosure of the transactional documents themselves goes far beyond anything envisaged by the WFO.

    Discussion by reference to the categories of information sought by the bank

  83. Against that background I now turn to the individual applications for disclosure of information.
  84. (1) The request for an affidavit from each of the sixth to eighth defendants exhibiting the loan agreement and trade receivables contracts.

  85. In my judgment the order sought by the bank goes beyond what was required by the terms of the WFO, although Mr Akkouh seeks to suggest otherwise. I do not see that the reference to "value, location and details" in paragraph 8(a) on a strict construction necessarily requires disclosure of these transactional documents, although I accept that these documents will almost certainly contain information that could be said to fall within these words.
  86. The question is whether, notwithstanding that the order sought would in my view go beyond the order made in the WFO, I should nevertheless make that order pursuant to the jurisdiction under section 37(1) of the Senior Courts Act 1981 to make orders ancillary to freezing orders and/or because it is just and convenient to do so. I remind myself that whilst I certainly have jurisdiction to make such an order, my jurisdiction is not unlimited and it does not extend to anything which I do not consider to be necessary for the purposes of policing the freezing order, which phrase I also use, for reasons I have already explained, to encompass the decisions that need to be made as to the steps that may be required properly to police the freezing order.
  87. I have wavered on this issue, not least because of the suggestion in Gee On Commercial Injunctions at 23-016 that on the facts in JSC BTA Bank v Ablyazov, which concerned chose in action, it would be necessary to disclose the loan contracts. However, the issue of disclosure was not considered by the Supreme Court in that case and I am not convinced that a strict construction of the words in the WFO permits me to arrive at that conclusion.
  88. I am not satisfied that disclosure of the transactional documents is necessary to enable the bank to identify the nature and extent of the sixth to eighth defendants' interests in the assets. I accept Mr Plewman QC's analogy with an order for details of a bank account. In such a case the court would require disclosure of the bank's name and location, the name or names in which the account is held, the account number and the balance in the account, which is the asset for these purposes. What the court will not do is order the provision of bank statements. They contain details about the asset but they are not details necessary to understand the nature of the interest in the asset or to enable the freezing order to be policed.
  89. I do not entirely accept his analogy with Mr Justice Bryan's refusal to order disclosure of the indemnity documents in Gerald Metals, which appear to me to be documents evidencing a separate liability unrelated to the nature of the asset, but nevertheless I agree that the inherent nature of a chose in action is unlikely to be as complex or as difficult to fathom as the nature of a complex trust arrangement. Certainly there is no evidence to the effect that it will be impossible to understand the nature and extent of the sixth to eighth defendants' interest in the chose in action without sight of the contracts themselves.
  90. Mr Akkouh submits that disclosure of the transactional documents is likely to be useful in the context of foreign proceedings because the foreign court may want to have sight of the relevant document. However, it seems to me that for the purposes of this application that is far too vague. Mr Lewis says nothing to this effect in his evidence and nor does he say that the absence of the documents themselves, as opposed to the categories of information sought, presents a problem for the bank.
  91. In the circumstances I am not persuaded that disclosure of the transactional documents is necessary for the purposes of policing the freezing order and I dismiss the bank's application for such disclosure.
  92. (2) The request for an affidavit from each of the sixth to eighth defendants setting out information as follows:

    (i) The date on which each of the contracts was entered into and (ii) the nature of the goods sold or services provided under the contracts.

  93. Mr Akkouh took these two heads together on the grounds that they are concerned with the most basic information relating to assets. If one were to describe a chose in action, he says, one would typically do so by reference to the date the agreement was entered into and, insofar as a contract is concerned, by reference to what it was for: its subject matter. Mr Akkouh says that this basic information is analogous to the information identified by Mr Justice Bryan in paragraph 52 of Gerald Metals.
  94. Mr Akkouh also points out that dates have already been provided in relation to two transactions where the counterparty for each transaction is the same entity and that there are other transactions where the counterparty is the same entity but where dates have not been given.
  95. Mr Plewman QC argues that the provision of dates is not necessary to police the injunction, essentially because the sheer scale of the loan and receivables renders the need for the information unlikely. He says that if the bank had written to the counterparties seeking information about these contracts and there was evidence that they had said they were unable to identify the relevant contract, then there may be grounds for the application. However, he points out that there is no evidence to this effect. Mr Akkouh's riposte is that in reality there is no real point in writing to the relevant counterparties, who are outside the jurisdiction and so not bound by the terms of the WFO.
  96. I agree with Mr Akkouh that the dates of the transactions constitute basic information which falls within the word "details" for the purposes of the WFO. It is information which enables the bank to identify the assets and I accept Mr Akkouh's submission that the provision of dates will also enable the bank to distinguish between different contracts entered into by the same counterparty.
  97. The sixth defendant has already provided some dates and I see no reason why dates should not be provided in relation to all of the transactions for the purposes of permitting their proper identification. The mere fact that these transactions involve very substantial sums of money does not, in my judgment, affect the need to provide basic information to facilitate their identification and nor can it affect my approach to the true and proper interpretation of the word "details" in the WFO.
  98. As to information about the nature of the goods and services sold or provided under the trade receivables contracts, again on balance I am persuaded that Mr Akkouh is right that this should be disclosed for the reasons he advances. It seems to me that the word "details" also encompasses high-level information as to the subject matter of the receivables contracts which enables their identification. I disagree with Mr Plewman QC that this is in reality a request for information purely about the underlying business which gives rise to the asset, which may be of interest to the bank but not necessary for the purposes of enforcing the WFO. I also disagree with him that this application is in substance the same application that failed in Gerald Metals in relation to the indemnity documents.
  99. Further, and taking both categories of information together, I cannot see how an order for disclosure is either objectionable or oppressive. On the basis that these transactions are genuine, I can see no sensible reason why such disclosure should create any real difficulties for the bank. Accordingly, I shall make an order in the terms sought.
  100. (iii) Why certain repayment dates are said by the schedule to the 7 February letter to be not specified or not available. This relates only to the sixth and eighth defendants.

  101. The cumulative value of the agreements in respect of which repayment dates are either not specified or not available is something in the region of [] US dollars. Mr Akkouh argues that this is wholly unsatisfactory. There appears to be an acknowledgement from the sixth and eighth defendants that information as to repayment dates should be provided, but the information provided only serves to raise further questions. As to the seventh defendant, it has failed to provide any information at all about repayment dates.
  102. Mr Akkouh says that it is overwhelmingly likely in contracts of this type that the date of repayment will be provided for and that such information is plainly relevant to the policing of the WFO as the dates on which payments are due relate directly to the value of the asset. If the date is many years ago, as with the circa [] US dollars of lending which is said to have fallen due for repayment to the eighth defendant on [], and the amount due has not been paid, then this provides an indication that the asset may be of no value and that it is unlikely to be worth taking steps to police the freezing order in relation to the relevant asset. Also, information as to the repayment date may assist the bank's decision as to whether it needs urgently to seek relief in foreign jurisdictions so as to preserve the asset.
  103. Whilst Mr Plewman QC sought to explain in his submissions what the references to "not specified" and "not available" mean, as I have already mentioned, he was forced to accept that there was no evidence from the defendants to support his explanations and that whilst in his submission the words "not specified" were clear and unambiguous, there was more force in the complaint about the explanation that the repayment date was "not available". He maintained that loan agreements and trade receivable contracts may be payable on demand or on notice and that the court should not assume that they would all include repayment dates.
  104. I agree with Mr Akkouh that the disclosure to date is entirely unsatisfactory and unexplained. In my judgment, the date of repayment is a detail which is directly relevant to the value of the chose in action and so falls within the words "location, value or details" in the WFO. It is not sufficient for the sixth and eighth defendants to assert in correspondence, without explanation, that dates are not available or not specified and it is also not sufficient for the seventh defendant to refuse to provide any repayment date information whatsoever; indeed, as to the seventh defendant I am particularly concerned that an updating affidavit was said to be in preparation, and so was presumably thought to be necessary, but has never been provided.
  105. Whilst it may be, as Mr Plewman QC submits, that some of the chose in action do not include repayment dates, I agree with Mr Akkouh that it is, on the face of it, very hard to accept Mr Plewman's QC's explanation without supporting evidence that contracts for trade receivables worth many millions of dollars do not specify when the seller is to be paid, and even more difficult to accept that some of these extremely valuable contracts cannot be found.
  106. Accordingly, in my judgment the sixth to eighth defendants must identify insofar as possible the repayment date in each chose in action and if there is no repayment date available or it is not specified, they must each explain why by reference to the specific chose in action. I can see nothing oppressive in requiring the provision of this information, not least because the sixth and eighth defendants have already had to look at this issue for the purposes of the preparation of the schedule attached to the letter of 7 February 2018 and the seventh defendant has already said it was in the process of preparing an updated affidavit, which is presumably going to address the same point.
  107. Accordingly, I make the necessary order in relation to each of the sixth to eighth defendants.
  108. (iv) Whether repayment of monies due under D6 to 8's contracts is secured and, if so, the nature and estimated value of the security, and (v) the estimated realisable value of each of D6 to 8's contracts.

  109. Mr Akkouh invited me to take these two heads together. He points to the extracts from Gee On Commercial Injunctions, set out above, as to what is meant by the value of an asset and he says that it is not enough to identify the face value of these chose in action because that does not necessarily assist the bank in understanding their true realisable value or indeed what will be available to satisfy a future judgment in the proceedings. He says that it is plain from the information provided by the defendants to date that they recognise the need to identify the realisable value to the best of their ability, for example, their reference to realisable value remaining under investigation in the disclosure affidavits and the recognition in paragraph 6.3 of Mr McNeill's statement of the 14 January 2018 that there may be qualifications to the entitlement to recover the face value. He says that information as to value is critical to the bank's decision as to whether to take steps to police the freezing order in foreign jurisdictions.
  110. Mr Plewman QC accepts that a question arises if a receivable is due on a date that has passed, which in fact appears to be the case for many of these chose in action, and in my judgment he is right to do so. He also accepts that in such a case it may be that the non-payment by the due date suggests impairment of the asset. Nevertheless, he continues to maintain his objection to this category. However, I find it difficult to ignore the singular lack of information from the sixth to eighth defendants on this front.
  111. Indeed, it appears to me to be striking that there has been no attempt on the part of any of the sixth to eighth defendants even to say whether the enormous sums of money due on historic dates have in fact been paid, let alone to explain whether, if those sums have not been paid, there is any likelihood that they will ever be realised. At the very least it seems to me that in such circumstances information as to value and/or the requirement for details in the WFO should encompass information as to whether each individual chose in action has been paid on the due date, if not, whether any alternative date has been agreed, and whether any security exists in respect of the asset.
  112. In my judgment, this is information required by the bank in order to decide what steps, if any, it needs to take properly to police the freezing order. The debtor might be a shell company, in which case the bank might decide that it is not worth spending the money to obtain an order in a foreign jurisdiction: but it seems to me that the bank is at least entitled to be put into the position where it can make an informed decision about that. If payment has in fact been made, then it seems to me that such information is required under the existing WFO in any event as to when the payment was made and where it has gone, ie the bank account into which it has been paid. As I have already said, there appears to be no indication of any breach of the WFO to date.
  113. I accept that in the case of receivables due in the future the defendants cannot possibly be expected to take steps to determine, whether by way of some form of valuation exercise or otherwise, whether the value of the asset is likely to be impaired, but as Mr Plewman QC acknowledged, the position is different if to their knowledge there is reason to believe that a receivable has become impaired, for example, by reason of the bankruptcy of the counterparty. In such a case there is a requirement to inform the bank of that impairment, as the sixth to eighth defendants appear to accept.
  114. In the circumstances I am prepared to make an order in the terms suggested by the bank but I need to provide some further clarity. Insofar as contracts which have passed their repayment date are concerned, alternatively where it proves impossible to identify a repayment date, I shall order that the sixth to eighth defendants provide information as to their estimated realisable value and as to the existence of security in the terms sought by the bank, which information should in my judgment encompass, first, whether payment has been made; secondly, if not, whether an alternative date has been agreed for payment and what that date is; thirdly, whether security exists for the payment and, if so, the nature and value of that security; and fourthly, any information available to the defendants to indicate that the value of the asset has been impaired other than by reason of its non-payment on the due date.
  115. Insofar as contracts with future repayment dates are concerned, I shall make the same general order but in this case the information provided should encompass, first, whether security exists for the payment and, if so, the nature and value of that security, and second, whether there is any reason to believe that the contract might be impaired and, if so, what the reason is.
  116. However, as with every order that I shall make, I am only prepared to make it on the basis that the defendants are required to use their best endeavours to provide the information, alternatively that they should provide it to the best of their ability, the term used in the WFO. I cannot see that an order in these terms is objectionable or oppressive in circumstances where the defendants appear themselves to have appreciated that information as to realisable value was required pursuant to the terms of the WFO.
  117. (vi) Details of each of the bank accounts into which payments under the sixth to eighth defendants' contracts will be made.

  118. If any payments have been made already, the bank is entitled to information as to what has happened to those payments. Specifically, if the WFO is to be properly policed, the bank is entitled to have details of the accounts into which the receivables have been paid so it can take appropriate action to freeze those accounts in the relevant foreign jurisdiction. However, absent information of any payments having been made, I am asked to order that information be provided as to the details of the bank accounts into which payments are to be made.
  119. This is obviously important because of the provisions of paragraph 23 of the WFO to the effect that for the most part the terms of the order do not affect or concern anyone outside the jurisdiction of the court (often referred to as the Babanaft proviso) and paragraph 24 to the effect that in respect of assets located outside England and Wales, nothing in the order prevents third parties from complying with their obligations under the laws of the country in which the assets are situated or with orders of the courts of that country or state, provided reasonable notice of an application for an order has been given (often referred to as the Bank of China proviso).
  120. However, I am inclined to agree with Mr Plewman QC that the terms of this request presuppose that the defendants know in advance of payment, perhaps because it is specified in the contracts, the identity of the accounts into which money will be paid. I am not convinced that this is likely to be the case and nor do I accept that this is information which naturally falls within the strict construction of the word "details" in the WFO.
  121. Accordingly, whilst I accept that insofar as payments have been or are made under any of the contracts, information as to those payments must be given to the bank pursuant to the terms of the WFO, I am not going to order that the defendants must provide information as to where payments will be made in the future.
  122. (vii) Insofar as not answered by (i) to (vi) above as against the sixth defendant, whether the payments of the four sums I identified earlier due on [] were made and, if so, the current whereabouts of the said sums, if the said payments were not made, an explanation as to why they were not made, and whether and, if so, when they are expected to be received.

    and insofar as not answered in (i) to (vi) above as against the eighth defendant, whether the payment of [] US dollars due on [] was made and, if so, the current whereabouts of the said sum.

  123. In my judgment the information to which the bank is entitled has already been addressed in relation to the earlier categories of information sought and insofar as these requests go beyond that information, I am not prepared to order the provision of anything further. In particular, I am not prepared to order the sixth defendant to explain why the payments due on [] were not made if in fact they were not made. This is information which does not seem to me to fall within the strict construction of the words of the WFO and I have no evidence to suggest that it is information which is required for the purposes of policing the freezing order.
  124. If the bank finds in due course that it is unable properly to police the freezing injunction without this or any other piece of information, it can no doubt return to court with evidence to that effect.
  125. Should there be any doubt, I shall make the orders identified above on the grounds that the information ordered falls within the wording of paragraph 8(a) of the WFO on its true and proper interpretation, alternatively that it is just and convenient to make those orders as part of the court's ancillary jurisdiction, where I have found that they are necessary for the purpose of enabling the bank properly to police the WFO. I make the orders by way of clarification or addition to the WFO.
  126. I invite the parties to now make submissions to me about the terms of the order so as to reflect the judgment I have given and to provide me with a draft in due course. I accept the general submission of Mr Plewman QC that an appropriate order will also be required pursuant to CPR 31.22(2) in respect of various documents, including Mr Lewis's statement, so as to protect confidentiality, and we have already discussed the possible need to redact sections of my judgment and I invite further submissions as to that and any other consequential matters, including the time for provision of the affidavits and costs.
     


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