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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Danilina v Chernukhin & Ors [2018] EWHC 2503 (Comm) (02 October 2018) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2018/2503.html Cite as: [2018] EWHC 2503 (Comm) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Rolls Building, 7 Rolls Building Fetter Lane, London EC4A 1NL |
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B e f o r e :
____________________
| Lolita Vladimirovna Danilina |
Claimant |
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| - and - |
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(1)Vladimir Anatolevich Chernukhin(2) Navigator Equities Limited(3) Vadim Kargin |
Defendants |
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Jonathan Crow QC, James Weale and Fraser Campbell (instructed by Clifford Chance LLP) for the First and Second Defendants
Iain Pester (instructed by PCB Litigation LLP) for the Third Defendant
Hearing dates: 12 and 13 September 2018
____________________
Crown Copyright ©
Mr. Justice Teare :
The amount sought
Indemnity/standard basis
Chernukhin,
another wealthy Russian businessman, claims that he is the beneficial owner of Navigator so that he and Mr. Deripaska were the indirect beneficial owners of the real estate held by TGM. The Claimant was, he says, only the nominal party to the shareholders' agreement. The disputed 50% interest is said to be worth of the order of $100 million.
Apportionment of costs between this case and Mr. Deripaska's s.67 arbitration claim
Chernukhin
and Mr. Deripaska pursuant to the terms of the shareholders' agreement. In that arbitration Mr.
Chernukhin
sought an order that Mr. Deripaska purchase his interest in Navio on the grounds of "oppression". Mr. Deripaska challenged the right of Mr.
Chernukhin
to commence the arbitration against him. He alleged that Ms. Danilina was his joint venture partner. By an award dated 16 November 2016 the tribunal held that Mr.
Chernukhin,
not Ms. Danilina, was the beneficial owner of Navigator (and hence of 50% of the shares in the joint venture company, Navio, which owned the Russian company TGM) and therefore that he was the substantive party to the 2005 shareholders agreement and thereby entitled to commence arbitration pursuant to its terms. On 14 December 2017 Mr. Deripaska issued a challenge to the arbitrator's jurisdiction pursuant to section 67 of the Arbitration Act 1996 on the grounds that Ms. Danilina, not Mr.
Chernukhin,
was the substantive party to the shareholders agreement. After the tribunal made its award on jurisdiction it proceeded to determine the merits of the claim. By an award dated 20 July 2017 it decided in favour of Mr.
Chernukhin
and ordered Mr. Deripaska to pay him some $95 million plus interest and costs.
Chernukhin
and Mr. Deripaska. The suggested apportionment of 65/35 is consistent with the TGM claim generating 70% of the costs and the Family Assets claim generating 30% of the costs, which appears to me to be reasonably possible. If the TGM costs are apportioned 50/50 between the claim and the arbitration challenge (which would appear sensible since each raises the same issue) that would mean the claim and the challenge each bearing 35% of the costs attributed to the TGM issue. When the 30% attributable to Family Assets claim is added that gives rise to an overall apportionment of 65/35. This broad brush analysis suggests to me that the 65/35 apportionment made by the First and Second Defendants' solicitors is within the range of reasonably likely apportionments which might be made at the end of the trial. It might not prove to be the correct apportionment at the end of the day but it appears to me to be a reasonably likely possibility which can, for that reason, properly be taken into account when making the order for security for costs.
Is it probable that an order for security in an amount in excess of £1.1 million would stifle the claim ?
Chernukhin),
(ii) not cooperating with the Defendants and (iii) instituting proceedings against the Defendants to establish that she, not Mr.
Chernukhin,
was and is the beneficial owner of Navigator. Pursuant to a Loan Agreement (entered into at the same time) Mr. Deripaska agreed to finance the Claimant's claim up to $3 million subject to Mr. Deripaska agreeing upon the identity of her lawyers and being kept informed of progress and strategy.
Chernukhin.
In those circumstances it is to be expected that, if there is a risk that her claim may be stayed or struck out because of a failure to provide security for the Defendants' costs, he would provide the necessary security for those costs. Otherwise the $5 million which he has provided to her would be wasted.
"My solicitors and I have approached the representatives of Mr. Deripaska to request that he assist me with the provision of security. We were recently informed that he had not agreed to do so."
The counterclaim of the First and Second Defendants
"There is no world in which my client would be pursuing a counterclaim for a declaration against Ms. Danilina that she does not own things to which he does not havetitle
if she hadn't been suing him."
"a declaration that the present proceedings have been instigated and prosecuted pursuant to a corrupt and abusive arrangement between Mrs. Danilova and Mr. Deripaska for the collateral purpose of frustrating the Defendants' claims against Mr. Deripaska in Arbitral proceedings and/or the enforcement of awards obtained by them in those proceedings. The Defendants hereby give notice that they intend, following the conclusion of the present proceedings, to issue proceedings against Mrs. Danilova and Mr. Deripaska for tortious damages and/or contempt of court by reference to their participation in that corrupt and abusive arrangement and expressly reserve all their rights in that regard."
The intention of the First and Second Defendants
Chernukhin's
intention is to "oppress the fair pursuit and trial of Ms. Danilina's legitimate and genuine claims". He supported this submission by reference to Mr.
Chernukhin's
knowledge of her "relatively limited means", his maximising of the costs incurred by her by failing to give proper disclosure and so necessitating disclosure applications by her, his demand for security for costs in the sum of 100% of his incurred and estimated costs and his decision to seek security from her rather than from Mr. Deripaska.
Chernukhin
is defending the claims brought against him aggressively. That is suggested by his (initial) demand for 100% security. However, he is entitled to request security and has been held entitled to security. The demand for 100% was dropped when this matter came on for hearing. Whilst there are questions to be asked about his approach to disclosure (which were discussed in the context of Ms. Danilina's applications for specific disclosure), it is not possible for me to determine on this application that Mr.
Chernukhin
wishes to maximise the costs she must incur or that he intends to "oppress the fair trial" of her claims. In any event it has been accepted on her behalf that Mr.
Chernukhin
is entitled to further security and a further £1.1 million has in fact been offered. In those circumstances I am not persuaded that I should reduce the amount of security to be provided by Ms. Danilina because of what has been alleged about Mr.
Chernukhin's intention.
Possible security for a non-party security for costs order against Mr. Deripaska
The stage at which this application is being determined
Conclusion