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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Ablyazov v JSC BTA Bank  EWCA Civ 1386 (28 November 2011)
Cite as:  2 All ER 575,  EWCA Civ 1386,  1 WLR 1988
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ON APPEAL FROM Queen's Bench Division,
Mr Justice Teare
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE MOSES
LORD JUSTICE GROSS
| Mukhtar Ablyazov
|- and -
|JSC BTA Bank
Mr Stephen Smith QC and Mr Tim Akkouh (instructed by Hogan Lovells International LLP) for the Respondent
Hearing dates : 16th November 2011
Crown Copyright ©
LORD JUSTICE GROSS:
i) As provided by para. 15 of the freezing order dated 12th November, 2009 (as amended), the restriction on the distribution of certain information furnished by or on behalf of Mr. Ablyazov, would remain in place.
ii) The Court would make such orders as appropriate under CPR 3.1(1)(m), to ensure that the material on the Court file would not be open for inspection, save with the leave of the Court and that any reference to material in a witness statement would not trigger the operation of CPR 32.12(2)(c). The precise drafting of such an order has been entrusted to counsel; the order should be incorporated in the order made at the conclusion of this appeal.
" 1. This is an extraordinary case.
2. The Claimant ('the Bank') is a bank in Kazakhstan, 75.1% of whose share capital has, since 2 February 2009, been owned by the State of Kazakhstan through a sovereign wealth fund, Samruk-Kazyna. On that date the State effectively took control of the Bank when, according to the evidence of the Bank, there was significant concern as to the ability of the Bank to continue as a going concern. The Bank's accounts for the year ending 31 December 2008 recorded a negative equity of about US$6.1 billion. Its debts, which are said to amount to US$12 billion, are being restructured according to the law of Kazakhstan.
3. The Defendant ('Mr. Ablyazov') is the former chairman of the Bank and is accused by the Bank of 'widespread misappropriation of the Bank's funds'. It is said that he has treated the Bank 'as if it were his own private source of funds'. Four claims have now been issued in this jurisdiction against Mr. Ablyazov. The total sum claimed is in excess of US$1.8 billion. Further claims are anticipated which I was told will bring the total sum claimed to US$4 billion.
4. Mr. Ablyazov denies these claims. He states that the claims are an attempt by the President of Kazakhstan, Nursultan Nazarbayev, to take control of his assets in support of a politically motivated claim against Mr. Ablyazov, who is a leading figure in Kazakhstan's democratic opposition. His evidence paints a chilling picture of life in Kazakhstan where power resides with the President and the members of his family and close associates, where the rule of law is not respected and where dissent is ruthlessly eliminated……..
5. In late January 2009 Mr. Ablyazov was forced to leave Kazakhstan hurriedly. He arrived in London where he now lives with his wife and three of his four children…."
THE JUDGMENT, THE RULING AND THE ORDER UNDER APPEAL
" It would be undesirable to disrupt those directions by ordering that a long contempt hearing involving many allegations should take place during the period when the parties should be preparing for the trial of the actions. "
Considerations of fairness towards Mr. Ablyazov pointed likewise to the limitation of the number of contempt allegations to be dealt with at the contempt application.
i) A failure to disclose;
ii) A failure to tell the truth on oath;
iii) A wrongful dealing with assets.
It was not appropriate for the Court to make the selection; that was a matter for the Bank.
" … having regard to the limited number of contempt allegations to be heard and to the importance to the Bank of the efficacy of the freezing order, I consider that the potential overlap of issues between the contempt application and the trial does not require that the contempt hearing be determined after the trial of the main action. "
" …it would be inappropriate now to declare that any future attempt by the Bank to bring further allegations of contempt for a hearing would be an abuse of process. Whether that would be an abuse would depend on the circumstances then prevailing and I cannot know what they will be. However, the right of Mr. Ablyazov to seek to strike out any such further allegations on the grounds of Villiers v Villiers is preserved."
" …the reason for my decision was primarily the importance of making the freezing order effective. To delay the hearing of the contempt allegation until after the trial would deprive the claimant of the opportunity of compelling the defendant to comply with the freezing order by bringing contempt proceedings."
i) Allegation A1 – non-disclosure of the shares in Bubris Investments Limited ("Allegation A1" and "Bubris" respectively). In breach of the freezing order and the receivership order, Mr. Ablyazov had failed to disclose that his assets included 100% of the shares in Bubris.
ii) Allegation B3 ("Allegation B3") – false evidence regarding (1) English real estate and (2) three "Schedule C" companies. In short, Mr. Ablyazov, on oath, had mis-described or omitted his interest in various properties (part (1) of this allegation). Furthermore, he had given false evidence on oath denying that he was the owner of and asserting that he was unable to give any information as to companies known as the "Schedule C" companies (namely, FM Company, Carsonway and Bergtrans). The true position to Mr. Ablyazov's knowledge, the Bank alleged, was that Mr. Ablyazov was the ultimate beneficial owner of these companies.
iii) Allegation D1 ("Allegation D1") – dealing with the assets of Stantis Limited. Here the allegation was that in breach of the freezing order, Mr. Ablyazov had instructed and/or procured and/or encouraged and/or permitted various dealing with or disposals of or diminution of the value of his assets. For present purposes, the details do not matter.
"2. Those allegations of contempt raised by the Committal Application as are listed in the Schedule hereto ('the Allegations') shall be determined at the hearing …..[ These are Allegations A1, B3 and D1]…
18. Insofar as allegations raised by the Committal Application are not to be dealt with pursuant to paragraph 2, above, the Claimant shall have liberty to apply for permission to proceed with such allegations or to institute fresh contempt proceedings which include such allegations. The First Defendant's right to apply to strike out any such allegations pursuant to the principle in Villiers v Villiers….is preserved."
THE GROUNDS OF APPEAL
i) The decision of the Judge, to permit the Bank to reserve a purported right to bring forward for future determination those allegations of contempt which are not among the three allegations ordered to be heard at the Contempt Application, was wrong as a matter of fact and/or law and/or involved a serious procedural irregularity which caused the decision to be unjust. ("Ground I").
ii) The decision of the Judge to permit the Bank to select three allegations of contempt to be heard before the trials in the substantive proceedings, where two of those allegations directly overlap with issues in dispute in those substantive proceedings, was wrong as a matter of fact and/or law and/or involved a serious procedural irregularity which caused the decision to be unjust. ("Ground II").
I take those Grounds in turn.
" In any case where a court has power to commit a person to prison for contempt of court and (apart from this provision) no limitation applies to the period of committal, the committal shall (without prejudice to the power of the court to order his earlier discharge) be for a fixed term, and that term shall not on any occasion exceed two years in the case of committal by a superior court….."
" …section 14 of the Contempt of Court Act 1981 restricted the maximum sentence which might be imposed on any occasion to two years, and, on the true construction of the section, the relevant occasion was that on which the order of committal was made and the contemnor left court for prison, irrespective of the number of applications to which the order related; that, therefore, a judge could not on a single occasion activate a suspended sentence and impose a fresh sentence which cumulatively exceeded that limit…."
" Mr. Munby…. [who had been instructed as amicus curiae]…has drawn attention to a number of situations which could give rise to argument and difficulty. For example, he has indicated that a judge might sentence for one contempt in the morning and another in the afternoon, or for one contempt one day and another contempt the next day in the belief that by doing so he would not be imposing the sentences on one occasion. I could imagine circumstances in which this court would have little hesitation in holding that there had been a manipulation of the timetable such as to amount to an abuse of process. On the other hand, where, in the ordinary course, different contempts came before the court on different occasions and without any manipulation of the timetable it may be that cumulative sentences of more than two years could be justified….. "
" I agree. Mr Munby's lucid submissions have satisfied me that there is no construction of section 14(1) which will avoid every possibility of anomaly. But…it should be possible in practice to give effect to the general intention of the Act of 1981.
I agree with Sir Thomas Bingham MR that the 'occasion' in section 14(1) is the hearing at which the sentence is imposed or a suspended sentence is activated, irrespective of the number of contempts or applications with which the court is dealing. In order to make this principle work it is necessary to try to ensure that all the allegations of contempt which could at any time be brought before the court, are so far as possible, considered on a single occasion. Otherwise the maximum sentence will depend on the choice of the applicant as to whether to make a single application or multiple applications and the vagaries of the listing system as to when those applications are heard. This means that it may, for example, be prudent for a defendant charged with contempt to invite the applicant to move at the same time or not at all in respect of any other contempt which he thinks that he may have committed. The application of the principle will be very much a matter for the discretion of the judge at the hearing; but I have no doubt that, with common sense, it should be possible to give effect to the general intention. "
" 54. When a comprehensive application such as the present one is made and a substantial sentence of imprisonment is contemplated and imposed, it would….normally be wrong to leave matters over in that way. If the maximum sentence is insufficient….the remedy would be in a statutory or other power to imprison for a longer period and not the procedure followed here. I do not, however, exclude the possibility that circumstances could arise in which it may be appropriate to leave over consideration of alleged contempts.
55. In my judgment, the other contempts alleged and not pursued should not be proceeded with upon a future application. As to the suspended sentence, I regard the choice as being between activating it concurrently with the existing sentence and discharging it. The better course in the circumstances, including the judge's decision not to activate it, is to discharge it. The judge had already imposed a sentence of nine months' imprisonment for breach of an undertaking given when the suspended sentence was imposed……"
" 16. ….. a party who proposes to bring contempt proceedings may wish to bring contempt proceedings not simply to persuade the court to punish the alleged contemnor, but also in order to induce the subject of the order to produce more information about assets falling within the scope of the order than he has so far done, notwithstanding that he has been ordered to provide that information by the terms of the freezing order (or an order made in consequence of the freezing order). If this information is produced the party who obtained the freezing injunction will be able to identify the assets within the scope of the order and this will facilitate the enforcement of any judgment obtained at trial against the subject of the order. In the meantime he will also be able to ensure that the terms of the freezing injunction are observed….
17.……the court should provide significant protections for the subject of a freezing injunction who was cross-examined or provided information under a freezing order. None the less, subject to those protections, the court should….lend its weight to an application to use information obtained from such a person for the purpose of enforcing or policing the freezing order. A freezing order is an important tool in the court's armoury for the purpose of doing justice between the parties, or more precisely for the purpose of preventing or policing the disposition of assets which would inhibit the enforcement of an order. In the normal situation, failures too provide information about assets subject to a freezing order can be enforced by orders for further information. Litigants who are the subject of an order to produce further information will generally produce it to the best of their ability. But that is not always the case, and the court will in particular be astute to identify those defendants who are deliberately concealing assets. In some situations, a party who obtains a freezing order will have little option but to bring contempt proceedings to ensure that the order is properly observed…… "
In his judgment, Longmore LJ expressed the matter in similar terms:
" 38. More often than not a court exercises its powers in contempt proceedings for the purpose of punishing a party for disobedience to or non-compliance with a court order. In the particular case of freezing injunctions, however, it is common to bring contempt proceedings in order to 'improve' a defendant's compliance with the original order. Under the pressure of a committal application, a defendant may feel obliged to reveal the whereabouts of assets the existence or amount of which he has hitherto concealed or the ownership of which he has hitherto misrepresented. "
i) As is plain from the judgment and ruling, the Judge had well in mind the importance of ensuring the efficacy of the freezing order. That provides the essential rationale for his decision.
ii) The Judge was right, or, at the very least, entitled to conclude that trying 35 allegations of contempt would seriously disrupt preparation for the substantive trial/s and, not least, would be unfair to Mr. Ablyazov. Accordingly, the choice for the Judge was either to try a limited number of contempt allegations as soon as possible or to defer a contempt application dealing with all the allegations until after the main trials – and so not before 2013. The latter option was deeply unattractive in the context of alleged breach of the terms of the freezing order and its ancillary provisions; to put it no higher, the delay would significantly reduce the prospect of benefiting from such improved compliance with the freezing order as the contempt application might induce. For completeness, there was no (certainly no serious) question of the timetable being manipulated here.
iii) As the Judge in effect observed (judgment, at ), it was premature to determine the fate of the 32 remaining allegations of contempt at this time; he could not know what would be the prevailing circumstances if, or when, the Bank applied to pursue those applications. Though not a matter currently arising for decision, the right time to consider the fate of those allegations may well be when the Judge has ruled on the 3 allegations of contempt which form the subject of the contempt application – though that will be for the Judge to determine. In passing, it was at the equivalent stage in Phillips v Symes (supra), when the comparable decision came to be taken.
iv) Though Mr. Matthews was right to say that para. 18 of the order furnishes less of a safeguard than that provided in criminal proceedings when charges are left on the file and that the parties cannot bind the Court on questions of sentence (Innospec, supra), I am not at all persuaded that fairness to Mr. Ablyazov has been overlooked or inadequately catered for. The terms of the judgment or ruling themselves suggest otherwise. Moreover and realistically, if it be assumed that the 3 allegations of contempt are established (to the criminal standard of proof) in the contempt application and that Mr. Ablyazov was committed to prison for a substantial term, any application to proceed with the remaining allegations would inevitably be subject to close scrutiny by the Judge considering the matter. Para. 18 reinforces and serves as an express reminder of the need for such scrutiny. Still further, while the Bank's concession (recorded above, as to not pressing for an aggregate sentence in excess of 2 years in total) could not bind the Court, I find it difficult to conceive of any Judge not taking it most carefully into account; it must, again realistically, be likely that the concession would only be overridden in circumstances where the authorities contemplate as justified consecutive sentences in excess of 2 years in total.
" 18. Paragraph 28.3 of the Practice Direction supplementing Pt 32 directs the applicant to consider whether proceedings for contempt would further the overriding objective and that is a matter which the court itself should plainly have in mind. It is important not to allow satellite litigation of this kind to disrupt the progress of the substantive proceedings and it may not be possible to assess the strength of the complaint until those proceedings have concluded. This danger was well described by David Richards J in Daltel Europe Ltd v Makki  EWHC 749 (Ch) at , as follows:
'….Allegations that statements of case and witness statements contain deliberately false statements are by no means uncommon and, in a fair number of cases, the allegations are well founded. If parties thought that they could gain an advantage by singling out these statements and making them the subject of a committal application, the usual process of litigation would be seriously disrupted. In general the proper time for determining the truth or falsity of these statements is at trial, when all the relevant issues of fact are before the court and the statements can be considered against the totality of the evidence. Further, the court will then decide all the issues according to the civil standard of proof and will not be applying the criminal standard to isolated issues, as must happen on an application under r32.14….' "
LORD JUSTICE MOSES:
THE CHANCELLOR OF THE HIGH COURT: