[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | ||
England and Wales High Court (Commercial Court) Decisions |
||
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> JSC BTA Bank v Ablyazov & Ors [2014] EWHC 2788 (Comm) (08 August 2014) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2014/2788.html Cite as: [2014] EWHC 2788 (Comm) |
[New search] [Context] [View without highlighting] [Printable RTF version] [Help]
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
7 Rolls Building, Fetter Lane London, EC4A 1NL |
||
B e f o r e :
____________________
JSC BTA BANK |
Claimant |
|
- and - |
||
MUKHTAR ABLYAZOV and others and MUKHTAR ABLYAZOV SYRYM SHALABAYEV CLYDE & CO LLP STEPHENSON HARWOOD LLP ADDLESHAW GODDARD LLP |
Defendants Respondents |
____________________
Charles Béar QC and Giles Robertson (instructed by Addleshaw Goddard LLP) for the First Defendant and First Respondent
Alain Choo Choy QC and Anna Boase (instructed by Clyde & Co LLP) for the Third Respondent
Jeffrey Gruder QC (instructed by Stephenson Harwood LLP) for the Fourth Respondent
Hearing dates: 28, 29, 30 July 2014
____________________
Crown Copyright ©
The Hon. Mr Justice Popplewell :
Introduction
The Proceedings
(1) Mr Ablyazov failed to disclose Bubris Investments Limited ("Bubris") in breach of the disclosure obligations contained in the Freezing Order. Bubris was a company used by Mr Ablyazov to perpetrate the frauds complained of in the AAA proceedings: see [84]-[124].
(2) Mr Ablyazov falsely denied on oath his interests in three English properties, valued at more than £30 million: see [125]-[173].
(3) Mr Ablyazov falsely denied on oath his ownership of three of the companies to which funds had been transferred in the fraud on the Bank complained of in these proceedings (known as the "Schedule C Companies"): see [174]-[206].
(4) Mr Ablyazov dealt in December 2010 with three sets of loan rights with a face value exceeding US$80 million in breach of the Freezing Order: see [207]-[235].
(5) Messrs Ablyazov and Shalabayev gave false and deliberately misleading evidence as to Mr Shalabayev's ownership of a uranium project and a company called Widley Worldwide Inc for the purposes of suggesting that it was Mr Shalabayev and not Mr Ablyazov who owned the English properties and one of the Schedule C Companies: see [79] and [190]-[191].
(6) Mr Ablyazov misled the Court by procuring that trust deeds were backdated to hide Mr Shalabayev's involvement with his assets in 2009: see [79].
(7) Mr Ablyazov was the owner of: (i) Sunstone Ventures Limited, which Mr Ablyazov had untruthfully denied owning ([129]-[132]); (ii) Mega Property Limited, which Mr Ablyazov had untruthfully denied owning ([150], [152]); and (iii) Alterson Limited, which Mr Ablyazov had untruthfully said was in the ownership of a Mr Kossayev ([225]-[226]).
(8) Generally, Mr Ablyazov relied upon backdated and fabricated documentation and suborned the giving of false evidence on a wide-ranging basis: see [54], [79], [92], [95], [115], [116], [137], [146], [192], [204], [226], [227], [228], [229], [230], [233] and [236].
(9) Mr Shalabayev was a person who was "willing to cause to be created documents which contain untruths and are designed to hide the truth. He did not appear to see anything wrong about this practice. It was, as he described it, 'his business'": [64].
"[106] Mr Ablyazov's contempts have been multiple, persistent and protracted, have embraced the offences of non-disclosure, lying in cross-examination and dealing with assets, and have been supported by the suborning of false testimony and the forging of documents.
[109] Mr Ablyazov, emboldened perhaps by the wealth at his disposal, which enables him to travel, hide and still instruct lawyers on a prodigious scale, continues to obstruct justice with an attempt at impunity for the consequences of this litigation"
"It is difficult to imagine a party to commercial litigation who has acted with more cynicism, opportunism and deviousness towards court orders than Mr Ablyazov."
(1) CJSC Logopark Pyshma and buildings and plots of land held by the same in Sverdlovsky, Russian Federation.
(2) CJSC Logopark Kolpino and buildings and plots of land held by the same close to St Petersburg, Russian Federation.
"[9]… [Mr Ablyazov] no longer maintains even a pretence, as he once did, of being willing to abide by the orders of the court …….
[12]….Mr Ablyazov is a persistent and serial contemnor. There is every reason to think that he does not regard himself as bound by the orders of the court and that he will do all he can to avoid the Bank being able to execute its judgments against his assets, not only by direct disobedience to the court's orders, but also by taking any steps that may occur to him to thwart any future orders, or any steps that the Bank may take to enforce the judgment…….
[25][Mr Ablyazov's] desire to make representations on this application is not that of a litigant who seeks to persuade the court to make an order only to the extent that it is fair to him, in order that he may comply with it to that extent. His opposition to the form of order is, I would conclude, advanced despite his intention of ignoring, and indeed seeking to thwart the purpose of, any order which may be made."
The Tyschenko proceedings and evidence
(1) Ms Tyschenko's affidavit of 7 March 2014 as showing that Mr Ablyazov had continued in 2012 to seek to arrange his assets through new offshore companies so as to conceal them from the Bank and the Court in breach of the Freezing Order and Receivership Order; and
(2) Material supplied by BWB from the TSO search as evidence supporting further breaches on Mr Ablyazov's part in respect of:
(a) collusion in the Lithuanian divorce between his UBO nominee Mr Batyrgarejev and his wife whereby a substantial number of companies beneficially held for Mr Ablyazov were transferred to Mrs Batyrgarejev as part of the divorce settlement which Mrs Batyrgarejev applied for on 14 February 2012, the day that the Committal Judgment was circulated in draft to Addleshaw Goddard as Mr Ablyazov's solicitors; and
(b) the transfer of assets previously held by seven Russian companies to Belizean companies in breach of the Freezing and Receivership Orders.
(1) to exclude the evidence emanating from the TSO and Ms Tyschenko relied upon by Mr Hardman in his 68th witness statement;
(2) for disclosure of the TSO Materials;
(3) to cross examine Mr Hardman in order to:
(a) explore the circumstances giving rise to Ms Tyschenko's affidavit for the purposes of supporting the argument for its exclusion from evidence on the Bank's applications on the grounds that there is a real risk that it was obtained in breach of Article 3 of ECHR; and
(b) explore the current information available to the Bank as to Mr Ablyazov's assets.
The Solicitors' retainers
Clyde & Co
Stephenson Harwood
Addleshaw Goddard
The Issues
(1) Legal professional privilege, whether legal advice privilege or litigation privilege, does not exist where the advice or litigation is in furtherance of a fraud or crime or similar iniquity. I shall call this the "iniquity exception". Disclosure may be ordered where there is a strong prima facie case that the iniquity exception applies: Kuwait Airways Corpn v Iraqi Airways Co (No 6) [2005] 1 WLR 2734.
(2) There is a strong prima facie case that the iniquity exception applies to all the documents held by the solicitors concerning the former or current assets of Mr Ablyazov and Mr Shalabayev. Mr Ablyazov and Mr Shalabayev pursued a strategy, conceived by the time they first instructed Clyde & Co in February 2009, or at the latest when the Freezing Order was made in August 2009, which involved (i) lying to and/or deliberately misleading the Court and the Bank about the extent and nature of the assets of which Mr Ablyazov was the ultimate beneficial owner, and (ii) dealing with those assets in breach of court orders without informing the Court or the Bank or (after their appointment) the receivers, and (iii) lying to and/or deliberately misleading the Court and the Bank about those dealings, and (iv) otherwise seeking to prejudice the interests of the Bank by putting or seeking to put assets of which Mr Ablyazov was the ultimate beneficial owner beyond its reach. The Bank does not allege, for the purposes of the present application, that the solicitors knew of or were party to any iniquity. The Bank's case is that the solicitors were unwittingly retained and used by Mr Ablyazov and Mr Shalabayev to further their iniquitous strategy which was designed fraudulently to deceive the Bank and the Court by perjury, falsification of documents and wilful defiance of orders of the Court on a vast scale.
(3) Accordingly the Court should order the disclosure sought because the solicitors are likely to hold documents casting light on Mr Ablyazov's and Mr Shalabayev's beneficially owned assets which may assist the Bank in executing its judgments and enforcing the Court's orders against them.
(1) It is not sufficient to prevent privilege attaching that a solicitor is used in the conduct of litigation to advance a case on behalf of his client which the client knows to be untrue and therefore involves perjury, or an attempt to deceive the other party and the court, or to disobey court orders. That is the ordinary run of case in which privilege applies. Although Mr Ablyazov's conduct in this respect may be seen as persistent and involving large sums, there is no principled distinction between his conduct and the ordinary run of case.
(2) The Bank's case involves an impermissibly sweeping approach and fails to establish the necessary requirement that the communication in question must be "in furtherance" of the fraud. In doing so it is inconsistent with both the common law authorities, and the European jurisprudence on Articles 6 and 8 of ECHR. What is required is that the abuse of the privileged occasion itself operates to further the iniquitous purpose. There must be a real causal connection between the particular legal advice/assistance and the wrong being committed. That is not established in this case.
(3) Disclosure should not be granted because Mr Ablyazov invokes the privilege against self incrimination.
(4) Disclosure should not be granted as a matter of discretion, because it is a vast and pointless fishing expedition. The Bank has failed to make out a case that there is any prospect of responsive material of any value in addition to that which the Bank currently holds, alternatively any prospect which justifies the expensive, time consuming and intrusive nature of the search exercise. Moreover the exercise can only be undertaken if paid for by Mr Ablyazov who will not pay; the court will not act in vain. For similar reasons the invasion of Mr Ablyazov's ECHR rights is not necessary or proportionate.
(5) The interests of others must be protected where there is joint privilege or common interest privilege.
The law
"The principle which runs through all these cases and the many other cases which were cited, is that a man must be able to consult his lawyer in confidence, since otherwise he might hold back half the truth. The client must be sure that what he tells his lawyer in confidence will never be revealed without his consent. Legal professional privilege is thus much more than an ordinary rule of evidence, limited in its application to the facts of a particular case. It is a fundamental condition on which the administration of justice as a whole rests."
"[26] In the Snaresbrook case [1988] QB 532 it was alleged that the defendant, who was charged with attempting to pervert the course of justice by making a false allegation of assault against the police, must have made a false statement in an application for legal aid made by him for the purpose of bringing his civil action for assault. Section 23 of the Legal Aid Act 1974 made it an offence for anyone seeking legal aid knowingly to make a false statement or representation when furnishing any information required from him. In response to a submission for the Director of Public Prosecutions that the communication with the area office of the Law Society for the purpose of obtaining legal aid was made in furtherance of such a crime, Glidewell LJ said, at pp 537-538:
"Obviously, not infrequently persons allege that accidents have happened in ways other than the ways in which they in fact happened, or that they were on the correct side of the road when driving while actually they were on the wrong side of the road, and matters of that sort. Again, litigants in civil litigation may not be believed when their cases come to trial, but that is not to say that the statements they had made to their solicitors pending the trial, much less the applications which they made if they applied for legal aid, are not subject to legal privilege. The principle to be derived from R v Cox and Railton applies in my view to circumstances which do not cover the ordinary run of cases such as this is." (Emphasis supplied.)
Glidewell LJ then went on to hold, at p 538, that for the purposes of section 10(2) of the Police and Criminal Evidence Act 1984 it was the holder who had to have the criminal purpose, and that the Law Society was the holder and that the Law Society had no intention of furthering a criminal purpose: "No intention could be further from its thoughts."
[27] This latter reasoning was overruled by the House of Lords in the Francis case [1989] AC 346 but Lord Goff of Chieveley went out of his way to approve the first part of Glidewell LJ's reasoning. He said, at p 397:
"I have to recognise that . . . my conclusion in the present case undermines part of the reasoning of Glidewell LJ [in the Snaresbrook case]. But it does not necessarily undermine the conclusion of the Divisional Court in that case. This is because I am inclined to agree with Glidewell LJ that the common law principle of legal professional privilege cannot be excluded, by the exception established in R v Cox and Railton 14 QBD 153 in cases where a communication is made by a client to his legal adviser regarding the conduct of his case in criminal or civil proceedings, merely because such communication is untrue and would, if acted upon, lead to the commission of the crime of perjury in such proceedings." (Emphasis supplied.)"
"… no privilege can exist in communications between Iraqi Airways Co and their previous English solicitors (let alone Iraqi Airways Co's internal documentation) in relation to the tactics of and the evidence given in the main action or in the Perjury I action where the fraud was established."
"40….The present case is far from the ordinary run of cases envisaged by Glidewell LJ and is much more than a mere case where, in the words of Lord Goff, a client gives wrong information to his solicitor which "if acted upon would lead to the commission of perjury". Here there was a widespread conspiracy to deceive the English court which was acted upon and has been proved to have led not only to perjury but to forgery and the perversion of justice on a remarkable and almost unprecedented scale.
41 If the fraud exception cannot be relied on where there has been a final decision of the court that an earlier decision of the court has been procured by fraud, perjury and a conspiracy to pervert the course of justice, it would be difficult to think of any circumstances where it could he relied on once litigation was contemplated or begun. Once it is established (as I would hold) that the fraud exception can, in law, apply in such circumstances, it would be a travesty if it did not apply in the present case."
"It is not accurate to speak of cases of fraud contrived by the client and solicitor in concert together, as cases of exception to the general rule. They are cases not coming within the rule itself; for the rule does not apply to all which passes between a client and his solicitor, but only to what passes between them in professional confidence, and no Court can permit it to be said that the contriving of a fraud can form part of the professional occupation of an attorney or solicitor."
"In this case [Greenhough v Gaskill] the rule as to professional communications was laid down in the following words:-
"If, touching matters that come within the ordinary scope of professional employment, they" (legal advisers) "receive a communication in their professional capacity, either from a client or on his account, and for his benefit in the transaction of his business, or, which amounts to the same thing, if they commit to paper in the course of their employment on his behalf, matters which they know only through their professional relation to the client, they are not only justified in withholding such matters, but bound to withhold them, and will not be compelled to disclose the information or produce the papers in any court of law or equity, either as party or as witness."
"The reason on which the rule is said to rest cannot include the case of communications, criminal in themselves, or intended to further any criminal purpose, for the protection of such communications cannot possibly be otherwise than injurious to the interests of justice, and to those of the administration of justice. Nor do such communications fall within the terms of the rule. A communication in furtherance of a criminal purpose does not "come into the ordinary scope of professional employment." A single illustration will make this plain. It is part of the business of a solicitor to draw wills. Suppose a person, personating some one else, instructs a solicitor to draw a will in the name of the supposed testator, executes it in the name of the supposed testator, gives the solicitor his fee, and takes away the will. It would be monstrous to say that the solicitor was employed in the "ordinary scope of professional employment." He in such a case is made an unconscious instrument in the commission of a crime."
"It is true that this is only a dictum, but it shows decisively how Lord Cranworth understood the rule on this subject, and this suggests another observation. In order that the rule may apply there must be both professional confidence and professional employment, but if the client has a criminal object in view in his communications with his solicitor one of these elements must necessarily be absent. The client must either conspire with his solicitor or deceive him. If his criminal object is avowed, the client does not consult his adviser professionally, because it cannot be the solicitor's business to further any criminal object. If the client does not avow his object he reposes no confidence, for the state of facts, which is the foundation of the supposed confidence does not exist. The solicitor's advice is obtained by a fraud."
"The true doctrine is that there is no confidence as to the disclosure of iniquity. You cannot make me the confidant of a crime or a fraud and be entitled to close up my lips upon any secret which you have the audacity to disclose to me relating to any fraudulent intention on your part; such a confidence cannot exist".
"The third point relied on by the appellant, as an answer to the claim of professional privilege, is that the present case comes within the principle that such privilege does not attach where a fraud has been concocted between a solicitor and his client, or where advice has been given to a client by a solicitor in order to enable him to carry through a fraudulent transaction. If the present case can be brought within this principle, there will be no professional privilege since it is no part of the professional duty of a solicitor either to take part in the concoction of fraud, or to advise his client how to carry through a fraud. Transactions and communications for such purposes cannot be said to pass in professional confidence in the course of professional employment. Such a case must be differentiated from a case in which, after the commission of a crime, or in order to meet a charge of fraud made against him in a civil action, a client consults a solicitor in his professional capacity, employing him in order to obtain the benefit of his confidential advice and assistance."
". . . The principle on which the plaintiffs seek disclosure is that laid down in the classic judgment of Stephen J in R v. Cox and Railton (1884) 14 QBD 153, namely that privilege does not attach to a communication between a client and his legal adviser "intended to facilitate or to guide the client in the commission of a crime or fraud". This principle applies not only when the legal adviser is party to the crime or fraud but also when he is ignorant of the purpose for which his advice or assistance is being asked. As Stephen J said, in neither case can the client have been consulting his adviser in a confidential professional capacity: "The client must either conspire with his solicitor or deceive him.""
"The rationale for the principle, and the decisions cited all pointed to the conclusion that communications in furtherance of a crime or fraud were not protected from disclosure if they were relevant to an issue in the action whether of not the plaintiff's claim was founded on that crime or fraud.
Different considerations might apply to litigation privilege. It was plain from the authorities that litigation privilege was not displaced solely by virtue of the original fraud or crime: see R v Cox and Railton (at p 175); O'Rourke v Darbishire ([1920] AC 581, 622-3); R v Snaresbrook Crown Court, ex parte DPP ([1988] 1 QB 532, 537); and Francis and Francis (at p 397).
But none of those cases dealt with the situation where a client, having committed a fraud, sought to further that fraud by stifling it yet further after proceedings were anticipated or commenced by putting forward to his solicitors bogus defences.
The rationale behind the principle that by deceiving his solicitor the client deprived the communication of the necessary element of professional confidence was as applicable to communications after proceedings had been brought as to those which took place before."
"Ultimately, it seems to me that criminal or fraudulent conduct undertaken for the purposes of litigation falls on the same side of the line as advising on or setting up criminal or fraudulent transactions yet to be undertaken, as distinct from the entirely legitimate professional business of advising and assisting clients on their past conduct, however iniquitous. In this connection the extracts that I have cited above from Reg. v Cox, 14 Q.B.D 153, 167, appear to me to lend support to my conclusion. I therefore think that the documents sought in the present case are in principle within the established exception."
"The application of this exception to cases where the privilege claimed is one of litigation privilege is likely to be rare. It will of course not be enough that a solicitor has simply been the conduit of untruthful evidence: see R v Central Criminal Court Ex p. Francis [1989] AC 346. But it cannot be part of the professional duty of a solicitor to assist in the presentation of a bogus defence particularly with the assistance of manufactured documents and the deliberate suppression of others."
"There is a privilege protecting communications between attorney and client. The privilege takes flight if the relation is abused. A client who consults an attorney for advice that will serve him in the commission of a fraud will have no help from the law. He must let the truth be told."
"The explanation given by Turner V.-C. [in Russell v Jackson (1851) 9 Ha 387, 392-3] for the principle on which the exception rests, namely that a communication in furtherance of an illegal purpose is not within the ordinary scope of professional employment, was in substance accepted as correct in Reg. v. Cox and Railton and is now generally accepted."
Wilson J said at p. 524:
"The principle may be expressed by saying that, generally speaking, the public interest in the protection of alleged confidential professional communications will not be outweighed by the public interest in ensuring that all relevant evidence is admissible save when the professional relation is abused in a manner involving dishonesty that goes to the heart of the relationship. The presence of such dishonesty is enough to cause the privilege to "take flight", to use the words of Cardozo J. in Clark v. United States, because it precludes a true professional relationship from arising: see the remarks of Stephen J. in Cox and Railton."
Article 6 and Article 8 ECHR
The law applied to the facts
Iniquity
Furtherance
The privilege against self-incrimination
"... the right of a person in any legal proceedings other than criminal proceedings to refuse to answer any question or produce any document or thing, if to do so would tend to expose that person to proceedings for an offence or for the recovery of a penalty."
"Whilst it is not for the court to try to assess the probability of the risk of proceedings being taken, the court must be satisfied that 'there is reasonable ground to apprehend danger' to the party claiming privilege, or that the risk is 'reasonably likely' or that 'there must be grounds to apprehend danger to the witness and those grounds be reasonable rather than fanciful', or that there is a 'real and appreciable' risk of prosecution if the documents are produced for inspection. A 'mere possibility' of grounds for charge being disclosed is insufficient."
(1) Further contempt proceedings in the English actions.
(2) Criminal proceedings by the Russian authorities who have sought his extradition from France pursuant to a criminal investigation.
(3) Criminal proceedings by the Ukrainian authorities who have sought his extradition from France pursuant to a criminal investigation.
(4) Criminal proceedings by the Kazakhstan authorities which are already on foot, and which Mr Ablyazov fears may be pursued against him in person following a rendition by Ukraine or Russia in the event of his extradition to either of those countries from France.
"72. In my view, it has been established by the authorities that the privilege against self-incrimination does not extend to provide a person with protection against the risk of incriminating himself by the provision of a document or documents which come into existence independently of any order, statute or other instrument of law which compelled their production. It does not normally cover documents other than those which come into existence by an exercise of will pursuant to a testimonial obligation imposed upon the party. I derive that formulation in particular from the passages I have identified at paragraphs 68 and 69 of Saunders v United Kingdom [1998] 1 BCLC 362, (1996) 23 EHRR 313, paragraphs 28, 31, 36, 38, 46, 63 and 64 of C Plc v P [2008] Ch 1 paragraph 18 of R v S (F) [2009] 1 WLR 1489, and paragraph 53 of R v Kearns [2002] 1 WLR 2815, cited with approval by the Court of Appeal in R v S."
Discretion
Joint and common interest privilege
Declaratory Relief
Preservation Order
The evidence applications
(1) I express no conclusion on the argument that Ms Tyschenko's affidavit and exhibit should be excluded from evidence on the grounds that there is a real risk that it was obtained in breach of Article 3 of ECHR. It has played no part in my conclusions on the Bank's applications.
(2) I reject the application to exclude the evidence obtained as a result of the TSO. Mr Béar's argument, in summary, was that the way in which the TSO was granted and implemented, without the knowledge or involvement of Mr Ablyazov and without Ms Tyschenko being present when it was executed, was inadequate to protect his privilege in documents seized, and was therefore such a clear violation of common law standards and his Article 6 and Article 8 rights that it would be unfair to allow reliance on evidence acquired by the Bank in response to the TSO. There is force in the submission that BWB were not as well placed as Addleshaw Goddard to form a judgment on privilege questions. Nevertheless there were obviously good reasons for seeking to keep the order secret from Mr Ablyazov if it was to serve its purpose of assisting in tracing further assets and assisting the Bank in enforcing the Court's judgments, given Mr Ablyazov's strategy of taking every step he could to thwart that purpose. With the possible exception of one document (dealt with in Mr Leedham's 8th witness statement), upon which I have not placed any reliance, there is no reason to believe that any of the documentation relied upon by the Bank in this application has been the subject of an erroneous assessment of privilege by BWB. Mr Béar sought to suggest that the Bank had knowingly received responsive material from BWB which could only properly have been provided if an iniquity exception had been applied, which the Bank had made clear it was not seeking to apply to the TSO responsive material at this stage. The criticism is unfounded. It was for BWB to identify whether privilege potentially attached, and the role played by Ms Tyschenko is not such as to render it obvious that she was acting in a legal capacity or that legal professional privilege attaches to communications which were disclosed by BWB upon which the Bank relies. The Bank was entitled to deploy in evidence the material received from the TSO in accordance with the privilege regime put in place by the orders of Flaux J and Eder J, which was a reasonable and proportionate way of protecting Mr Ablyazov's Article 6 and Article 8 rights consistently with the protection of those of the Bank and the necessary public interest in maintaining the rule of law.
Conclusion
SCHEDULE: THE BANK'S PLEADING
(i) The allegations of fraud (iniquity) upon which the Bank relies
(ii) How the fraud (iniquity) was furthered by the use of or consultation with each of the solicitors
(a) corresponded with the Bank and third parties, which correspondence was premised upon and/or made reference to their untruthful and/or deliberately misleading instructions and/or evidence;
(b) provided false, backdated or concocted documents to the Bank and/or the Court;
(c) prepared and submitted evidence to the Court, which evidence (where it was given by Messrs Ablyazov and/or Shalabayev) was untruthful and/or deliberately misleading and/or (where it was given by others) had been suborned by Messrs Ablyazov and/or Shalabayev and was untruthful and/or deliberately misleading and/or (in either case) relied on the documents referred to in (b);
(d) instructed counsel to make written and oral submissions to the Court, which submissions relied on correspondence sent on their instructions and/or false documentation and/or untruthful and/or deliberately misleading evidence (as described in (a) – (c) above); and
(e) were provided with legal services in relation to corporate transactions which were intended by Messrs Ablyazov and/or Shalabayev to put assets of which Mr Ablyazov was the ultimate beneficial owner beyond the reach of the Bank.
a. seeking advice which they intended to use for the purposes of putting or seeking to put assets beyond the Bank's reach; and/or
b. about whether particular dealings in assets were permitted or not permitted by the Court's orders. It is to be inferred from the matters set out in the Schedule hereto that on those occasions they lied and/or gave deliberately misleading instructions to the solicitors about their connections with those assets.
(iii) The injunctions referred to in paragraph 1(a)(ii) of the draft order sought in the Disclosure Application and the nature of the Claimant's case with regard to prospective injunctions
Injunctions
a. The freezing order (and the injunctions contained therein, including in relation to the disclosure of information and documents concerning assets) first made by Mr Justice Blair on 13 August 2009, as amended or restated from time to time and as continued post-judgment by Mr Justice Teare on 23 November 2012 (the "Freezing Order").
b. The receivership order (and the injunctions contained therein, including in relation to the disclosure of information and documents concerning assets) first made by Mr Justice Teare on 6 August 2010, as amended or restated from time to time thereafter (the "Receivership Order").
c. The search order made by Mr Justice Henderson in the AAA Proceedings on 3 February 2011.
d. The injunctions granted against Mr Ablyazov by Mr Justice Teare on 29 February 2012.
e. The reversal orders (and the injunctions contained therein) made by Mr Justice Teare on 21 September 2012 and Mr Justice Flaux on 18 January 2013.
Prospective injunctions
30 September 2009
a. The disclosure was described by Teare J, on 16 October 2009, as "extraordinarily inadequate": see [2009] EWHC 2833 (QB), at [5].
b. By his judgment dated 16 July 2010 ([2010] EWHC 1779 (Comm), the "Receivership Judgment"), Teare J held that Mr Ablyazov should have disclosed (as a minimum) the identity of the trustee at the top of his asset-holding structures and the nature of the asset at the bottom of each structure, and that there were "substantial grounds to believe" that these matters were not set out because "Mr Ablyazov wished to make enforcement of the Freezing Order difficult": [76]-[85].
c. The affidavit did not disclose the numerous assets which have now been found to the criminal or civil standard to belong to Mr Ablyazov: see below.
d. The affidavit did not disclose the c. 1000 companies which have now been added to the receivership (on the basis that the Bank has persuaded the Court that there is good reason to believe that they belong to Mr Ablyazov): see Hardman, §§46-49, [2013] 1 WLR 1331 (the "Committal Appeal Judgment"), [58], [85], [176], and below.
October - November 2009
a. Mr Ablyazov denied that he owned any real estate anywhere in the world. He instead said that he was the tenant of the mansion on the Bishop's Avenue known as Carlton House. It was later established to the criminal standard that he was the ultimate owner of three properties located in or around London: Carlton House (worth c. £15 million), Oaklands Park (worth c. £20 million) and Alberts Court (worth c. £1 million); that the tenancy agreement he said he had entered into in respect of Carlton House was a sham; and that this perjured evidence was given with the intention of interfering with the administration of justice: see [2012] EWHC 237 (Comm) (the "Committal Judgment"), at [125] to [173], and Hardman, §34.
b. Mr Ablyazov denied that he retained any interest in the Eurasia Logistics group of companies, and instead asserted that he had given away his interest in these companies in July 2009.[2] Teare J later found, on the balance of probabilities, that Mr Ablyazov was the ultimate owner of two large logistics parks within the Eurasia Logistics group: see [2012] EWHC 2543 (Comm) (the "Reversal Judgment"), at [76] to [80], the Orders made on the handing down of the same (the "Reversal Orders"), Hardman §35ff, and below. In order to reach this conclusion, Teare J must have been satisfied that Mr Ablyazov was the ultimate owner of Eurasia Logistics Limited, a company incorporated in Jersey, and its subsidiaries.[3]
c. Mr Ablyazov denied that he had any interest in 29 of the 33 Schedule C Companies.[4] It was later established to the criminal standard that he was the owner of three of the companies of which he denied ownership and that his perjured evidence was again given with the intention of interfering with the administration of justice: see Committal Judgment, [174] to [206], and Hardman, §34. Further, (i) 29 of the Schedule C Companies have been added to the receivership on the basis that there is good reason to believe that they are Mr Ablyazov's assets and (ii) 10 of the Schedule C Companies were found in the Granton proceedings to belong to Mr Ablyazov ([2013] EWHC 510 (Comm), [87]).
d. Mr Ablyazov gave false evidence to the Court as to how a document which referred to the Schedule C Companies was produced: see Committal Judgment, [179], [183].
e. Mr Ablyazov denied any interest in Wintop Services Limited ("Wintop"), which he said was owned by a "friend".[5] Mr Ablyazov later said that Wintop was in fact Mr Shalabayev's company at this time.[6] Both assertions were untrue and/or deliberately misleading. Wintop was always owned and/or controlled by Mr Ablyazov: see (i) Christopher Clarke J's judgment of 26 October 2011 (described below), (ii) the addition of Wintop to the receivership order, and (iii) Mr Shalabayev's false evidence as to his means (Committal Judgment, [58]-[77], and the Committal Appeal Judgment, at [44]).
f. Mr Ablyazov failed to reveal that Messrs Alexander Udovenko and Syrym Shalabayev played a critical role in relation to his asset-holding structures: see Committal Judgment, [79] and [179]-[184], and Hardman, §37ff. Instead, Mr Ablyazov falsely asserted that Individual C was involved in the administration of his assets: ibid.
g. Despite being asked questions about Eastbridge Capital Limited, Mr Ablyazov failed to disclose[7] the central role carried out by this company in relation to the administration of his assets: see Committal Judgment, [18], [64], [65], [90], [152] and Trial Judgment, [11], [13], [22], [85], [86] and [180]. By the Committal Judgment, Teare J found that Mr Ablyazov was the owner of Eastbridge Capital Limited's parent company, Mega Property Limited: see [152].
h. Mr Ablyazov stated that he dictated the terms of trust deeds signed by Rinat Batyrgareyev during a telephone call and that these terms reflected a previous "oral agreement".[8] This was untrue: Mr Shalabayev gave instructions on and after 19 October 2009 for the creation of the new trust deeds for the purpose of hiding his (Mr Shalabayev's) prior involvement with Mr Ablyazov's (disclosed) assets: see CGH109, pages 228-239.[9] Some of those documents were backdated: see CGH109, pages 237, 239.
i. Mr Ablyazov failed to disclose the sale of his interests in BTA Kazan and his agreement to sell his interest in Eurasia Tower, such that his evidence in relation to these assets was deliberately misleading: see the Receivership Judgment, [113] and [115].
15 December 2009
a. Did not disclose the numerous assets which have now been found to the criminal or civil standard to belong to Mr Ablyazov: see below.
b. Did not disclose the c. 1000 companies which have now been added to the receivership (on the basis that the Bank has persuaded the Court that there is good reason to believe that they belong to Mr Ablyazov): see Hardman, §§46-49, the Committal Appeal Judgment, [58], [85], [176], and below.
c. Referred in the present tense to Mr Ablyazov's ownership of interests in BTA Kazan and Eurasia Tower (via Blackdesert Holdings Ltd, Colligate Investments Limited and ZAO Techinvest) without making reference to Mr Ablyazov's recent sale of the same.
d. Stated that Mr Batyrgareyev had been the nominee acting in relation to Stantis Limited since 7 August 2009, which has subsequently been held to have been a "falsification of the position": see Committal Judgment, [79(ii)].
February 2010
April 2010
16 April 2010
a. He continued to deny having any interest in the vast majority of the Schedule C Companies (which at the time Teare J said would be a "remarkable and brazen lie", such that he did not disbelieve Mr Ablyazov): see Receivership Judgment, [99]. It took the Bank a further 18 months to prove that Mr Ablyazov's lie did indeed justify this description: see Committal Judgment, [174]-[206].
b. He did not disclose the numerous assets which have now been found to the criminal or civil standard to belong to him: see below.
c. He did not disclose the c. 1000 companies which have now been added to the receivership (on the basis that the Bank has persuaded the Court that there is good reason to believe that they belong to Mr Ablyazov): see Hardman, §§46-49 and Committal Appeal Judgment, [58], [85], [176].
d. He did not mention the central role played in his asset administration by Messrs Udovenko and Syrym Shalabayev: see Committal Judgment, [79].
e. He said that trust deeds with Mr Batyrgareyev were created "… to show transparency and as an act of good faith in this litigation. They formalised an existing relationship. I do not believe that the execution of those deeds is consistent with a desire to evade the court's judgment or to put obstacles in the way of the Claimant": see paragraph 255 of Mr Ablyazov's third witness statement and the Receivership Judgment, [119]. This was untrue:
i. the trust deeds were created to hide Mr Shalabayev's role in relation to Mr Ablyazov's disclosed assets (and so were created in bad faith and evidenced a new relationship);
ii. the trust deeds were not created in the manner described by Mr Ablyazov when cross-examined (see above); and
iii. at least some of the trust deeds were backdated: see CGH109, pages 237, 239.
f. He made the following assertions which, for the reasons set out herein, were untrue: (i) he had "no intention of doing anything other than abiding by the orders of the Court", (ii) he would "never knowingly breach an Order of the English Court", (iii) he "tried to answer the questions put to me at my two cross-examination sessions as openly as I could …", (iv) he had "tried again in [his third witness statement] to be entirely open with the court and the Claimant", and (v) the suggestion that it was far from improbable that he would manufacture a situation to avoid judgment was "outrageous and offensive … (I apologise to the court if this is stated in strong terms but this reflects my feelings …)": see paragraphs 211, 213 and 256 of his third witness statement.
August 2010
a. Falsely asserted that "For the avoidance of doubt, I confirm that I do not own any assets worth more than £10,000 other than the assets listed under paragraph 259 [of his third witness statement]".
b. Failed to refer to the breaches of the Freezing Order identified above.
October 2010
5 November 2010
9 November 2010
a. The breaches of the Freezing Order committed after the appointment of receivers described herein (which also constituted breaches of the Receivership Order).
b. Paragraph 233 of the Committal Judgment and paragraphs 108 and 176 of the Committal Appeal Judgment.
c. Moore-Bick LJ's finding that Mr Ablyazov had "… failed to co-operate with the Receivers": [2012] EWCA Civ 639, [29].
December 2010
Late 2010 / early 2011
a. the right to lease a land plot situate at Paveletskaya Square, Moscow: see the Reversal Judgment and Orders; and
b. the right to lease land plots located at Kutuzovsky Prospect, Moscow: see the Reversal Judgment and Orders.
January 2011
a. An email sent by Mr Alexander Udovenko on 9 October 2008, which gave a Cypriot corporate services provider, Paul Kythreotis, instructions to change the ostensible beneficial ownership of 102 companies from Mr Udovenko to Mr Shalabayev: see Committal Judgment, [90], [183], [184].
b. An email sent by Mr Shalabayev on 26 July 2010, which gave Paul Kythreotis instructions in relation to 103 companies. The email included a large number of instructions to "change the contact person" or "change the UBO" of particular companies, and to backdate documents to "the date of incorporation" of a particular company or to the "date of transfer" of a company to the "current agent". See Committal Judgment, [194], [199], [200].
February 2011
8 April 2011
May-June 2011
6 September 2011
26 October 2011
Nov-Dec 2011
16 February 2012
a. Mr Ablyazov failed to disclose Bubris Investments Limited ("Bubris") in breach of the disclosure obligations contained in the Freezing Order. Bubris was a company used by Mr Ablyazov to perpetrate the frauds complained of in the AAA Proceedings (in relation to which summary judgment has now been entered against Mr Ablyazov: see [84]-[124] and [2013] EWHC 3691 (Ch) (the "AAA Judgment")). Teare J's conclusion that Bubris was one of Mr Ablyazov's assets placed reliance upon:
i. The removal of Mr Batyrgareyev as the ostensible ultimate beneficial owner of Bubris (pursuant to instructions given by Mr Shalabayev) shortly after the Bank obtained a Norwich Pharmacal disclosure order in relation to this company on 12 February 2010, a change backdated to 8 April 2008: [107]-[109].
ii. Mr Batyrgareyev was purportedly replaced by an individual called Mr Kovalenko. When the Bank traced Mr Kovalenko, he denied any knowledge of Bubris. The Bank relied upon this evidence when it applied for and was granted a freezing order in the AAA Proceedings on 26 July 2010. When served, this caused Mr Shalabayev to give instructions to change the ostensible beneficial owner of Bubris yet again, this time to a Mr Sadykov and this time backdated to May 2010: [110]-[117].
iii. Mr Kythreotis initially maintained that Mr Sadykov's appointment had not been backdated but then "confess[ed]" that it had been: see [2011] EWCA Civ 1241, [61]-[62] and Committal Judgment, [112]. This and other false evidence contained in Mr Kythreotis' affidavit of 28 September 2010 was suborned by Mr Ablyazov agreeing to pay Mr Kythreotis an indemnity of £4.5 million: see the email referred to at [2011] EWCA Civ 1241, [62].
b. Mr Ablyazov falsely denied on oath his interests in three pieces of English real estate, valued at in excess of £30 million: see [125]-[173]
c. Mr Ablyazov falsely denied on oath his ownership of three Schedule C Companies: see [174]-[206].
d. Mr Ablyazov dealt in December 2010 with three sets of loan rights with a face value exceeding US$80 million in breach of the Freezing Order: see [207]-[235].
a. Messrs Ablyazov and Syrym Shalabayev gave false and/or deliberately misleading evidence as to Mr Syrym Shalabayev's ownership of a uranium project and a company called Widley Worldwide Inc for the purposes of suggesting that it was Mr Shalabayev and not Mr Ablyazov who owned the English real estate and one of the Schedule C Companies: see [79] and [190]-[191].
b. Mr Ablyazov misled the Court by procuring that trust deeds were backdated to hide Mr Shalabayev's involvement with his assets in 2009: see [79].
c. Generally, Mr Ablyazov relied upon backdated and fabricated documentation and suborned the giving of false evidence on a wide-ranging basis: see [54], [79], [92], [95], [115], [116], [137], [146], [192], [204], [226], [227], [228], [229], [230], [233] and [236].
d. Mr Ablyazov was the owner of: (i) Sunstone Ventures Limited, which Mr Ablyazov had untruthfully denied owning ([129]-[132]); (ii) Mega Property Limited, which Mr Ablyazov had untruthfully denied owning ([150], [152]); and (iii) Alterson Limited, which Mr Ablyazov had untruthfully said was in the ownership of a Mr Kossayev ([225]-[226]).
e. Syrym Shalabayev was a person who "is willing to cause to be created documents which contain untruths and are designed to hide the truth. He did not appear to see anything wrong about this practice. It was, as he described it, 'his business'": [64].
c. 16 February 2012
a. Mr Ablyazov's flight was contrary to the provisions of the Freezing Order which required him to remain within the jurisdiction.
b. Mr Ablyazov's flight evidenced a breach of the provisions of the Freezing Order which required Mr Ablyazov to deliver up all of his passports.
c. Mr Ablyazov's failure to attend was contrary to a "clear and unequivocal confirmation to the court in answer to a specific question from the court that he would attend the judgment" ([2012] EWHC 455 (Comm), at [6]).
February 2012
29 February 2012
a. he produced a witness statement (so as not to reveal his location) and not an affidavit (it is to be inferred that the said statement was drafted by Addleshaw Goddard);
b. his witness statement failed to disclose ownership of any assets other than those identified in his third witness statement; and
c. his witness statement failed to disclose the breaches of the Freezing Order described above.[22]
a. "… It is noticeable from the facts of this case, both as found by the judge, but also in the nature of the structure of the arguments as they have developed, how time and time again, as some aspect of Mr Ablyazov's conduct has come under question, so the evidence deployed has become remarkable for the way in which it has taken tortuous turnings which have asked the court to suspend its belief in reality in favour of reduplicating unrealities. …" (Committal Appeal Judgment, [96])
b. "The trial judge decided that [the Court] was being deceived by witnesses without credibility. It is not for this court to say that he was wrong without strong grounds for doing so, grounds which have simply not been formulated." (ibid., [100])
c. "Mr Ablyazov's contempts have been multiple, persistent and protracted, have embraced the offences of non-disclosure, lying in cross-examination and dealing with assets, and have been supported by the suborning of false testimony and the forging of documents" (ibid., [106])
d. "Mr Ablyazov, emboldened perhaps by the wealth at his disposal, which enables him to travel, hide and still instruct lawyers on a prodigious scale, continues to obstruct justice with an attempt at impunity for the consequences of this litigation" (ibid., [169]).
September 2012
a. CJSC Logopark Pyshma and buildings and plots of land held by the same in Sverdlovsky, Russian Federation.
b. CJSC Logopark Kolpino and buildings and plots of land held by the same close to St Petersburg, Russian Federation.
18 January 2013
5 July 2013
a. "… [Mr Ablyazov] no longer maintains even a pretense, as he once did, of being willing to abide by the orders of the court" (at [9]);
b. "Mr Ablyazov is a persistent and serial contemnor. There is every reason to think that he does not regard himself as bound by the orders of the court and that he will do all he can to avoid the Bank being able to execute its judgments against his assets, not only by direct disobedience to the court's orders, but also by taking any steps that may occur to him to thwart any future orders, or any steps that the Bank may take to enforce the judgment" (at [12]); and
c. "[Mr Ablyazov's] desire to make representations on this application is not that of a litigant who seeks to persuade the court to make an order only to the extent that it is fair to him, in order that he may comply with it to that extent. His opposition to the form of order is, I would conclude, advanced despite his intention of ignoring, and indeed seeking to thwart the purpose of, any order which may be made." (at [25]).
31 July 2013
26 November 2013
Note 1 References to Hardman are to the sixty-third witness statement of Christopher George Hardman dated 12 December 2013. [Back] Note 2 Subsequently, Clyde & Co (acting on Mr Ablyazov’s instructions) stated, by letter dated 17 November 2009, “The document evidencing the gift to Mr Volkov of a 75% interest in Eurasia Logistics will not be provided. This asset was not owned by our client at the date the Order was made and therefore falls outside the scope of it.” [Back] Note 3 12 of those subsidiaries have been added to the receivership. They are: Aruma Holdings Limited, Bondiza Consulting Limited, CJSC Joint Venture Eurasia M4, CJSC Logopark Biek Tau, CJSC Logopark Mezhdureche, CJSC Logopark Tolmachevo, Dregon Land Limited, Gatova Holdings Ltd, Keppel Land Limited, Melchia Trading Limited, Naturalna Holdings Limited and Timmins Investing Ltd. [Back] Note 4 The companies which received the traceable proceeds of the monies misappropriated by the frauds complained of in the Drey Proceedings, so-called because disclosure relating to them was required to be made pursuant to Schedule C of the Freezing Order. [Back] Note 5 Transcript of examination held on 27.10.09, pages 22-23. Subsequently, Clyde & Co (acting on Mr Ablyazov’s instructions) stated, by letter dated 17 November 2009, “The written agreement with Wintop … is an agreement with a third party who has not been made subject to the terms of the Order. The document will therefore not be provided.” [Back] Note 6 [2011] EWHC 2664 (Comm), [26]. This assertion was subsequently repeated, for instance in Mr Ablyazov’s evidence to the Court of Appeal by witness statement dated 17 April 2012 (prepared by Addleshaw Goddard), at [49]. [Back] Note 7 Transcript of examination held on 18.11.09, page 5. [Back] Note 8 Ibid, pages 9-10. [Back] Note 9 In a small number of cases, the intention was to replace someone other than Mr Shalabayev with Mr Batyrgareyev: see CGH109, pages 233, 234, 239. [Back] Note 10 Mr Ablyazov failed to disclose this dealing when he produced evidence in opposition to the receivership application in April 2010 (when Stephenson Harwood were acting for him) or when he was ordered to provide further asset disclosure in August 2010 (when Stephenson Harwood were acting for him) or in February 2012 (when Addleshaw Goddard were acting for him). In consequence his evidence on these occasions was untruthful and/or deliberately misleading. [Back] Note 11 The previous footnote is repeated. Addleshaw Goddard acted for him in relation to the reversal application. [Back] Note 12 The previous footnote is repeated. [Back] Note 13 Mr Ablyazov failed to refer to the said breach when he purported to comply with the Court’s disclosure orders of 6 August 2010 (when Stephenson Harwood were acting for him) or 29 February 2012 (when Addleshaw Goddard were acting for him). Further, Addleshaw Goddard acted for him in relation to the reversal application. [Back] Note 14 Mr Ablyazov failed to refer to the said breach when he purported to comply with the Court’s disclosure order of 29 February 2012 (when Addleshaw Goddard were acting for him). Further, Addleshaw Goddard acted for him in relation to the reversal application. [Back] Note 15 Mr Ablyazov resisted that application in the manner described below, in respect of which Addleshaw Goddard acted on his behalf. [Back] Note 16 Mr Ablyazov failed to refer to the said breach when he purported to comply with the Court’s disclosure order of 29 February 2012 (when Addleshaw Goddard were acting for him). Further, Addleshaw Goddard acted for him in relation to the reversal application. [Back] Note 17 Mr Ablyazov failed to refer to the said breach when he purported to comply with the Court’s disclosure order of 29 February 2012 (when Addleshaw Goddard were acting for him). Further, Addleshaw Goddard acted for him in relation to the reversal application. [Back] Note 19 Later, Henderson J ordered Clyde & Co to disclose Mr Shalabayev’s contact details. The Judge concluded:“It is in the highest degree unsatisfactory that [Mr Shalabayev] can still be at large, as a fugitive from justice, while he has solicitors on the record acting for him, and intervening in legal proceedings as and when it suits his purposes. Such a procedure is liable to bring the administration of justice into disrepute, and to give the impression that British justice is an a la carte menu from which he can order at choice without ever having to pay the bill”: see [2011] EWHC 2163 (Ch), [39]. [Back] Note 20 See the second witness statement of Ian Hargreaves dated 15 September 2011, and in particular paragraphs 12-14 thereof. [Back] Note 21 Skeleton argument dated 23 February 2012, paragraph 8. [Back] Note 22 The said evidence was served by Addleshaw Goddard who (it is to be inferred) drafted or assisted in the preparation of the same. [Back]