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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 >> JSC BTA Bank v Ablyazov  EWCA Civ 1411 (06 November 2012)
Cite as:  WLR(D) 308,  2 All ER 515,  1 WLR 1331,  EWCA Civ 1411
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ON APPEAL FROM QUEEN'S BENCH DIVISION COMMERCIAL COURT
MR JUSTICE TEARE
2009 FOLIO 1099
Strand, London, WC2A 2LL
B e f o r e :
VICE PRESIDENT OF THE COURT, CIVIL DIVISION
LORD JUSTICE RIX
LORD JUSTICE TOULSON
| JSC BTA BANK
||Respondent / Claimant
|- and -
||Appellant / Defendant
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7404 1424
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Mr Stephen Smith QC, Mr Tim Akkouh and Mr Caley Wright (instructed by Hogan Lovells International LLP) for the Respondent
Hearing dates : Monday 2nd July 2012
Tuesday 3rd July 2012
Wednesday 4th July 2012
Crown Copyright ©
Lord Justice Rix :
The claims and the defence
"In circumstances where the claimant was insolvent and had reason to believe that substantial assets have been misappropriated it is to be expected that the claimant would wish to recover those assets. Indeed, the claimant is now contractually obliged to use its reasonable endeavours to maximise the recovery of its assets. In those circumstances the suggested inference may also not be a reasonable inference. I have even more doubt as to whether it can be inferred that the claimant's predominant purpose in bringing proceedings against the first defendant was to eliminate him as a political opponent of the President…However, I hesitate to decide on this application that no such inference can be drawn in the face of the tsunami of evidence which has been served by the defendant about political and economic life in Kazakhstan. It is extremely difficult for this court to make a judgment about that evidence without it (or at least the relevant parts of it) being tested and examined in detail. The inference which the court is being asked to draw may appear unlikely but I am not persuaded that it is unarguable."
See also , where Teare J said inter alia that "it is not contended that the claimant does not have a good arguable case against the first defendant".
The freezing injunction and receivership order
" In summary therefore the circumstances which give reason to believe that the Freezing Order may not provide the Bank with adequate protection against the risk that Mr A's assets will be dissipated prior to any judgment that the Bank obtains are as follows…His initial disclosure of his assets can now be seen to have been seriously inadequate in that he failed to mention the crucial role of a nominee and the nature of the operating assets (save for one). There are grounds for believing that he wished to make it difficult for the Bank to enforce the Freezing Order…
 Although Mr Ablyazov has stated that he will obey the orders of this Court that statement has to be considered in the light of his conduct in this action. He has stated that he can be trusted but I have to have regard not only to what he has said but also to what he has done. Consideration of his conduct with regard to disclosure of his assets in August/September 2009 and of his failure to inform Clyde & Co [his then solicitors] of dealings in the Eurasia Tower…has left me unable to trust him not to deal with his assets in breach of the Freezing Order."
The application to commit
"(i) Mr Ablyazov failed, in breach of the WFO [worldwide freezing order], to disclose his beneficial ownership of the shares in Bubris Investments Limited, a company incorporated in the British Virgin Islands.
(ii) Mr Ablyazov, when cross-examined under oath as to his assets, lied to the court when (a) he stated that he was merely the short-term tenant of two properties in London and stated that all the residential properties he owned were included in his schedule of assets and (b) he denied that he was the beneficial owner of shares in FM Company Limited (a company incorporated in the Marshall Islands), Bergtrans Contracts Corp and Carsonway Limited (both being companies incorporated in the BVI).
(iii) Mr Ablyazov, in breach of the WFO, dealt with an asset, namely loans held by Stantis Limited (a company incorporated in Cyprus) by assigning them to Nitnelav Holdings Limited in December 2010."
The judge's findings regarding Bubris (the non-disclosure allegation)
(i). Bubris was incorporated in the BVI on 2 January 2008.
(ii). Shares in Bubris were registered in the name of Valen Limited, a company incorporated in the Bahamas ("Valen").
(iii). Until about 9 October 2008 Valen held the shares in Bubris in trust for Mr Alexander Udovenko. Mr Udovenko was a director of Eastbridge Capital Ltd ("Eastbridge"), an agency company in England used by Mr Ablyazov (and, he would say, by others) to provide corporate agency services for the administration of companies in which he was (and he would say others were) the beneficial shareholder. Thus during this period Mr Udovenko was, apparently, the so-called "ultimate beneficial owner" or "UBO" of Bubris, but in truth he was the merely nominal UBO holding for its true UBO.
(iv). Mr Udovenko used Mr Paul Kythreotis in Cyprus to assist him in the activities of Eastbridge.
(v). Pursuant to an email of 9 October 2008 from Mr Udovenko to Mr Kythreotis, the declared UBO of the shares in Bubris was altered from Mr Udovenko to Mr Syrym Shalabayev. Mr Shalabayev is the brother-in-law of Mr Ablyazov. Pursuant to the same email, the declared UBO of the shares in another 101 companies listed in the email was similarly altered to Mr Shalabayev. Mr Udovenko spoke of all 102 companies as being in the same group ("So in accordance with the current policy of the Group we would like to have in all companies under your administration Mr Shalabayev as UBO").
(vi). In April 2009 the UBO of Bubris was changed again, this time to Mr Rinat Batyrgarejev. Mr Batyrgarejev, as was common ground, was Mr Ablyazov's man. He was his principal nominee, and acted exclusively for Mr Ablyazov. However, Mr Ablyazov said that this appointment was by mistake, as did Mr Shalabayev and Mr Batyrgarejev himself. Mr Shalabayev gave evidence by video-link from an unknown location. Mr Batyrgarejev gave evidence only in writing. The judge did not accept the evidence of any of these witnesses in this respect. The judge considered that the appointment of Mr Batyrgarejev was highly significant on the question of who was the true ultimate owner of Bubris. The appointment of Mr Batyrgarejev was backdated to 3 November 2008.
(vii). On 12 February 2010 the high court of the BVI, on the application of the bank, ordered the agent of Bubris (and four other companies) in the BVI to disclose the beneficial owner of those five companies. The order was served on 15 February. On 18 February the agent, Totalserve Management Limited, sought the name of the UBO from Mr Kythreotis. Totalserve was under the order of the court not to disclose the existence of the order, and therefore explained its request as originating from the "BVI Financial Investigation Authority". On 22 February Mr Kythreotis passed the request to Mr Shalabayev, saying "the matter is now very serious". That same day Mr Shalabayev emailed Mr Kythreotis to say that he would like to change the UBO of all five companies: the UBO of Bubris was now to be changed from Mr Batyrgarejev to Mr Vladimir Kovalenko. That was done and the change was backdated to 8 April 2008.
(viii). On 26 July 2010 Henderson J granted the bank a freezing order against Bubris in what are known as the AAA proceedings (one of the set of claims against Mr Ablyazov). The application was supported by a statement from Mr Kovalenko saying that he had no knowledge of Bubris.
(ix). On or about 23 September 2010 the UBO of Bubris was changed to Mr Kairat Sadykov. He gave written, but not oral, evidence to the judge that he was and had always been the true UBO of Bubris. The judge rejected Mr Ablyazov's case that Mr Sadykov had been declared Bubris's UBO in May 2010 (which is what a trust deed dated 7 May 2010 purported to show, but which the judge found had been backdated). Thus he also rejected the evidence of Mr Sadykov that he had declared his hand as UBO of Bubris in May 2010. Mr Sadykov, in his written evidence, referred to a letter signed by him and dated 7 May 2010 addressed to Mr Kythreotis which stated that he had been the beneficial owner of Bubris since 2008 but had been unable to reveal that earlier "for confidentiality reasons". However, Mr Kythreotis, when seeking in 2011 to avoid being imprisoned for contempt of court, had confessed that he had given false evidence in saying that he had learned of Mr Sadykov's beneficial ownership in May 2010 when in fact the letter from Mr Sadykov had been received by him only in September 2010. Moreover, that is what the documents show (see at paras 111-112 of the judgment). (Mr Kythreotis had been found guilty of contempt by Proudman J who had refused however to commit him to prison. However, this court on appeal imposed a sentence on him of 21 months:  EWCA Civ 1241.)
(i). The appointment was pursuant to a series of emails dated 24 April 2009 in which the request for a change of UBO specifically mentioned Mr Batyrgarejev as a replacement for Mr Shalabayev. Mr Shalabayev's own email to Mr Kythreotis asked for the change from himself to Mr Batyrgarejev. Mr Batyrgarejev's passport details were attached to an email on the same day. Mr Shalabayev's written evidence that he realised his mistake the same day and called Mr Kythreotis to cancel the appointment was rejected. There was no documentary evidence to support it. In his oral evidence Mr Shalabayev inconsistently stated that he had only realised his mistake in February 2010 (when Mr Kovalenko was substituted for him): but the judge rejected that account as well. It was plain to the judge that the February 2010 change had been generated by the enquiry as to the ownership of Bubris, purportedly coming from the BVI authorities. The reason for his replacement was not because he had been appointed by mistake, but because his close association with Mr Ablyazov would expose a link, through him, between his principal and Bubris, which had not been part of Mr Ablyazov's disclosure. As the judge said: "It is an inescapable conclusion that in directing a change of the UBO from Mr Batyrgarejev to Mr Kovalenko Syrym Shalabayev was intending to keep secret from the FIA the fact that Mr Batyrgarejev was the UBO of Bubris…Syrym Shalabayev removed Mr Batyrgarejev as UBO because he did not wish the identity of Mr Batyrgarejev as UBO of Bubris to get into the public domain in circumstances where Mr Ablyazov had not disclosed that Bubris was his asset but had revealed in cross-examination as to his assets that Mr Batyrgarejev was his trusted nominee".
(ii). The judge gave separate reasons for distrusting the evidence of the various witnesses who supported the case of mistake: I will refer to the judge's account of the witnesses below.
(iii). The judge was not impressed by the points made by Mr Duncan Matthews QC, who appeared for Mr Ablyazov at the trial as he does again on this appeal: that Mr Batyrgarejev had not been appointed UBO of the other four BVI companies whose UBO was also changed in February 2010; and that in a document dated 23 November 2009 which listed a number of companies with the words "Batyrgarejev, Trust for MK" (ie MKA, Mr Ablyazov), those words were not found against Bubris. Neither point, however, demonstrated that his appointment had been or may have been in error; on the contrary, a document of 25 November 2009 expressly referred to Mr Batyrgarejev as the "nominal beneficiary owner" of Bubris; and the concept of an express trust reflected cross-examination evidence of Mr Ablyazov in October 2009 about companies which he had admitted owning but which did not include Bubris.
(iv). The judge rejected Mr Ablyazov's case that Mr Sadykov was appointed in May 2010, as distinct from September 2010. The significance of these timings was that it was on 26 July 2010 that Henderson J had granted a freezing order against Bubris in the AAA proceedings. That was when Bubris entered as a name into this litigation, ie after May but before September 2010. It appears that it was already in August 2010, that is to say not long after the late July 2010 entry of Bubris into the litigation, that Mr Sadykov was first made a "contact" for Bubris and subsequently a director. Then, on 23 September, a trust deed, backdated to 7 May, showing Mr Sadykov as the UBO, was sent to Mr Shalabayev; and on 24 September Euroguard sent Mr Sadykov's letter to Mr Kythreotis about being the true UBO of Bubris. The judge concluded: "I am sure that Mr Kythreotis did not learn that Mr Sadykov was the UBO of Bubris in May 2010 and that he only received the letter dated 7 May in September 2010. There can be no reason for [Mr Kythreotis] to admit having given false evidence to the court when faced with contempt proceedings other than that such admission was true…It must follow that the letter was not written in May 2010…" (at para 115). "It is difficult to conceive of any reason why Mr Sadykov's letter should have been backdated to May 2010 other than as part of an attempt to hide Mr Ablyazov's interest in Bubris, in circumstances where Bubris had been served with a Freezing Order on 29 July 2010 requiring disclosure of who ultimately controlled Bubris' affairs and also served with evidence that Mr Kovalenko knew nothing of being UBO" (at para 116).
(v). Mr Kovalenko made a second written statement on 26 July 2011, this time refuting his first statement (see para 18 (viii) above) in which he had said that he knew nothing about being UBO of Bubris, and now asserting that he had been indeed the official beneficiary of Bubris and subsequently transferred the beneficial ownership to Sadykov. (This conflicted not only with his first statement, but also with Mr Sadykov's statement that he had always been the beneficial owner of Bubris.) Thus it followed, on the judge's findings, that Mr Ablyazov, Mr Sadykov, and Mr Kovakenko, had all lied about Mr Sadykov's role.
(vi). The judge also observed that "neither Mr Ablyazov nor Syrym Shalabayev was able to explain how Mr Batyrgarejev had been appointed by mistake or what the nature of that mistake was", despite some speculations of Mr Matthews (at para 100); and further that "there is no credible reason why Mr Sadykov, if he were the true owner of Bubris and had remained hidden since 2008, should choose September 2010 to take centre stage after Bubris had been made a defendant to the AAA proceedings" (at para 121).
The judge's findings regarding the UK properties (the first of the lying allegations)
(a) Carlton House, a grand house in The Bishop's Avenue, Hampstead, was purchased in April 2006 for £15.5 million by Mount Properties Limited, a BVI company, whose shares are said by Mr Ablyazov to be owned by Syrym Shalabayev. Mr Ablyazov lived in Carlton House with his family. It is common ground that he did so since May 2009, and the bank says that was so since at least 2007. Mr Ablyazov says that he leased the house from his brother-in-law on a short-term basis. The purchase monies were provided by Sunstone Ventures Limited ("Sunstone").
(b) Oaklands Park Estate, a country house and 100 acre estate in Surrey, was purchased in about March/April 2006. The registered proprietor is Lafe Technology Limited, a Seychelles company, whose shares were purchased for £18.15 million with funds paid by Sunstone Ventures Limited, Mega Property Limited and Widley Worldwide Inc. The estate, that is to say the shares in Lafe, is said by Mr Ablyazov also to be owned by Syrym Shalabayev. It is common ground that Mr Ablyazov and members of his family visited Oaklands Park at weekends until the New Year of 2011.
(c) 17 Alberts Court is a flat bought on 27 June 2008 for £965,000. The registered proprietor is Bensborough Trading Inc, a BVI company. The declared UBO of Bensbourogh is Syrym Shalabayev's brother, Salim. Salim gave oral evidence at trial that he was the true beneficial owner of the company and thus the flat. The bank says that the true UBO is Mr Ablyazov. It appears (from Salim's evidence) that the only persons to have lived in the flat were Mr Ablyazov's driver and his wife, at any rate for a while. When they moved out, Salim did not move in: he was living at Carlton House and then at Elizabeth Court (see below, property (d)).
(d) 79 Elizabeth Court is a flat which was purchased for £650,000 in January 2002. The registered proprietor was Rocklane Properties Limited, a BVI company. The bank said that the true UBO of Rocklane was Mr Ablyazov: the declared UBO was Mr Udovenko (up to October 2008) and Syrym Shalabayev thereafter. Mr Ablyazov, supported by Syrym's evidence, said that the beneficial owner was Syrym, from 2003 to December 2009, when Syrym sold it. The judge said that the changes of declared UBO from one trusted associate of Mr Ablyazov to another, in tandem with many other companies, suggested a single true UBO, namely Mr Ablyazov. Nevertheless, there was no evidence as to the source of the purchase monies, and the judge concluded that, despite matters which "strongly support" the bank's case and "odd aspects" of Mr Ablyazov's evidence, there was insufficient evidence to dispel all reasonable doubts. This appeal is therefore concerned only with the first three properties.
(i) It was common ground that the purchase price was provided by Sunstone. Who owned Sunstone? Between 2004 and 2007 Sunstone was the shareholder of TechStroyAlyans, a Russian company, which Mr Ablyazov admitted owning. Mr Ablyazov accepted that Sunstone held his interest in TechStroyAlyans. That pointed to Sunstone as being Mr Ablyazov's company. However, Mr Ablyazov asserted that Sunstone was an agency company holding assets for different clients, with Mr Udovenko holding his, Mr Ablyazov's, assets within Sunstone on his behalf.
(ii) Thus Mr Ablyazov suggested that other persons also held assets within Sunstone. For the purposes of Carlton House, however, such "other persons" came down to Mr Ablyazov's own brother-in-law, Syrym Shalabayev, because it was Syrym who both Mr Ablyazov and Syrym said had paid for Carlton House and owned it. However, the judge rejected the account of how Syrym had risen to such prosperity as enabled him to purchase not only Carlton House but also Oaklands Park. The rejection of Syrym's and Mr Ablyazov's evidence in this regard was critical both to the issue of the ownership of these properties and to their credibility.
(iii) Syrym said that his wealth derived in particular from a uranium business which he founded in 2003 based upon a joint venture with the government of Kazakhstan. In November 2005 he sold it with Mr Ablyazov's help for $350 million, of which Mr Ablyazov was entitled to a selling commission of $160 million. During this period Syrym also said that he obtained an MBA at Westminster University in London and started working for Mr Udovenko and his company Eastbridge in providing corporate and consulting services. He purchased Carlton House and Oaklands Park as investments in 2006, paying with his own money.
(iv) The bank said that the uranium business was Mr Ablyazov's not Syrym's, and the judge concluded that he was sure that that was right. Thus, on 14 January 2004 Mr Ablyazov had written to the President of Kazakhstan describing himself as "Head of the Board of Directors of Astana Kazakhstan Investment Group". Astana was the company which owned the uranium business, and Mr Ablyazov was head of its board. Syrym said that Mr Ablyazov was useful as a mere figurehead, but the judge rejected that explanation. Moreover, on 16 August 2005 Mr Udovenko wrote to Denton Wilde Sapte to answer their request as to who the client was who had instructed them in connection with the sale of the uranium business. Mr Udovenko explained that the uranium business was 70% owned by "our private Kazakhi company…Astana" which was in turn owned (through a Cypriot company) by Widley Worldwide Inc (of the BVI), and that Mr Ablyazov was "the beneficiary of the structure". The judge described these two documents as "compelling evidence that the uranium deal was Mr Ablyazov's deal, not Syrym Shabalayev's deal" (at ). It followed, said the judge, that Syrym's account of his uranium wealth as leading to the purchase of the English properties was untrue. The judge therefore rejected the account that Syrym had the wealth to pay for those properties.
(v) There was strong support for this conclusion in the fact that Mr Ablyazov's account of Syrym's business career contained in the former's third affirmation dated 16 October 2011, made in response to the committal application, did not even mention the uranium business or its sale.
(vi) The shares in Mount Properties (the registered proprietor of Carlton House) were in turn held by Mega Property Ltd. In October 2009, however, a new company, Smartwhere Limited, was purchased to hold the shares in Mount Properties. The transfer was made for a nominal consideration of $50,000, because, of course, the beneficial interests were the same. Syrym said that he was the owner of both Mega Property and Smartwhere, which evidence reflected that obvious point. However, it followed that this further evidence from Syrym was also viewed as lacking in credibility. The transfer was an attempt to distance the ownership of the property from Mr Ablyazov. It was in October 2009 that Mr Ablyazov faced cross-examination.
(vii) In October 2009 Mr Ablyazov said, in support of his evidence that he did not own Carlton House, that he had leased it and had a lease in writing. However, it was only on 11 November 2009 (but, significantly, shortly after that cross-examination evidence) that the lease, subsequently produced in November 2010, was sent for execution in Cyprus by Syrym. Equally significantly, the lease was backdated to 1 May 2009. The lease provided for a deposit, payable before the commencement of the term, of £60,000. That deposit was paid on only 20 December 2010 (after the lease's production to the bank). The judge concluded that the lease was a sham, and indeed that it had to be, given Mr Ablyazov's beneficial interest. A first rental payment purported to be made on 23 October 2009 was likewise a sham. A letter purported to be written on 1 October 2009 from estate agents Ashbury & Bloom demanding that first rental was therefore inexplicable: but, as the judge said, he did not have to be able to answer all the questions which arose in the trial "so long as I am sure that he is guilty of the alleged contempt, in particular that he was the true beneficial owner of the shares in Mount Properties and thus of Carlton House. I am so sure. I do not consider that Syrym Shalabayev's evidence that he owned Carlton House may be true" (at ).
(viii) Syrym said that he had sold Carlton House in November 2010, (the same month in which the lease was produced) but refused to tell the judge to whom, or at what price, claiming that this information was confidential. He even refused to tell the judge which firm of lawyers had acted in the transaction. No documents were available at the trial to support the allegation. On 8 April 2011 Mount Properties was brought within the receivership order, and a note was placed on the Land Registry that no disposition by the proprietor could be registered without the consent of the bank or order of the court. The judge could not see how this event could have failed to come to the attention of any purchaser of the shares in Mount Properties. Yet as at the time of trial there had been no challenge by any purchaser to the inclusion of Mount Properties in the receivership order.
(ix) On 11 January 2012, that is to say after the conclusion of the trial, during which the bank had made the point described in (viii) above, and pending judgment, the judge received a second witness statement dated 10 January 2012 from Syrym Shalabayev. He then stated that the purchaser of Carlton House was Roland Koefer, a resident of Switzerland. He exhibited a Cypriot court document, dated 14 December 2011 (the last day on which Syrym gave evidence to the judge), in which Mr Koefer claimed to be the "essential and/or ultimate beneficiary of 100% of the authorised stock capital of [Smartwhere Limited] and/or [Mount Properties] pursuant to a written and/or oral and/or explicit and/or implied and/or resulting trust". No reference was made to any sale of shares in 2010. There was no explanation of why Mr Koefer then felt able to expose his identity, when he had been unwilling before. No further documentary evidence of any sale was even then produced, either by Mr Koefer or by Mr Shalabayev. As the judge remarked, if Mr Koefer had been a bona fide purchaser, he would have challenged the receivership order. The judge rejected this evidence as untrue.
(i) Lafe Technology is a company administered by Mr Udovenko and Syrym Shalabayev, in the same manner as other Ablyazov companies.
(ii) Syrym Shalabayev alleged that he had sold Oaklands Park in late 2010. However, Lafe Technology had been included in the receivership order on 8 April 2011. Yet the judge pointed out that there had been no approach to the court to exclude Lafe Technologies or its property from the order. As in the case of Carlton House, in between the end of the trial and publication of the judge's judgment Syrym provided a statement that the purchaser of the estate was Mrs Fabienne Beaud, another Swiss resident, and that she has issued proceedings in Cyprus (but not in England). The judge rejected this evidence as he had done with the similar late evidence relating to Carlton House.
The judge's findings regarding the Schedule C companies (the second of the allegations of lying)
(i) Mr Ablyazov (and Syrym Shalabayev) had lied in saying that C had provided the chart. There were no reliable contemporaneous documents to support that case, even though Syrym had claimed to have kept a copy of Eastbridge's documents on a memory stick. The chart was supposed to have come forward in August 2009, but Mr Ablyazov could produce nothing to document that allegation.
(ii) The judge asked himself "Why did he lie?" and concluded that the only explanation was that Mr Ablyazov did not wish to reveal the roles of Mr Udovenko and Syrym Shalabayev in administering his assets. Bergtrans and Carsonway had been among those companies of which Mr Udovenko and Syrym Shalabayev had been successively the declared UBO, and which they had administered under powers of attorney.
(iii) FM, in particular, must have been a company owned by Mr Ablyazov, because it was clear that FM made payments and loans to companies which were admittedly among his assets. The explanation of such payments proferred on behalf of Mr Ablyazov, namely that FM was Syrym's company, that he was wealthy from the uranium deal, owed money to Mr Ablyazov, and was in the habit of providing short-term finance to Mr Ablyazov, was rejected. The judge had already rejected the case that the uranium company belonged to Syrym. No documents evidencing such dealings between the brother-in-laws were available, even though Syrym said that he had supplied Mr Ablyazov with such documents.
(iv) As for Bergtrans and Carsonway, they were alleged to be companies belonging to a Mr Kossayev. As in the case of Bubris (see above), the declared UBO of these companies underwent a number of changes: first it was Mr Udovenko, then (in October 2008) Syrym Shalabayev, then (in March/April 2010) the UBO of Bergtrans was changed to a Ms Gracheva and that of Carsonway to a Mr Degtyarev (both appointments being backdated to the time of the companies' incorporation), and then there was a further switch (in July 2010) to Mr Kossayev in the case of both companies (again backdated). The judge went into these arrangements in detail. The forensic explanation proffered for these changes was that Mr Kossayev had always been the true owner, but that it was only in July 2010 that he had been prepared for it to be known publicly that he was. In the meantime Syrym Shalabayev said that the switches made earlier in 2010 had been to save Mr Kossayev the embarrassment of being connected with him through his involvement in this litigation. However, when the judge asked Syrym directly whether there came a time when Mr Kossayev was happy to be recorded as the "true" UBO of the companies, Syrym replied: "I don't know, my Lord, I don't know the facts of that. I don't know about any such facts." The judge commented therefore that there was nothing to explain why Mr Kossayev should suddenly in July 2010 have been prepared to be revealed as the true UBO of these two companies, having kept it a secret for two years. Although it was suggested that the use of nominal UBOs was a Kazakhstan device to protect the rich from the political dangers of being known to be rich, there was no evidence of any change in political conditions in Kazakhstan to make it safe for rich men to be revealed as the owners of their assets.
(v) To cap this, there was evidence that the wealthy Mr Kossayev had borrowed approximately £10,000 from the bank to buy a second-hand car. This was a man whose companies had borrowed over $200 million from the bank. It was submitted that the Kazakh wealthy borrowed everything in order to keep the source of their funds secret. The judge rejected that suggestion. I comment, even if the judge did not, that that submission, apart from being unrealistic, cannot explain how the source of the repayment of such loans is kept secret – unless one posits an infinite series of loans, never repaid.
(vi) The judge also laid stress on the speed with which the Schedule C chart showed that the payments between the companies were effected, on the monies' speedy, if complicated, journey from the bank through Drey and other companies back to the bank. That could only be explained on the basis that the transactions and companies were all linked as part of the manipulations of a single directing mind, their owner.
The judge's findings regarding Stantis (the dealing allegation)
(i) Stantis's sole director was Mr Batyrgarejev, who, as stated above, worked exclusively for Mr Ablyazov.
(ii) Mr Ablyazov's case that Stantis was an independent company which was in the business of providing project finance was rejected. Mr Ablyazov's own witness statement (his third, dated 16 April 2010) had included Stantis as one of the companies by which he held his interest in BTA Ukraine. He did not identify Stantis as an independent company whose business might be damaged by the receivership order.
(iii) Mr Batyrgarejev's statement dated 4 June 2010 had referred to Stantis as a "holding company" or "nominee company", not as an operating company, and this was confirmed by his solicitors, Stephenson Harwood, in their letter dated 12 July 2010 to the court.
(iv) In effect, Stantis was a mere conduit for channelling funds for Mr Ablyazov's projects. That was in effect how a Mr Anuar Aizhulov, a former director of Eastbridge who worked in various roles for Mr Ablyazov until 2009, whose name was on the short form agreement, the long form agreement and the 2009 agreement (although he denied that he had signed the latter two documents), and who had given oral evidence at trial, described Stantis. He said that it was a "special purpose vehicle used in transactions where Mr Ablyazov would organise funding for Ukrainian projects".
(i) The short form agreement, a short document barely over one page in length, was genuine. No one suggested otherwise, and Mr Aizulov recognised his signature on it. It had been found both in the bank's records and in the Big Yellow storage unit.
(ii) The short form agreement and the long form agreement were incompatible: they provided for different proper laws; only the long form agreement allowed for accelerated repayment or assignment; the long form agreement made no reference to the short form agreement, and the short form agreement contained no suggestion that it was merely a prelude to a longer agreement. Therefore the suggestion that the long form agreement was merely a working out of the short form agreement was unrealistic.
(iii) Unlike the short form agreement, the long form agreement had not been found in the bank's records or in the Big Yellow storage unit. It had been produced in what the judge described as odd and implausible circumstances, namely as a copy given to Syrym Shalabayev by Mr Kossayev. Similarly, the original of the June 2009 agreement had never been produced.
(iv) The assignment agreements produced in December 2010 made no reference to the 2009 agreement, which was consistent with and supported the conclusion that the 2009 agreement was a late forgery.
(v) The December 2010 assignments, backdated to July - October 2010, and the June 2009 agreement, were an attempt to legitimise the assignments of Stantis's loans at a time when the receivership order had been made and had survived an appeal to this court.
(vi) A structure chart attached to an email passing between Eastbridge employees in October 2008 indicated that the true UBO of Stantis was also the true UBO of Alterson. The very brevity of the short form agreement was consistent with the loan from Alterson to Stantis as being an "inter-group agreement". Mr Kossayev was put forward as the true UBO of Alterson, but this was rejected.
(vii) Although there was no evidence that Nitnelav belonged to Mr Ablyazov, the judge was persuaded that he must have benefited from the assignments to Nitnelav.
The witnesses at trial
"The only evidence Mr Aizhulov has given relates to his apparent signature on the Stantis documents. There is no indication that he has given or will give any other evidence. The matter is relevant because the Stantis documents are relied upon by Mr Ablyazov in defence to the allegation of contempt concerning dealing with Stantis' loans. That allegation was first made on 16 May 2011 when the contempt application was issued. The existence of the loans was only discovered by the Bank as a result of the Norwich Pharmacal orders made against Yahoo! In early 2011. Mr Ablyazov's reliance on the Stantis documents emerged by way of the evidence adduced by him in defence of that allegation much later in 2011. In those circumstances the suggestion that in or about December 2010 Mr Aizhulov made an arrangement with the Ukrainian authorities to give evidence against Mr Ablyazov is fanciful. The relevance of the Stantis documents was not revealed until later in 2011 and there is no other issue on which Mr Aizhulov has given evidence. Nor is there any reason apparent as to why the Ukrainian authorities would benefit from such evidence being given. The suggestion that a deal was done with the Bank in meeting with Mr Prosyankin in 2010 runs up against the same difficulty. The Bank could not have known about the relevance of the Stantis documents until later in 2011 when they were relied upon by way of defence to the Stantis allegation."
The appeal against the Bubris finding of contempt
"…the prosecution bears the burden of proving all the elements of the crime beyond reasonable doubt. That means that the essential ingredients of each element must be so proved. It does not mean that every fact – every piece of evidence – relied upon to prove an element by inference must itself be proved beyond reasonable doubt. Intent, for example, is, save for statutory exceptions, an element of every crime. It is something which, apart from admissions, must be proved by inference. But the jury may quite properly draw the necessary inference having regard to the whole of the evidence, whether or not each individual piece of evidence relied upon is proved beyond reasonable doubt, provided they reach their conclusion upon the criminal standard of proof. Indeed, the probative force of a mass of evidence may be cumulative, making it pointless to consider the degree of probability of each item of evidence separately."
"…The creation of such documents must cause the Court to exercise caution before accepting as true, or as possibly true, statements made by such witnesses notwithstanding that the creation of such documents may be a necessary practice to prevent the President of Kazakhstan from unlawfully appropriating such assets.
35. In such circumstances the email traffic and other contemporaneous documents which the Bank has been able to obtain are likely to be of considerable assistance to the Court. The cornucopia of material obtained from disclosure, search and Norwich Pharmacal orders against Yahoo!, the Yellow Box strorage facility in north London and from the offices of corporate providers in Cyprus demonstrates the value of such orders…"
"It is probably the case that he lied to protect the location of his brother's house in Latvia but the fact that he was prepared to lie so blatantly means that I must exercise very great caution before accepting anything else he says."
As for point (iii), the judge was never asked to make the video link facility available to the witnesses in question. It is not open therefore for Mr Matthews to submit that the judge would inevitably have declined any such application, if cogently made. In any event, the judge had good reason to discount this untested evidence. Mr Batyrgarejev, apart from being Mr Ablyazov's man, had allowed his name to be used on a large number of false documents; Ms Kabanova was responsible for creating an even larger number of false documents; and Mr Sadykov had only come on the scene for the purpose of assisting Mr Ablyazov's committal defence.
"the Court must exercise care when relying upon and drawing conclusions from the disclosed material. That is because it is possible that the Bank may not have had access to all of Eastbridge's electronic documents and that some relevant documents may have escaped the electronic searches directed by Mr Hardman. These matters must be borne in mind when considering whether the Bank has been able to discharge the burden of proof to the criminal standard. I have sought to do that" (at ).
That was an impeccable self-direction.
The Bubris allegation: appeal and discussion
"134. Mr Ablyazov's case provides a good starting point for this discussion. In Mr Ablyazov's case, the type of contempt was the same as it is here, but Teare J thought he had all the available evidence on the point. That is not the same in this case. There is no doubt that there may be very much more evidence available concerning the AAA Transactions and Mr Ereshchenko's involvement in them. Indeed, the Bank has not yet been ordered to give disclosure and, according to Mr Hardman, has been careful to disclose only the documents it perceives that Mr Ereshchenko is entitled to receive at this stage. …
"135. If the substantive case against Mr Ereshchenko is proved at trial, the court would undoubtedly be in a better position at that stage to determine whether what he said about his recollection and access to documents in December 2010 was clearly false…"
The UK properties
The Schedule C companies.
Conclusion on the committal judgment appeal
The appeal against sentence
" From this review of authority I derive the following propositions concerning sentence for civil contempt, when such contempt consists of non-compliance with the disclosure provisions of a freezing order:
(i) Freezing orders are made for good reason and in order to prevent the dissipation or spiriting away of assets. Any substantial breach of such an order is a serious matter, which merits condign punishment.
(ii) Condign punishment for such contempt normally means a prison sentence. However, there may be circumstances in which a substantial fine is sufficient: for example, if the contempt has been purged and the relevant assets recovered.
(iii) Where there is a continuing failure to disclose relevant information, the court should consider imposing a long sentence, possibly even the maximum of two years, in order to encourage future co-operation by the contemnor."
The unless judgment
"19. In my judgment, where the court has issued a warrant for the committal of a contemnor and where the contemnor has gone into hiding, being careful whilst giving instructions to his solicitors not to reveal his whereabouts to them, it is just and convenient to issue a mandatory injunction ordering the contemnor to surrender himself to the tipstaff so that he may execute the warrant of committal. There is, therefore, jurisdiction to make the order sought pursuant to section 37 of the Senior Courts Act 1981. I do not consider that in this context the Bank needs to establish a legal or equitable right.
20. If that is wrong, then in my judgment the court has inherent jurisdiction to issue ancillary orders designed to make effective orders which it has previously issued. That jurisdiction is confirmed by the authorities to which Mr Smith referred. He has decided to go into hiding, either here or abroad and has sought thereby to frustrate the court's order. An order that he surrender to the tipstaff will enable the tipstaff to execute the court's warrant.
21. Mr Matthews made two further points. First, he said that neither section 37 nor the court's inherent jurisdiction could justify an order designed to deprive a person of his liberty. He described such an order as a "reverse habeas corpus". This point is in my judgment misconceived because it overlooks the circumstance that it is the warrant of committal that seeks to deprive Mr Ablyazov of his liberty. The order sought on the present application is designed to make that order effective.
22. Second, he said that the order is unnecessary because the court has made all the appropriate orders by committing Mr Ablyazov to prison and ordering that a warrant of committal be issued. Mr Matthews submitted that it is for the tipstaff to execute the warrant, a submission which is perhaps encapsulated in the phrase, "Catch me if you can".
23. The current position is that Mr Ablyazov has gone into hiding and so it is unlikely that the warrant can be executed. If Mr Ablyazov surrenders to the tipstaff then the warrant can be executed. The order is, therefore, appropriate and necessary.
24. If Mr Ablyazov has fled abroad, which must be a possibility, then surrender is essential because the tipstaff's jurisdiction ends at Dover…"
"51. In the present case it is not suggested that Mr Ablyazov's failure to comply with the order for disclosure of assets will impede the court's ability to conduct a fair trial of the issues in the action. The unless order is sought in order to bring further pressure on him to comply with the disclosure order. That appears to me to be legitimate in principle and to be supported by the authorities relied upon by Mr Smith. Were it otherwise, the court would be powerless when faced with a defendant who refused to comply with an order for disclosure of his assets and when sentenced to be imprisoned for his contempt of court went into hiding in order to avoid the execution of that sanction.
52. The unless order would not be made because the court is indignant that the defendant has flouted the court's disclosure order, but because the unless order may cause the defendant to reconsider his position and comply, belatedly, with the disclosure order…
53. The authorities relied upon by Mr Matthews do not, in my judgment, suggest that it is illegitimate to make an unless order for such purposes. The principle which they establish is that a defence may be struck out if there is a substantial risk of injustice.
54. Whilst the cases essentially deal with a risk of injustice by reason of the difficulty of there being a fair trial of the issues in dispute, a risk of injustice can also arise by reason of the difficulty of enforcing a judgment caused by a defendant hiding his assets or dealing with his assets prior to trial…
59…Where there is a failure to give full disclosure of assets, the court must also carefully consider whether the failure has given rise to a substantial risk that overall the proceedings would be unfair or unsatisfactory…
62. The Bank's claims are very large indeed. They run to several billion dollars…
63. Mr Ablyazov's own estimate of the value of the 17 assets which he has disclosed was itself much less than the total value of the Bank's claim. There would therefore appear to be a risk, and a substantial risk, that the judgments the Bank seeks will not be fully enforced by execution on the 17 assets disclosed by Mr Ablyazov and, therefore, a substantial risk that justice cannot be done to the Bank without further disclosure…
66. It thus appears to me that, in the interests of overall fairness, the unless order should be granted in respect of the disclosure obligation…
76. So far as the surrender order is concerned, an unless order will be an incentive to comply with the order. Since compliance will enable the tipstaff to execute the warrant of arrest, it is appropriate that it be imposed. If the warrant is not executed, the proceedings will, in that respect, be unsatisfactory because the committal is designed to persuade Mr Ablyazov to comply with the freezing order and so ensure a fair trial in the full sense of that phrase…"
"58. I do not consider that if Mr Ablyazov's defence is struck out for failing to provide a full affidavit of assets he has been denied a fair hearing of his civil rights and obligations. Such an affidavit is required to ensure a fair resolution of the Bank's claim against him. He will have a fair hearing of his civil rights and obligations if he provides a full affidavit of his assets. If he chooses not to provide a full affidavit of his assets, then his defence will be struck out by reason of his own actions, not because the court has denied him his entitlement to a fair hearing of his civil rights and obligations."
The submissions on behalf of Mr Ablyazov
"To my mind there must be inherent in that power, the power to make all such ancillary orders as appear to the court to be just and convenient, to ensure that the exercise of the Mareva jurisdiction is effective to achieve its purpose."
Moreover, the same power existed in the inherent jurisdiction of the court (at 942G/H).
"Parker J. described the plaintiffs' application and his order for discovery in aid or support of the Mareva injunction and so in a sense they were. But in so far as they relate to the defendant's assets at past dates as distinct from their present whereabouts their purpose seems to be not so much to help the court or the plaintiffs to locate and freeze particular assets now, as to open the way to incriminating and ultimately punishing the defendant for contempt of court in formerly disobeying the Mareva injunction and/or breaking his undertaking. This purpose emerges not only from the wide terms of the order but from the judge's comments at the end of his judgment. To that extent the order goes beyond the legitimate purpose of an order for discovery in aid of a Mareva injunction and Robert Goff J.'s order in A v. C and is not necessary for the proper and effective exercise of the Mareva injunction."
"The judge was clearly dealing with a very evasive litigant…The judge was, in my opinion, fully justified in taking the view that the defendant's affidavits were so unsatisfactory that he was entitled to refuse to accept their contents at their face value and to order the defendant to make a full disclosure of his financial position…It is true that the judge might have used other measures to put pressure on the defendant to induce him to reveal the true state of his finances…
I agree that the power to order discovery in support of a Mareva injunction should be sparingly exercised and if too readily resorted to could easily become a most oppressive procedure.
I am sure that the judges in the commercial court have this well in mind. There should be no question of an order for discovery becoming a usual part of the Mareva relief…"
"it is by no means inconceivable that cases, albeit perhaps rare cases, could arise where the court could properly take the view (1) that the defendant in an action appeared determined both to put and keep his assets beyond the reach of the plaintiff and to conceal the true nature and extent of these assets from the court; and (2) that, in the particular circumstances of the case, an immediate order for oral examination or cross-examination of the defendant was the only "just and convenient" way of ensuring that he would not deal with his assets, so as to deprive the plaintiffs in the future of the fruits of any judgment."
Cumming-Bruce LJ said (at 183):
"The court has the power (and, I would add, the duty) to take such steps as are practicable upon an application of the plaintiff to procure that where an order has been made that the defendants identify their assets and disclose their whereabouts, such steps are taken as will enable the order to have effect as completely and successfully as the powers of the court can procure."
"It is clear, however, that the law in relation to the grant of injunctive relief for the protection of a litigant's rights pending the hearing of an action has been transformed over the past 10 years by the Anton Piller and Mareva relief which has greatly extended the law on this topic as previously understood, so as to meet the needs of justice.
Bearing in mind we are exercising a jurisdiction which is statutory, and which is expressed in terms of considerable width, it seems to me that the court should not shrink, if it is of the opinion that an injunction is necessary for the proper protection of a party to the action, from granting relief, notwithstanding that it may, in its terms, be of a novel character."
"The object of Ord 24 r 16 is not to punish the offender for his conduct but to secure the fair trial of the action in accordance with the due process of the court...The deliberate and successful suppression of a material document is a serious abuse of the process of the court and may well merit the exclusion of the offender from all other participation in the trial. The reason is that it makes the fair trial of the action impossible to achieve and any judgment in favour of the offender unsafe. But if the threat of such exclusion produces the missing document, then the object of Ord 24 r 16 is achieved. In my judgment an action ought to be dismissed or a defence struck out (as the case may be) only in the most exceptional circumstances once the missing document has been produced and then only if, despite its production, there remains a real risk that justice cannot be done. That might well be the case, for example, if it was no longer possible to remedy the consequences of the document's suppression despite its production, perhaps because a material witness who could have dealt with the document had died in the meantime, or where, despite the production of the document, there was reason to believe that other documents had been destroyed or remained concealed. But I do not think that it would be right to drive a litigant from the judgment seat without a determination of the issues as a punishment for his conduct, unless there is a real risk that that conduct would render the further conduct of proceedings unsatisfactory. The court must always guard itself against the temptation of allowing its indignation to lead to a miscarriage of justice."
"Secondly, there is the authority of this court in A. J. Bekhor & Co. Ltd. v. Bilton  QB 923 and other cases that there is an inherent power under what is now section 37(1) to make any ancillary order, including an order for discovery, to ensure the effectiveness of any other order made by the court. This applies in the unusual circumstances of this case. Since the alternative means of appointing a receiver or of making an order under Order 48 are unavailable, the order for disclosure is necessary to render the plaintiffs' judgment against the I.T.C. effective."
"These cases are all instances of injunctions granted pursuant to section 37(1) of the Act of 1981for the purpose of rendering some other order effective. They provide ample justification for the order made by Millett J. in the present case in aid of the plaintiffs' unsatisfied judgment."
"The fundamental principle underlying this jurisdiction is that, within the limits of its powers, no court should permit a defendant to take action designed to ensure that subsequent orders of the court are rendered less effective than would otherwise be the case…" (at 76E).
"What changes is not the power or the principles but the circumstances, both special and general, in which courts are asked to exercise this jurisdiction. This can and does call for changes in the practice of the courts. We live in a time of rapidly growing commercial and financial sophistication and it behoves the court to adapt their practices to meet the current wiles of those defendants who are prepared to devote as much energy to making themselves immune to the courts' orders as to resisting the making of such orders on the merits of their case" (at 77C).
"… but in the context of a Mareva injunction, I think that a sufficient sanction exists in the fact that, in the event of disobedience, the court could bar the defendant's right to defend. This is not a consequence which it could contemplate lightly as it would become a fugitive from a final judgment given against it without its explanations being heard and which might well be enforced against it by other courts" (at 81E).
"The other point is that it has become increasingly clear, as the English High Court regrettably has to deal more and more often with major international fraud, that the court will, on appropriate occasions, take drastic action and will not allow its orders to be evaded by the manipulation of shadowy offshore trusts and companies formed in jurisdictions where secrecy is highly prized and official regulation is at a low level."
"53. In those circumstances I take the view that it was wrong for the judge to allow the petition to proceed once he had reached the conclusion that there was a substantial risk that the allegations in relation to the disputed terms of the 1994 agreement were incapable of a fair trial…
54. It would be open to this court to allow the appeal against the judge's refusal to strike out the petition on that ground alone. But, for my part, I would allow the appeal on a second, and additional ground, I adopt, as a general principle, the observations of Millett J in Logicrose Ltd v Southend United Football Club Ltd (1988) Times, 5 March, that the object of the rules as to discovery is to secure the fair trial of the action in accordance with the due process of the court; and that, accordingly, a party is not to be deprived of his right to a proper trial as a penalty for disobedience of those rules, even if such disobedience amounts to a contempt for or defiance of the court, if that object is ultimately secured, by (for example) the late production of a document which has been withheld. But where a litigant's conduct puts the fairness of the trial in jeopardy, where it is such that any judgment in favour of the litigant would have to be regarded as unsafe, or where it amounts to such an abuse of the process of the court as to render further proceedings unsatisfactory and to prevent the court from doing justice, the court is entitled, indeed, I would hold bound, to refuse to allow that litigant to take further part in the proceedings and (where appropriate) to determine the proceedings against him. The reason, as it seems to me, is that it is no part of the court's function to proceed to trial if to do so would give rise to a substantial risk of injustice. The function of a court is to do justice between the parties; not to allow its process to be used as a means of achieving injustice. A litigant who has demonstrated that he is determined to pursue proceedings with the object of preventing a fair trial has forfeited his part to take part in a trial. His object is inimical to the process which he purports to invoke.
55. Further, in this context, a fair trial is a trial which is conducted without an undue expenditure of time and money…The trial was 'hijacked' by the need to investigate what documents were false and what documents had been destroyed…
56…A decision to stop the trial in those circumstances is not based on the court's desire (or any perceived need) to punish the party concerned; rather, it is a proper and necessary response where a party has shown that his object is not to have a fair trial which it is the court's function to conduct, but to have a trial the fairness of which he has attempted (and continues to attempt) to compromise."
"73. The attempted perversion of justice is the very antithesis of parties coming before the court on an equal footing…
74. This was, therefore, a flagrant and continuing affront to the court. Striking out is not a disproportionate remedy for such an abuse, even when the petitioners lose so much of the fruits of their labour."
Roch LJ said he agreed.
"The differences in approach between the traditional grounds of review and the proportionality approach may therefore sometimes yield different results. It is therefore important that cases involving Convention rights must be analysed in the correct way" (at 548B).
"161. Article 6 of the Convention requires attention to be addressed to a matter which has always been implicit in cases of this kind, namely that the effect of the court's refusal to grant relief is that the losing party will be deprived of a trial of his defence on the merits. Clearly, as the judge recognized, that is an important factor. But three points must be borne in mind. First, it is open to a party to consent to judgment being given against him without a trial on the merits…Second, this is not an appeal against the judgments entered against the appellants. The appellants cannot say those orders were wrongly made. Third, the state can impose restrictions on the right of access to court provided that the restrictions serve a legitimate aim, are proportionate and do not destroy the very essence of the right. Here, the legitimate aim in imposing a sanction is to secure compliance with court orders, which in the instant case were made to ensure the effectiveness of freezing orders. The imposition of a sanction is proportionate if it is reasonably necessary for achieving that aim. The essence of the right of access to court is not destroyed because the litigant has the opportunity to seek relief against the sanctions. The refusal of that relief is Convention-compliant if the same tests are satisfied. The legitimate aim remains the same. Proportionality will be met if the overriding objective is met. The essence of the right will not be destroyed even if refused, since the appellants always had the chance to comply with the court orders and to help progress the case to trial."
" At first sight this may seem unattractive. It may seem unattractive that a person can, at one and the same time, evade justice in respect of his criminal conduct and yet seek the assistance of courts in protection of his own civil rights. But the contrary approach, adopted in the name of the public interest, would lead to wholly unacceptable results in practice. It would mean that or so long as a fugitive remained "on the run" from the criminal law, his property and other rights could be breached with impunity. That could not be right. Such harshness has no place in our law. Mr Polanski is not a present-day outlaw. Our law knows no principle of fugitive disentitlement."
"But the focus at Strasbourg is not and has never been whether a challenged decision or action is the product of a defective decision-making process, but on whether, in the case under consideration, the applicant's Convention rights have been violated. In considering the exercise of discretion by a national authority the court may consider whether the applicant had a fair opportunity to put his case, and to challenge an adverse decision…But the House has been referred to no case in which the Strasbourg court has found a violation of a Convention right on the strength of failure by a national authority to follow the sort of reasoning process laid down by the Court of Appeal. This pragmatic approach is fully reflected in the 1998 Act. The unlawfulness proscribed by section 6(1) is acting in a way which is incompatible with a Convention right, not relying on a defective process of reasoning, and action may be brought under section 7(1) only by a person who is a victim of an unlawful act."
"28. The issue before Briggs J arising from the alleged deficiencies in the respondent's written evidence related to the effective policing of and ensuring compliance with the protective orders of the court. In these circumstances the court has to make a decision now about the respondent's evidence that he has no assets or only negligible assets. If the court takes the view that the respondent's written evidence about his assets and property is incredible, there is no need for cross-examination to establish that it is incredible. This course is pointless and simply postpones appropriate measures for dealing with a person who has submitted incredible evidence to the court. If, however, the court takes the view that the evidence is not incredible and it is contested, the proper course was not to postpone the issue of cross examination, but to order it in order to determine the position on alleged non-disclosure of assets.
29. In my judgment, Mr Marshall has demonstrated that the judge was wrong not to make an unless order in relation to the respondent's disclosure of assets. I agree with Lindsay J that, on the material before the court, his evidence is incredible and that it is now necessary to make an unless order, which, if not complied with, will result automatically in the respondent being debarred from defending the claim against him."
"…In the present case the "unless orders" were supplementary to, and in enforcement of freezing orders. Freezing orders are critical weapons in the court's armoury against fraud, securing the preservation of assets which might otherwise be wrongfully dissipated pending judgment, and, in appropriate cases, the preservation of evidence, including documentation, and the provision of information to trace the proceeds of fraud."
"…In a case of deliberate and persistent non-compliance with orders to provide information and deliver documents made in order to safeguard proprietary claims, a proper administration of justice requires that, save in very exceptional circumstances, sanctions imposed should take effect. There were no exceptional circumstances in the present case."
Waller LJ and Thomas LJ agreed.
" I reject Mr Malek's submission that because the non-compliance with the grounding order will not impact on whether the court can ascertain the truth in the Phase 2 trial, that necessarily makes the barring of the defendants from participating in it disproportionate. I have concluded that, in the circumstances of this case, the breach of the order falls within the second limb of the analysis of Denning LJ in Hadkinson's case."
The judge put over his decision pending the provision of up-to-date information.
" Lastly, if Mr Colton be right, fraudsters will flourish, since a challenge by the jurisdiction will automatically preclude the court from enforcing, by any realistic sanction, a disclosure order…
 In my judgment if the court makes an order for disclosure for information or documents it is entitled, in the event of non-compliance, to order that if such non-compliance is persisted in the claimant will be at liberty to enter judgment. Were it otherwise, in many cases the order will be without effect. The making of such an order is of course a discretionary exercise…There are many cases in which it is only an 'unless' order that will ensure compliance. Thus in CIBC Mellon Trust Co v. Stolzenberg  All ER (D) 363 (Jun) at  and  the Court of Appeal agreed with the trial judge that on the facts he had no realistic alternative to making an 'unless' order in the face of the persistent defiance of two of the defendants in relation to the disclosure of their assets…
 As to that I do not accept that the question is solely whether non-compliance will render further conduct of the proceedings unsatisfactory. As Arrow Nominees Inc v. Blackledge and the Marcan Shipping (London) case indicate, the court is entitled to take into account the effect of making, or not making, the order sought on the overall fairness of the proceedings and the wider interests of justice as reflected in the overriding objective.
 As to those considerations the object of the present case is to compensate the bank for the huge sums allegedly purloined from it by what is said to be a dishonest scheme by securing a judgment against the wrongdoers which can effectively be enforced so as to make a real recovery. In deciding what order to make the court, as I have said, must necessarily take into account on the one hand that absent an 'unless' order the bank may effectively be prevented from any recovery, or restricted in the recovery that it might otherwise make…"
" Taking all these considerations into account, I consider that the balance comes down in favour of ordering disclosure by Clydes of all the contact details (past and present) which they hold for Mr Shalabayev. The primary purpose of the disclosure is to aid enforcement of the committal order made by Briggs J on 27 June. In the absence of that order I would probably not have been prepared to make the order sought. But in my view the committal order makes all the difference. All reasonable efforts must now be made to ensure that Mr Shalabayev is apprehended so that he can begin to serve his sentence. It is in the highest degree unsatisfactory that he can still be at large, as a fugitive from justice, when 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 will without ever having to pay the bill…"
"…The order is sought as a remedy of last resort, in a situation where, at the date of the application notice, there had still been no compliance whatsoever with the requirements of the freezing order. Furthermore, experience has shown that, on at least two previous occasions, Mr Shalabayev has been prepared to comply with an unless order. So it seems reasonable to infer that he might be anxious to avoid judgment being entered against him, and that the making of an unless order might prove fruitful."
" Given the history of the proceedings to date, and his continued disregard for the authority of the court, as exemplified, above all, by the history of the committal proceedings, I think it would be a waste of time to make any order of a less draconian nature.
 If Mr Shalabayev wants to continue to participate in these proceedings, he must now take this last chance to do what he should have done 11 months ago, that is to say comply properly, and in detail, with the requirements of the freezing order. If he fails to do so, he will, in my judgment, have nobody to blame but himself, and he will have forfeited the right to defend the Bank's claim against him; although, even then, the possibility of making an application for relief against forfeiture would still be open to him.
 That final point illustrates that even an unless order is not necessarily the very end of the road, although it does represent the court's firm and considered statement that this should be the very last chance afforded to the defaulting party."
" One important factor to bear in mind in the present case is that there are two parties to the litigation and that in seeking to determine how the interests of justice will best be served it is important not to lose sight of the Bank's very real interest in obtaining information which will enable it to identify the ultimate destination of the funds to which it lays claim. That is unlikely to be achieved without the co-operation, however, grudging, of Mr. Ablyazov. The committal order was intended in part to encourage him to give full and proper disclosure of his assets and to that extent the interests of justice would be better served by bringing him within the jurisdiction of the court. Moreover there are certainly strong grounds for believing that Mr. Ablyazov is in wilful and contumacious default of other orders of the court, despite the explanation he has given in his most recent statement for his refusal to surrender to custody or to make an affidavit giving disclosure of his assets. Much of what he says appears at first sight to be exaggerated and implausible and it is striking that the fears for his personal safety on which he now relies so heavily were voiced only after judgment was given in the committal proceedings. However, they cannot be entirely dismissed, as the judge himself has accepted. It can also be said that, as in the case of Arab Monetary Fund v Hashim, Mr. Ablyazov is doing his best to prevent the Bank from enjoying the fruits of any judgment it may in due course obtain against him and the other defendants and to that extent is abusing the process of the court. He has, for example, dealt with assets in breach of the freezing order and there is evidence to suggest that he is seeking to do so again. He has failed to co-operate with the receivers. There are very strong reasons for thinking that he has left the jurisdiction in breach of the court's order. All these factors point towards the conclusion that the court should make the order which the Bank seeks, even though a failure to comply would lead to the dismissal of Mr. Ablyazov's appeal and in turn the striking out of his defence to the substantive claim."
" In all the circumstances I have come to the conclusion that it would not be in the interests of justice to require Mr. Ablyazov to surrender himself to custody as a condition of proceeding with his appeal. However badly he may have behaved, Mr. Ablyazov is seeking to challenge an order which directly affects his personal liberty. As Potter L.J. observed in Motorola v. Uzan (No. 2), the circumstances will be rare indeed where it will be right to shut a contemnor out from arguing an appeal against an order for committal. I accept that full and proper disclosure of the location of assets which the Bank is seeking to recover is necessary if there is to be a fair trial of the action, but I do not think that an order of the kind now being sought is the right way to protect the Bank's position. Mr. Ablyazov has not been committed simply for failing to give the disclosure required by the freezing order, but for specific acts and omissions amounting to contempts of court. If Mr. Ablyazov were to succeed in his attempt to have the committal order set aside, the requirement to surrender would disappear. Subjecting him to custody would not then be available as a way of compelling him to give the required disclosure. If his appeal fails, it may at that stage be appropriate to require him to surrender to custody as the price of being allowed to contest the claim, but that is for another day. I do not think that he should be required to surrender to custody as the price of being heard on this appeal."
"(1) In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law…"
"The right is not however absolute. It may be subject to legitimate restrictions, for example statutory limitation periods, security for costs orders, regulations concerning minors and persons of unsound minds."
"80…The purpose of the Convention being to guarantee not rights that are theoretical or illusory but rights that are practical and effective, this right can only be seen to be effective if the observations are actually "heard", that is duly considered by the trial court. In other words, the effect of Art 6. is, among others, to place the "tribunal" under a duty to conduct a proper examination of the submissions, arguments and evidence adduced by the parties, without prejudice to its assessment of whether they are relevant."
Fairness, necessity and proportionality
Lord Justice Toulson :
Lord Justice Maurice Kay :
Note 1 The judge describes it as containing inter alia a 50 foot ballroom, a library, 9 bedroom suites, and a Turkish bath. [Back] Note 2 I comment: Mr Udovenko again, the first, 2008, UBO of Bubris. [Back]
Note 1 The judge describes it as containing inter alia a 50 foot ballroom, a library, 9 bedroom suites, and a Turkish bath. [Back]
Note 2 I comment: Mr Udovenko again, the first, 2008, UBO of Bubris. [Back]