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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> JSC Commercial Bank Privatbank v Kolomoisky & Ors  EWHC 403 (Ch) (24 February 2021)
Cite as:  EWHC 403 (Ch)
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IN THE BUSINESS AND PROPERTY COURTS OF
ENGLAND AND WALES
Fetter Lane, London, EC4A 1NL
B e f o r e :
| JSC COMMERCIAL BANK PRIVATBANK
- and –
|(1) IGOR VALERYEVICH KOLOMOISKY
(2) GENNADIY BORISOVICH BOGOLYUBOV
(3) TEAMTREND LIMITED
(4) TRADE POINT AGRO LIMITED
(5) COLLYER LIMITED
(6) ROSSYN INVESTING CORP
(7) MILBERT VENTURES INC
(9) ZAO UKRTRANSITSERVICE LTD
Tom Adam QC, Alec Haydon QC and Tom Foxton (instructed by Fieldfisher LLP) for the First Defendant
Hearing date: 12th February 2021
Crown Copyright ©
Mr Justice Trower:
(1) that the evidence "was strongly indicative of an elaborate fraud perpetrated by someone, allied to an attempt to conceal from any auditors or regulator the existence of bad debts on the bank's books, and money laundering on a vast scale"; and
(2) that Mr Kolomoisky and Mr Bogolyubov had admitted "a good arguable case of fraud on an epic scale".
"Against the background of those authorities and the submissions of the parties which were not much at odds as to the principles to be applied, it seems to me that the requirements for ordering cross-examination in circumstances such as these may be summarised as follows:
(1) the statutory discretion to order cross-examination is broad and unfettered. It may be ordered whenever the court considers it just and convenient to do so.
(2) generally, cross-examination in aid of an asset disclosure order will be very much the exception rather than the rule.
(3) it will normally only be ordered where it is likely to further the proper purpose of the order by, for example, revealing further assets that might otherwise be dissipated so as to prevent an eventual judgment against the defendants going unsatisfied.
(4) it must be proportionate and just in the sense that it must not be undertaken oppressively or for an ulterior purpose. Thus, it will not normally be ordered unless there are significant or serious deficiencies in the existing disclosure.
(5) cross-examination can in an appropriate case be ordered when assets have already been disclosed in excess of the value of the claim against the defendants."
(1) Significant or serious deficiency in the existing disclosure has been characterised as a necessary, but not sufficient, condition for ordering cross-examination: Kazakhstan Kagazy v Zhunus  EWHC 1693 (Comm) at  (per Jacobs J).
(2) Defects in asset disclosure should be identified with as much precision as possible - a general suspicion that disclosure is inadequate is unlikely to be sufficient: CBS United Kingdom v Perry (1985) FSR 421 at 429.
(3) A change in the respondent's story may be a good reason to order cross-examination: Shalson v Russo (Neuberger J, Unreported 23 March 2001) (at p.5).
(4) The court will have regard to whether there is a less intrusive means to obtain the information required (and in that context will take account of earlier efforts to do so by means of solicitors' correspondence and the like): Otkritie v International Urumov  EWHC 3106 (Comm) at .
(5) It would be wrong to make an order for cross-examination for a wider purpose, such as the investigation of issues in the substantive claim or to obtain ammunition for an application for contempt (JSC Mezhdunarodniy Bank v Pugachev (No 2)  1 WLR 781 at ).
"58. There is a fine line between a genuine scepticism about the veracity of asset disclosure and a refusal to accept the truth of any statements made by a mistrusted defendant. This case has epitomised that line. The claimants in this case have seemingly refused to accept the truth of anything the defendants have said, querying everything and demanding documents to support every point.
59. The defendants say that this is simply not what asset disclosure is about. It is not intended to allow the claimant to investigate every aspect of every transaction undertaken by a defendant in the run-up to litigation.
60. It seems to me that the balance between these two positions must be carefully held. Asset disclosure is intended to ensure that the worldwide freezing order is effective, and that the claimants are aware of assets owned or allegedly owned by the defendants so as to prevent their being dissipated so as to frustrate an eventual judgment obtained.
61. But the asset disclosure process cannot resolve disputed questions as to the ownership of assets. Nor is it appropriate to allow any kind of mini-trial, by endless rounds of evidence and counter-evidence. A stage is eventually reached at which the claimants can contend that an asset is owned by the defendants and the defendants can contend that it is not. It [is] then up to the claimants to take such steps as they legitimately can to persuade this court -- or in some cases a foreign court -- that that asset should be preserved, pending the conclusion of the contested substantive litigation. Only at that stage, during a final enforcement process, will the court determine whether a disputed asset actually belongs to a defendant, so that it can be enforced against."
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