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England and Wales High Court (Commercial Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Tugushev v Orlov & Ors (No. 2) [2019] EWHC 2031 (Comm) (26 July 2019) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2019/2031.html Cite as: [2019] EWHC 2031 (Comm) |
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BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Strand, London, WC2A 2LL Claimant Defendants |
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B e f o r e :
____________________
Alexander Tugushev |
Claimant |
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- and – |
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(1) Vitaly Orlov (2) Magnus Roth (3) Andrey Petrik |
Defendants |
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JUDGMENT NO 2 |
____________________
Mr Christopher Pymont QC, Mr George Hayman QC, Mr Benjamin John and Mr James Kinman (instructed by Macfarlanes LLP) for the First Defendant
Hearing dates: 12, 13, 14 June 2019
____________________
Crown Copyright ©
Mrs Justice Carr :
Introduction
i) Mr Orlov's challenge to the WFO and to the order permitting service out of the jurisdiction ("the service out order") on the basis of alleged breaches by Mr Tugushev of his duty of full and frank disclosure on his without notice application before Bryan J ("the non-disclosure application");
ii) Mr Tugushev's application to continue the WFO/the WFO challenge by Mr Orlov ("the continuation application");
iii) (if the WFO survives) Mr Tugushev's application for permission to apply in Russia to freeze assets ("the domestication application").
The non-disclosure application
i) A (deliberate) failure fairly to present his prior conviction for fraud;
ii) A (deliberate) failure to present fairly the credibility of Mr Orlov's claim that Mr Tugushev had divested himself of his shares in AA before taking up public office in 2003;
iii) A (deliberate) failure to draw the court's attention to Mr Tugushev's previous statements that he had knowingly transferred his shares in AA to Mr Orlov and Mr Roth in 2003;
iv) A (deliberate) failure to inform the court of parallel criminal proceedings in Russia.
i) A (deliberately) misleading presentation of evidence regarding Mr Orlov's domicile;
ii) A failure (by oversight) to inform the court of evidence illegally obtained;
iii) A failure (deliberate or by oversight) to inform the court that Mr Orlov had been found to be not resident in England in the Norwegian proceedings;
iv) A failure (by oversight) to take the court appropriately through the application for permission to serve out of the jurisdiction pursuant to the tort or necessary or proper party gateways;
v) A failure (by oversight) to address the court on the question of the governing law of his claims;
vi) Reliance on illicitly recorded conversations between Mr Tugushev and Mr Orlov without (deliberately or by oversight) drawing attention to Mr Orlov's previous comments on these recordings.
The law
i) The duty of an applicant for a without notice injunction is to make full and accurate disclosure of all material facts and to draw the court's attention to significant factual, legal and procedural aspects of the case;
ii) It is a high duty and of the first importance to ensure the integrity of the court's process. It is the necessary corollary of the court being prepared to depart from the principle that it will hear both sides before reaching a decision, a basic principle of fairness. Derogation from that principle is an exceptional course adopted in cases of extreme urgency or the need for secrecy. The court must be able to rely on the party who appears alone to present the argument in a way which is not merely designed to promote its own interests but in a fair and even-handed manner, drawing attention to evidence and arguments which it can reasonably anticipate the absent party would wish to make;
iii) Full disclosure must be linked with fair presentation. The judge must be able to have complete confidence in the thoroughness and objectivity of those presenting the case for the applicant. Thus, for example, it is not sufficient merely to exhibit numerous documents;
iv) An applicant must make proper enquiries before making the application. He must investigate the cause of action asserted and the facts relied on before identifying and addressing any likely defences. The duty to disclose extends to matters of which the applicant would have been aware had reasonable enquiries been made. The urgency of a particular case may make it necessary for evidence to be in a less tidy or complete form than is desirable. But no amount of urgency or practical difficulty can justify a failure to identify the relevant cause of action and principal facts to be relied on;
v) Material facts are those which it is material for the judge to know in dealing with the application as made. The duty requires an applicant to make the court aware of the issues likely to arise and the possible difficulties in the claim, but need not extend to a detailed analysis of every possible point which may arise. It extends to matters of intention and for example to disclosure of related proceedings in another jurisdiction;
vi) Where facts are material in the broad sense, there will be degrees of relevance and a due sense of proportion must be kept. Sensible limits have to be drawn, particularly in more complex and heavy commercial cases where the opportunity to raise arguments about non-disclosure will be all the greater. The question is not whether the evidence in support could have been improved (or one to be approached with the benefit of hindsight). The primary question is whether in all the circumstances its effect was such as to mislead the court in any material respect;
vii) A defendant must identify clearly the alleged failures, rather than adopt a scatter gun approach. A dispute about full and frank disclosure should not be allowed to turn into a mini-trial of the merits;
viii) In general terms it is inappropriate to seek to set aside a freezing order for non-disclosure where proof of non-disclosure depends on proof of facts which are themselves in issue in the action, unless the facts are truly so plain that they can be readily and summarily established, otherwise the application to set aside the freezing order is liable to become a form of preliminary trial in which the judge is asked to make findings (albeit provisionally) on issues which should be more properly reserved for the trial itself;
ix) If material non-disclosure is established, the court will be astute to ensure that a claimant who obtains injunctive relief without full disclosure is deprived of any advantage he may thereby have derived;
x) Whether or not the non-disclosure was innocent is an important consideration, but not necessarily decisive. Immediate discharge (without renewal) is likely to be the court's starting point, at least when the failure is substantial or deliberate. It has been said on more than one occasion that it will only be in exceptional circumstances in cases of deliberate non-disclosure or misrepresentation that an order would not be discharged;
xi) The court will discharge the order even if the order would still have been made had the relevant matter(s) been brought to its attention at the without notice hearing. This is a penal approach and intentionally so, by way of deterrent to ensure that applicants in future abide by their duties;
xii) The court nevertheless has a discretion to continue the injunction (or impose a fresh injunction) despite a failure to disclose. Although the discretion should be exercised sparingly, the overriding consideration will always be the interests of justice. Such consideration will include examination of i) the importance of the facts not disclosed to the issues before the judge ii) the need to encourage proper compliance with the duty of full and frank disclosure and to deter non-compliance iii) whether or not and to what extent the failure was culpable iv) the injustice to a claimant which may occur if an order is discharged leaving a defendant free to dissipate assets, although a strong case on the merits will never be a good excuse for a failure to disclose material facts;
xiii) The interests of justice may sometimes require that a freezing order be continued and that a failure of disclosure can be marked in some other way, for example by a suitable costs order. The court thus has at its disposal a range of options in the event of non-disclosure.
(See in particular Memory Corporation plc and another v Sidhu and another (No 2) [2000] 1 WLR 1443 at 1454 and 1459; Behbehani v Salem [1989] 1 WLR 723 at 735 and 730; Congentra AG v Sixteen Thirteen Marine SA (The Nicholas M) [2008] EWHC 1615 (Comm); [2009] 1 All ER (Comm) 479 at [62]; Bank Mellat v Nikpour [1985] FSR 87 at 89 and 90; Kazakhstan Kagazy plc v Arip [2014] EWCA Civ 381; [2014] 1 CLC 451 at [36] and [42] to [46]; Todaysure Matthews Ltd v Marketing Ways Services Ltd [2015] EWHC 64 (Comm) at [20] and [25]; JSC BTA Bank v Khrapunov [2018] UKSC 19; [2018] 2 WLR 1125 at [71] and [73]; Banca Turco Romana SA v Cortuk [2018] EWHC 662 (Comm) at [45]; PJSC Commercial Bank PrivatBank v Kolomoisky and others [2018] EWHC 3308 (Ch) at [72] and [73] to [75]; National Bank Trust v Yurov [2016] EWHC 1913 (Comm) at [18] to [21]); Microsoft Mobile Oy v Sony Europe Ltd [2017] EWHC 374 (Ch) at [203].)
Category 1: failure to give fair presentation of conviction
"6.2 In 2004 I was arrested in Russia, subsequently convicted and sentenced to 6 years' imprisonment on charges of fraud. The charges against me were politically motivated and were untrue….
32. On 2 June 2004, I was arrested in connection with allegations of fraud under article 159(4) of the Criminal Code of the Russian Federation made against me by one Mr Alexandrov. The allegations were that I, assisted by others, received a payment of US$3.7 million in exchange for promising to award a 50,000 tons per annum fishing quota whilst knowing that my post at the State Committee did not carry with it the authority necessary to award such quota. Mr Alexandrov alleged that he was an intermediary in that arrangement and that it was he who paid the money and lost out. He claimed damages against me in a civil claim adjunct to the criminal proceedings. The allegations were wholly false. I believe that another deputy chairman at the State Committee Mr Burkov and his associate Mr Egiazaryan, at the time an influential member of the Russian State Duma, were behind my arrest because I refused to acquiesce in their plans to turn the State Committee into a vehicle for generating wealth for them. Mr Egiazaryan has close ties with Main Directorate for Organised Crime Control ("GUBOP"), which arrested me. I believe that Mr Burkov and Mr Egiazaryan influenced Mr Alexandrov into making the false allegations. I do not know what the basis of that influence was.
33. Despite the falsity of the charge, after a delay of 3 years, on 15 February 2007 I was convicted and sentenced to six years imprisonment. Having served a considerable amount of the sentence on remand, I was released on 2 December 2009. My conviction, which I maintain was wrongful, is now spent under Russian Law."
"15. Then on 2 June 2004, Mr Tugushev was arrested under Article 159(4) of the Criminal Code of the Russian Federation in relation to allegations of fraud which resulted in Mr Tugushev being sentenced to 6 years' imprisonment. He was released from prison on 2 December 2009 and returned to the Norebo Group. I should say Mr Tugushev denies those charges and believes they were politically motivated…"
i) the precise charge against him;
ii) the sum involved in the fraud;
iii) the fact that the conviction related not only to fraud but abuse of position;
iv) the sentence imposed.
Category 2: failure to disclose declarations and statements relating to AA shareholding in 2003
The issue
"Around the beginning of 2003, A. Tugushev informed me that he decided to become a public employee of GosKomRybolovstvo. I tried to beguile him out of this, because I saw potential in our joint business.
At the same time, A. Tugushev informed me that due to the federal legislation forbidding public employees to participate in any commercial activities, he intended to sell his share in the business. A. Tugushev and I agreed that his share in [AA] would be bought out by ZAO "Norebo Invest".
"As regards the case that I sold my AA shares in 2003:
182.1 I did not.
182.2 The relevant Russian legislation in force in September 2003, the Federal Law No 119 FZ of 31 July 1995, did not prohibit me from owning shares. It required Russian civil servants to place on trust their shares subject to a state guarantee but the mechanism for doing so was not yet enacted."
"14. One thing that then happened was that on 22 September 2003, Mr Tugushev was appointed as Deputy Chairman of the State Fisheries Committee of the Russian Federation and as a result stepped down from his management role but retained, it is said, his shareholding and interest in the Norebo Group, although again I note that, from the material I have been shown, it has been alleged by Mr Orlov that that appointment led to Mr Tugushev divesting himself of his shares and any interest, something which is strongly denied by Mr Tugushev."
The new documents
i) A Declaration of Compliance by an Individual with the Restrictions Associated with Holding an Official Position of the Russian Federation or a Government Position in the Federal Civil Service (in precisely the form anticipated by Professor Maggs) completed and signed by Mr Tugushev in hand on 22 May 2003. On the face of the document he declared that he had no shares or other equity interests in any commercial organisations;
ii) Internal governmental correspondence in January 2004 querying Mr Tugushev's compliance with applicable restrictions on his carrying out business activity or being a member of a commercial organisation's management body by reference to two specific companies. By handwritten letter dated 23 January 2004 in response Mr Tugushev stated that as at 22 September 2003 he was not a shareholder of nor held management positions in those companies, enclosing a list of supporting documents;
iii) Internal governmental correspondence later in January 2004 from the Acting Chairman of the State Fisheries Committee setting out a number of complaints about Mr Tugushev's conduct in office and requesting his removal and complaints about his interests in the two companies referred to above and a failure of disclosure on his part. A letter dated 27 January 2004 asserted that as at that date the Unified State Register of Taxpayers showed Mr Tugushev as a shareholder of Karatt CJSC, Sevkomp CJSC, Oktyabr CJSC and Murmanrybprom CJSC;
iv) A typed letter dated 5 February 2004 signed by Mr Tugushev in hand addressed to the Head of the Department of the Personnel and Civil Service in which he stated:
"On the basis of data supplied by the Russian Ministry for Tax and Revenues regarding the participation of me…..as a founder of the companies [Karatt CJSC, Sevkomp CJSC, Oktyabr CJSC and Murmanrybprom CJSC], I hereby inform you that on entering government service I took all actions necessary to alienate shares and ownership interests in commercial organisations. As per the above, I …did not violate the Federal Law (On the Principles of State Service of the Russian Federation).
Attached: Legal conclusion – 8 pages,
Documents confirming the transfer of shares – 11 pages"
The legal opinion attached was from a Russian law firm and concluded that, based on documents presented by Mr Tugushev, sufficient actions were taken by him prior to him taking up public office to transfer away his rights to the shares and equity interests in the four companies (and also Karat LLC). It noted that Mr Tugushev had passed his interests in Karatt CJSC and Karat LLC to AA. The documents attached recorded Mr Tugushev selling his shares in Oktyabr CJSC in 2002 to a Mr F V Kuznetsov, someone whom Mr Tugushev denied in 2016 being acquainted with or having ever met. They also showed a sale of shares in respect of Sevkomp CJSC and Murmanrybprom CJSC in January 2003, when Mr Tugushev said in 2016 he was on holiday outside the Russian Federation;
v) A further Declaration of Compliance by an Individual with the Restrictions Associated with Holding an Official Position of the Russian Federation or a Government Position in the Federal Civil Service (again in precisely the form anticipated by Professor Maggs) completed and signed by Mr Tugushev in hand on 29 March 2004. On the face of the document he declared that he had no shares or other equity interests in any commercial organisations.
"Nor could I remember, and could not be reasonably expected to remember, the contents of any such documents dating back to early 2003 and 2004."
As for the declarations, he believes that at the time he was only required to disclose real property. Further, he would not have considered his interests in private unlisted companies to be securities and so would not have disclosed them for this reason as well. He did not commission or read the legal opinion that accompanied his letter of 5 February 2004. He relied on Mr Orlov and his cousin, Mr Romanovsky, to procure this material.
i) In both declarations Mr Tugushev only completed the real property section, crossing out for example the section for money in accounts in banks and other credit organisations. This supports his evidence that he believed he only had to declare real property interests. (Mr Orlov submits that this is a particularly difficult submission by the time it comes to the declaration in March 2004);
ii) Mr Tugushev has consistently said that he had no recollection of filing any such documentation. He was required to sign a great many documents on taking up office at the State Fisheries Committee;
iii) The dates of the transfers of shares in Oktyabr CJSC (in 2002) and in respect of Sevkomp CJSC and Murmanrybprom CJSC in January 2003 had nothing to do with (being well in advance) of his taking up office in September 2003 (if those dates are correct). Equally, the transfers relating to Karatt CJSC and Karat LLC are dated December 2002;
iv) The fact that the legal opinion records transfers of shares in Karat LLC by Mr Tugushev to AA provides significant support for Mr Tugushev: had Mr Tugushev disposed of his shares in AA and understood that he needed to show that he had divested himself of all shareholdings, he would have volunteered as much about AA, just as he was volunteering information about Karat LLC;
v) Mr Tugushev's statement in the letter of 5 February 2004 was, in context, limited to the specific companies under scrutiny.
Category 3: failure to draw the court's attention to Mr Tugushev's previous statements that he had knowingly transferred his shares in AA to Mr Orlov and Mr Roth in 2003
i) That Mr Tugushev told the Russian bailiff in 2012:
"I have no properties. I'm neither a member, nor manager of any business entities. I hold no shares or bonds … I hold no shares in Roliz CJSC. I hold no shares in Almor Atlantika CJSC. I have not heard anything about the shares in those companies. I would found and be employed with them, but all shares were sold in 2003 to Karat company. I hold no shares in Akros. Nor am I employed with the company. I hold no shares in MTF OJSC.";
ii) That Mr Tugushev told the Russian Investigative Committee in March 2016:
"In 2003, based on the agreement we had reached on creating Karat Holding, the shares of the above-listed companies [which include AA] were re-registered nominally to other individuals (nominee holders) who were friends of mine and V. Orlov and employees of companies that were to be combined into the Holding.";
iii) That one of Mr Tugushev's lawyers, Mr Begun, told the Russian Investigative Committee in April 2016:
"A.I. Tugushev explained that since 1998 he has been a shareholder of Karat Group, however, at some point in time, when he was employed as a civil servant, he ceased to be the owner of shares and lost the relevant rights.";
iv) That Mr Tugushev had pleaded as follows in the Norwegian Proceedings:
"At the time Tugushev entered into the public sector, there was no prohibition in Russian legislation against ownership of shares or ownership interests in private companies. The only condition set by Russian law was that Tugushev transferred his shares into a trust. However, there were no set requirements relating to how the trust wealth should be established or managed. Thus, Orlov and Roth managed Tugushev's shares on behalf of Tugushev, while he worked in the public sector.."
and
"In 2003, Mr Tugushev was appointed vice-chairman of the Fisheries Committee in Russia. The transition to the public meant that Tugushev could no longer participate in the daily follow-up of the Fisheries Group, and Tugushev's stake was placed in trust with Orlov and Roth."
Category 4: failure to inform the court of parallel criminal proceedings in Russia
"[Mr] Tugushev was required to file an application with the law-enforcement agencies and open the criminal case for his statement of claim against [Mr] Orlov to be examined by the High Court of Justice of England and Wales."
Additional matters
i) A (deliberately) misleading presentation of evidence regarding Mr Orlov's domicile: it is said that Mr Tugushev adduced evidence from a private investigator which he knew to be very seriously misleading evidence, to the effect that Mr Orlov spent Christmas in England in at least 6 out of 9 years since 2009. In fact, to Mr Tugushev's knowledge (because he was there), Mr Orlov had spent Christmas with his sons in Austria in 2011, 2012 and 2013. Whilst Mr Tugushev's affidavit did refer to the fact that Mr Orlov had been in Austria in December 2013, the mistake has been rightly accepted. It was not identified by Mr Tugushev (who was apparently not taken through the detail of the private investigator's evidence) or his lawyers during the preparation of the application, and an apology has been given. It was an unfortunate (but in my judgment non-deliberate) error. The fact remains that Mr Orlov had spent some Christmases since 2009 in England with his family and there were multiple other factors pointing to a domicile here;
ii) A failure (by oversight) to inform the court of evidence illegally obtained: it is said that a substantial part of Mr Tugushev's evidence as to Mr Orlov's domicile was border data compiled by the Russian border service. It is said that this data cannot be lawfully obtained, a fact which ought to have been, but was not, made clear to the judge. Unlike the position in Franses v Al Assad [2007] EWHC 2442 (Ch), however, there is a lively debate between the parties' experts as to whether this is the case. The court could have been told in terms that there might be an issue as to whether the data had been lawfully obtained. But the court was made expressly aware that the data was not publicly available and had been obtained by Mr Tugushev's private investigator via a contact from the Russian Border Service. Bryan J was clearly alive to what he described as a "concern about how [the private investigator] obtained that information" but felt able to rely on the material nevertheless;
iii) A failure (deliberate or by oversight) to inform the court that Mr Orlov had been found to be not resident in England in the Norwegian proceedings: it is said that there was an unfair presentation of this finding. In particular, Mr Tugushev's skeleton argument stated that there had been no such finding: rather the Oslo County Court had "commented" that, based on the information and documentation provided by Mr Orlov's counsel, Mr Orlov was resident in Russia. But, the court was told, the Oslo County Court had not been given the full picture. I have addressed the nature and weight to be attached to the finding of the Oslo County Court at paragraphs 186 to 189 of my first judgment. Against those findings, it cannot be said that there was any material non-disclosure, deliberate or otherwise. The court's finding in the Norwegian proceedings was incidental and based on very limited material;
iv) A failure (by oversight) to take the court appropriately through the application for permission to serve out of the jurisdiction pursuant to the tort or necessary or proper party gateways: Mr Tugushev, who was represented by different leading and junior counsel before Bryan J, accepts that forum arguments were not addressed in the evidence, skeleton or oral argument in any detail before Bryan J. He accepts that the court should have been taken through the arguments and any obvious counterarguments (and it should have been made clear that the question of forum non conveniens fell to be considered at this stage). It is also accepted that the service out order falls to be set aside so far as it relates to the contractual claim. Without condoning them in any way, these were lawyers' shortcomings in a very complex and heavy application and in circumstances where the question of forum was immaterial to jurisdiction based on domicile. It is not suggested that they were deliberate. The court had the gateways and their requirements well in mind, including for example the need for Mr Petrik not to be sued merely as an anchor, as the transcript and ensuing judgment of Bryan J demonstrate, and I have now carried out the balancing exercise on the question of forum in Mr Tugushev's favour;
v) A failure (by oversight) to address the court on the question of the governing law of his claims: Mr Orlov points to his contention that Mr Tugushev's claims against him are governed by Russian law. Again, this was a lawyers' shortcoming. Mr Tugushev readily acknowledges that it would have been better had the question of governing law been raised, but essentially for the sake of completeness only;
vi) Reliance on illicitly recorded conversations between Mr Tugushev and Mr Orlov without (deliberately or by oversight) drawing attention to Mr Orlov's previous comments on these recordings, in particular in a section of a pleading lodged by Mr Orlov in November 2017 in the Norwegian proceedings. The thrust of Mr Orlov's case as there set out, namely that he was resisting the Norwegian proceedings on the basis that Mr Tugushev had sold his shares in AA in 2003 and had no ownership or other interest in the Norebo Group, was always fairly and squarely before the court. Moreover, the specific transcript relied upon by Mr Orlov was before Bryan J as the first entry in Annex 2 to Mr Tugushev's skeleton argument. That Annex was drawn to the court's attention in the main body of the skeleton (at paragraph 97) expressly for the purpose of identifying examples of past comments by Mr Tugushev which did not correspond with how he was now putting his case.
Consequences of non-disclosure and sanction
The continuation application
i) Whether or not there is a real risk of dissipation;
ii) If so, whether the continuation of the WFO is just and convenient, or whether the WFO is being used as a tool of oppression;
iii) Whether, if continued, the scope of the WFO is too extensive and should be limited.
The law on risk of dissipation
i) The court must conclude on the whole of the evidence before it that the refusal of a freezing order would involve a real risk that judgment would remain unsatisfied, in the sense that, unless restrained by injunction, either the defendant will dissipate or dispose of his assets other than in the ordinary course of business or assets are likely to be dealt with in such a way as to make enforcement of any award or judgment more difficult, unless those dealings can be justified for normal and proper business purposes. The claimant must show a real risk, judged objectively, that a future judgment would not be met because of an unjustified dissipation of assets;
ii) The risk is not to be inferred lightly. Bare or generalised assertion of risk by a claimant is not enough. There must be solid evidence of the risk of dissipation;
iii) Mere reliance on the alleged dishonesty of the defendant is not, of itself, sufficient to found a risk of dissipation. The court must scrutinise with care whether what is alleged to have been the dishonesty justifies the inference of a real risk of dissipation. Where the dishonesty alleged is at the heart of the claim against the defendant the court may be able to draw the inference that the making out to the necessary standard of that case against the defendant also establishes sufficiently the risk of dissipation of assets;
iv) A defendant's former use of offshore structures may be relevant but does not itself equate to a risk of dissipation. Businesses and individuals often use offshore structures as part of the normal and legitimate way in which they deal with their assets;
v) Each case is fact specific and relevant factors must be looked at cumulatively.
(See Bank Mellat v Nikpour (supra) at 92; Elektromotive Group Ltd v Pan [2012] EWHC 2742 QB at [33]; Congentra AG v Sixteen Thirteen Marine SA (The Nicholas M) (supra) at [49]; JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2014] EWHC 4336 (Ch) at [221]; Fundo Soberano De Angola v Dos Santos [2018] EWHC 2199 (Comm) at [86]; Metropolitan Housing Trust Ltd v Taylor and others [2015] EWHC 2897 (Ch) at [29] to [31].)
Finding on risk of dissipation
Mr Tugushev's case
i) Mr Orlov's denial to the Moscow police in November 2017 that he had ever offered Mr Tugushev US$60million for his share in the business;
ii) Mr Orlov's denial in the Koptevskiy proceedings that he knew about the facts surrounding the transfer of the Norebo Invest shares in circumstances where there is now evidence that the terms of that transfer were specifically confirmed with Mr Orlov.
Analysis
i) He would need to find a buyer. He does not know what buyers there might be;
ii) Selling the business would not be simple given the need for clearance from the Governmental Committee on the Control over Foreign Investments in the Russian Federation. This is not an easy process and it is very unlikely that permission to sell to a foreign investor would be granted. (The fishing companies are active in an area deemed to be of strategic importance to the Russian state). Further, any significant transfer would be subject to prior approval by the Federal Anti-Monopoly Service ("FAS"). Any buyer who did not first receive clearance from the Governmental Committee and the FAS would be at risk of losing the necessary fishing quotas and no buyer would ever take such a chance. Finally, the fact that his shares (save for those in Arctic Shipping LLC which are of no significant value) are pledged in favour of the Norebo Group's lender ("the lender") would mean that Mr Orlov could not sell or transfer any of his shares without the lender's consent.
"…The Norebo Group funds much of its capital expenditure with debt facilities, secured… inter alia over my shares in Norebo Holding, and shares in the fishing companies. If I were to attempt to devalue the lender's security by hollowing out the companies, enforcement of the share pledges would swiftly and inevitably follow."
i) It was suggested that Mr Orlov received more than £18m in dividends only three days before the grant of the WFO which he did not declare. These monies, it was said, appeared to have been dissipated before or after the WFO. In fact, it appears that there were set-offs against debts owed to Mr Orlov by various Norebo group companies effective prior to the grant and service of the WFO;
ii) It was suggested that Ms Shumova was the "beneficiary of a substantial sinecure from Norebo, despite having no role in the company". In fact, it appears that the (relatively modest) payments made to Ms Shumova were most probably made in respect of interior design services provided by her.
"….This latter argument assumes that a defendant is already of dubious probity and it is a curious principle that would allow such a defendant to rely on his own dubious probity to avoid an order being made against him…"
"As I said previously, in 2003 [Mr Tugushev] sold his share in the business and went into civil service. In light of this, after 2003 I did not and could not have offered [Mr Tugushev] US$60,000,000 for his share in the business."
Conclusion