JSC BTA Bank v Ablyazov & Ors [2014] EWCA Civ 602

[2014] EWCA Civ 602Case No A3/2013/2034
IN THE COURT OF APPEAL (CIVIL DIVISION)
[2013] EWHC 2161 (COMM)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION (COMMERCIAL)
MR JUSTICE FIELD
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Wednesday 14 th May 2014
Before
LORD JUSTICE MOORE-BICKLORD JUSTICE ELIASLORD JUSTICE CHRISTOPHER CLARKE
Between
JSC BTA BankClaimant/ Respondent(1) Mukhtar Ablyazov & 16 OrsDefendants
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Miss Catherine Newman QC and Jonathan Allcock (instructed by McGuireWoods London LLP) for AppellantStephen Smith QC and Tim Akkouh (instructed by Hogan Lovells International LLP) for RespondentHearing Hearing dates: 25 th and 26 th March 2014
Judgment
[1]The principal issue in this appeal is whether the judge was wrong to order the trial of an issue as to the ownership of shares in a company which owned, indirectly, an extremely valuable property in Moscow.[2]The North Domodedovo Logistics Park (“the Park”) comprises over half a million square metres of “class A” warehousing space near Domodedovo Airport. It is let to a large number of tenants and had in 2010 an estimated rental value of US $ 62 million per year. The lease of the Park was held by CJSC Joint Venture Eurasia M4 (“Eurasia M4”), a Russian corporation, which is a subsidiary of Dregon Land Limited (“Dregon Land”), a Cypriot company.[3]There is good reason to suppose that in September 2007 Mr Mukhtar Ablyazov (“Mr Ablyazov”) was the beneficial owner of Dregon Land and the appeal has proceeded on the assumption that that is so. At that stage the shares in Dregon Land were held, as to 51%, by Eurasia Logistics Ltd (“Eurasia Logistics”), a Jersey company, and, as to 49% by Seretta Assets Ltd (“Seretta”), a Seychellois company, both of which appear to be nominees for Mr Ablyazov. Mr Ablyazov, as is now apparent, arranged his affairs through a myriad of companies in various jurisdictions with a view to hiding the enormous sums that he had stolen from the JSC BTA Bank (“the Bank”), the Respondent to this appeal. When in this judgment I refer to a company as “an Ablyazov company” I am referring to a company which appears to be a nominee for him.[4]On 19 September 2007 Eurohypo Aktiengesellschaft (“Eurohypo”), now named Hypothekenbank Frankfurt AG, entered into a facility agreement (“the facility agreement”) whereby it agreed to make available up to $ 746,980,000 to Bondiza Consulting Limited (“Bondiza”), an Ablyazov company. Eurohypo is a large and reputable German Bank and a fully owned subsidiary of Commerzbank Group. No suggestion is made on this appeal that it has acted in any way improperly. The loan was made to finance the development of the Park.[5]The security for the loan facility included a pledge (“the Pledge”) of the shares in Dregon Land by Eurasia Logistics and Seretta. Under the terms of the Pledge those two companies delivered up executed but undated instruments of transfer in respect of the shares in Dregon Land. Eurohypo agreed that it would only exercise its power of sale on notice to the two shareholders and “without unreasonably discounting” the value of their interests.[6]Further security consisted of a Debenture of 27 September 2007 by which Flairis Technology Ltd (“Flairis”), an Ablyazov company in Cyprus, assigned to Eurohypo by way of security 11 Loan Agreements between it as Lender and Eurasia Logistics as borrower totalling $ 207,095,000. Flairis was a party to the facility agreement as were Eurasia Logistics and Seretta.[7]On 31 July 2009 by a Deed of Accession and Deed of Amendment Dregon Land became, inter alia, a guarantor of the facility. The freezing and receivership orders against Mr Ablyazov[8]On 12 August 2009 Blair J made, ex parte, a freezing order against Mr Ablyazov and others. On 21 August 2009 Teare J made a disclosure order. The disclosure given by Mr Ablyazov pursuant to that order was wholly inadequate and on 16 October 2009 Teare J ordered that he be cross-examined. On 12 November 2009, at an inter partes hearing, Teare J made a freezing order (“the original freezing order”). The original freezing order applied to Mr Ablyazov’s assets generally and specified a number of them. It did not specify the shares in Dregon Land or its assets.[9]Paragraph 18 of the original freezing order provided that:
“Anyone other than the Respondents served with or notified of this Order may apply to the court at any time to vary or discharge this Order (or so much of it as affects that person), but they must first inform the Applicant’s solicitors. If any evidence is to be relied upon in support of the application, the substance of it must be communicated in writing to the Applicant’s solicitors in advance.”
A similar provision was made in a post judgment freezing[10]On 20 November 2009 Seretta sold its shares in Dregon Land to Seaworld Processing Ltd (“Seaworld”), another Ablyazov BVI company, which was owned by Eurasia Logistics. Pursuant to a Substitution Agreement of 20 November 2009 Seaworld was substituted for Seretta as a Pledgor under the Pledge. Mr Sait Gutseriev[11]Mr Sait Salam Safarbekovich Gutseriev (“Mr Gutseriev”) is a Russian businessman. He is said to be one of the wealthiest people in Russia. He is the ultimate owner and controller of a group of companies known as the SSG Group.[12]By July 2010 Eurohypo was eager to divest itself of the loan to Bondiza. The exact reason why that was so is not known but it seems likely that this was an asset with which Eurohypo no longer wished to be associated. There had been allegations of criminal mismanagement at the Park; a document of August 2010 either prepared by or for Eurohypo (“the Project Snow document”) refers to the current management of the Park as having been arrested in March 2010 with press reports citing fraud and money laundering. A disclosure letter provided by Eurohypo to Chisholma Holding Ltd (“Chisholma”) a Cypriot company, on 21 March 2011 (see [21] below) refers to Eurasia M4 having entered into a loan agreement on 8 April 2008 with AMT bank, and lease agreements, without Eurohypo’s prior knowledge or consent. In addition by 2010 Eurohypo and Commerzbank were under significant financial stress as a result of the financial crises of 2008.[13]Accordingly in July 2010 negotiations began between the SSG Group and Eurohypo for the assignment of the facility agreement to some entity in that Group. The fact that Eurohypo was interested in such an assignment was not public knowledge; but Eurohypo was also in contact with other potential purchasers. Eurohypo presented the opportunity to private equity investors in Moscow including B & N Bank, and at least one other high profile Moscow financial institution. B & N Bank is owned by Mr Gutseriev’s nephew and he is said by Mr Walter White of McGuireWoods London LLP (“McGuireWoods”) in his witness statement on behalf of the applicants to have introduced the opportunity to Mr Gutseriev.[14]On 28 July 2009 Eurohypo sent Mr Maxim Kalyuzhny, Mr Gutseriev’s in house lawyer, a confidentiality agreement for signature by GCM Global Energy Plc (“GCM”), which is owned by another nephew of Mr Gutseriev and of which Mr Kalyuzhny is the CEO. GCM is expressed in the letter to be interested in acquiring an interest in the loan facility granted under the facility agreement. The address to which it was sent was 64-65 Vincent Square, London, at which Mr Kalyuzhny has an office. Valuations[15]In July 2010 Jones Lang LaSalle (“JLL”) produced a report on the Park in which they expressed the view that its estimated rental value was $ 62 million and that its value was $ 380,350,000. On 4 August 2010 a report from PwC, the accountants, valued the Park at between $ 317.5 and $ 410.3 million. The Receivership Order[16]On 6 August 2010 Teare J made a Receivership order in respect of a large number of Ablyazov companies. These did not include Dregon Land.[17]Mr Ablyazov did not refer to Dregon Land or the Park in his original (“extraordinarily inadequate” – per Teare J) disclosure. When cross examined in October 2009 he said that he no longer had the 75% interest in Eurasia Logistics that he had once had, having given it by an agreement in writing in July 2009 to Mr Alexander Volkov and Mr Arthur Trofimov. The agreement has never been produced. Mr Trofimov was served by the Bank with a Norwich Pharmacal order and went on the run. He was found in Austria where extradition proceedings by Russia are understood to be pending. Mr Volkov is currently serving a 9 year sentence of imprisonment in Moscow, having been found guilty of a fraud relating to the release of securities in favour of the Bank over land for residential development in Domodedovo. They both appear to be Ablyazov nominees. Further in [78] of his judgment of 21 September 2012 [2012] EWHC 2543 (Comm) Teare J held that it was more likely than not that Mr Ablyazov was the owner of two companies owning two other parks. This involved a finding that Mr Ablyazov was in late 2010 and early 2011 the owner of Eurasia Logistics.[18]On 8 September 2010 Eurohypo and Mr Gutseriev, or someone on his behalf, signed Heads of Terms for a $ 313.5 million finance facility between Eurohypo and an SPV whose ultimate beneficial owner would be Mr Gutseriev. Its purpose was expressed to be to finance the purchase of shares and corporate purposes. Heads of Terms were also signed in respect of the assignment of the loan to Bondiza. The assignment of the Original Finance Agreement.[19]On 10 November 2010 Eurohypo agreed to assign to Chisholma all its interest under the facility agreement together with the security for it, including the Pledge and the Debenture. Mr Gutseriev is the ultimate beneficial owner of Chisholma and it is part of the SSG Group. The consideration for the transfer consisted of the Initial Consideration and the Deferred Consideration. Together they amounted to $ 343,846,308.69. In addition, the SSG Group made payments of $ 3,174,079.93 for outstanding interest and $ 41,690,325.75 in respect of certain hedging liabilities. Chisholma’s obligation to pay the Deferred Consideration was secured by way of a security granted over various SSG Group assets, a Bank Guarantee for $ 50,000,000 from B & N Bank, and a personal guarantee from Mr Gutseriev in respect of all obligations outstanding from Chisholma to Eurohypo less the $ 50,000,000 guarantee from B & N Bank.[20]On 28 December 2010 Eurohypo agreed to provide Tercialia Enterprises Limited (“Tercialia”), a Cypriot company in the SSG group, with a $ 308 million facility, in order to pay the Deferred Consideration under the assignment agreement.[21]The assignment did not take effect until 22 March 2011. On 21 March Eurohypo served Chisholma with a Consideration Notice which specified 22 March 2011 as the Assignment Effective Date and the Initial Consideration as $ 35,246,308.69. The Deferred Consideration was expressed to be $ 308,600,000 making the total consideration $ 343,846,308.69. The Initial Consideration was paid by Chisholma on 22 March. It was funded by a loan from Marinesa Limited, a BVI company in the SSG Group. The enforcement of the Pledge[22]On 23 March 2011 Chisholma demanded payment from Bondiza of the whole amount due under the facility agreement. Chisholma relied on the acceleration clause in the facility agreement, which it claimed to be entitled to invoke because of the failure of Bondiza to pay interest and its entry into a loan agreement and lease agreements without its prior knowledge and consent. The amount outstanding was said to be $ 337,600,631. This is less than the total consideration under the assignment agreement because it does not include $ 6,186,725 in respect of outstanding hedge payments.[23]On 30 March 2011 Chisholma procured the entry of its name on the blank transfers in respect of the shares in Dregon Land provided pursuant to the Pledge and caused those shares to be registered in its name. The effect of this was to perfect the security held by Chisholma by converting its equitable interest into a legal one. Nevertheless Eurasia Logistics and Seaworld, the pledgors, retained an equity of redemption. The amendment of the original freezing order and the Receivership order[24]By now the Bank had learnt of Mr Ablyazov’s connection with Dregon Land and the Park. It had not, however, learnt of the Eurohypo loan to Bondiza, the assignment of that loan to Chisholma, or of the Pledge (and its assignment).[25]On 8 April 2011 Teare J amended the original freezing order and the Receivership order to include specific reference to the shares in Dregon Land. On 15 April 2011 the District Court in Nicosia made an order giving effect to that order.[26]On 26 April 2011 Chisholma sold the shares in Dregon Land, by way of enforcement, or purported enforcement, of its security, for € 1 to Lapointec Ventures Ltd (“Lapointec”) and Limia Holdings Ltd (“Limia”), who, together with Dregon Land, were the applicants below and are now the appellants. Lapointec is a Cypriot and Limia a BVI company. Both are 100% indirectly owned and controlled by Mr Gutseriev and, like other similar companies, are part of the SSG Group. Lapointec owns 99% and Limia 1% of Dregon Land. 2012[27]On 16 February 2012 Teare J found Mr Ablyazov to be guilty of contempt and sentenced him to 22 months imprisonment. Mr Ablyazov went on the run and was eventually found in France in July 2013 where he was arrested, and where he remains pending extradition to Russia or the Ukraine.[28]On 22 February 2012 Mr Onufriou, Mr Ablyazov’s Cypriot lawyer, applied to the Court in Nicosia to have the shares in, inter alia, Dregon Land removed from the reach of the Cypriot order.[29]On 23 November 2012 Teare J gave judgment in the action. He made a freezing order (“the post judgment freezing order”) which included the shares in and assets of many companies including Dregon Land. The dispute[30]In the summer of 2011 Chisholma sought to novate the rights and obligations of Bondiza under certain hedge documents. That was refused by the administrator of Bondiza who cited the existence of the freezing and Receivership orders. McGuireWoods corresponded with Hogan Lovells to try to get Dregon Land excluded from the scope of the orders.[31]On 20 February 2013 Lapointec, Limia and Dregon Land (together “the applicants”) applied for a variation of the Receivership order, the post judgment freezing order and any other applicable orders emanating from those proceedings so as to remove Dregon Land from their scope on the ground that it is not a company which is under the ownership and/or control of Mr Ablyazov or any of the defendants. The three issues[32]The dispute has three aspects. The first is whether there is any good reason to suppose, or any good arguable case, that Dregon Land is in fact beneficially owned and controlled by Mr Ablyazov so that it is properly brought within the Receivership and post judgment freezing orders. The second is whether the Court has jurisdiction, at any rate in the events which have happened, to continue to include it in those orders. The third is whether the order in fact made by the judge goes beyond the scope of ordering an issue as to where the beneficial ownership lies, because it includes an issue as to whether, even if it does not lie with Mr Ablyazov, the Bank is entitled to some relief against Lapointec and Limia because there has been collusion between Mr Gutseriev and Mr Ablyazov to bring about the transfer of Dregon Land to Lapointec and Limia, in breach of the freezing order.

The judge found that the Bank had established:

“a good arguable case for challenging the applicants’ contention that Lapointec and Limia are beneficial owners of the Dregon Land shares and are otherwise entitled as against the Bank to exercise full rights of ownership in respect of those shares”
. Beneficial ownership – the rival contentions The applicants[34]Miss Catherine Newman QC for the applicants submits that the judge was quite wrong to find that there was any good arguable case that anybody other than Lapointec and Limia were the beneficial owners of the shares in Dregon Land. The Court has found Mr Ablyazov to be an international fraudster on an industrial scale, and that many of his associates held shareholdings in their names when they were in truth nothing more than stooges for him, they being engaged to act in that way in order to hide the true ownership of the shares from prying eyes. Not surprisingly the court has found little difficulty in deciding that those who have acquired what appears to be an Ablyazov asset otherwise than pursuant to some regular transaction from which their entitlement can be said to derive are, at the very least well arguably, his nominees.[35]Here the position is, she submits, completely different. Eurohypo is a respectable bank. It loaned large sums to Bondiza. No one suggests that there was anything improper in that. It then decided that it wanted to assign the loan. It retained reputable surveyors, accountants and solicitors (Clifford Chance) to advise it in relation to the contemplated disposition. There is no basis on which to impugn the assignment agreement of 10 November 2010, including the assignment of the Pledge. Bondiza was in default. Chisholma was entitled to accelerate the loan and demand payment of the whole amount outstanding and to enforce the security which the Pledge had given it. It perfected its security by registering the shares in its name and enforced it by selling to Lapointec and Limia, which were bona fide purchasers of a legal estate disposed of by a secured creditor. The equity of redemption thus came to an end. There was nothing suspicious about the € 1 price. The net value of Dregon Land (subtracting the outstandings under the facility agreement from the capital value of the Park) was negative. The case to the contrary advanced by the Bank, which involves very serious charges of dishonesty against a person of blameless reputation, is pure speculation. The Bank[36]Mr Stephen Smith QC for the Bank contends that there is a well arguable case that Mr Ablyazov and Mr Gutseriev entered into a collusive agreement whereby Bondiza would be put deliberately into default. That would enable Chisholma to activate the Pledge and, having done so, to transfer the shares in Dregon Land to Lapointec and Limia. By this means, to which Mr Ablyazov would deliberately make no objection, Mr Ablyazov’s ultimate beneficial interest in the Park would, in truth, remain with him but, through the good offices of Mr Gutseriev, would escape the restriction of the freezing order as a result of the apparently legitimate enforcement of the Pledge. For this purpose Mr Smith relies on ten matters.[37]First, Mr Ablyazov appears to have been prepared to surrender his equity of redemption without a fight. This is most unlike him, since he has resisted every attempt by the Bank to discover, preserve and get hold of his assets with relentless vigour. He failed to disclose the existence of the Park, no doubt because it was a very valuable asset of which he did not wish to lose control. In an interview with a journalist in what Mr Ablyazov said was the summer of 2007 he described Eurasia Logistics as worth more than $ 1 billion and said that it was laying the foundation of a new satellite town of 9 million square metres in the Domodedovo area.[38]PwC’s report of August 2010 describes the Park as “the largest operating industrial centre in the Moscow region”. The July 2010 JLL valuation of between $ 380,250,000 and $ 400,300,000 was out of date by 2011. A report on the Russian real estate market by Colliers International described 2011 as a record year, with class A properties having a 21% growth in rental yields, growth being driven by logistic companies, with the most sought after premises in the Moscow region being “large blocks of space”. By the end of 2011 rental rates for class A properties had reached $ 135 per square metre which would give the Park an annual rental income of c $ 73 million. A valuation in a newspaper article of January 2011 gave valuations of between $ 450 and over $ 500 million. This contrasts with the outstanding sum of $ 337 million.[39]The outstanding interest set out in the Consideration Notice was $ 11,420,421l. That would appear to be the amounts due at 30 September and 31 December 2010. Mr Ablyazov could easily have discharged that sum, using, in order to keep the payment secret, one of his myriad companies. There was the rental income from the Park. Further funds were available. Between September 2009 and December 2010 Mr Ablyazov had four loan facilities each for £ 10 million, which are the subject of a decision of this court reported at [2013] EWCA Civ 928. A sum of $ 47,940,000 passed through the Cypriot bank account of Millenium Support Group Limited, another Ablyazov company, which was distributed by one of his brothers in law – Mr Salim Shalabayev - who has been committed to prison for 22 months for failing to give information relating to this company. On 17 December 2011 € 29,200,000 was paid by BTA Ukraine to an Ablyazov company called Neshani Investment Ltd (now added to the Receivership). The judgments that have currently been entered against Mr Ablyazov are on the basis that he has misappropriated about $ 4.25 billion from the Bank.[40]Second, Mr Ablyazov made no attempt to challenge the enforcement of the pledge by the sale of the Dregon shares for € 1. That enforcement was patently irregular. Under the Pledge Eurohypo was bound not unreasonably to discount the value of the interests of the Pledgors. Under the assignment agreement also Chisholma agreed with Eurohypo that, if it undertook any Enforcement Action, it would “do so diligently with due care and so as to obtain fair market value for any asset subject to any Underlying Security as a result of such Enforcement Action”: paragraph 17.1.1. Under paragraph 17.1.2 it agreed “to obtain an independent valuation of any asset subject to any Underlying Security before undertaking any Enforcement Action in relation to any such Asset”. The valuation was to come from PwC or JLL.[41]In fact the sale took place without, so far as appears, Chisholma taking advice as to the value of the property in April 2011, or as to the appropriate method of sale or an appropriate reserve. The sale was to a sister company pursuant to a transaction that was plainly not at arm’s length. Nothing has been produced on paper from either Eurasia Logistics or Seaworld relating to the sale even though they would have a direct interest in the price because they would be entitled to any surplus. The net value of Dregon Land was more than € 1, even if you take the July 2010 valuations, the mean of which was $ 390,275,000 against an amount owing as of 21 March 2011 of $ 337 million.[42]Third, reliance is placed on a sequence of meetings attended by Mr Ablyazov or those connected with him at either 64-65 Vincent Square or Tower 42. The former premises are the offices of Mr Kalyuzhny. Tower 42 (the old NatWest Tower building) held the premises where Eastbridge Capital Limited, an Ablyazov company, was located. Mr Ablyazov was followed by the Bank’s inquiry agents to 64-65 Vincent Square and it is likely that there were other occasions when he attended when he was not spotted.[43]In particular on 7 September 2010 Mr Ablyazov spent 4 ½ hours at Vincent Square. The next day Head of Terms were signed for the loan by Eurohypo of $ 315.5 million and the sale by it of its loan to Bondiza: see [18] above. On 16 September 2010 the hearing of Mr Ablyazov’s appeal against the Receivership order began. On 27 September 2010 Mr Ablyazov spent 80 minutes at Vincent Square. On 30 September 2010 Bondiza was in default under the original facility agreement.[44]The Bank maintains that this was the first default under that agreement. Miss Newman has pointed out that the Project Snow document refers to default in March 2010. The position in relation to that is not clear. No default notice from Eurohypo in March 2010 has been found. Moreover, there is an email of 12 February 2010 from Eurohypo increasing the drawdown under the facility by $ 142,019,474 and referring to outstanding interest of $ 1,360,805. Presumably Eurohypo thought that there was at least $ 142 million of equity remaining in the project. The Completion Notice of 21 March 2011 refers to outstanding interest of $ 11,429,421 which would seem to be about six months’ worth.[45]On 23 February 2011 Mr Ablyazov travelled to Vincent Square for a 2½ hour meeting. On 23 March 2011 Chisholma made a demand for payment under the facility agreement. On 13 April 2011 he had another 75 minute meeting at Vincent Square. Thirteen days later, on 26 April 2011 Chisholma entered into the sale and purchase agreement to sell the shares for € 1: see [26] above. On 11/13 May 2011 individuals from Mr Gutseriev’s camp attended Tower 42. Mr Ablyazov had further meetings at Vincent square on 3 June, 15 June and 20 September 2011. On 14 June 2011 a meeting took place at the Sheraton Park Tower hotel with individuals in Mr Gutseriev’s camp.[46]The timing of these meetings (and their number) prompts, it is said, the inference that they were meetings related to the exercise of causing Bondiza to be in default, the perfection of the pledge and the making of the agreement to sell the Dregon Land shares. Mr Gutseriev says, not directly but through Mr Kalyuzhny and Mr White, that the Dregon Land transaction was never discussed at these meetings. Mr Gutseriev had, it is claimed, never met Mr Ablyazov. Mr Kalyuzhny had only met Mr Ablyazov once – in around January 2010 – in connection with the business of Mr Mikhail Gutseriev, Mr Gutseriev’s very wealthy brother. He had not had any discussions with Mr Ablyazov about the transactions now in issue, but only in respect of unrelated matters, and not on behalf of Mr Gutseriev or any of the applicants. If this is so, then any discussions that Mr Ablyazov had at Vincent Square would appear to have been with, or in relation to the affairs of, Mr Gutseriev’s brother. But what these discussions were about does not appear.[47]The Bank suggests that it is implausible that these meetings were not about Mr Gutseriev’s business. In this respect they point to the following:(a) the 10 November 2010 assignment agreement - see [19] above - was signed by Mr Kalyuzhny on behalf of Chisholma and the address for notices was stated to be 64-65 Vincent Square;(b) under the facility agreement of 28 December 2010 in favour of Tercialia - see [20] above - GCM Global Energy of 64-65 Vincent Square is specified as the agent on whom process may be served: see para 38.2 and the definition of “Process Agent” at page 17; and(c) the confidentiality agreement of 28 July 2009 was between Eurohypo and GCM: see [14].[48]Fourthly, the Bank applied to admit fresh evidence on the hearing of the appeal. We acceded to that application since it appeared to us that it was not evidence that the Bank could reasonably be expected to have produced before Field J; was apparently credible; and might have a significant effect on the outcome. The evidence consisted of the 65th witness statement of Mr Hardman of Hogan Lovells, the Bank’s solicitors, which exhibited a number of documents. These included two affidavits of Mr Sergey Tyshchenko, made in November and December 2013.[49]On 9 October 2013 the Bank became aware of press reports that Mr Tyshchenko had seized Logoparks Pyshma and Tolmachevo, both of which were owned by companies that appeared to be Ablyazov companies, and which had been added to the Receivership. The Bank obtained disclosure relief against Mr Tyshchenko which led to him swearing the two affidavits. In them he explained how in 2012 Mr Ablyazov had offered him the opportunity to purchase the shares in the companies owning Logoparks Pyshma, Tolmachevo and Biek Tau by redeeming the bank loans against the companies’ assets with money provided by Mr Ablyazov and thereafter obtaining a transfer of the shares, which Mr Tyshchenko would then hold as nominee for Mr Ablyazov. He turned this offer down.[50]Mr Tyshchenko also gave details of the way in which Medion CJSC, an Ablyazov company, took control of the Pyshma Logopark. In 2008 or 2009 LLC Logopark Pyshma (“Logopark Pyshma”), the company owning the Pyshma park, obtained a loan from MDM, a bank. In August 2011 Medion took a loan from BTF, another bank. Medion used that money to buy the right to repayment of the MDM loan to Logopark Pyshma. In December 2012 Logopark Pyshma defaulted and Medion enforced, taking Logopark Pyshma’s assets i.e. the Pyshma park. The BTF bank was prepared to lend because Mr Khrapunov, Mr Ablyazov’s son in law, had arranged for it to receive a deposit in the sum of $ 70 million. This is, the Bank submits, the same modus operandi as Mr Ablyazov adopted in relation to Dregon Land.[51]Mr Tyshchenko also said that he understood from Mr Ablyazov that similar arrangements took place in relation to the Tolmachevo and Biek Tau Logoparks. In his December affidavit he said that Mr Ablyazov had suggested that he should purchase the loans made by AMT Bank (an Ablyazov company) in relation to three companies, enforce the loans in order to obtain shares in the companies and then together they would sell the shares and divide the profits.[52]Fifth, Mr Smith relied on what he said was an attempt to conceal the fact that Mr Gutseriev was aware of the original freezing order in 2010. This was said to arise because Mr White said, in para 65 of his first witness statement, that the transaction whereby ownership of the Dregon Land shares was transferred to Lapointec and Limia occurred “without knowledge of any relevant Orders of the English and Cypriot Courts”. In that witness statement “Orders”was a defined term meaning the Orders of 6 August 2010 and 23 November 2012“and any other applicable orders emanating from these proceedings wherever located”. It is not suggested that Mr White did anything improper: on the contrary reliance is placed on the fact that he is, it is suggested, most unlikely to have said what he said without explicit instruction from Mr Gutseriev.[53]At the hearing before Field J submissions were made by counsel then appearing which left the impression that what was being said was that Mr Gutseriev had not been aware of any freezing order until 2011. Mr Hardman of Hogan Lovells was not in court. When he read the transcript he realised that what was being said could not be correct because he had been told something different by Mr Kalyuzhny. Correspondence followed between Hogan Lovells and McGuireWoods which led Mr White to file a 3rd witness statement on 9 August 2013 in which he made clear that it was not the applicants’ position that they did not know of the original freezing order of 12 November 2009. On the contrary they were aware of it at the time they entered into the transactions having, at the latest, seen a copy of it in late November or early December 2010. But it was not until June 2011 that they became aware of any order which named Dregon Land.[54]Sixth, Mr Smith relies on the fact that the defaults of Bondiza were not substantial ones, which, he submitted, suggested that they were contrived.[55]Seventh, Mr Smith relied on an application made to the Provincial Court of Nicosia on 22 February 2012 whereby that court was asked to annul the acknowledgment of the Cypriot Court of the order of 6 August 2010, as amended on, inter alia, 8 April 2011, either in toto or insofar as it affected a number of companies including Dregon Land. The application was supported by a statement from Mr Panikos Onufriou, who has acted for Mr Ablyazov in the past. The Bank also obtained certain documents as a result of an order made by Popplewell J on 5 July 2013. These included a document dated 12 September 2011 apparently signed by Mr Trofimov (although the signature looks to be a scanned one), addressed to Consulco, a Cypriot company service provider used by Mr Ablyazov, in which Mr Trofimov declares himself to be the “beneficiary” of, inter alia, Dregon Land and authorises Consulco to provide any information to the PNO law firm, of which Mr Onufriou is a partner, which firm is described as “appointed as my Lawyers to represent me in the Court cases”. A letter from the PNO law firm of 12 October 2012, found as a result of the execution of a search order against Mrs Tyshchenko made by Singh J on 14 August 2013, addressed to whom it may concern, confirms that the PNO law firm had been instructed by Mr Trofimov as the beneficial owner of various companies as stated in the application to the District Court.[56]This application, Mr Smith submits, shows that Mr Ablyazov is still, in effect, claiming a beneficial interest in Dregon Land 10 months after it has supposedly passed to Lapointec and Limia. That indicates that the arrangement in place was that he should continue as beneficial owner. He observes that, although Miss Newman said, on instructions, that the application had nothing to do with her clients, there was no evidence from them as to how this application by Dregon Land came about, or as to their ignorance of it. Further there was no direct evidence from Mr Gutseriev at all.[57]Eighth, there was found in the material obtained as a result of the execution of the search order against Mrs Tyshchenko a list on a memory stick of 23 companies many of which appear to be Ablyazov companies, including Stepan Investment, Bondiza, Seaworld and Flairis. One of them is Dregon Land. Analysis of the metadata reveals that its file name is “Eurasia .2.doc” and that it was modified and created on 19 December 2011 at 12.55. Miss Newman observes that the data only applies to this copy which may have been in existence for some time before that. However, the shareholders of Dregon Land are said in the list to be Lapointec and Limia. So, whilst its date of original compilation in this form is not certain, it must plainly have been after April 2011. It appears therefore to be a document which postdates the purported sale of Dregon Land but in which that company is included as one in Mr Ablyazov’s stable.[58]Ninth, on 12 January 2011 there appeared in a Russian business newspaper – RBC Daily – a report which indicated that a source close to the company had told the paper that Eurasia Logistics, (said in the article to be controlled by Mr Ablyazov) had sold the Park, described as Mr Ablyazov’s “main develop [ment] asset”, at the end of 2010 and that the new owner was the BIN group affiliated to Mr Gutseriev. It said that “The top manager of a foreign consulting company claims that the transaction ... began in 2009”; and that the source said that Mr Ablyazov made “respective negotiations with BIN group representatives in London”. Information in the report is said to have come from several sources including Mr Ryabov who is the author of Collins International’s 2011 report into the Russian industrial property market.[59]This, Mr Smith submits, all supports the inference that the Park was not subjected to some arms length security enforcement but was the subject of a contrived deal. The January 2011 date of the article and its reference to a sale to Mr Gutseriev’s group is indicative of the fact that a transfer of the shares in Dregon Land was exactly what was being envisaged in late 2010 or early 2011, before any enforcement action had begun. It is also consistent with the evidence of meetings in Vincent Square. One of these was the attendance of a Mr Udovenko on 7 October 2009 at Vincent Square. He was one of Mr Ablyazov’s “most trusted associates” (per Teare J) and occupied a position later occupied by Mr Syrym Shalabayev as a nominee UBO and hider of Mr Ablyazov’s shareholdings.[60]Lastly, Mr Smith relies on the involvement of Mr Syrym Shalabayev. On 10 November 2010, the date of the assignment of the original facility agreement, Mr Eriskhan Kurazov was appointed by Eurasia M4 as its Managing Director, Administration under a contract of employment. The signatory to the appointment for Eurasia M4 was Mr Komarov, who had in August 2008 or January 2009 been appointed by Mr Udovenko as the general director of Eurasia M4. The appointment, the Bank suggests, must have been at the behest of Mr Shalabayev who had been giving instructions in relation to Eurasia Logistic companies and continued to do so thereafter.[61]According to Mr White’s statement [64] prior to November 2010 members of Eurasia M4’s top management had been implicated in fraud and forgery and a few of them had been arrested; Mr Kurazov was well known in the industry, especially in dealing with distressed businesses, and had been advising the SSG Group on the assignment of Eurohypo’s rights under the facility agreement. Shortly after Mr Kurazov’s appointment Mr Komarov tendered his voluntary registration on 27 November 2010 effective 27 December 2010.[62]On 23 December 2010 an email sent from the email address used by Mr Shalabayev asked Cypriot company service providers to draw up a resolution appointing Mr Kurazov as Managing Director in place of Mr Komarov as of 28 December 2010. That was the day when Eurohypo agreed to lend Tercialia, Mr Gutseriev’s company, $ 308 million to finance the Deferred Consideration: see [20]. As from 28 December Mr Kurazov was, Mr Smith submits, Mr Gutseriev’s man. Here, he suggests, is the mortgagee securing the appointment, by the main asset administrator/ agent of Mr Ablyazov, the effective mortgagor, of a Managing Director of the company which is the prime asset of the company whose shares are pledged, and doing so several months before Mr Gutseriev’s companies purported to acquire any interest in Dregon Land. This must have been at the behest of Mr Gutseriev and with the consent of Mr Ablyazov in anticipation of the enforcement process that was destined to follow. It is inconsistent with the events of March/April 2011 being an arm’s length enforcement of security for a debt.[63]Other documents which have been revealed to the Bank show the further involvement of Mr Shalabayev. On 24 November 2010 he emailed Consulco Ltd in Cyprus to ask them to arrange for over 80 documents concerning loan agreements where Flairis was the lender and Eurasia M4 the borrower to be drawn up. This appears to have involved terminating a set of loans granted in 2006/7 and replacing them with loans backdated to 28 October 2010 i.e. a date preceding the assignment agreement. These were then the subject of an agreement of 30 March 2011 whereby, pursuant to the exercise by Chisholma of its powers under the Debenture (assigned to it by Eurohypo), Flairis assigned the loans to Tercialia, on the footing recorded in Recital (B) that the loans were in place at the time of the 10 November 2010 assignment. Paradoxically the same appears to have happened in relation to the replaced 2006/7 loans. Quite why Mr Shalabayev was doing all this is unclear but, it is said, his continued involvement is indicative of Mr Ablyazov’s continued participation in the transaction and, as Mr Smith put it, all was not what it seemed. Discussion[64]Some of these points are stronger than others and there are matters that can be said to point in the other direction.[65]As to the former, it may well be that Mr White’s first witness statement was loosely drafted and misunderstood by the applicants’ then counsel, although it is somewhat surprising that no reference was made in the statement to the applicants’ knowledge of the original freezing order. In their letter of 15 May 2013 Hogan Lovells recorded that Mr Hardman had not prior to reading the transcript understood that the position that was being taken that there was no knowledge of any order over Mr Ablyazov’s assets. The defaults of Bondiza may have been more extensive than two quarters. The transfer to Lapointec and Limia is said not to have been at an undervalue having regard to the fact that Chisholma had to pay off Bondiza’s debt to Eurohypo, $ 42 million in hedging liabilities and $ 3.1 million in interest which would, it is said, leave no equity for the shareholders. The appointment of Mr Kurazov may have been simply because he was the right man to rescue ailing property ventures and Mr Gutseriev was concerned to have someone of his calibre in charge of a company that represented his security for the debt which had already been assigned. He should not be regarded, Miss Newman submits, as Mr Gutseriev’s “man” if that means assistant in unlawful activity. The involvement of Mr Shalabayev is obscure.[66]As to the latter, there are a number of questions. Why, it may be asked, should Mr Gutseriev have been willing to assist Mr Ablyazov to retain any beneficial interest in the Park (rather than having it for himself, particularly since industrial property is his business) and take the burden of financing its acquisition and maintenance (although in the light of the rental income and increase in property values that may have been a limited risk)? If he did do so, it must surely have been on some basis which ensured that his outgoings would be paid off, either by Mr Ablyazov providing the money to pay off Eurohypo or by his being reimbursed out of the proceeds of any sale. But there is before the Court no evidence of what those arrangements were or might have been. Further the arrangements may have been such that Mr Ablyazov could expect to receive money from the exercise but not such that he would retain or regain any beneficial interest in Dregon Land and thus in the Park. Good arguable case[67]I am, however, satisfied that, on the material before him, the judge was entitled to find, as he did, that the Bank had established that there was a good arguable case that Mr Ablyazov and Mr Gutseriev entered into some form of agreement the effect of which was that beneficial ownership of Dregon Land would remain with Mr Ablyazov, in whole or in part, whilst appearing to be extinguished by the enforcement of the Pledge. A fortiori I am satisfied that, on the more extensive material which we now have, there is(i) a good arguable case and(ii) good reason to suppose that that is what has happened. In each case the combination of factors justifies that conclusion. With the possible exception of points 5 and 6 Mr Smith’s points have real strength, and the revelation from Mr Tyshchenko’s evidence of Mr Ablyazov’s modus operandi provides grounds for thinking that this was what he was about in this context. The judge was well justified in deciding that the issue must be tried out. Whether or not the position is as the Bank contends is, of course, something that the Bank, which accepted that it should be the claimant in the issue, will have to establish on the balance of probabilities.[68]In those circumstances it is not necessary to decide which of the two formulations (good arguable case/good reason to suppose) is the most appropriate one. The former is derived from Chabra and the latter from Masri. It was not submitted to us that, for the purposes of the present case, there was any significant difference between them and certainly none which it is now necessary to explore. Nor is it necessary to decide whether, given that Lapointec and Limia are the applicants for an order, it is sufficient for the Bank to show that there is a real prospect of success in defeating that claim, i.e. the test under CPR 24.2 or the extent to which, if at all, there is any practical distinction between that and the other two tests. Jurisdiction[69]It is, however, necessary to decide whether or not it was open to the judge, as a matter of jurisdiction, to order the trial of an issue.[70]Miss Newman submits that it was not. What has happened, she submits, is that the Bank has simply sidestepped the need to go through the jurisdictional hoops against Lapointec and Limia, neither of which is resident within the jurisdiction, and has, thus, deprived the applicants of the opportunity to raise objections to the court exercising jurisdiction. What the Bank should have done, once it became apparent to it that there had been a pledge which had been perfected and then enforced in March and April 2011, was to return to court and draw the court’s attention to the fact that the inclusion of Dregon Land had been secured under a misapprehension as to the true facts. That misapprehension was made apparent to the Bank by McGuireWoods which engaged in correspondence from December 2012 in an attempt to exclude Dregon Land from the orders.[71]She drew our attention to Speedier Logistics v Aardvark Digital [2012] EWHC 2776 (Comm) where Eder J considered a passage in Gee on Commercial Injunctions (5th ed, Sweet & Maxwell), para 9.020, to the effect that where(i) new information becomes available only to the applicant for ex parte relief after the defendant has been fully apprised of what occurred at the ex parte hearing;(ii) the defendant does not know of the fresh information; and(iii) the fresh information means that the information given to the court on the ex parte application was misleading, or that the basis on which relief was granted could no longer be supported, the applicant should either consent to the discharge of the order or disclose to the court the new position so that the court can consider the circumstances of the case. Eder J could see no reason in principle why, when the claimant becomes aware of information which renders what he told the court originally incorrect, he should not be under a duty to go back and inform the court that there had been a relevant change, or, at the very least, to inform the defendant of the new circumstances.[72]In that case the claimant had failed to inform the defendant of the relevant change of circumstances viz that the risk of a liability in China had disappeared, of which the defendant was not aware, and had failed to revert back to the court. Eder J set aside the injunction.[73]I do not regard this authority or the passage in Gee as assisting the applicants. Nothing I say should be understood as underestimating the importance of disclosure on ex parte applications. But the judge did not have before him an application to discharge any order for non disclosure. Further, the circumstances of the present case were significantly different. All the Receivership extension orders that were made did not have a return date but did include a liberty to apply. The freezing orders contained express provision for anyone prejudicially affected to apply. The freezing order was not continued on the basis of information unknown to the applicants, but known by the Bank to be false (as in Speedier). The applicants were aware of what they claim to be the true position. They learnt of the grant of the injunction; claimed that, on the basis of what they say is the true position (itself in dispute), they should be excluded from it; and sought to persuade the Bank to agree to that. It was not suggested in that correspondence that it was incumbent on the Bank to go back to the court. If the Bank had done so the issues raised would have been, or been very similar to, those that arose on the applicants application. The fact that it was the applicants that applied has not altered the incidence of the burden of proof.[74]If the Bank still sought to have the Dregon Land shares included in the freezing or receivership orders, then, Miss Newman submits, it should have sought permission to serve proceedings on the applicants either by making them additional defendants or by an application to which Mr Ablyazov and they were parties. The Bank would have to have established(a) that there was a claim made against Mr Ablyazov on whom the claim form had been or would be served;(b) that there was as between the Bank and him a real issue which it was reasonable for the court to try; and(c) that the Bank wished to serve the claim form on the applicants as necessary or proper parties: see 3.1. (3) of CPR PD 6B. It would have to seek permission in the usual way. By that means the applicants would have been able to dispute the appropriateness of the Court exercising extraterritorial jurisdiction. Since the Bank has not done that, the judge should have excluded them from the scope of the order.[75]As it happens, she submits, this route is not open to the Bank (or not yet at any rate). There is no issue between the Bank and Mr Ablyazov adumbrated in the claim form (or anywhere else) as to the ownership of Dregon Land. There has been no application by the Bank to join the applicants and there is, indeed, no subsisting application between the applicants and the Bank. Paragraph 1 of the judge’s order provides that the application to have the freezing order and the Receivership order amended by removing from their scope the shares in and any direct and indirect assets of Dregon Land “shall be dismissed”.[76]As to the latter, the order is infelicitously drafted. The judge cannot have intended that the application should come to an end, because in paragraphs 2 and following he ordered the trial of an issue, to which the application gave rise, and gave directions in relation to it. What he must have intended was that he would not then and there grant the application for Dregon Land to be removed from the scope of the orders. Discussion[77]I do not accept the applicants’ submissions. The position, as it seems to me, stands thus. The Bank obtained a freezing order in November 2009 which did not specifically mention the shares in Dregon Land. If they were in truth an asset of Mr Ablyazov, or held in accordance with his instructions, he would nevertheless be precluded from disposing of them (subject to the terms of the order). The Bank then obtained a Receivership order which did not refer to Dregon Land. Both orders were amended in April 2011 so as to make specific reference to the shares in Dregon Land. When that happened Mr Ablyazov was still arguably the ultimate beneficial owner of the shares and holder of the equity of redemption. The freezing order permitted persons affected by it to apply to vary or discharge it. This is what the applicants have done.[78]They did not have to do so. It would have been open to them to do nothing; and to rely on what they claim to be the true position namely that Lapointec and Limia are the beneficial owners of Dregon Land. There are, of course, potential risks in such inactivity at any rate if a Court in Cyprus declared the order enforceable (as in April 2011 it did), although it was also open to the applicants to apply to discharge any order of any foreign court declaring the freezing order enforceable (as Mr Onufriou did, or purported to do, in respect of Dregon Land). Refinancing might, also, well prove very difficult if the orders remain in place.[79]Once the applicants had decided to make their application it was for the court to decide how to deal with it. It could have decided without more either that Lapointec and Limia were, or that they were not, the beneficial owners of Dregon Land. But it would be unlikely to do so if there was good reason, in either case, to think the opposite. What the court did not have to do was to decide whether it had and should exercise jurisdiction under CPR PD 6B. The Court had made orders against Mr Ablyazov who was within its jurisdiction. He could legitimately be restrained from disposing of companies of which he was the apparent beneficial owner whether or not those companies were subject to the jurisdiction of the court and whether or not they were made parties to the proceedings. What the applicants were availing themselves of was the opportunity afforded by the terms of the order to seek to vary it because of its potentially prejudicial effect upon them.[80]The approach argued for by the applicants would have strange consequences. The supposed requirement that there be an issue between the claimant and the defendant to the resolution of which another person is a necessary or proper party is, in this context, inappropriate. A claimant may obtain an order restraining a defendant from disposing of an asset abroad which he accepts is his and should come within the order. Someone in the country in question may then claim that, whatever the defendant says, the asset belongs to him. The court should not be disabled from making freezing orders against a defendant who is within its jurisdiction, which may impact on third parties, because there is no dispute by the defendant that the asset is his. Nor should that position change when the foreign claimant applies for the asset to be released from the order.[81]Further, if the applicants are right, it would appear to mean that although, on the evidence before Teare J in April 2011, it appeared to him appropriate to include Dregon Land in the orders, and the same is true now (albeit on a different evidential basis) Dregon Land should now be excluded from orders made against Mr Ablyazov (not the applicants). The alternative approach i.e., that there is no jurisdiction to determine the issue raised by the application but that the post judgment freezing order and the Receivership order remain in effect in respect of it is equally unacceptable.[82]Miss Newman drew our attention to a number of cases on the Masri jurisdiction in order to point out that in most of them the “third party”, i.e. the person in the position of the applicants, had been joined in the proceedings: a) S.C.F. Finance Co Ltd v Masri [1985] 1 WLR 876 – where the third party wife was joined as a defendant; b) T.S.B. Private Bank International S.A. v Chabra [1992] 1 WLR 231 - where the third party was joined by the judge as a defendant of his own motion under Order 15, r.6 (2) (b) (ii); c) Mercantile Group (Europe) A.G. v Aiyela [1994] QB 366 – third party a defendant; d) C Inc plc v L [2001] 2 All ER (Comm) 446 – permission sought and granted to join the third party husband (out of the jurisdiction) to the proceedings as a necessary and proper party to the issue as to whether a Receiver should be appointed in respect of the wife’s right of indemnity against her husband; e) Revenue & Customs Commissioners v Egleton [2007] 1 All ER 606 – the third parties were defendants; and f) Parbulk II AS v PT Humpuss Intermoda Transportasi TBK [2012] All ER (Comm) 513 - where the third party was precluded by its conduct from disputing in personam jurisdiction (although Gloster J did not consider that there were any substantial grounds for service out of the jurisdiction). She also referred us to Cardile & Ors v LED Builders Pty Ltd [1999] HCA 18 and its oft cited exposition of Chabra like principles at [57]. In that case the third parties were not made actual parties to the litigation; and in the judgment four members of the court referred to that fact and one (Kirby J) said that those who were traditionally spoken of as “third parties” in this context ought not to be so described since they were, at any rate in that case, non parties.[83]The present case is not, however, one in which relief is sought by the Bank against the applicants; but the reverse. Accordingly, as it seems to me, these authorities do not bear upon the question that we have to decide, so far as it concerns the ruling of the judge on the applicants application that there should be the trial of an issue as to whether Mr Ablyazov continues to enjoy some beneficial interest in Dregon Land. Conclusion[84]The judge was not, in my view, in error in deciding that he had jurisdiction to decide, and in deciding, that there should be a trial of the issue “Where lies the (ultimate) beneficial ownership of the Dregon Land shares”: para 2.a. of the Order.[85]But he also ordered that the issue should extend to whether the applicants were involved in a collusive breach of the freezing order and/or the Receivership[86]So it is that in the Points of Claim that have been served since the judge’s order the relief sought includes, firstly, a declaration that Mr Ablyazov is and has all material times been the (ultimate) beneficial owner of the shares in Dregon Land and/or that those shares are held by nominees on his behalf; and, secondly, a declaration that the failure to disclose, and the enforcement against, the shares in Dregon Land were breaches of the orders which were knowingly assisted or encouraged by Lapointec and Limia. Orders are sought requiring the applicants to restore the shares in Dregon Land to Eurasia Logistics and Seaworld such that the Bank is to be at liberty to enforce the judgment it has obtained against Mr Ablyazov against those shares. The applicants have not responded to this pleading.[87]During the course of the argument Mr Smith indicated an alternative order that might be sought, namely that Lapointec and Limia are declared to hold the shares subject to the equity of redemption in favour of Eurasia Logistics and Seaworld (and hence Mr Ablyazov), notwithstanding the sale; or that the shares be transferred back to Chisholma to be held by it subject to that equity. He confirmed that the Bank’s claim was as pleaded, but might be reviewed.[88]This is, in my judgment, a step too far. The applicants sought to exclude the shares in Dregon Land from the relevant orders on the footing that Mr Ablyazov had no beneficial interest in them. That did not open the way for the Bank to bring an entirely different claim that Lapointec and Limia should be required to return shares (of which they were in fact the beneficial owners) because they had been party to a disposition which was to their knowledge in breach of those orders. Any such application would need to be brought by some originating process.[89]The basis upon which the judge ordered the second issue is not wholly clear. The passage where he dealt with that issue appears only to be in the words underlined in the citation from his judgment below:
“ 31 I agree with Mr Smith's first submission on jurisdiction. The Receivership and the Freezing orders and their predecessors having been properly made when they were granted -- at which time the Dregon Land shares were beneficially owned by Mr Ablyazov -- and the applicants having brought their application before the court, the only question is whether it is just and appropriate to order that there be a determination of the issue of where lies the beneficial ownership of the Dregon Land shares. 32 Is it just and appropriate to make such an order? In my opinion it is since I find that the Bank has established on the evidence a good arguable case for challenging the applicants' contention that Lapointec and Limia are the beneficial owners of the Dregon Land shares and are otherwise entitled as against the Bank to exercise full rights of ownership in respect of those shares. … 34 I am accordingly of the view that it is just and appropriate that there be a trial of the competing claims made by the Bank and the applicants as to where lies the beneficial ownership of the Dregon Land Shares and that, if it be necessary for the Bank to establish it, the court has territorial jurisdiction over the applicants in respect of such a trial. 35 Thus, for the reasons I have given, I dismiss the applicants' application to have the Receivership and Freezing Orders amended so as not to apply to the Dregon Land shares and I order instead that there be a trial of the competing claims made by the Bank and the applicants as to where lies the beneficial ownership of the Dregon Land Shares.”
It should be pointed out that in refusing permission to appeal the judge observed that the conclusion that the case advanced by the bank “as to whether there has been a collusive breach of the order, gave rise to a good arguable case, was a conclusion in the nature of an assessment of the evidence before the court” which he thought there was no prospect of displacing. …[90]In para 33 of his judgment the judge went on to consider that there was jurisdiction for making a Chabra order against the applicants and accepted the alternative submission that the court had such a jurisdiction under paragraph 3.1 (3) of CPR PD 6B. The Bank’s claim that the shares belonged beneficially to Mr Ablyazov was, he said, a classic Chabra claim and there was an issue between the Bank and Mr Ablyazov, who was served within the jurisdiction, as to whether he retained the beneficial ownership, which it was reasonable for the court to try, and to which the applicants were necessary and proper parties.[91]Since, in my view, the judge had, for the reasons that I have stated, jurisdiction to decide to order the first of the two issues it is not necessary to determine whether the Chabra line of authority also gave him jurisdiction to do so.[92]It is, however material to consider whether the Chabra style jurisdiction was a route by which the second basis of claim (a collusive bargain to evade the effect of the orders not resulting in the beneficial ownership remaining with Mr Ablyazov) could be pursued under paragraph 3.1 (3).[93]It may be that it is. There are two possible routes. The first is if it can properly be said(a) that there is a claim which is being made against Mr Ablyazov, on whom the claim form has been served, that he has, in relation to the Dregon Land shares, colluded with Mr Gutseriev and, thus, the applicants; and(b) that they are necessary or proper parties to that claim: CPR PD 6B 3.1 (3). The difficulty with that approach is that the Practice Direction appears to contemplate that a claim form has or will have been served on one defendant and the same claim form served on the person outside the jurisdiction. Here there is no claim of the sort now under consideration advanced in any originating proceedings so that service of the claim form will not be service of a document which puts forward any such claim.[94]The alternative is for the Bank(i) to issue an application in the action against Mr Ablyazov and (at least) the applicants in the action;(ii) to serve it on Mr Ablyazov; and then(iii) to apply for permission to serve that application on the applicants out of the jurisdiction, making use of CPR 6.2 (c) which provides that “claim” includes “any application made …to commence proceedings” and that “claim form” is “to be construed accordingly”. This (and the problem identified in the previous paragraph) was the route taken by Aikens J in C Inc v L; and appears to me to be a permissible approach. I did not understand Miss Newman to suggest the contrary.[95]I do not propose, however, to decide any question about the legitimacy or appropriateness of service out now. No permission has ever been sought to join Lapointec and Limia to any proceedings. Paragraph 33 of the judgment deals with the first issue, not the second, and does not, in any event, grant any permission. If it is necessary to make use of CPR PD 6B 3.3 we would not, in my view, be justified in sidestepping the procedural steps, which require an application to the judge. Further it is not self evident that the court would think fit to make an order for service out for a number of reasons.[96]First, it might well be inappropriate to do so if neither Chisholma (nor Eurasia Logistics and Seaworld) nor Mr Gutseriev is sought to be made a party. It may also be necessary or, at least, appropriate for Eurohypo to be joined since it would appear to have security over the shares in Dregon Land for the Tercialia loan: see clause 4.1. and condition 20(19) of schedule 1 to the agreement of 28 December 2010: para [20] above. Any decision as to whether an order should be made for the shares to revert to some company other than the applicants would need to take account of the interests of those who have advanced monies for the acquisition of the shares, particularly if they have acted in good faith.[97]Second, the claim contemplated seems a very convoluted route to redress. If there has been a collusive enforcement of the pledge of the shares in Dregon Land, which has led to a sale at an undervalue, there would, on classic principles, appear to be a claim against Chisholma for equitable compensation which might afford a better route to recovery, if pursued by the Receivers of Eurasia Logistics and Seaworld, as owners of the equity of redemption, if so authorised. That might be a factor which argued against giving permission. Third, there may be further considerations that the applicants could properly raise on an application for permission as to the appropriateness of proceeding against them in this jurisdiction in this manner.[98]Accordingly I would allow the appeal but only to the extent of removing paragraphs 1 and 2b of the judge’s order, and would otherwise dismiss it. The removal of paragraph 1 will make it plain that the application is not completely dismissed and that the first issue will be determined. It may be that that result can be reached by a process of interpretation but removing paragraph 1 will remove any doubt. The removal of paragraph 2 b will mean that the issue will be confined to the question of beneficial ownership of the shares in Dregon Land.[99]The effect of that is that the Points of Claim that have been filed will require amendment but, subject to any further submissions that the applicants may wish to make, I do not think it necessary for our order to deal with that. It will, of course, be open to the Bank to seek to advance their second line of attack by whatever originating process and against whichever defendants or respondents they think fit.[100]As to costs I would order the applicants to pay 85% of the Bank’s costs and to pay £ 75,000 on account of those costs. That seems to me fairly to reflect the fact that the Bank are, in substance, the winners on this appeal (having succeeded in defeating the contention that the applicants could summarily extract themselves from the scope of the Court’s orders either because there was no good arguable case that Mr Ablyazov was beneficially interested in them or on jurisdictional grounds) and makes sufficient allowance for the fact that the Court has set aside paragraph 2 b of the judge’s order. I would also replace the judge’s order that the applicants pay the Bank its costs of the application and order instead that they should shall pay the Bank its costs of the hearing before Field J on 8 May 2013 but that, otherwise, the costs of the application of 20 February 2013 should be costs in the application, which has yet to be determined. LORD JUSTICE ELIAS[101]I agree. LORD JUSTICE MOORE BICK[102]I agree.

order

see [29] below. order: para 2.b. This came about because the Bank had made it part of its case that there had been collusion between Mr Ablyazov and Mr Gutseriev to get round these orders such that the court could make orders undoing what had been done.

Cited in 1 later judgment