“It is difficult to imagine a party to commercial litigation who has acted with more cynicism, opportunism and deviousness towards court orders than Mr Ablyazov. Rix LJ has described in trenchant terms the factors which cause me to express myself in this way. There can be no complaint that Teare J decided that the court’s powers should be deployed so as to put the maximum pressure on Mr Ablyazov to comply with its orders so as to endeavour to prevent its fair procedures from being subverted.”
“16. Before summarising the parties’ respective cases it is necessary to note three matters. The first is the manner in which Mr. Ablyazov “holds” his assets. In my judgment on the receivership application,[2010] EWHC 1779 (Comm) at paragraph 7, I described it in these terms: “7. Mr. Ablyazov does not hold his assets in his own name. Rather, a trusted associate appears to hold shares in a holding company on his behalf and by that means controls the shareholdings in a chain of other companies at the bottom of which chain is an operating business. The use of a nominee and of companies registered in offshore jurisdictions makes it difficult to trace his assets. He says that the elaborate scheme by which he owns his assets is necessary to protect him from unlawful depredations by the President of Kazakhstan.” 17. Assets held in this way are assets of Mr. Ablyazov within the wide definition of assets in the WFO. They are assets which Mr. Ablyazov has the power indirectly to dispose of as if they were his own. Although not the registered owner of any shares in a company he is the “ultimate beneficial owner” of them (“the UBO”) and can dispose of the assets held by the company as if they were his own by reason of being able to instruct his nominee. 18. Mr. Alexander Udovenko was one of Mr. Ablyazov’s most trusted associates until sometime in late 2009 (when, it seems, he disappeared). He was a Russian lawyer who had practised with an American firm in Moscow and had then worked for an American bank in Moscow. From 2001-2003 he studied in London obtaining a diploma in law and an MBA. From 2003 he worked at Eastbridge Capital Limited in London. He appears to have provided his services to Mr. Ablyazov in London at the offices of Eastbridge. He was the nominee UBO of at least some of Mr. Ablyazov’s companies and as such made use of corporate service providers in off-shore jurisdictions, in particular in Cyprus and the BVI. He was assisted by Syrym Shalabayev, Mr. Ablyazov’s brother-in-law who, in the Autumn of 2008, replaced Mr. Udovenko as the nominee “beneficial owner” of at least some of Mr. Ablyazov’s companies and was perceived by at least one person familiar with the workings of Eastbridge as Mr. Udovenko’s “successor”
“89. As for Alberts Court: the points raised on behalf of Mr Ablyazov are a straightforward attempt to reargue the judge's assessment of the evidence of Salim and Syrym Shalabayev, witnesses who for the careful reasons given by the judge had no credibility with him. While the judge accepted that the case in respect of this property was not as strong as in the case of Carlton House and Oaklands Park (I would comment, if only because the purchase prices were not as outstandingly large), the facts show that there was nothing to tie Salim Shalabayev with this property other than the say-so of the two brothers. However, he never lived there, although Mr Ablyazov's driver and his wife had lived there. If, therefore, the property was not Salim's, it must have been Mr Ablyazov's. Syrym, who had selected it, and negotiated for and paid for it, did not say that he bought it for himself.”
“10. By a Respondent's Notice issued on8 January 2014 the Bank invited this court to exercise its discretion not to hear Mr Shalabayev's appeal against the order of Teare J dated17 May 2013 on the basis that he is now a committed contemnor whose contempts are unpurged. A hearing for directions was listed. We heard the Bank's application on16 October 2014 . At the conclusion of the hearing we announced that we would not exercise our discretion to decline to hear Mr Shalabayev's appeal and that the Bank's application in that regard was accordingly dismissed. These are my reasons for having joined in that decision. Mr Shalabayev's contempt 11. Mr Shalabayev is not party to any substantive proceedings brought by the Bank. The Bank has not asserted any cause of action against him. Apart from this dispute over the ownership of Alberts Court, Mr Shalabayev's main involvement as a party in this vast litigation was as a respondent to a Norwich Pharmacal application made against him by the Bank in December 2011. He was served with that application on6 December 2011 whilst temporarily in London to give evidence on the Bank's committal application against Mr Ablyazov, as I described in paragraph 4 above. In fact, he was served at the conclusion of his evidence with a Disclosure Order made by Andrew Smith J. 12. The Disclosure Order related to Mr Shalabayev's role as nominal ultimate beneficial owner of two companies in the Seychelles, Millennium and Proteus, a role he performed at the request of Mr Ablyazov. Mr Shalabayev was sole signatory on accounts held by these companies at banks in Cyprus. As a result he was involved in two transfers of large amounts of money from Millennium to Proteus in early 2011. The effect of the second transfer, made in suspicious circumstances so far as concerns its timing, was to remove US$23 million from Millennium to Proteus and thus out of the scope of protection ordered by the court through freezing and receivership orders over Mr Ablyazov's assets. It was that transfer which underlay the orders for disclosure made against Mr Shalabayev. 13. On20 December 2011 Field J dismissed an application by Mr Shalabayev to discharge or set aside the Disclosure Order by reason of Mr Shalabayev's privilege against self-incrimination and/or material non-disclosures by the Bank in its application therefor. Field J remade the Disclosure Order and also imposed restrictions on the ability of Mr Shalabayev to leave the jurisdiction, requiring surrender of his passport to his solicitors and a prohibition on applying for any travel document until after he had complied with the Disclosure Order. 14. On15 February 2012 Mr Shalabayev was cross examined before Cooke J as to his compliance with the Disclosure Order. On16 February 2012 Cooke J delivered a judgment expressing the conclusion that Mr Shalabayev had not fully and properly complied with his Disclosure Order obligations under the20 December 2011 order and he continued the travel restrictions pending proper compliance. 15. It seems that thereafter Mr Shalabayev left the jurisdiction in March 2012. At around the same time he applied for and obtained a new Kazakh passport which he failed to surrender to his solicitors. In October 2013 Eder J made the findings of contempt to which I have already referred. 16. It should be pointed out at the outset of the discussion that there is no direct connection between the findings of contempt against Mr Shalabayev and the issue of beneficial ownership of Alberts Court which arose in connection with the charging order proceedings. Mr Stephen Smith QC for the Bank suggests that there is nonetheless a real connection in that proper disclosure concerning the Millennium-Proteus transfer could have assisted in tracing misappropriated property which would have rendered it unnecessary to seek to enforce the Bank's judgments against other property such as Alberts Court. As to that, it is pointed out by Mr James Sheehan on behalf of Mr Shalabayev that the Bank has never yet asserted any more than that it "may well" have a proprietary claim to the misappropriated funds and has not yet established that, absent such a claim, the funds transferred belonged to Mr Ablyazov and were thus available for enforcement. It has also been said by the Bank that certain of the information sought from Mr Shalabayev has now been obtained from other sources. Less compelling is Mr Sheehan's point that there is no reason to think that breach of the travel and passport restrictions has in practice affected the prospect of the Bank obtaining information. The travel and passport restrictions were designed to enforce compliance with the disclosure obligation. However, Mr Sheehan's overall point that there is no very real connection between Mr Shalabayev's contempts and the subject matter of the charging order of proceedings is I think well-made. Still less is there any connection between Mr Shalabayev's contempts and the question whether his attempt to intervene in the charging order proceedings represents a collateral attack upon the earlier findings and is an abuse of process. 20.……..Nonetheless, whilst Mr Shalabayev’s contempt has impeded the course of justice in ascertaining the truth concerning the Millennium-Proteus transfer, his continuing contempt is of little consequence to the just resolution of the question of beneficial ownership of Alberts Court, or the enforcement of the charging order if that is upheld. 21. Teare J was invited to decline to hear Mr Shalabayev’s application to be joined as an intervener, albeit at a stage before Eder J had found the contempt proved. Teare J expressed himself as “particularly exercised by the question whether it would be disproportionate to decide not to hear Mr Shalabayev in response to the charging order in circumstances where the property which is the subject of the charging order is not the subject of the orders for disclosure or the subject of the orders that he not leave the jurisdiction and deliver up his passports.”
“The jurisdiction to stay or strike out proceedings as an abuse of process on the footing that a point has been decided in earlier proceedings is not a jurisdiction that will be exercised lightly…This point is even stronger where the person who is sought to be debarred in the second set of proceedings was not even a party to the first set. While a non-coincidence of parties is not necessarily a bar to a finding of abuse, it must be an important pointer against it.”
“The circumstances in which abuse of process can arise are very varied; those which give rise to the instant appeal must surely be unique. It would, in my view, be most unwise if this House were to use this occasion to say anything that might be taken as limiting to fixed categories the kind of circumstances on which the court has a duty (I disavow the word discretion) to exercise this salutary power.”
“There can be no catch-all formula for identifying an abuse of process, since each case will depend on its own facts.”
“d) If the parties to the later civil proceedingswere not parties to or privies of those who were parties to the earlier proceedings then it will only be an abuse of the process of the court to challenge the factual findings and conclusions of the judge or jury in the earlier action if (i) it would be manifestly unfair to a party to the later proceedings that the same issues should be relitigated or (ii) to permit such relitigation would bring the administration of justice into disrepute.”
“10. …… In February 1999 an ex parte application was made by HM Customs and Excise, the respondents to this appeal, to Latham J sitting as a judge of the High Court for the appointment of a receiver under s.11 of the Act and other orders. Latham J made the orders asked for on 4 February. One of the orders made was a declaration: "that the defendant [Mr Clifford Norris] holds the beneficial interest in 7 Berryfield Close, Chislehurst Road, Bickley, Kent, title number SGL 42481". 7 Berryfield Close was the house in which Mrs Norris and her three sons lived. They had lived there since she bought it in July 1984. She was registered as having the unencumbered title to the property. The order also required any person having possession of Mr Norris's assets forthwith to deliver up the same to the receiver, subject only to a period of 28 days from the date of the order being allowed before the requirement to deliver up 7 Berryfield Close should take effect. 11. Mrs Norris had only heard about the ex parte application a few days before as the result of a telephone call from Mr Norris's solicitors. She attended the hearing before Latham J but it is not suggested that she was then in a position to take any part. She was not represented. Following the making of the order, she took legal advice. She swore an affidavit dated4 March 1999 , with accompanying exhibits, and applied for the order to be varied so as to recognise her title or interest in 7 Berryfield Close. Her application was met by the response from the Customs and Excise that it was an abuse of process for her to make any such application the matter having been concluded by the order of Judge Brown. Latham J upheld the objection of the Customs and Excise and dismissed Mrs Norris's application without considering its merits. Her appeal to the Court of Appeal was likewise dismissed[2000] 1 WLR 1094 . She has appealed here with your Lordships' leave.”
“16. The second type of power conferred upon the High Court is directed to realising the value of realisable property and applying the proceeds so that the sum payable under the confiscation order can be fully discharged. This is achieved through a receiver appointed by the High Court under s.11. The drafting of s.11 and the associated sections 12 and 13 acknowledge that others besides the defendant and the donee of a gift caught by the Act may have an interest in the relevant property and that, whilst the receiver is given the power to take possession of the relevant property and realise its value, the order does not override or confiscate the interests of others in the value of that property. S.13(4) expressly provides that the powers shall be exercised with a view to allowing any person, other than the defendant or the recipient of a gift caught by the Act, "to retain or recover the value of any property held by him". This would be implicit even in the absence of an express provision since the confiscation order only applies to the convicted defendant and, indirectly through such defendant, donees caught by the Act. To apply it so as to confiscate the property of innocent third parties would be not only exorbitant but also outside the purpose of the Act. Any such confiscation would now also raise Human Rights issues. Sections 11 and 12 support this scheme by providing for others to make representations to the High Court. S.11(8) is expressed in mandatory terms: "The court shall not in respect of any property exercise the powers conferred by subsection (3)(a), (5) or (6) above unless a reasonable opportunity has been given for persons holding an interest in the property to make representations to the court." The "court" which has the powers referred to is the High Court: see subsection (1). The respondents before your Lordships surprisingly sought to argue that in subsection (8) the court to which such persons were to have a reasonable opportunity to make representations was the Crown Court not the High Court. This argument had been advanced in the Court of Appeal and rightly rejected by Tuckey LJ ([2000] 1 WLR at p 1100G). The relevant court is clearly the High Court seised of the enforcement proceedings. The person entitled to make representations is any person holding any interest in relevant property. The High Court must be prepared to hear representations from any such person (s.11(8)) and allow him to retain or recover the value of his interest in the property (s.13(4)). Again, this requirement of the Act has been carried through into RSC Order 115: rule 8(1) applies (inter alia) rules 4 and 5 to the exercise of the powers under s.11. 17. The scheme of the Act is thus to enable the monetary order made against the convicted defendant to be enforced by effecting recovery from the defendant's property including property which he has given away during the six year period. This extension of the statutory powers takes into account the obvious possibility that those engaging in drug trafficking may transfer their wealth to others in order to try and frustrate the attempts of the authorities to recover them but without affecting the trafficker's expectation that he will ultimately be able to benefit from the proceeds of his trafficking. The concept of realisable property is used both as a measure of the defendant's current wealth for the purpose of fixing the monetary amount of the confiscation order made and for defining what assets can be used for the purpose of enforcing the order and recovering the relevant sum. Property "held" being widely defined so as to include property in which any relevant person has an interest, it must be contemplated that there is realisable property in which two or more people will have an interest. It is therefore part of the structure of the Act that questions may have to be determined as to the respective interests of different persons in the same property. Although the extent of the defendant's interest is relevant to the Crown Court's assessment of the value of his realisable property, the question of what other persons, if any, have an interest and what is the extent of their interests must be decided by the High Court in the exercise of its jurisdiction.”
“2. The Court of Appeal held that Mrs Norris had a fair opportunity to put her case in the Crown Court where she and her husband were making common cause and she gave evidence. It was on that basis that Tuckey LJ said that it would be an abuse of process for her to relitigate the same issues in the High Court:[2000] 1 WLR 1094 , 1101E-F. But, as my noble and learned friend has explained, the proceedings in the Crown Court and those in the High Court are designed to serve different purposes and the interests of Mrs Norris and her husband in the matrimonial home are not the same. Mrs Norris was not a party to the proceedings in the Crown Court, nor did the procedure which the statute lays down require her case that she had a beneficial interest in the property to be put at that stage. 3. At the stage when the proceedings were in the Crown Court the only question which had to be resolved was the value of the husband's interest in the house. The question for that court was the amount of the defendant's realisable property, as this was the upper limit on the amount of money which he could be ordered to pay undersection 1(5) of the Drug Trafficking Offences Act 1986 by that court. It was not the function of the Crown Court to make any order which affected the interests that any third parties might have in the property whose value it took into account when determining the amount of the defendant's realisable property. 4. The scheme of the Act, so far as third party interests are concerned, is for their claims to be resolved in the High Court. The question for the High Court, when the proceedings reach this stage, relates not to the amount of money which the defendant must pay - that has already been fixed by the order made in the Crown Court - but to the powers which the receiver is to be authorised to exercise. It is at this stage that third parties are entitled to have their claims heard and determined. This is when, as a matter of both substance and procedure, representations may be made as to their interests, if any, in the property which the receiver wishes to realise. This is provided for expressly bysection 11(8) of the Act , consistently with which RSC, Ord 115, r 7(4) lays down the procedure by which those holding any interest in the realisable property are to be notified. 5. Provisions designed to protect the interests of third parties are conspicuously absent from the rules of procedure that apply at the stage of the hearing in the Crown Court. Third parties are not entitled to participate in the criminal proceedings in that court. But the issue for the Crown Court is not whether any property in which a third party might have an interest is to be confiscated. The order which it makes is an order which is directed against the defendant only, and it is simply an order for the payment of a sum of money. The question of realisation, if the exercise of powers by a receiver is needed in order to make good the order which the defendant is required to satisfy, is reserved for the High Court. 6. I do not therefore, with respect, agree with the observation by Tuckey LJ that the situation which has arisen in this case is exactly that which the doctrine of abuse of process is designed to prevent:[2000] 1 WLR 1094 , 1101F. The scheme of the Act itself shows that this proposition must be unsound. It cannot be an abuse of process for a third party holding an interest in property, to whom a right is given bysection 11(8) of the Act to make representations to the High Court, to seek to exercise that right just because he or she gave evidence in the Crown Court in support of the defendant's case that the property was not to be valued and taken into account as realisable property. I agree with my noble and learned friend, Lord Hobhouse that there may be other cases where the position which a third party wishes to adopt may be regarded as an abuse of process which should not be allowed to stand in the way of the enforcement of a confiscation order. But, for all the reasons which he has given, that has not been shown to be the position in this case.”
“It will be a rare case where the litigation of an issue which has not previously been decided between the same parties or their privies will amount to an abuse.”