(1) Jsc Mezhdunarodniy Promyshlenniy Bank (2) State Corporation "Deposit Insurance Agency" v Sergei Viktorovich Pugachev [2015] EWHC 1694 (Ch)

[2015] EWHC 1694 (Ch)Case No HC-2014-000262IN THE HIGH COURT OF JUSTICECHANCERY DIVISIONSITTING IN PRIVATEVenue Royal Courts of Justice, Strand, London, WC2A 2LLDate 12 June 2015
Before
THE HONOURABLE MR JUSTICE HILDYARD
Between
(1) JSC MEZHDUNARODNIY PROMYSHLENNIY BANKClaimants(2) STATE CORPORATION "DEPOSIT INSURANCE AGENCY"ClaimantSERGEI VIKTOROVICH PUGACHEVDefendant
Stephen Smith QC and Ben Griffiths (instructed by Hogan Lovells International LLP) for ClaimantsThe Defendant appeared in person for in personHearing Hearing dates: 23, 24 & 31 March 2015, 2, 15 & 20 April 2015 and 6 May 2015
JudgmentThe Hon. Mr Justice Hildyard :Scope of this judgment
[1]Aftertheir cross-examination of the Defendant in respect of his assets which are subject to freezing orders made by this court in aid of proceedings in the Russian Federation, the Claimants now seek an order that the Defendant should pay, on an indemnity basis and with a payment on account, the costs of the hearing.[2]The Claimants also seek an order to require the Defendant to swear and serve a further affidavit in connection with his assets, on the grounds that he has still not provided information or documentation which is said to be available to him and to be necessary to give a full effect to the freezing orders.[3]Also, pending the provision of any such further affidavit, the Claimants contend that a passport order against the Defendant intended to prevent the Defendant leaving this jurisdiction should be continued in the meantime.[4]Lastly, the Claimants invite me to adjourn the hearing for cross-examination generally with liberty to restore it if circumstances suggest its utility.[5]I should explain at the outset an unusual feature of this judgment. It is a substantially revised version of a largely ex tempore ruling that I provided in private to the parties on 6 May 2015. Particularly unusually, and regrettably, I felt it appropriate, and indeed my duty, to withdraw certain aspects of that ruling in light of various points made or emerging during the course of that hearing, which persuaded me that I should reconsider my final judgment before finally handing it down. In the event, and after re-reading the entire record before me, I have been persuaded that I should modify certain of my provisional conclusions, as I shall identify in the relevant context. This, then, is my reconsidered judgment in the matter.

Structure of this judgment

[6]The purpose of the process of cross-examination to assist in the policing of a freezing order is to clarify issues arising in relation to asset disclosure; it is essentially to enable investigation and clarification of the disclosure given, and of issues to which that disclosure gives rise, rather than to enable adjudication of points of disputed fact. The role of the court is primarily supervisory rather than adjudicatory, so that it would not usually be necessary for the court to delve into the evidence which emerges.[7]However, in this case, the Claimants’ consequential applications both for costs on an indemnity basis and for the Defendant to be directed to provide further affidavit evidence, and also for the cross-examination process to be adjourned, do seem to me to require me to undertake a substantially more detailed review and assessment than would usually be the case, even though it remains inappropriate for me to seek to resolve issues of fact which are contested in good faith.[8]In particular, the Claimants base their claim for costs on an indemnity basis on an allegation against the Defendant that he has been evasive to the point of in effect declining to engage in good faith, and indeed dishonest in at least certain specifically identified instances. That in my view necessarily requires me to deal in some detail with those instances, as well as my overall impression of the utility of the process, and of requiring further evidence.[9]There is an added complication in this case: much of the evidence was given in private, and is of a nature that has been treated as private and confidential. It would obviously undermine the rationale of hearing various matters in private and of the various forms of confidentiality clubs which continue in place for this judgment to record matters such matters publicly.[10]The structure for this judgment is as follows:(1) First, I outline the background, so as to set the present issue in the context of the broader dispute;(2) Next, I adumbrate the purposes for which Arnold J ordered the cross-examination of the Defendant;(3) Then, I describe briefly the course of the hearing;(4) Before addressing the evidence, I examine the principles or tests which I consider that I should apply in adjudicating the various applications I have described;(5) After that, I describe the scope of the evidence in the way I have outlined;(6) Then I express my decision as regards the application for costs;(7) Following that, I set out my decision on the application for further evidence, and to adjourn the cross-examination;(8) Lastly, I refer to the question as to the Defendant’s passports.

Background

[11]The background to this jurisdiction’s involvement in aid of the proceedings in the Russian Federation and the ambit of the dispute underlying those proceedings is set out in a number of interlocutory judgments in this court and recently in a judgment of the Court of Appeal given on 27 February 2015, the reference for which is [2015] EWCA Civ 139.[12]There is no need for me to repeat the descriptions of the proceedings there given. I think it suffices to quote the following summary from the judgment of Arnold J dated 11 March 2015 which explains the circumstances in which he was persuaded to make an order for the cross-examination of the Defendant in relation to his assets:
“3. The Claimants' claims in the Russian proceedings are brought pursuant to Article 14 of the Russian Federal Law on Insolvency of Financial Institutions and concern an alleged scheme called the Share Pledge Scheme. That scheme is said to have involved the release of pledges given in favour of the First Claimant over the shares of companies connected with Mr Pugachev in order to guarantee indebtedness owing to the bank by other companies believed to be owned and/or controlled by Mr Pugachev. The share pledges, it is said, were all purportedly released by the First Claimant a matter of weeks before its collapse into insolvency and at a time when, so the Claimants contend, it would have been obvious to Mr Pugachev that the First Claimant could not avoid going into insolvency. It is the Claimants' case that the share pledges were released on the direct instructions of Mr Pugachev for no or no valuable consideration. As a result, it is said, the First Claimant lost security over assets with a potential value of hundreds of millions, or possibly even billions, of US dollars very shortly before its collapse. 4. Mr Pugachev is defending the Russian proceedings, and he vigorously denies any wrongdoing in those proceedings. Furthermore, it is Mr Pugachev's contention that what has in fact been going on is a determined attempt by powerful people in Russia to expropriate his assets. 5. In the English proceedings it is the Claimants' case that, following the receipt by the First Claimant of substantial loans from the Central Bank of Russia in order to recapitalise it in about December 2008, Mr Pugachev carried out a number of schemes designed to extract money from the First Claimant for the benefit of himself and companies under his control to the detriment of the First Claimant's independent creditors. The Claimants seek relief in respect of those schemes as well as the Share Pledge Scheme. 6. Mr Pugachev has challenged the jurisdiction of the English court to determine the Claimants' claims advanced in the English proceedings and applied to have them struck out. He has also denied any wrongdoing of the kind alleged. The English proceedings are presently stayed pending determination of the Russian proceedings as a result of an order made by Mann J on 26 January 2015. 7. In aggregate, the sums claimed by the Claimants in the Russian and English proceedings amount to more than US$2 [billion].”
[13]It is not necessary either to set out in any length the detailed reasons advanced on behalf of the Claimants in support of their successful application to cross-examine the Defendant. They too are rehearsed in the judgment of Arnold J.[14]As a general matter, Arnold J was persuaded that the Defendant had so far failed to give proper disclosure of his assets as required by the original freezing orders made by Henderson J. Arnold J described the approach taken by the Defendant and his solicitors (whilst he had them, he now being self-represented) as having been "either simply to ignore the requests for information or to give responses which were wholly unsatisfactory".

Purposes of ordering cross-examination

[15]The more particular purposes for which Arnold J was in those circumstances persuaded to order the Defendant’s cross-examination can be summarised as follows:(1) to explain what had become of his reputed personal wealth amounting to some billions of dollars, given that he had disclosed now assets with a value of less than US$40 million, taking account of security over and borrowing to fund those assets;(2) to explain how in such circumstances he could continue to fund living costs and expenses said to exceed GBP 200,000 per month, and more particularly to provide proper details in relation to specific issues arising in that context and matters required to be disclosed by an order of Mr Justice Peter Smith made on 14 August 2014;(3) to provide “the only way” (to quote Arnold J) of requiring the Defendant at last to disclose proper information about certain trusts in compliance with Henderson J’s order of 11 July 2014 (that being particularly identified by Arnold J, in the course of explaining the position to the Defendant during the hearing on 11 March 2015, one of the two main reasons for which cross-examination was being sought);(4) to determine whether the Defendant owns or controls certain specified assets including properties in France, a private jet, and a blood substitutes business which were not identified in the schedule of assets which he provided pursuant to the freezing orders, and also various assets or businesses nominally owned by others, including his two sons, but suggested in fact to be controlled or owned by the Defendant himself;(5) to provide details of wine and art disclosed in his asset schedule but without meaningful description or elaboration (it having been stated that the Defendant would make enquiries as to their value);(6) to provide information about two businesses, which the Defendant accepts he owns or controls, and other assets held through corporate structures that are said to be opaque or uncertain.[16]Although Arnold J did not accede to an application by the Defendant for further time, his order for the Defendant's cross-examination to commence on 23 March 2014 made provision for the Defendant, should he wish to do so in the meantime, to respond to the Claimants' points of concern in relation to his assets, asset disclosure and living expenses, as adumbrated over the course of more than 20 pages in the 12th witness statement of Michael Gordon Roberts, solicitor on behalf of the Claimants. It also provided in that context for the Defendant to have liberty to apply: I infer that this was primarily to enable him to contend that his answers in writing when given made his cross-examination unnecessary.[17]In the event, the Defendant did not take up that opportunity and served no such witness statement. Before me, he contended that he had provided as many answers as possible already and has often felt that the Claimants are, to quote, "trying to bury me in paperwork". He also relied on letters of 1 April and 8 April, written in the course of the extended hearing, as providing "concrete answers".

The course of the hearing

[18]The hearing (initially estimated to occupy two full hearing days) has ultimately spread over five days (although it did not occupy the court for the full day in each case) and a sixth day has been taken up in consequential argument on the Claimants’ various applications.[19]Where possible and appropriate the hearings were in public, but for most of the time they were in private in order to respect confidentiality restrictions and keep confidential information restricted to the various series of confidentiality clubs which had been devised before the cross-examination hearing took place.[20]Put very broadly, the days were occupied as follows. Day 1, 23 March 2015, occupied the whole day and was for the most part devoted to argument as to the width of confidential restrictions, much of which, as I have said, had already been ventilated and agreed previously.[21]Day 2, 24 March 2015, was cut short because the Defendant, citing medical reasons preventing him from doing so, did not attend. I made an order requiring proper medical certification of the Defendant's medical reasons for not attending.[22]Day 3, 31 March 2015, occupied a full day, sitting indeed until 5.00 pm, which was largely in private and concerned confidential material, including questions about certain trust assets.[23]Day 4, 2 April 2015, occupied a little more than half a day, and like Day 3 and for the same reasons, concerned confidential material.[24]Day 5, 15 April, was again largely in private for the same reasons of confidentiality. Its start was delayed until 11.00 am, but otherwise went the full day, and then concluded the cross-examination as such.[25]A sixth day on 20 April 2015 concerned the Claimants' subsequent application for costs, and for the Defendant to provide further affidavit evidence. This occupied the best part of a day, part of it devoted to addressing points of detailed criticism of the Defendants' evidence as adumbrated in the schedule exhibited to a witness statement, which was later supplemented by a further schedule.[26]For Day 6 the Defendant provided, at the commencement of the hearing, his own version of the Claimants' schedule and supplementary schedule with his response to their criticisms. He told me that he had only finished this in the early hours of the morning of Day 6; and so it was not possible for it to be given full consideration until after the hearing had concluded.

Test for order for costs on an indemnity basis

[27]Before turning to my assessment of whether by reference to the examples chosen by the Claimants, and my impression of the evidence given more generally, the Claimants have made good their grounds for an exceptional order of indemnity costs against the Defendant and for an order that he make a further affidavit, I need first to outline my understanding of the relevant principles or tests applicable to each issue in the circumstances.[28]Dealing first with the incidence of costs, it is important to distinguish between the costs of obtaining an order for cross-examination and the costs of the cross-examination itself. The former have already been adjudicated: by his order of 11 March 2015 Arnold J required the Defendant to pay those costs on the standard basis, to be assessed if not agreed. But by that order Arnold J reserved the latter to the judge hearing the cross-examination.[29]Inherent in the distinction between the two stages is that it does not follow from the mere fact that the court has been persuaded to make an order for cross-examination (which is itself unusual), on the grounds that there are significant issues in relation to disclosure which require an explanation or clarification (see paragraph 40 of Arnold J’s judgment), that the cross-examinee will also have to pay the costs of that cross-examination.[30]As to the incidence of the costs of the cross-examination itself, there is little direct authority. The Claimants cited to me various cases. These included:(1) JSC BTA Bank v Ablyazov and others (Tyschenko, Third Party) [2015] 1 WLR 1547, in which notwithstanding the usual provision for a third party’s reasonable costs of compliance with a freezing order Flaux J ordered a third party examinee to pay the costs of his cross-examination on the standard basis because it was shown that he was implicated and had actively assisted the defendant’s wrongdoing;(2) another of the numerous cases involving Mr Ablyazov, this time a decision of Teare J ordering him to pay costs on the standard basis on the ground that “the cross-examination…provided information and referred to documents which had not been set out, at any rate in terms, in the affidavit and schedule of assets”;(3) an order of Cooke J in yet another Ablyazov case ordering a cross-examinee to pay costs on an indemnity basis; but no reasoned judgment appears to have been given;(4) Bird v Hadkinson [2000] CP Rep 21, in which Neuberger J (as he then was) ordered payment of costs on an indemnity basis by a person who had failed to take all reasonable steps to investigate the truth or otherwise of the disclosure given.[31]As with almost all issues of costs, the decision is discretionary and every case must be decided on its own facts. But it seems to me that amongst the matters which the court needs to consider are(a) whether the examination elicits explanations or clarifications which were necessary for the purposes of proper disclosure and which should previously have been given in some other and less time-consuming and expensive way;(b) whether the cross-examinee in providing such explanations or clarifications has been co-operative or obstructive or evasive, and thus whether he or she has assisted in or frustrated a process of cross-examination that is as efficient and orderly as possible;(c) whether the cross-examination has been proportionate and properly directed to the ultimate objective of enabling revelation or a better understanding or protection of assets falling within the ambit of the freezing order which disclosure is intended to assist to police; and(d) whether overall the cross-examination has in the event proved to be a profitable exercise in terms of more complete disclosure and enabling enforcement and policing of the freezing injunctions to which such disclosure is ancillary.[32]As to the basis of assessment of any costs awarded, the general rule is that the standard basis applies, unless the court is persuaded that the paying party’s conduct or some other exceptional circumstance takes the case “out of the norm” (see Excelsior Commercial & Industrial Holding Ltd v Salisbury Hamer Aspden & Johnson (Costs) [2002] EWCA Civ 879).[33]In the particular circumstances, the Claimants accept that to justify an order for costs on an indemnity basis they must satisfy me that the Defendant did not engage in good faith with the process of cross-examination and was not merely evasive but actually intending to obstruct justice, the paradigm in a sense being by giving answers demonstrated to be plainly and obviously false.[34]The hurdle is a high one. The court is likely to be reluctant to reach a conclusion of bad faith and dishonesty in the course of what is meant to be an exploratory rather than adjudicatory process, and at an interlocutory stage, except on the clearest evidence.[35]As it seems to me, it is right that the hurdle be set particularly high where it is sought to persuade the court of the falsity of the examinee’s evidence as to disputed factual matters, as distinct from the impropriety of that person’s conduct in terms of want of good faith efforts to comply with court orders; and even higher where (especially in the context of freezing injunctions in aid of foreign claims) the court is being invited to assess propriety and honesty in the context of a business and political culture which it may not well understand.[36]Put another way, the court may be in a position to reach a firm conclusion, on the basis of clear evidence of their conduct, that an examinee or third party has actually been dissipating or assisting in the dissipation of assets (as in JSC BTA Bank v Ablyazov [2015] 1 WLR 1547); but it is likely to be far more reluctant to reach a conclusion contrary to the examinee’s evidence on oath that the examinee has no interest in a given asset, or as to lack of knowledge of the whereabouts of assets of which he or she disclaims any ownership or control.[37]Caution seems to me to be necessary in any event since the conclusion may itself found a contempt, without the protections applicable in the context of an application for contempt.

Test whether to order further affidavit evidence and adjourn cross-examination

[38]I can be brief in this context: the test is in effect whether the court is satisfied that further evidence is necessary in order to make the freezing order more effective.[39]As it seems to me, the court must be persuaded that there is practical utility in requiring such evidence and that it is necessary to enable the freezing order properly to be policed. It will be vigilant to prevent the abuse of seeking further evidence for some other purpose: such as to expose further inconsistencies, unduly pressurise a defendant who has already been cross-examined, yield ammunition for an application for contempt, or provide further material which might be of assistance, even if not actually deployed, in the main (foreign) proceedings.[40]I consider also that the court must be satisfied that a yet further round of evidence is proportionate. That seems to me to be especially so where the freezing orders are in aid of foreign proceedings over which it has no control and where the English court is in effect being asked for relief which that foreign court could not or would not provide (see Motorola Credit Corpn v Uzan (No 2) [2003] EWCA Civ 752 at [115]).[41]Another subsidiary point I should address in this context (since it may affect the question whether a further affidavit should be ordered and it may also be relevant on the issue of costs) is in relation to any obligation to “make all reasonable enquiries”. The Claimants submitted that this was implicit in every disclosure order, citing Gee on ‘Commercial Injunctions’ (5th ed) at 22-017, and Bird v Hadkinson [supra].[42]It seems to me to be obvious that a defendant required to comply with such an order must take reasonable steps to investigate the truth or otherwise of any answer he gives as regards assets in which he has or had an interest and has or can obtain information in right of that interest. However, in my view, that does not (at least at the point of initial compliance with a disclosure order) extend to making enquiries of persons in relation to assets in which the defendant unequivocally asserts he no longer has any interest of any kind or any right to information, although the court may make available the means of testing that assertion if there is credible evidence that it may be false (and see the Court of Appeal’s decision in these proceedings at [2015] EWCA Civ 139, paragraphs 43 to 60, and the cases there cited).[43]A further question is the extent to which a defendant under an obligation of disclosure may in effect delegate the task to his professional advisers. In a complex case, where the process of disclosure involves detailed investigations of corporate and/or trust structures and interests of an indirect or derivative nature, as well as more obvious and easily ascertainable assets, a measure of delegation as regards the enquiries is almost inevitable. However, the obligation of disclosure remains personal; and a casual approach, even if honest, will not suffice: Bird v Hadkinson.

Scope of the evidence

[44]The fact that the Defendant's annotated schedule and supplementary schedule extends over some 61 pages gives an indication of the detail into which the cross-examination descended.[45]The Claimants focused primarily and specially on what they contended were specific inconsistencies between evidence given on the Defendant’s behalf by a partner in the solicitors he then instructed, in witness statements earlier in the proceedings in response to the asset disclosure required by the freezing orders, and his own answers under cross-examination.[46]The Claimants highlighted various examples which they presented as particularly egregious and revealing.

The EPK example

[47]The example on which the Claimants placed greatest reliance related to a sale in 2011 of shares in a body corporate, which I shall call EPK (though it is also referred to as EPC). EPK was engaged in the extraction of coal. Its value depended upon its licence from the Russian Federation to do so.[48]The Claimants focused on the Defendant’s denial of any interest in EPK (or sometimes, EPC) and its holding company Basterre Business Corporation (“Basterre”). They sought to test his professed ignorance as to what had become of the proceeds of a sale by Basterre of a minority interest in EPK under an agreement for the sale of a minority shareholding in EPK to a body corporate called Devecom Ventures Ltd (“Devecom”), a special purpose vehicle controlled by a Mr Igor Altushkin (“Mr Altushkin”) which provided for an initial down-payment to Basterre of some $150 million.[49]This was inconsistent with evidence in a witness statement made by the Defendant’s then solicitor (apparently on the basis of information provided by him) to the effect that the Defendant had(a) been the sole beneficial owner of EPK,(b) personally negotiated the sale of a minority shareholding under an agreement which provided for an initial down-payment to Basterre of some $150 million, and(c) thereafter remained the beneficial owner of the remaining majority shareholding until its mining licence was withdrawn (annihilating its value).[50]It also appeared to be inconsistent with a personal letter from the Defendant to President Putin, in which the Defendant had expressly stated:
“Responding to your direction not to sell to a foreign company, I entered into a share purchase agreement for my stake in EPK in June 2011 with the Russian businessman Igor Altushkin. After the first instalment had been paid by Mr Altushkin, pursuant to the share purchase agreement the Russian Federation once again took steps to confiscate EPK's assets.”
[51]Further, the Defendant had asserted in his asset disclosure at the outset of the proceedings that he had claims "arising out of the loss of his interest in EPK" further to the cancellation of its licence and thereby the destruction of its value. Repeated reference is made to his ownership of EPK in a second witness statement provided on his behalf by his solicitor. I also note that in the course of his application (in November 2014, to Mann J) to set aside the freezing orders against him, it seems to have been accepted on his behalf, and it is recorded in Mann J’s judgment (at [2014] EWHC 4336 (Ch)), that at least in 2009 the EPK shares “were ultimately in the ownership and control of Mr Pugachev”.[52]Unsurprisingly, the Claimants identified and relied on these inconsistencies as being of central importance, not only as illustrating the Defendant’s unreliability, but also because of the serious issue which it appeared to raise as to what had happened to the $150 million paid or provided to be paid as the first instalment of the sale price, and why it had not been disclosed properly or at all.[53]The Defendant’s explanation of the apparent inconsistencies between that evidence and his own solicitors’ account was convoluted. It is not easy either to synthesise it or to summarise it, especially since it emerged in a somewhat disparate and disjointed way; but I think it had the following main strands:(1) First, he maintained that he had only asserted any interest in EPK in his letter to Mr Putin and in his claim for compensation under the Bilateral Investment Treaty (“the Defendant’s BIT claim”) as a means of obtaining redress for the cancellation of its mining licence and the destruction of its value pursuant to underhand machinations by or with the assistance of the Russian State.(2) Secondly, he explained that those machinations had begun with Mr Putin’s demand to him to the effect that he should take any necessary steps to ensure that shares in EPK should not be sold to any foreigners, as his son Viktor (who was resident in Paris) had been trying to arrange with the assistance of a well known European bank.(3) Thirdly, that in that context, it was futile for the Defendant to object to the demand on the ground that it was not he but his son who was the owner: Mr Putin would regard that as mere obstruction: although EPK was in truth his son Victor’s company and not his, that would have cut no ice with Mr Putin, who would have treated EPK as within the Defendant’s sphere of influence and not accepted any excuse for disobedience; “It is a kind of request you don’t turn down in Russia”. Thus the Defendant was left with no choice but to persuade his son not to sell to a foreign buyer, even if that caused a loss, for fear of endangering the entire family (most of whom were still in Russia). But, although he did exert familial pressure on his son not to sell to foreign interests, and was involved in negotiations with Mr Altushkin, he was not involved in the transaction otherwise, and certainly received no money from it.(4) Fourthly, he contended, in effect, that Mr Altushkin either always was or became part of the machinations, and that there had been steps in a sequence involving (a) the agreement with Mr Altushkin’s company, (b) the appointment before the Agreement had been completed of Mr Altushkin and his business partner (a Mr Baysarov) as Chairman and General Manager of EPK, (c) their purported discovery of significant undisclosed liabilities from EPK to the First Claimant, (d) the revocation both of Mr Altushkin’s Agreement before its completion and of EPK’s mining licence, and (e) the destruction of EPK’s entire value accordingly.(5) Fifthly, that he felt justified advancing a claim under the BIT on this basis because it was the Russian State’s demand that he should influence the sale that had set in motion this train of events.(6) Sixthly, that his solicitors’ witness statement had proceeded on the basis of material collated by the Defendant for the purpose of maintaining his BIT claim and was based on the same confusion between (a) the actual ownership of EPK and (b) the Defendant’s decision (apparently on advice) to claim compensation on the basis that it was Mr Putin’s demand of him and the further machinations that followed which ultimately led to the destruction of its value.[54]The Claimants rejected this explanation in its entirety as being incredible. They contended that the inconsistencies could not be explained away, and that the corollary was that either the evidence of his solicitor on his behalf was incorrect or his evidence before me under cross-examination was untrue; that on either footing an order for payment of indemnity costs was justified; and that in any event the discrepancies required further investigation and evidence by and from the Defendant.

The Safelight example

[55]The second main example of a failure to give proper and accurate disclosure which was relied on by the Claimants concerned a payment of some US$700 million to a Cypriot body corporate called Safelight Enterprises Limited (“Safelight”), which the Claimants described to me as a shell company. The Defendant's son Alexander was and is a director of Safelight.[56]That substantial payment is alleged in the proceedings against the Defendant in England to be part of a series of transactions intended to defraud the First Claimant’s creditors and divert monies to the Defendant or his interests (referred to as the “Deposit Scheme”).[57]In the second witness statement on his behalf made by his then solicitor Mr Michaelson on 29 September 2014, Mr Michaelson provided some detail as to the circumstances of and reasons for the payment. However, that detail, which is quite involved and intricate, is largely of no relevance to the issues now before me except insofar as, in giving it, Mr Michaelson gives his source for his evidence as the Defendant.[58]Yet by contrast, under cross-examination, the Defendant claimed to be unable to recollect anything about Safelight or the payment, or the bodies corporate which made the payment, including a body corporate called Sanara, of which he also disclaimed any knowledge.[59]The Claimants relied on this discrepancy as demonstrative of (at best) evasiveness on the part of the Defendant, and of a pattern of refusing to give meaningful answers to questions relating to matters which appeared likely to be within his knowledge, unless confronted with documentary evidence of such knowledge.[60]The Claimants built on this to suggest that what the Defendant was seeking to do was to disguise his ownership or control of Safelight (and of the monies it had received). They suggested that this was through a body corporate called Oreon Limited, of which they suggested he was (directly or indirectly) the owner.[61]Even with the assistance of his comments in the schedule he provided, it is not easy to synthesise and summarise the Defendant’s position in this regard. But I think the following strands illustrate that position:(1) The Defendant stressed repeatedly that before what he regards as its expropriation his business empire comprised so many companies and so many people (at one time, he said, up to 350,000 people) that it was quite unrealistic to suppose that he could recall their names without being referred to specific documentary evidence.(2) Further, he was at the relevant time a senior Senator: he had not the time and it would have been wrong to get involved in individual companies. He also made the point that for the purposes of his cross-examination he had been deluged with files, which had made the position all the more difficult.(3) He admitted to a vague recollection of Safelight and Sanara, and of two other bodies corporate also mentioned in the explanation provided by Mr Michaelson, namely, CJSC Plescheevo (“Plescheevo”) and CJSC Sanara (“Sanara”), but (except for Plescheevo which he said he knew very well) he could not remember any detail without refreshing his memory by being referred to specific documents. Nor could he recall specific transfers of money. He could however recollect the building project in which all three companies had been involved.(4) As to Oreon Limited, the Defendant said he simply could not remember whether he had owned it in 2008: indeed, he could not recall whether he had heard the name before. He accepted that his son Alexander had been a director of Safelight in 2008, but disclaimed any knowledge whether Alexander had any continuing role or interest.(5) As to his sons’ interests, he emphasised that this was a matter for them: his wealth and position had no doubt helped them, especially in Russia’s “relationship business world”; but their interests were their own, and not his.(6) In any event he queried the relevance of these historic matters now, in 2015, and to the question whether he had disclosed his assets. He remonstrated that there was nothing to link him now with Safelight or these other companies.(7) As to Mr Michaelson’s witness statement, the Defendant explained that he had provided his lawyers and other advisers with an “entire information database” primarily for the purposes of formulating and advancing his BIT claim, and that was Mr Michaelson’s real source.(8) More generally, he explained another reason why he was cautious in descending into details unless pointed to documents: his concern that the real interest of at least the second Claimant was to assist “politically motivated criminal proceedings in Russia” rather than asset disclosure. He suggested that asset recovery was not a real concern to them: the business empire the Russian State had, in effect, expropriated was worth billions; the real objective was political, and he made reference to certain press articles suggesting that the applications in this court were being deployed against him in Russia.(9) With particular regard to the questions relating to Safelight and Sanara, he said this:
“My holdings were in a large number of legal entities. For the reasons above, it is reasonable, given the filings made by the Claimants, that I surely cannot recall all matters without guidance or direction. In this particular citation, referencing Safelight Enterprises Limited, the Claimants had no documentary evidence, it appears, and so I said the documents they had shown me didn't say what they then proposed. They suggested to me that I owned one company and that, therefore, indirectly I owned Safelight. This matter is the heart of politically motivated criminal proceedings against me in Russia and not related to the worldwide freezing order disclosure issue.”
[62]As in relation to the Defendant’s attempts to explain inconsistencies in the evidence put forward on his behalf in relation to EPK, the Claimants rejected all this, and contended that in reality it demonstrated further both the Defendant’s unreliability and the need for further evidence from him to explain properly what had become of the monies paid to and his interests in Safelight and the other companies concerned.

Creative Associates

[63]To the same intended effect, a third example especially relied on by the Claimants concerned a body corporate called Creative Associates Service Limited (“Creative Associates”) and another called Lassiter Finance Inc (“Lassiter”).[64]The Claimants focused especially on a payment in December 2008 from one (Lassiter) to the other (Creative Associates) of approximately US$106 million (apparently, according to Mr Pugachev’s former lawyer, as consideration for the acquisition of Creative Associates’ shareholding in a body corporate called JSC Suprim (“Suprim”) which owned some 13.78% of the shares in the Sukhoi group, a major aircraft manufacturer). This payment to Creative Associates was apparently immediately followed by a payment of a dividend in the same amount from Creative Associates to the Defendant (as sole shareholder of Creative Associates at that time).[65]The Claimants sought to establish what had become of these monies and the Defendant’s interest in Creative Associates, and relied on discrepancies in the evidence on behalf of the Defendant to support their applications for indemnity costs and further evidence.[66]Once again the Claimants relied particularly on the evidence in Mr Michaelson’s second witness statement, in which he had sought to explain and justify the transactions to which I have referred briefly above (under a heading, ‘The alleged “dividend scheme”’, being a matter in substantive issue in the English proceedings).[67]That evidence, based apparently on information provided by the Defendant, supposed a fairly detailed knowledge both of the ownership structure, and the share sale, and the subsequent dividend. Yet under cross examination, and in the schedule he subsequently provided to me at its conclusion, the Defendant asserted that he had no personal involvement in or recollection of the transactions, and indeed that the name Creative Associates did not mean anything to him.[68]The Defendant’s response to the suggestion of inconsistency, and lack of credibility, was broadly in line with his explanations in relation to the two earlier examples discussed above, as follows:(1) that his business empire had been so extensive that without reference to documentary evidence he could not, and it was unreasonable to expect him to, recall details of individual companies such as Creative Associates or Lassiter. That response illustrates another general theme of the Defendant's, that his wealth was such and his web of companies so extensive that really he could not be expected to remember the details of every one, if indeed in his busy life, both as a commercial operator and as a Senator of the Federation, he had ever really focused on their individual identities;(2) that the transactions in 2008 were irrelevant in terms of asset disclosure now;(3) that Mr Michaelson’s evidence was based on the documentary evidence that he (the Defendant) had made available, and he had trusted Mr Michaelson to give an accurate depiction of what that evidence revealed, but had not himself such knowledge.[69]The Claimants, once more and inevitably, rejected this in its entirety. They contended that it was “inconceivable” that the Defendant had no recollection of the events in question.

Redflame and Glebe Place

[70]A fourth example relied on by the Claimants to demonstrate both the Defendant’s unreliability (to the point, they suggested, of lack of veracity) and the need for further evidence, related to two conjoined houses in Glebe Place, Chelsea, where the Defendant presently resides.[71]It is not necessary or appropriate to delve far into the detail of this example, not least since the properties are held through a company called Redflame Limited (“Redflame”), the shares in which are held in trust, and the trust issues are of particular sensitivity and confidentiality.[72]Put very shortly, the issue which the Claimants sought to explore was how it was that Redflame came to acquire the two houses (one in 2010 and the other in 2011) and with what funds; and in particular, from whom the trustees had acquired Redflame (it being the Claimants’ case that the Defendant had himself been the owner, and that the purchase money for Redflame to acquire the properties had been loaned to it by the Defendant, suggesting an asset in the amount of the debt that had not been disclosed).[73]Again put shortly, the Defendant contended that he simply could not remember any details, and had certainly not intended not to disclose any assets: he had put his trust in his lawyers to provide full disclosure. As is recorded in paragraph 50 of the 17th witness statement of Mr Roberts, Mr Pugachev stated that he had provided:
“... to my legal company all details of bankers, registrars, legal consultants, who spent a lot of time researching it, communicating with each other, exchanging emails. So it was the legal firm who wrote the letter disclosing my assets, not myself, who had been engaged in a very lengthy and detailed verification exercise.”
[74]He added:
“I really do put my trust in English lawyers, so when they brought me the list of disclosure of my assets to me to be signed by me, I signed it and then as far as I understand, they sent the list to you, and they must have had a sufficient time to verify what constituted loans, what constituted assets, and what didn't.”

Luxury Consulting

[75]The Claimants tested the Defendant on, and he was rather reluctant to elaborate about, the functions of a company which appeared to operate as a private office called Luxury Consulting and about the activities and his business connection with a Ms Dozortseva, a Russian lawyer, who appears possibly to be involved in the running of Luxury Consulting, and also of various trusts to which I refer below.[76]The Claimants sought both to contrast the undeniable evidence of Ms Dozortseva’s active role, including as a de facto legal adviser, with the Defendant’s efforts under cross-examination (described by the Claimants as even more brazen) to downplay her role (to the point of asserting that he did not know quite what she did, even after being constrained to accept that she does work for Luxury Consulting) and to present her administration of the trusts as entirely separate and not within his knowledge, still less influence.

Trust disclosure

[77]As to the trusts themselves (which I had, in the event wrongly, anticipated on the basis of previous judgments of this court and the decision of the Court of Appeal would be the main focus of the cross-examination), the evidence was quite full as to the assets held in various trusts, although not their detail, a subject which was also explored in the course of cross-examination, though under very tight confidentiality restrictions.[78]Without revealing the contents of the trusts, I can take from Mr Roberts' 17th witness statement that Mr Pugachev explained under cross-examination, when tested as to what had become of various assets or funds, that:
“... everything that hadn't been stolen out of my assets either in Russia or abroad, I was attempting to pass it on to my children, my offspring, my grand and great-great-grandchildren.”
[79]By further contrast, however, the Defendant maintained the position that he was completely ignorant as to the running of the trusts, had been denied access to any documents and had only been provided with details as to their holdings and terms latterly, despite his position as a protector and beneficiary.

Impression of the Defendant’s evidence

[80]I accept that these examples (and they are, I stress, only examples) of inconsistencies in the Defendant’s own evidence with that previously advanced on his behalf do give rise to real concern that the Defendant’s belief that he is under siege justify him in being, to put it moderately, unforthcoming. He has indeed on more than one occasion given me an impression of evasiveness.[81]I should add that I have also been concerned by, and have taken into account, other areas of criticism or concern raised by the Claimants, including most notably perhaps:(1) the Defendant’s strained evidence in respect of Luxury Consulting Limited, and the role of Ms Natalia Dozortseva;(2) continuing uncertainties as to whether (as the Defendant claims) his older sons (Viktor and Alexander) were or are truly beneficial owners of assets (such as Basterre) and a blood substitutes production business called OPK Biotech, when they became so, or whether in truth (as the Claimants suspect) they are his nominees; and(3) the still unexplained mystery as to how it is that the Defendant is able to meet his living expenses from the assets he has disclosed.[82]It is difficult to describe the Defendant's stance as wholly co-operative or his evidence as wholly satisfactory in the sense of resolving issues. His responses did, in certain important respects, as will be evident from what I have described, contradict earlier evidence given on his behalf, and through the lens of English spectacles, his justifications might be thought to be self-serving.[83]This impression of evasiveness was prima facie exacerbated by his tendency under cross-examination to make speeches rather than listen to and answer the question.

In the circumstances, should the Defendant be ordered to pay costs on an indemnity basis?

[84]As elaborated later, I accept that this is sufficient to justify an order for the majority of the costs of the process of cross-examination to be paid by the Defendant.[85]The Claimants, however, accept that they need to go further than this to establish their claim for indemnity costs. They must persuade me that the evidence given by the Defendant in cross-examination is, and I quote from Mr Roberts' 17th witness statement, paragraph 3, "demonstrably false", and that he "has not approached the exercise in good faith".[86]They submit that in those circumstances the proper course is for the Defendant to be required to pay the costs of the cross-examination, including the costs thrown away as a result of the adjournment of the hearing on Day 2 on the basis of his purported illness. In view of the approach adopted by the Defendant, they contend that he had not engaged with the process in good faith and his evidence was at times not merely evasive but actually intentionally misleading and dishonest. On that basis they contend that the costs should be paid on an indemnity basis. They mention that that approach was previously adopted at an earlier hearing in another context relating to his failure to disclose a passport, when Mr Justice Peter Smith noted that the Defendant had "led us all on a merry dance".[87]Although my recitation of the inconsistencies and the impression given by the Defendant might earlier have suggested otherwise, and although I must accept that I have had misgivings, I do not consider the hurdle has been cleared in this case so as to justify an order for indemnity costs.[88]Put shortly, I have been left sufficiently unsure where the truth really lies to dissuade me from an indemnity order. In that context I have felt it important to distinguish between appearances exacerbated by the Defendant's habit of testing the boundaries of the court's patience, and his resistance to any form of active co-operation on the basis that he contends that his assets have been been unlawfully expropriated and he is now being mercilessly hounded by the Claimants, and the Russian State itself, and on the other hand, whether he has actually sought to mislead and been dishonest.[89]Further, I do not think I can simply reject the general themes advanced by the Defendant, including to the effect that(a) he had a huge empire and he was unaware of the individual components and details of it;(b) he had relied on others to complete his asset disclosure, no doubt at huge expense;(c) some things which may prima facie appear to suggest evasiveness in reality reflect other pressures, including a wish not to reveal more than is strictly required for fear of the Russian State itself and what it may do with any information provided;(d) the realities of political power in the Russian Federation, where (for example) a Presidential call to prevent the sale of an asset may have to be complied with by exerting any means of influence, even in the absence of any actual ownership or control (as, according to the Defendant, was the case as regards EPK), thus confusing ownership and influence;(e) it is necessary to take into account the very considerable pressures upon the Defendant, the inherent difficulties of assimilating the copious material provided, and his (he would say understandable) reluctance not to commit himself unless taken to any documentary evidence thought to be relevant, and what may be genuine practical difficulties in recalling and providing details of assets (many of which he is adamant are now in the ownership or control of the Russian State).[90]As indicated above, I would give the apparently damning EPK issue as an example of the difficulties of being sure where the truth lies. In paragraph [53] above I have provided my résumé of what the Defendant told me in that regard, and further recitation of the evidence he actually gave may illustrate the difficulties which, according to his evidence, someone in his position, having had a great deal of money and having enjoyed a position of authority within the Russian Federation, is in, if circumstances arise such that they fall out with the government in that State.[91]It is difficult to decide, even with the benefit of watching the Defendant in the witness-box, whether there is substance in the admittedly rather general description given by the Defendant as to the reasons for his evidence in his witness statement through his solicitor departing so radically from his evidence in the witness-box, but it seems to me that it is wrong to make a finding of bad faith and dishonesty where there remain such doubts, and especially so in the context of circumstances of such complexity.[92]In short, I consider, as I have said, the truth of this matter and the ownership and control of EPK not to be capable of being decided definitively by me at this stage.[93]The same goes for Safelight and Sanara and the other companies who advanced or transferred monies to it, and to the issue as to whether his son or sons are in control themselves of Safelight, or whether the Defendant pulls their strings, or pulls the strings of the company directly.[94]These are matters which of course encourage curiosity and no doubt may give rise to further enquiry, but I do not consider it right to determine such facts at this stage on this evidence.[95]Further, my overall impression is that although the Defendant does not deny that he sought to protect assets that had not yet been expropriated by encouraging their transfer into trust, and has given the impression that he was able to do so because of some ownership or control of those assets, I am not in a position to determine what was or was not his relationship to those assets at this stage. The assets now are prima facie at least held on trusts which have not been shown to be shams and in respect of which, albeit belatedly, disclosure has for present purposes sufficiently been provided.

Order on standard basis

[96]That brings me back to the question as to whether and if so what proportion of costs should be paid by the Defendant on the standard basis, given the conclusion I have expressed that I should not award costs on an indemnity basis.[97]As to this, my approach has been most especially influenced by the following factors.[98]First, the fact that cross-examination was, after a detailed hearing, thought justified and when it took place did apparently reveal inconsistencies as I have described.[99]Second, the fact that, as also indicated briefly, it did also reveal substantial debts of some GBP 8 million owed to the Defendant from certain trusts.[100]Third, the fact that the exercise was prolonged by the Defendant's speeches, his tendency to seek to recast questions and to answer the recast question, which tended to give rise to more uncertainties than provide satisfactory explanations.[101]Fourth, and also in favour of an order for costs against him, the fact that the Defendant during the course of his cross-examination revealed that the living expenses that had been adumbrated were in all probability substantially overstated, in the sense that he had had to cut his cloth accordingly.[102]Fifthly, I take into account that the Defendant did have an (albeit limited) opportunity to provide a witness statement after the hearing before Arnold J as a means of shortening, even if not rendering unnecessary, his cross-examination.[103]Against all this I must also take into account the fact that in relation to a principal ground for ordering cross-examination (and for restraining the Defendant from leaving the jurisdiction), that is, the Defendant’s continuing failure to comply with Henderson J’s trust disclosure order, Ms Dozortsova’s admittedly last-minute but detailed description of the trusts and their provisions resulted in considerably less enquiry than I sense had been envisaged when the Claimants sought to justify an order for cross-examination in the first place. Put another way, the issue of trust disclosure was, as appears form the transcript of the hearing before Arnold J on 11 March 2015, one of the principal justifications for the Claimants’ original application for an order for cross-examination: but it became more of a side-show, even if important issues as to the source of the trust funds, and the extent of the trusts’ corporate interests, remained and still remain opaque.[104]I think I should also make allowance for the fact of the difficulties for the Defendant as a litigant in person, which he said were exacerbated by late production of very considerable material and what he felt was the occasional tendency of Counsel to conduct a quiz without grounding the question in a particular document or piece of evidence.[105]Also, though only of incidental and not determinative weight, I have to bear in mind my impression, which is only that, but which I should acknowledge, that the Claimants must always have appreciated that cross-examination was unlikely to result in perhaps its principal purpose of revealing assets in the name of, or nominally owned by, one or more of his children, or by trustees, to be in truth owned or controlled by him, and my associated impression (which the Claimants strongly disclaimed) that the cross-examination was in part being pursued as a test of consistency and credibility in respect of events which took place some time ago, rather than a torch exclusively focused to reveal assets presently hidden or in danger of dissipation.[106]I consider there is also something in the Defendant’s point that the Claimants have demonstrated occasional heavy-handedness, including in the repetition of questions which, it appeared to me, and for better or worse, had already been asked and answered.[107]I have also to look finally, in terms of determining what the entire five-day exercise eventually revealed beyond the inconsistencies that I have described, at what in effect was a so far undisclosed loan of an admittedly large sum of money by usual standards, but which is nevertheless small in comparison to the claim at large, and which I think it quite possible that the Defendant had overlooked or been unaware of.[108]Doing the best I can to balance these factors, and in recognition of the fact that other than deferring the question as to cost to another day, which would also be unsatisfactory, and after (as previously indicated) further review of all the evidence, I have concluded that I should make an order for the Defendant to pay 80 per cent (on the standard basis) of the costs of the hearing.[109]The discount, if one can call it that, of 20 per cent in relation to those days is intended to reflect the caveats or contrary factors that I have adumbrated, my overall assessment as to the utility of the process, and my assessment as to the outcome of Day 6 which was not wholly in the Claimants’ favour (see further below).[110]I should acknowledge in this context that my initial disposition was to require payment by the Defendant of a lesser percentage, and also to separate out the costs of Day 2 (which was aborted and the costs of which seemed to me should be paid by the Defendant) and Day 6 (which concerned ancillary or consequential applications for indemnity costs and further evidence (as to which see further below) on which the Claimants were only successful in part).[111]My assessment now reflects(a) my further review of all the transcripts and the evidence filed, and in particular my increased misgivings as to the inconsistencies in the Defendant’s evidence, especially in relation to EPK; and(b) my view, on further reflection, that it is more practical and realistic to deal with all the costs of the hearing together. My assessment upwards (in comparison to my initial inclination) of the percentage of those costs to be paid by the Defendant also reflects this modified approach.

Application for further Affidavit(s)

[112]As previously indicated, the Claimants seek further evidence by way of affidavit by the Defendant on the following issues.[113]First, the Claimants seek identification by the Defendant and a full explanation of any material changes to the asset schedule including omissions as provided on 14 July 2014. That should include, it is suggested, any adjustments or corrections to the estimated value of those assets; an example of fluctuations in price having been provided by the Defendant's evidence as to the reduction in value of his yacht by a very considerable margin.[114]Secondly, that the Defendant should also provide a proper account, having made all reasonable enquiries, the nature of which should be identified in affidavit, of what had happened to his historic wealth including some US$2 billion worth in cash which he admitted holding following the acceptance by a bank, VTB, of the Plescheevo land plots, which I understand to be very valuable and in the centre of Moscow, in substitution for an outstanding loan in that amount. The Defendant had suggested under cross-examination that all those bits of money, as he described it, had, as he said, been “sort of siphoned off”. The Claimants wish to explore that somewhat generically described process.[115]Thirdly, they seek an affidavit with more particular reference to the suggestion of the monies having been siphoned off, with regard to particular sums, some of which I have already mentioned, which his solicitor's evidence suggested might have been received by him or by companies controlled or owned by him, and in particular $150 million in respect of the EPK sale to which I have previously referred, and a further sum of $106 million apparently transferred by Creative Associates to his personal account, and thirdly, and again as previously mentioned, the $700 million or so transferred to Safelight.[116]Fourthly, the Claimants seek a full account of the process which led to the preparation of his asset schedule in light of what they describe as his attempts to distance himself from the preparation of the original asset disclosure and to disclaim involvement in its preparation.[117]Fifthly and finally, they seek disclosure of bank statements as a practical means of narrowing the obvious issues which arise both as to the quantum of his living expenses and as to the manner in which they are defrayed. They seek this notwithstanding earlier orders made by Mr Justice Peter Smith, which have so far not led to a full and proper understanding as to either matter.[118]The question which really concerns me is the real practical utility of this further evidence in terms of policing the freezing order and ensuring identification of assets and protection against their dissipation. I need to bear in mind that it is not the purpose of such an order to explore issues of credibility or garner evidence that may later be deployed against him, whether in this jurisdiction or the Russian Federation; and all the orders have made and will continue to make express provision to prevent that.[119]I also have to say that I consider that it is not appropriate or likely to be useful or even realistic to require evidence about assets that the Defendant has repeatedly been adamant he knows nothing about nor no longer owns. I have some sympathy in this regard for the Defendant's remonstrations about this to the following effect in his responses to the Claimants' schedule:
“My understanding is that the purpose of the cross-examination is to confirm if my asset disclosure prepared with counsel was accurate and complete. The cross-examination, therefore, should be about assets the claimant should have some reasonable basis to think that I own and should have disclosed and did not. The claimant has been wasting the court's time with questions about assets that I owned before and, as per the notice letter, do not own now.”
[120]I think I need also to bear in mind in determining any further exercise to be undertaken that the Defendant is appearing and would apparently be left to undertake that exercise in person. (That is itself suggestive, given his predicament, that he has genuine financial difficulties, although I sense that it is not impossible this is partly a matter of choice, and it may be that he reserves his resources for the International Arbitration proceedings, and where he is the complainant.)[121]There is also an issue as to proportionality, having regard to the resources already devoted to the making of, and efforts to police, the freezing orders, and also to the fact that some of the investigations suggested to be necessary relate to (albeit very large) transactions in Russia in 2008 and 2009. Asit seems to me, though I cannot of course make any finding to this effect, there must be at least some possibility that, if anyone can, the Claimants have the means of establishing, through their own channels, what has become of at least a proportion, and possibly a considerable proportion, of the assets in Russia which were previously the Defendant's, which by his account were of immense value, and which may be sufficient to meet even the Claimants’ very substantial claim.[122]Further, I can by no means entirely discount the Defendant’s evidence that a large part of his former assets were in fact effectively expropriated by emanations of the Russian state (including or at least with the assistance of the DIA); that the amounts already “recovered” from the Defendant by these means exceeded (on a true valuation) the deficit on which he has been sued (and see paragraphs 62, 82-83, 110 and 131 to 134 of the judgment of Mann J in this matter dated 19 December 2014); that alternatively the claims against him have been vastly inflated by diminishing the value of assets recovered; and that he may ultimately establish his claim in respect of them in the Defendant’s BIT claim in the international tribunal.[123]In these circumstances, and having regard also to the proportionality of a process which has already occupied the court for so long in aid of foreign proceedings over which otherwise it has no control, I propose to limit the further evidence required to that which is necessary to(1) explain or clarify certain inconsistencies in the evidence given by and on behalf of the Defendant with regard to EPK, Safelight and Creative Associates, and(2) illuminate what seems to me the real and unsettling mystery of the case, which is how it is that the Defendant has managed to service his living expenses, as he has presented them to be, and how and in what amount they are to be paid hereafter.[124]As to (1) in paragraph [123] above and the inconsistencies with regard to EPK and Safelight, what I propose to order is that the Defendant should file an affidavit personally explaining to the best of his belief, and having made all reasonable enquiries, (a) whether he ever had any, and if so, what interest in (i) Basterre (ii) EPK (iii) JSC Sanara (iv) Plescheevo CJSC (v) Safelight (vi) Oreon Limited or (vii) Creative Associates; (b) when and how he ceased to have such interest and, if he disposed of it, to whom he did so and when; and (c) whether Devecom paid to Basterre the whole or part of the sum of $150 million due pursuant to the share purchase agreement that he accepts he helped to negotiate. According to whether or not the Defendant had any such interest, and (if so) its nature, further enquiry may be justified as to what became of any sums transferred to such companies; but I do not think it is appropriate to anticipate that now.[125]As to (2) in paragraph [123] above, I am acutely aware that a number of judges before me have sought to focus in on this issue. A particular example is, as I have mentioned, the order of Mr Justice Peter Smith made on 14 August to which the Defendant provided an affidavit in response.[126]My concerns to pursue this matter have to some extent been exacerbated by the Defendant's own admission that the schedule of living expenses which he had proffered to the court was no longer accurate and always was indicative of what he would spend if he could afford it rather than evidence of what he would require and be able to fund.[127]The difficulty, exacerbated as I said by previous efforts not having entirely put the matter to bed, is to determine what simple form of order would require the illumination which I think is required, bearing in mind the Defendant's position and his inability so far to have solicitors to continue to assist him.[128]The suggestion made by the Claimants, which I admit I initially felt was too intrusive, was that the Defendant should be required to exhibit bank statements showing the current balance of all his accounts, as well as all transactions during the period from 1January 2015 to 30 April 2015, in order to update any disclosure previously ordered and to assist in resolving many of the outstanding issues in relation to his living expenses.[129]I shall hear further argument, having previously indicated that I felt that that was intrusive, but my provisional view in all the circumstances, guided by the overriding requirement to require the Defendant to undertake a practical exercise which he should be capable personally of undertaking without assistance, should militate in favour of what the Claimants commend as the simplest and most cost-effective way of narrowing the outstanding issues.[130]I would not be disposed to permit further cross-examination except on the further evidence to be given by affidavit, and then only on further application to the court.[131]Lastly, I consider that (subject of course to a continuation of the Defendant’s right to apply for some variation for good cause) the passport orders should continue until this process is completed. My reasoning appears in a separate judgment dealing with another application made on behalf of the Defendant (this time through Leading and Junior Counsel).

Cited in 14 later judgments

and 5 more of the most senior