Blue Tropic Ltd & Anor v Chkhartishvili [2015] EWHC 3640 (Ch)

Case No HC2013000296

[2015] EWHC 3640 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NL

Date 18/12/2015

Before

THE HONOURABLE MR JUSTICE PETER SMITH

Between

(1) Blue Tropic LimitedClaimants

(2) Coppella Ventures LimitedClaimant

Ivane ChkhartishviliDefendant

Joe Smouha QC & Watson Pringle (instructed by Signature Litigation LLP) for Claimants

Jonathan Crow QC & Stephen Midwinter & Hugo Leith (instructed by Mishcon de Reya) for Defendant

Hearing Hearing dates: 1, 5-8, 11-15, 18-20 and 22 May 2015

Judgment

Peter Smith J:

INTRODUCTION

[1]This judgment arises out of a trial I heard in May 2015. The Claimants are two companies incorporated in the BVI. However the Claim is in respect of real estate assets in Georgia and shares in companies incorporated in Georgia. The shares in the Claimant companies according to documentation are held by the Nile Trust, a discretionary settlement of which the intended beneficiary was Arkadi (“Badri”) Patarkatsishvili. He was a Georgian billionaire who died in February 2008 and his estate (whatever it might be) belongs to his widow and his daughters (“the AP Family”).

[2]The Defendant Ivane (“Vano”) Chkhartishvili is a Georgian businessman and a former politician who had dealings with Badri in his lifetime.

[3]The Claimants granted wide ranging powers of attorney to one Giorgi Kavtaradze (“GK”). He is a Georgian lawyer known to Badri who also came to act for Vano enabling him to deal with the Claimants’ assets. Vano instructed GK to use his powers of attorney to transfer the assets out of the Claimants to companies owned and/or controlled by him. The Claimants assert he provided no consideration for those transfers the majority of which were placed within a month of Badri’s death. Attached to this judgment is a Dramatis Personae and a Schedule setting out he challenged transactions for each Claimant.

[4]As the Claimants say in their opening their claim is relatively simple. There was no consideration and no justification for the transfer of these assets to Vano. It is alleged that Vano by instructing GK to transfer them engaged the Georgian law of delict and claim damages from him under Georgian law to compensate them for the value of the lost assets. It is to be observed that the only claim is against Vano, alleging that he is in breach of the delict obligations (tort) in Article 992 of the Civil Code of Georgia and that he is accordingly liable by reason of Article 408 (1) to compensate the Claimants for the harm caused and pay damages accordingly.

[5]The trial is on liability only; any damages will be the subject matter of a further inquiry.

[6]There is no claim against GK although there is an allegation that Vano caused GK to act without authority and in breach of duty in executing the documents. That is repeated in paragraphs 27 and 28 of the Re-Amended Particulars of Claim for example where it is alleged that a sale effected by GK on 10th March 2008 on instructions from Vano was at a significant undervalue and without authority on the part of GK. It is also alleged the consideration was not transferred.

[7]Alternatively it is alleged (paragraph 28) that GK in causing Copella to enter into those agreements and allowing the price to go unpaid without the consent of Coppella’s directors or shareholders breached his duty under Article 712 and 713 of the Georgian Civil Code namely executing documents without the Claimants’ consent and failing to furnish any necessary information and keep the Claimants informed of the performance of his mandated tasks.

[8]That example is in respect of a 66% shareholding Coppella had in two Georgian companies Prometko Georgia Ltd (“Prometko”) and GE-ES-Co (“GSCO”). The former was incorporated in Georgia in 1998 and at all material times held long term lease agreements for berths N3, 4 and 6 of the Poti seaport which enabled it to receive payments from vessels wishing to use those berths. GSCO worked together with it as a single entity. It was a stevedore company which loaded and transported goods.

VANO’S DEFENCE

[9]Vano’s primary defence is that as a result of an undocumented oral agreement entered into between himself and Badri he became the beneficial owner of the shares in the Claimant companies. Alternatively he says that Badri created a sub trust in Vano’s favour over his beneficial interest in those shares. Alternatively he became the beneficial owner of the assets held by the companies. Accordingly because of that entitlement he was entitled to deal with the assets as he thought fit and give GK directions.

[10]Finally Vano asserts that even if the claim is established by the Claimants it is time barred under Georgian law because the director of the companies and/or GK as the companies’ agent knew or ought to have known of the facts constituting the tort more than 3 years before the claim was issued (the Georgian limitation period for delict).

ASSETS SUBJECT MATTER OF COMPLAINT

[11]I set out the assets held by the two Claimant companies in the next ensuing paragraphs the disposal of which is complained about by those Claimants.

BLUE TROPIC

[12]Blue Tropic held 92.85% shares (543,843 shares) in JSC Poti Mill a Georgian company listed on the Georgian Stock Exchange. It is alleged that GK on 5th March 2008 on the instructions of Vano put up those shares for sale at a share price of Gel 4.95. On the same day Sonata Alliance Georgia Ltd (“SAGL”), a company incorporated in Georgia purchased the shares. It is owned by Sonata Alliance Inc (“SAI”) a company incorporated in the Seychelles and beneficially owned by Vano and members of his family.

[13]The Claimants alleged, but the Defendant denied, that subsequently pursuant to resolutions of the Supervisory Board of Poti Mill in a series of transactions SAGL sold a total of 73,309 m 2 of land held by it to various buyers for a total of $9,457,345.

COPPELLA

[14]It had purchased the building and land known as the Tbilisi Universal Store (“the Store”) at 2/4 Rustaveli Avenue Tbilisi from Gedeoni Ltd and Zurab Alavidze for a price of $900,000.

[15]By a further real estate purchase agreement dated 17th August 2007 executed by GK on behalf of Coppella it sold the Store to Movat Georgia for $12,275,000. Movat Georgia transferred that money to the Coppella Georgian branch bank account with JSC Bank of Georgia. Thirteen days later (on 30th August 2007) GK on the instructions of Vano paid $10m of the proceeds of sale of the Store from Coppella’s account to SAI’s account with Alpha Bank Cyprus Ltd.

[16]On 17th January 2007 the documents show that pursuant to a Deed of Share Purchase Agreement executed by GK on behalf of Coppella it acquired 100% of the shares in the Georgian Tobacco Manufacturing Ltd (“GTML”) a company registered in the BVI. The acquisition was from a Mr Avtandil Tsereteli. In late 2007 GK acting on instructions from Vano then caused Coppella to carry out a share purchase agreement where Coppella sold its shares in GTML for Gel 107,170 to SAGL and an agreement amending a loan agreement between Coppella and GTML so as to give a company called Sevaront Commercial Ltd (“Sevaront”) the benefit of Coppella’s right to repayment under the loan document. It is alleged that Sevaront is beneficially owned by Vano and gave no consideration.

[17]On 3rd June 2008 it is alleged that SAGL sold the shares in GTML to Smart Group, a Company owned 51% by Vano and 49% by one Mikheil Chkhartishvili (his son), for a price of Gel 107,170 (the same as the purchase price) but that was(a) a significant undervalue and

(b) not paid.

[18]Prior to 10th March 2008 as set out above Coppella held 66% shareholding in each of Prometko and GSCO. That shareholding was sold to SAGL for Gel 66,000 each. Once again it is said that the sale was at a significant undervalue and the proceeds were not paid anyway and that GK had no authority.

[19]On 30th December 2004 by a real estate purchase agreement Coppella purchased from Gedeoni Ltd and Zurab Alavidze a piece of land measuring 3577 m 2 in Lilo along with buildings covering 610.9 m 2 for $200,000 and a 138 m 2 lot located in Tbilisi for $100,000.

[20]On 16th August 2006 GK executed a real estate purchase agreement on behalf of Coppella where it transferred the above real estate to Management Consulting Ltd (“MCL”) a company owned by Vano which in turn sold the property to Smart Group Ltd the shares in which were owned at that time as 51% by Ms Chkhartishvili and 49% by Mikheil Chkhartishvili. On 6th March 2008 GK executed a real estate purchase agreement on behalf of Coppella by which it transferred the land and buildings in Lilo to SAGL for Gel 361,000.

[21]Once again it is said that these sales were at a significant undervalue and the consideration was not paid and GK had no authority to sell. Alternatively it is alleged GK breached his duties as set out above.

[22]Vano does not dispute that certain of the transactions above were made but does dispute the consequences and claims alleged by the Claimants.

MULTIPLE LITIGATION

[23]These proceedings were commenced in early February 2013 when Vano was domiciled in England and Wales. Notwithstanding that he challenged the jurisdiction of the English Court on the basis that because he alleged in his Defence that the shares in the Claimants were owned by him the dispute involved BVI company issues which should be tried in BVI. The jurisdiction challenge which took 18 months to resolve failed. After losing before the Master Vano commenced proceedings in Georgia and attempted to use the issue of those proceedings in the appeal before Newey J. That attempt failed and his appeal ultimately failed.

[24]He also commenced proceedings in the BVI for relief including a change to the share register.

[25]The status of the BVI proceedings remains unclear. It is believed they stand adjourned and nothing has happened since pleadings were closed. Vano has failed to achieve anything as result of these proceedings. Separately a company called Carlina brought proceedings against Vano. It was apparently in that litigation aligned with the AP Family. Those proceedings collapsed and were abandoned.

[26]In the Georgian proceedings he obtained a judgment at first instance but the Claimants successfully overturned that. That latter victory by the Claimants led Vano to abandon a res judicata plea in these proceedings. When the trial came on before me there was extant an appeal by him to the Georgian Supreme Court against that Georgian Court of Appeal decision. That was heard and a judgment was obtained in October 2015 overturning the lower Court’s decision and remitting back to it a duty to deliver a judgment in the case relying on the evidence that the Judge at first instance had heard. On the basis of that decision Vano applied before me seeking an order that I stay these proceedings or stop preparing the judgment. That application was unsuccessful and it was dismissed with costs.

STRUCTURE OF CLAIMANTS

[27]The structure is complicated but not actually disputed by Vano. Attached to this judgment is a table which sets out the structure of the Nile Trust. Accordingly the documents, the Claimants say, show that the assets were held by the Claimants and that the shares in the Claimants were held on the terms of a discretionary trust (the Nile Trust) of which Badri was the ultimate beneficial owner. That documentation is not challenged by Vano.

[28]The Structure was set out in the witness statements of Mr Baker, the current managing director of a professional Liechtenstein Trust Company called Griffin Trust AG which changed its name from Miselva Establissement (“Miselva”) it being the sole trustee of Nile Trust and in that capacity held 100% of the shares from 1st July 2007 to 20th July 2011 in both the Claimant companies. He was also the sole director of the companies at that time. His evidence was challenged and I shall deal with it in more detail. However, the evidence of Robin Gratz was not challenged. His organisations took over the trusteeship in respect of Nile Trust and the shareholding in the companies on 20th July 2011. He confirms that he, together with a Mr Baumann, a former partner of his had the day to day control over the companies and that was not in issue. Equally (again not in issue) he confirmed that it had never been suggested to him nor to the best of his knowledge his predecessors that Vano could have any ownership interest in the companies at all before the commencement of the present proceedings. Finally in this context the evidence of Christopher Richard Leney Samuelson who was responsible for setting up the arrangements initially was equally not challenged.

[29]It is fair to say that the internal documentation of the Claimants and the underlying structures does not show any presence of Vano.

[30]This is admitted by Vano.

[31]Its significance arises out of the need on the part of a trial Judge to test the oral testimony of witnesses who give evidence about events (especially when they took place years ago) against the contemporary documents see for example my recent decision in Harb v HRH Prince Aziz

[2015] EWHC 3155 (Ch)

. This merely reflects what has been said by other Judges see for example Grace Shipping v Sharp & Co Ltd [1987] 1 LR 207 at 215-6 where Lord Goff said:- “….it is not to be forgotten that, in the present case, the Judge was faced with the task of assessing the evidence of witnesses about telephone conversations which had taken place over five years before. In such a case, memories may very well be unreliable; and it is of crucial importance for the Judge to have regard to the contemporary documents and to the overall probabilities. In this connection, their Lordships wish to endorse a passage from a judgment of one of their number in Armagas Ltd v. Mundogas S.A. (The Ocean Frost) [1985] 1 Lloyd's Rep. 1 , when he said at p. 57: ‘Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses' motives, and to the overall probabilities, can be of very great assistance to a Judge in ascertaining the truth.” That observation is, in their Lordships' opinion, equally apposite in a case where the evidence of the witnesses is likely to be unreliable; and it is to be remembered that in commercial cases, such as the present, there is usually a substantial body of contemporary documentary evidence.” and Leggatt J in Geseman SGPS SA v Credit Suisse

[2013] EWHC 3560 (Comm)

at [15] to [22].

[32]These are of course indications only and ought not to be followed blindly. An agreement even if of significant age (see the Harb case above) can be sustained by oral testimony if its terms are relatively easy to understand and are unlikely to be forgotten. In the present case the bald agreement as asserted by Vano is easy enough on that basis but that is not the end of the matter when dealing with complex structures such as to be found in this dispute.

THE ROLE OF GK

[33]GK’s role in this dispute is vital. Somewhat surprisingly in view of the allegations made against him in the original pleading he gave evidence for the Claimants. Equally surprising is that I do not understand that they have intimated any claim against him. It may be that the Claimants’ change as regards the law of Georgia to contend that an intervening delict by him was not necessary to find liability against Vano shows a softening of their attitude towards GK. Originally, GK was going to give evidence by way of Civil Evidence Act Notice, which might have had a seriously damaging effect on the weight of his evidence. In the event he gave evidence and produced 3 witness statements and was cross examined on them.

[34]He had also given evidence in the BVI proceedings and in the Georgian proceedings. In the latter he was cross examined.

[35]GK, over a period of years between 2004 and 2007 was granted a general power of attorney in respect of both Claimants. This gave him full control of all of the assets of each company. The powers of attorney were granted for one year but were renewed.

[36]The last formal power of attorney for Coppella expired on 15th January 2008. However the last power of attorney in respect of Coppella was amended by a resolution dated 18th June 2007 of Brooklane Management Ltd the Trustee Group shareholder in Coppella. The amendments were twofold. First it gave GK a power of sale of the shares in Coppella upon such terms as he thought fit on the basis the sale proceeds would be transferred to his account. GK refers to this in paragraph 35 of his second witness statement. No actual power of attorney was issued and the Claimants in their initial case contended that GK had no authority under any power of attorney after 15th January 2008. In their closing they abandoned that submission (paragraph 2).

[37]All transactions were carried out by GK using his successive powers of attorney on instructions given by Vano. The bulk of the transactions were carried out by GK after Badri’s death. However, some took place before his death, see the dealings in respect of the Universal Department Store Tbilisi for example, some of the transactions in respect of GTML and some of the transactions in respect of the real estate.

[38]GK’s evidence ought to have been vital as to what he thought he was doing when Vano gave him the instructions. In order to understand that it is necessary to analyse the structure and arrangements behind the two Claimants. I have set them out above; all the documentation shows ultimately the assets behind the companies being subject to offshore trusts where the ultimate beneficiary was Badri. As late as October/November 2007 (i.e. a few months before his unexpected death) Badri was required by Lichtenstein law (under which Miselva was incorporated) to identify the beneficial ownership behind the Claimant. He signed due diligence declarations in respect of both of them on 24th October 2007. His signature was co-signed by Mr Baker. When I come to examine the evidence of Mr Joseph Kay later in this judgment I will make reference to this document because his answers (T7/128-133) undermined his evidence completely when Mr Smouha QC cross examined him on this and various other documents which were only consistent with the beneficial owner of the Claimants being Badri. This is one of several contemporaneous documents which appear to be inexplicable if Vano’s case is correct.

GK’S EVIDENCE

[39]His main witness evidence is to be found in his second and third witness statements. The latter one is responsive to matters set out in Vano’s first witness statement. Turning to his second witness statement, after explaining what he had said in previous actions he addressed points made by Vano in respect of his (i.e. GK’s) functions as attorney for the Claimants. In paragraph 12 he identifies six instances from Vano’s Defence where Vano contends that GK managed the affairs of the Claimants on his behalf because Vano was the 100% owner of the companies. GK (paragraph 13) indicated that he did not agree with the categorisation of his role. He does say in the section headed “My involvement with Coppella and Blue Tropic” that he was asked by Vano to become involved in Coppella but he is vague about what language was used but got the impression that both Vano and Badri had some kind of involvement in the companies. However he never enquired. Equally Badri and his people never gave him a clear understanding of the way in which Badri and Vano were involved in the Claimant companies. It might just be a share of profits which is in essence what the Claimants put to Mr Kay in cross examination or it might be a sharing of the ownership in some way. Clearly he accepted Vano had a management role as he took instructions from him about the disputed transactions. Nevertheless in paragraph 37 he said this:- “In taking instructions from Vano I did not consider myself then or now to be doing so solely in my capacity as his attorney. I thought that I was assisting Coppella and through it those who were interested in it, principally as I understood it Badri but also Vano to an extent that I never had clarified for me. That might seem odd in hindsight but in Georgia then and even so now it is simply not the place for a junior person in my position to question people such as Badri or for that matter Vano as to precisely what arrangements they had between themselves, unless of course it becomes apparent that there is a real and clear conflict between what was being said to me by them. There never was prior to Badri’s death. For that reason I had no need to discuss the matter with any of Badri’s people either.”

[40]In paragraph 47 he reverted to his understanding (or rather lack of understanding):- “In this period around early 2007, I became aware that the companies were held within a trust structure. By the time Badri died I had become aware that he was the beneficiary interested in that trust. I had no certain knowledge of this at the time. However it gradually became clear that the structure was being run by a team of people reporting to Badri, including Mutual Trust in Cyprus and LIB in London. I therefore increasingly had doubts as to whether Vano had been giving me an accurate account of the position. However again it was not my role to enquire and I did not do so. In particular I did not know and did not seek to find out whether what Badri and Vano had agreed between them was organised in a legal manner or had been left simply as an informal understanding between them”.

[41]In paragraph 61 he attempted to correct evidence he had given in the other litigation concerning what Vano had told him about the transfers. He said this:- “In my previous evidence I indicated that Vano had told me that the transfers now in dispute were essentially transfers of assets from one of his companies to another, and that this was simply a matter of reorganising his, rather than Badri’s businesses. I regret the poor and misleading language that I used. As I have said, I understood from Vano that Coppella was “his company”, in the sense that he had an agreed interest in it. I did not understand that it was entirely his to deal with without any reference to Badri. I accept however that by 2007 Vano was becoming inconsistent in these respects, sometimes suggesting that he now had a full beneficial interest in the companies. As I have said, in Georgia these are matters that are often not considered in detail. I understood that the companies were legally owned by Badri’s trust and that Badri was in agreement with the proposal to transfer them to companies beneficially owned by Vano. That was the substance of the matter with which I was concerned at the time. Other transfers took place rapidly following Badri’s death in February 2008. Vano told me he was concerned that Joseph Kay was in the process of seeking to appropriate Badri’s assets. Vano said that for that reason he was keen to transfer the assets out of Badri’s trust and into companies which Vano himself controlled. Given that we had the powers of attorney, incorporating powers of sale for both Blue Tropic and Coppella, it was open to Vano to instruct me to do this. When on 5 March 2008 I instructed Georgian Investment Group Limited (a broker) to put up for sale the 92.85% shareholding owned by Blue Tropic in Poti Mill, I did so on instructions from Vano but on the understanding that I was acting on behalf of Blue Tropic and in furtherance of some general understanding that existed between Vano and Badri, consistently with what Vano had previously told me he had agreed with Badri. I have the same belief, recollection and understanding in relation to the later sale, on 10 March 2008, of Coppella’s 66% shareholdings in Prometko and GE-ES-CO to offshore companies beneficially owned by Vano and members of his family.”

[42]After the death of Badri he said that he was told by Vano that everything was under control with the AP Family which is what he would have expected and that in 2010 he was told by Vano to take all the documents relating (inter alia) to Blue Tropic and Coppella and show them to one of the AP Family’s representatives. His understanding both from Vano and as regards what he would have expected was that Vano having secured the assets from appropriation from a third party was now ready to settle what was due to the AP Family. That is a reference to the threats posed by Mr Kay.

[43]His third witness statement was responsive to Vano’s first witness statement and the witness statements of Rati Ghvamberia and Paata Namshuridze.

[44]In summary GK’s evidence is that he now rejects any suggestion that he was operating on the assumption that Vano was entitled to the companies and their assets. His evidence now before me was in effect that he carried out what Vano requested and made minimal enquiries about it but assumed it was for the benefit of Badri.

VANO’S CASE

[45]Vano’s case as set out in his Re-Re-Amended Defence and Counterclaim is that Badri set up Coppella to help Vano because Vano had no experience of setting up offshore companies whereas Badri had experience and was able to provide the use of a number of individuals to set up a company. It, when set up using various offshore management entities, would be for the benefit of Vano and those offshore entities as registered shareholders would at all material times hold the shares on trust for Vano.

[46]Second it was arranged for a power of attorney to be given to someone to manage the affairs of Coppella on behalf of Vano. He nominated GK and GK at all material times managed the affairs of Coppella on his behalf.

[47]The position as regards Blue Tropic was slightly different. In this case Vano says that he and Badri in early 2004 entered into a Georgian law joint venture whereby they agreed to undertake various business opportunities together on terms to be agreed. Once again Blue Tropic was incorporated abroad with nominees. The shares were initially held on trust for Badri. However after the acquisition of the JSC Poti Mill it is said that Badri became disenchanted with that project which proved to be expensive. Accordingly Badri and Vano agreed orally that the beneficial ownership and/or control of Blue Tropic would be transferred to Vano, in return for which he would take on the sole responsibility for the development of the company and associated finance. Any of the proceeds of sale if the JSC Poti Mill was sold were to be split 50/50 between the two. That was evidenced it is asserted by the cancellation of the power of attorney given to Mr Namshuridze and the creation of a new power of attorney in favour of GK who took control of the management of Blue Tropic on behalf of Vano, who thereupon became the beneficial owner of 100% of the share capital in the company and the registered shareholder held the shares upon trust for him.

[48]Alternatively Vano’s case is that if he has not at all material times been the beneficial owner of Coppella then he contended that the assets held by those companies were held on trust for him or on trust for the Georgian law joint venture account. Accordingly he counterclaims declaratory relief to reflect those understandings that he is the beneficial owner of Coppella or Blue Tropic and consequential and ancillary relief. He abandoned that claim in closing as the concept of a trust is not known to Georgian Law as both experts agreed

[49]There is no documentary evidence of a contemporary nature that supports Vano’s case. Further as I have said all of the relevant disputed transactions were implemented by GK. His evidence is therefore vital as to understanding what the true factual position was. His stance in his evidence before me was that he did not support Vano’s case that he had explained his entitlement to GK. If I accept that evidence that will seriously undermine Vano’s credibility. It is not conclusive however because GK himself makes it quite clear that he was (to put it at its lowest) unquestioning as regards what Vano asked him to do.

[50]Further the question of his knowledge might well be relevant to the limitation defence raised by Vano. If he followed Vano’s instructions knowing they were improper then he might well be in breach of duties that he owed to the Claimants. In a late amendment however the Claimants assert that Vano can be liable in delict even if there is no intervening misconduct or breach of duty committed by GK. That amendment was allowed without prejudice to Vano being able to argue that the amendment should be disallowed at trial because the cause of action was time barred at the time the order was made for the amendment.

GK’S EVIDENCE

[51]Unsurprisingly he was cross examined extensively (T3 and part of T4). The reason for that extensive cross examination was the several previous occasions when he gave evidence (in the BVI and Georgia) or provided a statement (“the Istanbul Statement”) which appears to be at variance with the evidence he gave before me.

THE ISTANBUL STATEMENT

[52]This was a statement that GK gave to Joel Adler a partner at Mishcon de Reya, Vano’s solicitors and Rati Ghvamberia (“Rati”). Rati gave evidence at the trial but Mr Adler did not although he sat throughout the whole of the proceedings behind Counsel for Vano.

[53]The statement was given in Istanbul on 20th September 2011. After the meeting and having had sight of the statement GK sent an email to Mr Adler and Rati on 23rd September 2011 confirming the basis of his statement (adding that it was based on what he had been told by Vano). Nevertheless he adopted the statement. He sought to impose a restriction on the use of the statement by them save that he acknowledged it could be provided to Vano.

[54]In the statement he stated that Badri agreed to assist Vano in setting up Coppella and it was 100% owned by Vano beneficially, Badri not interfering with the affairs of Coppella unless specifically requested by GK. He also confirmed that Badri had no interest in the various properties save that there was a 50/50 arrangement in respect of the Docks, the Tobacco Production Company and JSC Poti Mill.

[55]To say that is somewhat at variance with what he said in his witness statements in this action is an understatement (see paragraph 12 for example of his second witness statement, paragraph 31, paragraph 37 and paragraph 43 where he attempted to explain affidavits he had sworn in the BVI proceedings and paragraph 61 where he corrected his poor language and said that Vano had an interest but not the entire interest).

[56]He commented on the Istanbul Statement in paragraphs 71 and following. He said that he went to Istanbul to meet Rati and Mr Adler alleging that Vano told him that Mr Adler had been Badri’s lawyer. The basis of the meeting he understood was a desire on the part of Vano to settle monies which he owed Badri’s family. He acknowledged that he signed each page but said that the note was written by Mr Adler. He disputed that the purpose of the meeting was to provide a statement and was reluctant to sign it. Afterwards he repented and said of the note that it was misleading in various aspects. He referred to the confirmatory email of 23rd September 2011 and urged me in effect by paragraph 85 to accept his statement before me as opposed to the Istanbul Statement where it was inconsistent.

[57]He provided a third witness statement in response to Vano’s witness statement served on his behalf. He challenged (paragraph 19) Rati’s evidence in paragraph 21 where he says that GK made no objection to any of the points made in the note. He reaffirmed his evidence that he was intending to say Vano had an interest in the companies but not the whole interest.

[58]Unsurprisingly he was extensively cross examined by Mr Crow QC on behalf of Vano (T3 and T4). Indeed his cross examination started in respect of the Istanbul Statement. He contended that he thought that the meeting was a friendly meeting as he believed both sides were represented there. This was on the (in my view untenable) view that Mr Adler represented Badri. I cannot see in any event how a lawyer representing Badri being there would justify making statements which he now says were untrue. The contrast between his evidence before me and the Istanbul statement is stark. GK is a lawyer albeit a relatively young one but by the time he signed the Istanbul Statement he had been a lawyer for 8 years. The following exchange took place about his signing it:- “MR JUSTICE PETER SMITH: Why did you sign a document if you didn't believe it was reality? A. It didn't look like any document I have seen before, either agreements or whatever, but it looked – it 9 was -- it didn't have a shape of document. That's why I couldn't imagine that it could be called a document later and signed. And that's why when I -- as soon as I returned, came back from Istanbul, I have sent this email. MR JUSTICE PETER SMITH: I could accept that answer if it was from somebody who wasn't a lawyer, but you're a lawyer, and you've been a lawyer for eight years. Why did you sign the document if it wasn't real? A. Yes, you are right, I should have taken this into consideration and I shouldn't have trusted Mr Vano. MR JUSTICE PETER SMITH: When you say they insisted that you sign it, how did they insist? A. This was actually a kind request and there is a detail, that I had a big respect to Mr Vano at that time, and that's why. MR JUSTICE PETER SMITH: So they didn't insist? A. So actually, it was a request, but repeated seven, eight times, you know, it's already I consider that he insisted. MR JUSTICE PETER SMITH: Thank you.”

[59]In my view Mr Crow QC however did not clearly put to GK Vano’s case namely that at all times he (GK) was acting for Vano and not Badri (T4/21-26). It was in my view an important point because it reflects the essential difficulty of this case.

[60]That difficulty arises out of the fact that Vano (whatever the true ownership was) had full authority to deal with the affairs of the companies and their assets. That power was either as a result of the arrangements he entered into with Badri as claimed by the Claimants or as a result of the arrangements and ownership as claimed by him. Outwardly there is no difference. Thus whatever the position “behind the curtain” Vano instructs and GK obeys.

[61]The Claimants in their closing in my view had it right about GK when they said in paragraph 62 “[GK] is, in the context of this case, a small man in a difficult position – a relatively young commercial lawyer caught in the middle of a dispute between two important camps in Georgia. He has been asked to give evidence by both sides in various sets of proceedings, and has done so. He has undoubtedly found the process very stressful. There can be no doubt that his evidence in the various sets of proceedings has been inconsistent, and indeed he acknowledges this in his witness statement…….”

[62]In addition of course GK said that he was violently assaulted although there is no clear evidence as to who assaulted him and for what purpose. It is important to understand clearly the pressures that someone like GK would have in dealing with powerful organisations such as are deployed in this action. That is not to condemn Georgians; I have seen plenty of cases before me where similar pressures are applied on smaller witnesses by powerful organisations in this country. At the end of the day I conclude that neither side has established that GK knew who was behind the relevant companies with any degree of certainty.

[63]He might have had some suspicions but I cannot begin to try and speculate on what those suspicions were. I am firmly of the opinion however that if he knew who was behind the companies he was not telling me. The inconsistencies in the various statements merely cancel each other out neither prevails over the other.

[64]In my opinion this reflects the reality of someone in the position of GK. He acted as a lawyer for the companies. He had a duty therefore to discharge his functions as a lawyer for the companies. However the direction to implement things came from Vano. He might have suspected some misdeeds on behalf of Vano but the reality was that he was there to implement what Vano told him and that he did. This might well be a “three wise monkeys” approach but for the reasons I have set out above I can well understand why questioning of actions might well have been an unhealthy exercise. I therefore conclude that GK has faithfully discharged his duties in carrying out instructions given to him by Vano. He was authorised (whatever the underlying position was) to instruct GK to do things.

[65]Equally if Vano had misappropriated the companies and their assets in breach of his arrangements with Badri I conclude GK did not know that at any time. I will deal with this more when coming to the limitation issue but the fundamental flaw in Vano’s argument about knowledge is that whilst I accept both GK and Mr Baker (see below) knew what Vano was doing neither of them knew that what Vano was doing was wrongful. Merely because the transactions were implemented at Vano’s request means nothing.

MR BAKER

[66]Mr Baker is a solicitor of the Senior Courts of England and Wales and works as a professional Trustee. He is the managing director of a professional Liechtenstein trust company called Griffin Trust AG which changed its name in December 2012 from Miselva. It was the sole Trustee of the Nile Trust from 1st July 2007 until 20th July 2011 and in that capacity held 100% shares of the two Claimant companies during that period Mr Baker was also at that time the sole director of the same companies. I have set out the structure of the Nile Trust as an annex to this judgment.

[67]The Nile Trust is governed by the laws of Gibraltar and was established pursuant to a settlement dated 25th July 2000 and was then known as the Octopus Settlement. It changed its name on 23rd October 2002 to the Sun Trust and subsequently on 24th March 2004 to the Nile Trust. Miselva was appointed Trustee on 1st July 2007 on the instruction of Badri.

[68]The Nile Trust is a fully discretionary trust under which the Trustees’ powers are exercisable in favour of the “Beneficiaries”. Until his death in February 2008 Badri was the sole named beneficiary having been added by a Deed dated 28th September 2000 on which date the only other named beneficiary, Imperial Cancer Research Fund, was removed.

[69]Under the Settlement the settlor is a trust company Valmet Corporate Services Ltd incorporated in Gibraltar. It created the settlement but I do not suppose for one minute that it provided any of the funds. An associated company Valmet Trust Company Ltd was the original Trustee. The Settlement was constituted with an initial payment of £1,000.

[70]Under clause 4 the trustees are given full powers of appointment whether by appointments revocable or irrevocable during the trust period. The power to appoint or remove trustees is exercised by the person specified in the 6th schedule and starts with the Protector. The first Protector is Valmet Trustees Ltd (an associated company of the others) based in Montreal, Quebec, Canada. The power to appoint a new Protector is vested in somebody called Hans-Peter Jenni and the Trustees’ powers are widely fettered in the sense that they cannot be exercised without the consent of the Protector.

[71]This follows a traditional line of offshore trusts. The concept of Protector in this context is not known to English law but is well known in offshore trusts. It is impossible to discern from the documentation who is really behind the trust; it is controlled by the Protector and the person who controls the Protector is obscure. The role of Protector was considered by the Staff Division of the Isle of Man Courts in Knox Darcy (Rawcliffe v Steele [1993-5] Manx LR 426) adopted in The Independent Trustees Service v GP Noble Trustees Ltd

[2010] EWHC 1653 (Ch)

at paragraph 88.

[72]Badri was clearly behind the settlement as seen by his letter of wishes dated 25th July 2000. On 28th September 2000 the Imperial Cancer Research Fund was removed as the Beneficiary and replaced by Badri. Thus to all intents and purposes unless Badri decided to change it he was the sole beneficiary under the Nile Trust. After Mr Baker’s Trusteeship as set out above the Trustees were SP Trustees which declared it held the shares in the two companies upon trust for the Nile Trust (Mr Graetz’s unchallenged witness statement). The same applied to the period of trusteeship covered by the original Trustees as Mr Samuelson sets out in his unchallenged witness statement (paragraph 24 in particular). Mr Baker operated on the directions of the London International Bank (“LIB”). Its sole director was a Mr Kay who gave evidence for Vano in these proceedings (see below). At some stage Mr Kay laid claim to an interest in the Nile Trust but his case was dismissed in trenchant terms.

[73]Somewhat surprisingly Mr Baker stated that he had little involvement or knowledge of the operation of the underlying assets and he never physically met Badri although he received instructions signed by him via LIB. That was unusual and the usual course was that he received his instructions from LIB employees. His understanding was always that LIB acted solely on behalf of Badri and in addition to Mr Kay’s claim the late Mr Berezovsky made claims to have interests in the Nile Trust and other business assets linked to Badri. In paragraphs 34 and 35 of his witness statement Mr Baker says “I never saw any evidence that anyone other than Badri was ultimately entitled to the assets of the Nile Trust including the Companies. I understand that [Vano] claims that he in fact was at all material times while Miselva was their Trustee the beneficial owner of the Companies or their assets….. Until I was asked by the Companies to give evidence in these proceedings I had no recollection of the name of [Vano] and no one ever suggested to me that he was involved in any way in the Companies or assets within Badri’s trust…. My understanding was always that the assets of the Nile Trust were intended to benefit Badri and his family….”

[74]He was cross examined on day 1. In the course of that cross examination he confirmed that he had never met Badri; he disputed that he had daily contact with GK who did not report to him as and when assets owned by Coppella or Blue Tropic were sold. He disputed evidence that GK gave in Georgia to the effect he (Mr Baker) as well as Natalia Shachkova demanded reports. Ms Shachkova was an employee of Mr Kay in LIB. She did not give evidence before me. The reality was that Mr Baker like GK really knew nothing about what was going on “behind the curtain”. It is well demonstrated by one of his answers (T1/77):- “MR JUSTICE PETER SMITH: It's like a blind trust, really,isn't it? Three wise monkeys, you don't want to know; is that right? A. It's not of not wanting to know, my Lord, but the way these things, particularly for clients from ex-Soviet countries, work is that one very often doesn't get to meet the big cheese.”75. After Badri’s death in 2008 Mr Baker was involved in ascertaining what assets Badri was beneficially entitled to. Part of that exercise involved contact with GK potentially. As part of that investigation he sent an email on 20th October 2008 to one Mark Hauf who was described in cross examination as being a friend of Badri’s family and an informal advisor to them. In that email he said:- “…I may have asked you this before, but do you know on which side of the fence [GK] sits?”

76. The reply he received was:- “GK is an associate of one of Badri’s alleged “partners”…..at this point, we would not view [GK] as necessarily sitting on our side of the fence”.

77. The request was in the context of a receipt of $7.84m by him in September 2007 from a Nile Trust subsidiary and the question was whether or not “he can be trusted”. Mr Baker in cross examination (T1/83) said that his email was quite reassuring. That was in the context of not being in Mr Kay’s camp who was at that time trying to claim substantial parts of Badri’s estate. He was shown several consolidation statements prepared in August-September 2008 by someone called Bruno Bruderer. These purported to set out details of all of the assets in the Nile Trust. Both Claimant companies are identified throughout the succession of statements through that period (this is 6 months after Badri’s death). They are correctly identified as BVI companies. The statement is that they are 100% owned in each case. It is said that they own land and property in Georgia. Mr Baker said he was not familiar with these documents. He identified Mr Bruderer as a consultant that Miselva had engaged to assist in trying to put together information about the assets of the Nile Trust (T1/88). He was shown a further document, being a statement of assets of the Nile Trust as at 20th July 2009. The information as regards the Claimant companies was extremely sparse. Mr Baker does not recall seeing it although he accepted that it might have been sent to him by email. His lack of communication as shown in cross examination with GK was somewhat unbelievable. He was not even able to explain why he sought the reassurance from Mr Hauf about the $7.8m.

78. He was shown various Georgian Company and Land Registration documents which showed the share dealings and property transactions which were disputed in this action. He had not seen those and he had not searched for them when he was investigating the assets.

79. At the end of the day Mr Baker effected to know very little about the underlying assets. I found his answers in respect of the email as to the trustworthiness or otherwise of GK unsatisfactory.

80. The significant part of his evidence was actually documentary. He produced the documents which were required by Liechtenstein law when Miselva took over in 2007. A fiduciary must identify a contractual person where he is to set up an entity and act in a fiduciary capacity. The contracting party is identified in form F1. Form F2 determines who the beneficial owners are. In the case of both companies Badri was identified as the beneficial owner. The document was signed on 24th October 2007 by Mr Baker and Badri. This evidence was not challenged by Vano. Mr Baker in his evidence did not clarify how this form came to be signed; I suspect he simply took it on trust. Nevertheless it is a strong piece of contemporary evidence to show the ownership of the Claimant companies in 2007. The document is contrary to Vano’s case.

81. This only goes so far of course because it is a document of which Vano is unaware and he is not a party to it. Nevertheless it is difficult to see why Badri would sign these documents if he had made an agreement with Vano as he alleges in his defence in this action. This reflected in both cases the declaration of trusts that were signed by Miselva when it acquired the shares in July 2007. It declared that it held the shares on trust for the Nile Trust, the trust of which Vano accepts Badri was the sole beneficiary.

82. Mr Baker’s oral testimony was, to adopt the phrase of Vano in his closing, unimpressive. I found even less evidence to assist me than I had in respect of GK. Nevertheless there is this information that was contemporary which supports the Claimants’ position and is contrary to Vano’s position. He submits in his closing (paragraph 33) that it is only evidence of the registered ownership. I disagree. The F2 for example goes beyond that. I accept that it is still open to Vano to argue that he had an oral arrangement between Badri and himself which meant that he was the ultimate beneficial owner of the shares in the Claimants. However the question is whether or not it is likely in the light of these documents which are signed by Badri long after the date of the agreement. Vano in annex A to his closing severely criticised Mr Baker’s evidence. However that showed merely that Mr Baker knew surprisingly little about the assets of which he was the corporate representative and made clearly insufficient enquiries about what those assets were and any dealings in respect of them. He never met or spoke to Badri; his instructions were received by LIB. He was aware that GK had powers of attorney but that does not take Vano’s case any further. What is missing is any credible evidence that he knew Vano was not merely beneficially interested in the Claimant companies let alone that he owned them entirely. His evidence shows he might have received Mr Bruderer’s overviews. That does not assist Vano because once again those documents put the Claimant companies firmly in the Nile Trust. As he said in his evidence in organisations like this you did not challenge “the big cheese”. He did precisely that. In my view Mr Baker knew nothing beyond gathering in the bits of paper that were fed to him over the years. It is impossible in my view for Vano to establish that he had any knowledge of Vano let alone Vano’s dealings and let alone that the dealings were done on a basis that the companies belonged beneficially to him.

CLAIMANTS’ OTHER WITNESSES

[83]The Claimants called 4 witnesses described as AP Family witnesses namely Ms Gudavadze, Mr Rukhadze, Mr Kvantaliani and Ms Patarkatsishvhili. Ms Gudavadze was Badri’s widow. She gave evidence about the shock of Badri’s unexpected death and briefly mentioned the extensive litigation that the estate became embroiled in over challenges to assets which belonged to Badri. The larger claims were made by Mr Kay and the late Mr Berezovsky. It is undoubtedly the case that she came to view Vano as being another predator against her late husband’s estate.

[84]Her evidence was not seriously challenged in any way. There were disputes over when meetings took place with Vano; I am quite satisfied that in early 2008 shortly after Badri’s death Vano did not raise his ownership of the companies.

[85]She was cross examined about a put and call option agreement dated March 2011 between Vano(1) Mr Chubinishvili

(2) and her (3). This related to a sale of shares in the Georgian Tobacco Manufacturing Ltd (“GTML”). Under the put and call option if exercised she and Vano were to receive £1.25m each. It is not disputed that she received that sum. This does not to my mind take the matter much further as both parties acknowledge that Vano and Badri were interested in the shares of GTML. It does not therefore assist me one way or another and neither party suggests otherwise although I do note recital 3 which says “whereas Parties acknowledge that Grantee was representing the interest of AP (i.e. Badri) in the company Georgian Tobacco Manufacturing Ltd” that provides a glimmer of support for the Claimants’ position but no more.

[86]Ms Gudavadze acknowledged that she had no real details of Badri’s dealings. Tellingly in her cross examination (T1/136) she said:- “I'm not sure that any person knew all Badri's businesses except -- “Q. I'm sure that's true. A. -- except himself. Q. I'm sure that's true.

[87]In the event her evidence whilst important background evidence did not assist me in determining the issues in this case.

MR KVANTALIANI

[88]He is one of the AP Family’s Georgian lawyers. He was mostly cross examined about GK’s testimony in Georgia and the Istanbul Statement. His evidence was of no assistance in respect of the matters before me save in one respect which is dealt with below.

NANA PATARKATSISHVILI

[89]Her evidence was led to challenge the witness proposed to be called by the Defendant, a Mr Jgharkava. That witness did not give evidence for Vano. Her evidence also does not assist me in determining the issues before me.

IRAKLI RUKHADZE

[90]Mr Rukhadze has been a long standing associate of Badri and did business with him. He gave evidence as to the informal nature of Badri’s arrangements when dealing with people like him. That was not challenged seriously by Vano. He went on also in his evidence to purport to say what had happened between Badri and Vano in relation to the properties that are subject to the dispute in this action. It was shown by the effective cross examination of Mr Crow QC that he had no direct personal knowledge of any of this and it was largely speculation. That made his evidence about the issues before me of little use.

[91]He was also cross examined about evidence that GK had given in Georgia and in relation to the Istanbul Statement. It was put to him that he had pressurised GK in to trying to change his statement which he denied. This does not really matter for the reasons I have set out above when I analysed GK’s evidence. GK neutralised the effect of any of his statement by the differences in the various witness statements, affidavits and notes that he has deposed to or signed.

[92]Mr Rukhadze was also accused of pressurising other witnesses in particular Mr Namshuridze who gave evidence before me on behalf of Vano. He denied he put any pressure on him. Mr Crow QC suggested to him (T2/19) that his evidence in that regard was a lie which he denied.

[93]He was heavily criticised in Vano’s closing (annex A). I do not accept that he was dishonest but I do accept that he was drawn in to exaggerating his knowledge out of a desire to assist the Claimants. He probably has a financial interest in the outcome as he appears to be on some kind of bonus as well as a retainer. The evidence he gave in his witness statements was exaggerated as to his knowledge. It fell apart by the simple expedient of Mr Crow QC testing where the knowledge that he set out in his witness statement as regards the relationship between Badri and Vano came from. Ultimately it turned out to be speculation. It follows that he had no evidence that is of any worth to me in deciding the issues that I have to decide in this action save in respect of one point.

[94]The one point is I think his relationship demonstrates the informal way in which Badri did business. He clearly did business informally in respect of the Claimants even on their case. Vano clearly had a role (which the Claimants have accepted) but that role is not documented or set out. At the end of the day the evidence before me will almost entirely be based on Vano’s credibility and little else.

[95]For example putting to him what GK might have said in Georgia or in the Istanbul Statement does not assist me at all. His comments are irrelevant as GK gave evidence before me and it is for me to ascertain the truth or otherwise of GK’s evidence as set out above. I can read the statements just like anyone else but they are only relevant to undermine or support GK’s evidence in this action. In the event the other statements and affidavits he has sworn undermine his evidence in this case as I have said above.

TAMAZ CHKHIKVISHVILI (“Tamaz”)

[96]The Claimants put forward Tamaz as being a very important witness. He is a businessman operating in Georgia and he was the founder and former shareholder of Prometko GSCO. These companies held lease agreements for a number of terminals at the Poti seaport and form part of the disputes in this action.

[97]He gave evidence as to the sale of a 50% share in his companies. His evidence is that as far as he was concerned he was dealing with Badri but that all the negotiations were conducted with Vano who he knew was Badri’s representative relaying matters back to Badri. He deposed in his witness statement that the only reason he listened to Vano was because he represented Badri.

[98]Nevertheless despite the fact that Vano conducted the negotiations he deposes to a meeting that he had with Badri where Badri reiterated that he would not interfere in trying to take over the business. He challenges Vano who said in his witness statement (paragraph 36) that he purchased a 50% share in Prometko and GSCO. Tamaz’s evidence is that he had direct discussions with Badri about the receipt of the purchase money which was received in to the account of a BVI company Cipco. The total amount he received on 20th April 2005 was $1,445,449. He also gave evidence of having to chase Badri for an outstanding $54,000 and reiterates that he was looking to Badri to provide the money not Vano.

[99]His second witness statement was to deal with the witness statement of Koba Tughushi who gave evidence on behalf of Vano. Mr Tughushi said he was a shareholder in GSCO and that he and Tamaz entered in to negotiations with Vano (as opposed to Badri) at the suggestion of Tamaz. Vano he was told by Tamaz had political and business connections that he could use to protect the company interests. As far as he was concerned he was dealing with Vano although he did not deal with the negotiations with Vano or the mechanics of transferring the shares.

[100]Tamaz completely contradicts Mr Tughushi’s evidence in his second witness statement and similar evidence set out in paragraphs 33-44 of Vano’s second witness statement.

[101]Mr Kvantaliani also gave evidence challenging how Tamaz was paid. He was a lawyer who was acting for the Claimants in this action and other proceedings against them in Georgia.

[102]He challenged Vano’s statement (paragraph 36) that Vano purchased the shares in Prometko and GSCO. He produced documents which show $1.45m made to fund the initial purchase was paid in March 2005 from a company called Courtvale Ltd (“Courtvale”) who paid it to GK who in turn paid it to a company controlled by Tamaz.

[103]Courtvale at all material times was owned by trust companies associated with Badri.

[104]Thus Tamaz and Mr Kvantaliani support the Claimants’ case and challenge Vano’s case that he acquired the shares in GSCO. They appear to be independent.

[105]Both were cross examined. With regard to Tamaz it was put to him that he was lying (T2/67) which he denied. This was in relation to the fact that the sale agreement did not refer to the obligation on the part of Coppella to pay for the shares. His evidence was that that was the practice in Georgia at that time but he took a promise from Badri because he trusted him to pay it.

[106]His evidence remained firm after the cross examination. I found him to be credible. His evidence was criticised in Vano’s closing (appendix A) but I am not persuaded that any of that criticism undermines the main thrust of his evidence which is that he negotiated the deal with Badri not Vano. How the paper work was drawn up was not clear but we are talking about events 10 years ago and it would not be the first time where documents do not reflect what actually happened. The important point of his evidence is the contacts with Badri rather than Vano and the source of the funding for the purchase (which was not challenged) coming from a Badri company not a Vano source.

[107]I do not agree with the Defendant’s comment in their closing (paragraph 23 (e)) that Tamaz’s evidence is disputed. Where it conflicts with Vano’s evidence it does not materially advance the debate. That understates the significance of the source of the payment for the acquisition of the shares and also understates Tamaz’s independence unlike Vano’s.

[108]Mr Kvantaliani was cross examined mostly about previous statements given by GK, his evidence and its supposed importance but his evidence is of no significance in that regard for the reasons that I have set out above in relation to similar cross examination on other witnesses. It is for me to consider the credibility of GK and I have done so. He was also asked about the availability of information concerning assets of Georgian land owners and shares the Claimants had in Georgian companies. The answers showed that the position about the registration requirements were not clear. He was not cross examined on his evidence challenging paragraph 56 of Vano’s statement about the source of the funds to acquire the shares in GSCO. The Defendant made no comment on his evidence in his closing. I accept his evidence in this regard and regard the evidence about what GK did or said elsewhere as irrelevant to the issues before me.

[109]It follows that from these two witnesses there is credible testimony from persons who appear to have no personal interest in the outcome of the case which undermines Vano’s evidence as regards the acquisition of GSCO quite seriously both as regards who was negotiating the purchase (i.e. Badri) and who paid for the purchase (i.e. Badri). I will deal with the assessment of that evidence in contrast to the evidence of Vano further in this judgment.

SUMMARY AS REGARDS THE CLAIMANTS’ EVIDENCE

[110]The Claimants produced significant documentation which undermines Vano’s case culminating in the documentation produced for the Liechtenstein authorities signed by Badri.

[111]None of the other witnesses called by the Claimants give primary evidence of any direct knowledge of the arrangements between Badri and Vano. As I have said above there is nothing significant in either GK or Mr Baker knowing what Vano was doing with the Claimants’ assets. It was not in their remit to question what Vano did and if Vano was appropriating the assets for himself they did not know it in my view. In other jurisdictions it might be thought that they ought to have enquired but I can well understand why in Georgia dealing with these “big cheeses” they regarded themselves as being in a position merely of implementing what Vano said.

[112]Thus the Claimants have no positive case beyond the documents as to the relationship between Badri and Vano.

[113]They do however have the evidence of Tamaz and Mr Kvantaliani. It is true that they do not know the relationship between Badri and Vano but what they do say in their evidence undermines Vano’s version of events as regards those companies. That will have an impact on his credibility in relation to the claims he put forward.

THE DEFENDANT’S EVIDENCE

[114]In my view the witnesses called by Vano were of no assistance and some positively undermined Vano’s case I am referring in particular to Mr Kay who was correctly described in the Claimants’ closing (paragraph 71 (1)) as a fantasist and notorious fraudster who had clearly come to court for the purposes of an elaborate publicity stunt at the AP Family’s expense. Vano called Mr Kay despite knowing that various findings had been made against Mr Kay in other courts around the world.

[115]He was first cross examined in respect of a Judgment of Mann J dated 4th December 2009 (T7/86). He claimed that he had never seen this Judgment other than half an hour before he gave evidence although he was a party to the proceedings and he was unaware of the proceedings in question. I do not believe him. The proceedings in question were a challenge to Mr Kay who had produced documents which he contended showed that he was entitled to be at least a Georgian executor. The Claimants were the AP Family who denied that the documents were valid and in any event contended that the court should exercise its powers under section 116 of the Senior Courts Act 1981 to pass over Mr Kay and appoint an administrator.

[116]Shortly after Badri’s death on 12th February 2008 copies of these Georgian documents were produced but an original had never been produced.

[117]Mr Kay had applied in the Georgian courts by the time of Mann J’s Judgment for a Grant of Probate under the Georgian documents. This would give him control of Badri’s estate in Georgia. He was initially successful. It is quite clear however that the basis for the application was the lack of confidence of the beneficiaries in Mr Kay; Mann J was not asked to make a determination as to the authenticity of the Georgian documents.

[118]It was put to him that he had forged documents and obtained a Judgment in the Tbilisi Court declaring that he was an executor on those forged documents. He denied that. He refused to acknowledge the reversal of that decision before the Supreme Court in Georgia in August 2011.

[119]He was taken to the Judgment of the Gibraltar Court (Dudley J) in an action in which he was a Defendant. That action started where the Claimants’ Trustees were seeking directions as to a trust known as the Valmore Trust and the Summit Trust. However it changed procedurally when Mr Kay changed his case. At the start of the trial of the Issues as defined in the Judgment Mr Kay’s evidence was that he was a man of independent wealth who had acquired the assets transferred into the trust from that independent wealth but only weeks before the start of the hearing he asserted for the first time there were a series of profit sharing agreements between Badri and himself and that the primary source of funding for those assets were profits from those agreements. Accordingly the disputes in the action were primarily between the AP Family and Mr Kay. Dudley J heard evidence. He was extremely critical of Mr Kay’s evidence for example indicating that he did not accept Mr Kay’s evidence “not least because for the reasons hereafter set out Kay has a palpable predisposition to mendacity” (paragraph 81).

[120]In paragraph 136 the learned Judge said this:- “The upshot of all of this is that I can reach no conclusion other than Kay is most certainly not a witness of truth. The one occasion during this evidence when to my mind he was truthful was during an exchange when cross-examined as to his US tax returns and the mask dropped: Q. ….you are the sort of person who is prepared to perjure himself to defraud third parties of large sums of money; in this case the Inland Revenue? A. Yes Q. That is the sort of person you are? A. Yes.” A. Yes Q. That is the sort of person you are? A. Yes.”

Q. That is the sort of person you are?

[121]In paragraph 143 the learned Judge commented on Mr Kay:- “In this regard I think it is clear that I have not formed a positive view of Kay as a witness. Truth for some may be malleable for Kay it is vaporous.”

[122]Mr Kay effected not to have read the Gibraltar Judgment although he acknowledged that he would have received one from his Counsel (Mr Alan Steinfeld QC). I do not believe him on this part of his evidence either.

[123]In further proceedings in the Chancery Division Mr Justice Sales (as he then was) gave a Judgement (

[2012] EWHC 1683 (Ch)

) where the AP Family sought summary judgment to pronounce against the testamentary documents produced by Mr Kay. Mr Berezovsky was also a party to the proceedings at that time. Sales J after referring to the Supreme Court Judgment which determined that Mr Kay had failed to establish that there was a valid will or that he had been validly appointed executor of Badri’s estate. He concluded (on a summary judgment application) that on the balance of probabilities the documents were forgeries. Mr Kay although a party to the proceedings did not appear to be represented.

[124]Nevertheless the result of that is that 3 courts have made determinations denying his executorship supposedly in respect of Badri’s estate and 2 of those (Tbilisi and Gibraltar) have determined that the documents he relied upon were forgeries and one (Sales J) determined on a Summary Judgment Application that the documents were forgeries. That is a particularly strong decision to have made under Part 24. Mr Kay effected not to know anything about the detail of these criticisms but ultimately he accepted he was bound by (in particular) Dudley J’s Judgment that he proffered forged documents to support his case.

[125]The greatest significance of Mr Kay’s evidence however relates to his position at LIB where he was according to his evidence (T7/117) the sole owner and sole director. In that capacity he said that LIB had set up about 100 companies and 30 trusts for Badri. He was shown an internal email in LIB from one Daniel Lam dated 8th September 2006 to David Ashfield who was the CFO. That attached a revised list of companies in relation to the Nile Trust (then known as the Octopus Trust) which shows that both Claimants were included as being within the Octopus Settlement. He was next shown a letter dated 23rd March 2007 addressed to Mr Samuelson signed by him and Badri terminating Mr Samuelson’s role on the basis that the administration was going to move from Mutual Trust to Miselva. Once again the attached document showed (inter alia) the Claimant companies being the subject of the Trust. He was shown a document prepared internally again by Ms Pithava dated 25th July 2007 which once again showed the organisational structure of the Nile Trust and included both of the Claimants. He was shown the documents F1, F2 and F4 which he had referred to in his witness statement (apparently without realising it) which were the Liechtenstein declarations.

[126]He confirmed that in 2004 Badri told him he was buying Poti Mill and wanted an offshore company to be set up and he was buying it on a joint venture basis with Vano (T7/136). He acknowledged that one of the ways in which Badri operated was to do business with someone and give them a share of profit at the end of recognition of their work in developing the business and that he was not told that Vano was to be given shares in the owning company or that a trust was to be set up for them and he acknowledged that he was never told that Vano was to be a 50/50 owner of Blue Tropic and that the same position appertained in relation to Coppella.

[127]All of this evidence is extremely damaging to Vano’s case. Mr Kay’s evidence must be treated with caution bearing in mind his track record in other courts. However one has to be careful when dealing with people who have been found to have told untruths or put forward forged documents. It does not mean invariably that person’s evidence is disregarded for all purposes. Sometimes it can be because the perjured evidence is so damaging. On the other hand one has to be careful as to why people lie. Some lie simply because there is not truth in their evidence and they are caught out. Others sometimes lie because it is thought that the lies assist their case. Catching such a person out on a lie does not necessarily mean the end of the case. Third sometimes people lie under pressure in the witness box. That too is not necessarily fatal.

[128]I do not accept Mr Kay’s evidence about his ignorance about the various decisions against him but that does not matter. In relation to the structure of the companies his evidence is significant because LIB of which he was apparently the sole director was responsible for setting the companies up and doing administrative things for the companies (such as the forms F1-F3) and in that regard Mr Kay’s evidence was supportive of the Claimants namely that they were part of the Nile Trust and that he was not told Vano was to be given shares in either of company or that a trust was to be set up for him. He acknowledged that both could have been done. He believed that Vano was entitled to a profit share but not a share of the ownership.

[129]That evidence is destructive of Vano’s case especially as it was given by one of his own witnesses.

OTHER WITNESSES

[130]The other witnesses called by Vano add no significance as regards the issue required to be decided by me in this case and I give them no weight. In relation to the shares in the companies of GSCO I unhesitatingly prefer the evidence of Tamaz as opposed to that of Mr Tughushi. I do not believe he actually knew what was going on as he was very much a secondary party. I accept Tamaz’s evidence entirely as regards that sale.

[131]That leaves Vano’s evidence. The reality has always been in this case that Vano can win it only on his evidence being believed.

VANO’S EVIDENCE

[132]Vano gave evidence over 4 days (interspersed with other witness evidence). He was extensively cross examined by Mr Smouha QC.

[133]His evidence regularly changed and was internally inconsistent. He also gave evidence in response to cross examination which did not feature in his witness statements. A good example of this is in respect of Poti Mill. His primary case was that he and Badri acquired the shares in Blue Tropic which owned Poti Mill. The purchase price was $1.5m which Badri provided in its entirety. The arrangement was that Badri provided the money and Vano was to develop the Poti Mill and make it profitable. The arrangement as put forward by Vano initially was that Badri would be repaid his $1.5m and the profits after that would be divided 50/50. Blue Tropic was incorporated as a joint venture with Badri to undertake various business opportunities and the first was Poti Mill.

[134]Vano’s evidence was then that Badri became disenchanted with the project because it was more expensive than anticipated due in part to JSC Poti Mill the company which owned the property, appearing to have larger debts than was originally thought to be the case. Accordingly Vano says that he and Badri agreed that the beneficial ownership and/or control of Blue Tropic would be transferred to him in return for which he would take on the sole responsibility for the development of the company and associated finance with any proceeds of sale to be split 50/50 between the two men.

[135]The shares were never actually transferred; all that happened was that GK obtained the power of attorney and Vano took control of the management of Blue Tropic. Although the pleading asserts that the shares were held upon trust for him that was of course never documented and GK’s evidence did not support that at the trial. The Claimants’ documentation as I have said above has both companies firmly in the Nile Trust and Badri’s Liechtenstein returns right up until December 2007 just before his death in the following February show him to be their beneficial owner.

[136]On 5th March 2008 GK on behalf of Blue Tropic and on the instructions of Vano instructed Georgian Investment Group Ltd (a broker) to put up for sale a 92.85% shareholding (543843 shares) that were owned by Blue Tropic in Poti Mill on the Georgian Stock Exchange with a share price of Gel 4.95. On the same day Sonata Alliance Georgia Ltd (“SAGL”) purchased the shares. The Claimants contend SAGL is owned by SAI a company incorporated in the Seychelles which is beneficially owned by Vano and members of his family. Vano has admitted those contentions (see paragraphs 10 and 11 of the Re-Amended Particulars of Claim and his admission in paragraph 11 of the Defence). The Claimants assert that the sale was at a significant under value and that even the reduced purchase price was not paid to Blue Tropic by SAGL. That allegation is not admitted save that it was admitted that SAGL did not pay the purchase price.

[137]The significance of this is said by the Claimants to be that between 25th December 2009 and 20th December 2010 SAGL sold a total of 73,309 m2 of land owned by Poti Mill to various buyers for a total of $9,457,345. Vano denies that in his pleading.

[138]Vano fleshed out his pleading in his first witness statement. He said that Poti Mill’s debts were approximately $5m and because it was a quick purchase the proper due diligence was not carried out. However once creditors knew that Badri was the owner of the controlling interest and he was a wealthy person they started pestering him and protested at his house. That led to the agreement he said whereby he would take over responsibility for Poti Mill and on a sale the profits would be split 50/50 without first taking out the $1.5m that Badri had already spent. He says that he was happy with the terms (unsurprisingly).

[139]He started Poti Mill running by appointing all the members of the supervisory board and consolidated the debt by obtaining a loan from United Georgian Bank. At that time he was a director of that bank. He was also an active politician in Georgia.

[140]He said that the shares were transferred to SAI in March 2008 when he gave instructions to GK to effect that. The purpose of the sale was to protect the shares from the activities of Mr Kay who at that time was asserting Badri’s assets belonged to him. In 2008 he arranged a loan with TBC Bank but he fell out with the politicians and by August 2010 the loan could no longer be serviced. The loan was secured against the assets of Poti Mill and it sold the assets referred to in paragraph 14 of the Re-Amended Particulars of Claim. Vano attempted to save the situation by using his former connections with the Bank of Georgia but that was unsuccessful. Vano’s evidence was supported (save in one respect) by the evidence of Rati whose evidence was not challenged. I accept that evidence as regards the dealings in respect of Poti Mill. The Claimants have not adduced any evidence to support paragraph 14 of the Re-Amended Particulars of Claim. Based on the evidence of Vano and Rati it seems to me that the assets were actually sold by TBC Bank in exercise of its security when Poti Mill defaulted in 2010. I accepted Vano’s evidence that he tried to have his former bank save the situation but that it was blocked by them because he was no longer in favour with those in power in Georgia. These things happen.

[141]However it is important to look at Vano’s evidence in cross examination.

[142]He was extremely confused over the agreement he said he had with Badri.

[143]The cross examination by Mr Smouha QC elicited confusion in the mind of Vano as set out in the Claimants closing at T6/77 and following. The key answers at T6/77-78 :- “Q. You do agree that there was no discussion about Blue Tropic at this time? A. Blue Tropic has always been, both for me and for Badri, the instrument for managing and dealing with these assets. It has never been economic instrument. Q. I'm afraid, Mr Chkhartishvili, I must insist that you answer my question. In your discussions which you are referring to at this time, which we have established were in about December 2004, there was no discussion between you and Badri about Blue Tropic, was there? A. No, absolutely it has never happened. Q. Thank you. And it follows that there was no discussion about beneficial ownership of Blue Tropic? A. Absolutely not because I was never even interested who was the beneficial owner of the Blue Tropic because always this company represented for me Badri and we had verbal agreements with Badri about all the companies that are subject to this claim, to these proceedings. In Georgia, all the offshore companies have been created like they are right now, like they exist now. For us, main thing was asset and not the offshore company or its beneficial owner. Q. We just need to clarify your answer, please. When you said "absolutely not", you mean absolutely there was no discussion about beneficial ownership of Blue Tropic? A. Yes, that's what I mean. Q. You confirm? A. Yes, I do confirm.” Q. You confirm? A. Yes, I do confirm.”

Q. You confirm?

[144]Then at T6/83-84:- “……It is untrue, Mr Chkhartishvili, that you and Badri agreed orally that the beneficial ownership and/or control of Blue Tropic would be transferred to the defendant. A. It is true. Q. It is untrue because you did not have -- MR JUSTICE PETER SMITH: What's true? What's true, please? It's a very important question, this. Put the question again, please. I want to know whether he's agreeing or disagreeing when he says "It is true". A. The true is that the power of attorney issued by Badri meant -- actually implied -- that the assets controlled by this company were owned 50/50 by me and by Badri. MR SMOUHA: Mr Chkhartishvili, you know perfectly well that this is not what this paragraph is saying. I will take it as simply and shortly as possible because this is very important because you authorised your solicitors to say that a court document was true when you knew that it was not. So the sentence begins as follows, the sentence we're looking at:

"The defendant and Mr Patarkatsishvili accordingly agreed orally that the beneficial ownership and/or control of Blue Tropic would be transferred to the defendant."

Now, first of all, it is not true that you agreed orally with Badri that the beneficial ownership of Blue Tropic would be transferred to you because, as you said a few moments ago, you did not discuss that with Badri; correct? A. Not, not true. Q. Well, you'll have to explain how it is that, if you didn't discuss it, you made an oral agreement with Badri about transfer of beneficial ownership.”

Q. It is untrue because you did not have --

[145]Then at T6/87-88 “Mr Chkhartishvili, this is a question that can be answered "yes" or "no". Do you stand by that answer? A. No, I don't agree with this answer. Q. You don't agree with the answer that you gave? A. No, I want to make an explanation with this regard. Q. No, I want you, please -- I asked you a question, you gave a categoric answer. Your answer was. "No, absolutely it has never happened." Was that answer true or not true? No, Mr Chkhartishvili, please answer the question. Was the answer you gave true or not true? A. It's a misunderstanding. Maybe -- either it's because of translation or maybe in your question. I don't know. MR JUSTICE PETER SMITH: I'm not going to allow you to blame the interpreter. Mr Smouha's question was quite clear because he put it to you twice. You didn't answer it correctly the first time. A. So I had discussions with Badri with regards to the transfer of the company, and if this is meant here, then I said incorrectly -- my answer was not correct. MR JUSTICE PETER SMITH: It was so incorrect that you actually said it affirmatively. "Absolutely not" was what you said about the likely discussion. A. No, then it means that I had discussion with Badri with regards to the transfer of the company. Now I say, I declare, that I had such discussion and so that means that I just misunderstood and I apologise for this.”

Q. You don't agree with the answer that you gave?

[146]He then tried to change his mind at T6/89-92:- “MR SMOUHA:

"The company", you mean Blue Tropic? A. Yes. Q. Then I asked you an even more specific question. This is at line 20. I asked you: "

And it follows that there was no discussion about beneficial ownership of Blue Tropic?" And you answered:

"Absolutely not because I was never even interested who was the beneficial owner of the Blue Tropic because always this company represented for me Badri ..."

Was that true? Was that true, "yes" or "no"? A. Once again, I would like to confirm. Q. No, I would like you to answer the question. Was that true? Was the answer you gave a few minutes ago true or not? A. So after I understood your question correctly, now I can answer you that this answer was -- MR JUSTICE PETER SMITH: Are you telling me that you didn't understand Mr Smouha's question before? "Yes" or "no", please. A. No, I didn't understand it. MR JUSTICE PETER SMITH: Then why didn't you ask for it to be clarified? A. No, now -- based on the questions you're asking now I understand it properly, I think, because before, when I said for me I was not interested who was nominal beneficiary because Badri was guarantee for me and I associated this with Badri – Badri was guarantee for me always and Badri transferred these companies to me. MR JUSTICE PETER SMITH: The question is exactly the same; it's the answers that are different. What didn't you understand about the question Mr Smouha put to you, "... there was no discussion about beneficial ownership of Blue Tropic?" What is there to misunderstand about that? A. When I was asked about this, I was thinking about the nominal owners of this company, and that's why I answered that for me Badri was always a guarantee. This is the fundamental issue in our relations. It's impossible to make a mistake in this. MR SMOUHA: I agree with you, Mr Chkhartishvili, it's impossible to make a mistake. You understood the question perfectly well and I asked it again. Mr Interpreter, could you go down to page 79, line 4? Mr Chkhartishvili, you said:

"For us, main thing was asset and not the offshore company or its beneficial owner."

And I asked you the following:

"We just need to clarify your answer, please. When you said 'absolutely not', you mean absolutely there was no discussion about beneficial ownership of Blue Tropic?"

You answered:

"Yes, that's what I mean."

I asked you again: "You confirm?" You answered: "Yes, I do confirm." You understood it perfectly well. A. Once again, your Lordship, I would like to state that when Mr Smouha was asking me these questions, I thought that it was -- it related to the directors of this company because beneficial owner was clear, and without transferring this beneficial ownership to me, we just would not be able to do this business. Q. You know perfectly well that that was not the question because the main issue in this action is about beneficial ownership of the claimant companies; correct?”

[147]The conclusion I draw from his evidence is that ultimately I find that there was no agreement for him to be the owner of Blue Tropic as he now alleges. The arrangement it seems to me and I so find to be the one canvassed by the Claimants namely that Badri was the owner but he allowed Vano to run the company and the remuneration for Vano was that he would receive 50% of the profits he generated. This makes sense particularly in regards to Poti Mill because Vano did not put any money in to it at all and yet on his case he has ended up as the owner. I regard the reason he gave as bogus and I reject it. I cannot see why an experienced businessman such as Badri would in effect allow his $1.5m investment to be written off in the sense that it is subsumed in the 50/50 profit share as opposed to being paid out first.

[148]Vano suggested for the first time in cross examination that he had assumed a liability for debts in respect of money that had been advanced by the Bank of Georgia. In his first witness statement (paragraph 26) the Bank of Georgia has a fleeting appearance. Vano says that he tried to get the Bank of Georgia to save Poti Mill but it was probably blocked by the government.

[149]In the course of his cross examination he clearly realised that the deal that he was trying to put forward was not at all attractive to Badri as he portrayed it. All Vano was going to do was improve the profitability of Poti Mill. That of course is no different to the original understanding which was put in place; Badri puts the money in and Vano puts the work in. In those circumstances it is difficult to see why Badri would as I have said effectively write off the $1.5m simply because creditors were camping outside his house.

[150]In an attempt to better his position Vano then came up in cross examination with the suggestion that he had assumed a liability for this large amount of undiscovered creditors.

[151]Rati (first witness statement paragraph 9) gave evidence that United Georgian Bank lent Poti Mill around $1.36m sometime in 2005. That was then refinanced in August 2007 with TBC Bank. At that time the total debts amounted to around $1m. TBC Bank then provided $1.5m out of which $1m was used to refinance the VTB loan and the rest for working capital needs. That is Rati’s unchallenged evidence.

[152]What is missing however, is any evidence from Rati supporting Vano’s statement volunteered in cross examination that he had assumed the liability for this large amount of extra creditors (which he had put at $5m). In his own witness statement as I have said the Bank of Georgia appeared fleetingly in paragraph 26 when he failed to persuade them to refinance TBC Bank in 2010 which led to Poti Mill’s default.

[153]In an attempt to show that he was assuming obligations he volunteered (T5/66-67) that he financed the projects “so under my personal guarantee – I was the share holder in United Georgian Bank – I started financing this project.” Mr Smouha QC asked him whether or not he was saying he personally assumed responsibility for the $5m. He evaded answering that question initially and suggested that he had guaranteed to pay the debts through his bank. Such a guarantee had to be in writing to be enforceable under Georgian law. It was put to him that he just made that up which he denied. He asserted that he paid the debts by the money that Poti Mill received from United Georgian Bank as a loan under his personal guarantee. In day 6 he asserted he had paid money out and he explained the mechanism (T6/10) on the basis that when he sold United Georgian Bank all his personal debts and his personal shares which he had under collateral which were not recovered had all those liabilities deducted from his purchase price. None of that is supported by Rati. Further it is a contradiction of Rati’s evidence. He said that the United Georgian Bank debts were repaid by the financing with TBC Bank. The next day, because of the lack of documentation which would be required for these arrangements to be enforceable in Georgia, he said it was an oral arrangement (T6/43-44).

[154]I reject this evidence. In my view Vano made this evidence up to show that he had taken on a burden and thus changed the arrangements. Prior to that Badri put the money in and he put the work in. This was an attempt to justify taking control of all of the shares for his own benefit because he had the exposure. None of this was referred to in his previous witness statements and it was merely volunteered in cross examination by Mr Smouha QC. He has produced no documentation from the Georgian Bank to support it and I reject it. I conclude therefore that he is not telling the truth as regards the arrangements under Poti Mill. The arrangements under Poti Mill were in my view as contended for by the Claimants, namely that Badri put up the initial $1.5m; he owned the company through Nile Trust and Vano’s task was to make the profits whereupon he would take half those profits after the repayment of Badri’s loan.

[155]Whether this would actually achieve any money for the Claimants is another matter. If Vano’s and Rati’s evidence is to be believed TBC Bank foreclosed and there was no surplus. The Claimants have not adduced any evidence to show the sales that took place in some other way. That is something that will be investigated at the second stage when the inquiry will take place to see what loss the Claimants have suffered.

SIGNIFICANCE OF DONEE OF POWER OF ATTORNEY

[156]Vano suggested from time to time that where somebody was appointed under a power of attorney that was indicative that the donee of the power was acting for the benefit of the person who appointed him. The reason Vano put this forward was an attempt, to provide some scrap of documentary evidence that supports that view and thus bolster his case which was otherwise completely contradictory to the documentation in respect of the Claimant companies. I do not accept that is a correct proposition. This is the more so when one is dealing with offshore front companies where the directors and shareholders clearly have no beneficial interest as is the case of the Claimants. The appointment of GK in my view was not significant either.

[157]It seems to me Vano ultimately gave up this argument in cross examination at T6/124-126.

PROMETKO/GSCO

[158]Coppella acquired a 50% shareholding in Prometko from Tamaz and in GSCO from Tamaz and Mr Tughushi in October 2004 (see above). The purchase according to documentation of $2m was paid by Badri and that accords with Tamaz’s evidence. In paragraph 25 of his Defence Vano alleges that he provided the purchase price. At paragraph 36 of his first witness statement he repeated that.

ACQUISITION OF REAL ESTATE ASSETS

[159]Coppella purchased the real estate assets the Universal Store and surrounding land and two further plots in Kolmeurmeoba Square and the Lilo settlement on 30th December 2004. The assets were purchased from the United Georgian Bank via intermediaries. The purchase price was $900,000 for the supermarket and $300,000 for the rest.

[160]GK gave evidence that the $900,000 was funded by Badri. He said it certainly was not Vano.

[161]Vano in his evidence asserted that he provided the $900,000 half of which was provided to GK by him in cash and the other half a loan put up in GK’s name but acting on behalf of Vano. Accordingly Badri decided not to invest. Vano marketed the property and found a buyer for $12.275m.

[162]In his second witness statement he said the first part of the $450,000 that he put up was cash that belonged to him personally through profits and dividends from his businesses. It was kept in a safe in his office. He removed the cash from the safe and provided it to GK who then used it to complete the purchase of the Universal Store. The second part was arranged by him through United Georgian Bank with a loan to GK. He was able to arrange these funds because of his directorship and share in the bank. It will be seen that the acquisition from the bank appears to be at a very low value given the subsequent sale on.

[163]GK in his fourth witness statement (paragraphs 9-11) disputed what Vano said and in particular denied he had received any cash from him.

[164]GK was cross examined (T3/89-95) in respect of this transaction. First it was pointed out to him that when he gave evidence to the Prosecutor he said he could not remember the detail yet he suddenly remembered this now. His answer was that he had not seen the bank documents, which is not an answer. He was accused of having taken a bribe to give favourable evidence on behalf of the Claimants. He denied that. I do not see that question and answer is capable of resolution just on that.

[165]Vano expanded on his evidence. He said he handed the money in a canvas bag to GK (T9/11-13). I have of course criticised GK’s evidence above. However on this point I believe him.

[166]It is of course not unheard of for deals to be done in cash (so called “Blackpool Completions” for example). It is more difficult now with the anti money laundering legislation that persists in this country. There are clearly attempts in Georgia to stop corruption and tax evasion. As a politician Vano would have had to declare in the real estate assets in 2004 or the real estate acquired in his 2005 statement. The acquisition of these assets ought to have been declared and it was not and equally the cash ought to have been declared and it was not. This led to my observation as follows:- “MR JUSTICE PETER SMITH: Of course it's a relevant question because the position, as I see it, is he has either defrauded Georgian law or he's lying before me. That's the straightforward position in relation to this cash. He's lying before me because the cash is arguably non-existent. If it is existent, he should have declared it. If he hasn't declared it, it's a good argument to show that it never existed. ……MR JUSTICE PETER SMITH: Mr Crow, I'm going to infer, in the absence of full disclosure, that no lawyer told him anything like that. I simply don't believe him on that point. It's impossible, looking at 15(1), unless you get the most stupid lawyer in the world, to believe that he could advise that cash in a safe wasn't declarable. But as Mr Smouha says -- he says it more elegantly than I ever do, as usual -- it's a matter for you to deal with on your re-examination, but I'm putting a marker down that unless the lawyer is produced, I'm going to infer there was no lawyer.”

[167]I am not (given the unfortunate history of events in the English Parliament) going to make any kind of superior observation as regards politicians in Georgia. However I am required it seems to me either to reject Vano’s evidence now which then shows his declaration was correct. Alternatively if I accept his evidence now it means that he made false declarations. In my view I should reject his evidence now. His non declaration supports GK’s evidence. I therefore conclude that he did not make any contribution in respect of the acquisition of realty as alleged. In my view the assets were acquired with funding by Badri and on the basis as contended for by the Claimants.

TRANSFERS POST BADRI’S DEATH

[168]A large amount of transactions perfecting titles or disposing of shares were rushed through just after Badri’s death.

[169]Vano’s evidence is that he did this to protect the estate from claims that Mr Kay was bringing against the assets in Badri’s estate.

[170]In my view the purpose was undoubtedly to put the assets potentially beyond Mr Kay’s reach. However that was not for the purpose of benefitting Badri’s estate; in my view and I so find it was for the purpose of protecting Vano’s assertion of control and ownership of these assets.

CONCLUSION IN RESPECT OF VANO’S EVIDENCE

[171]Vano was extensively cross examined over 3 days. He gave evidence through translators. That is always an exercise that has to be covered very carefully. The translation was first class but nuances can often be lost in translation. Equally questions can be misunderstood. Finally one has to be aware of the question which is answered “no” when the witness really means “yes”. This is of course a well known danger of transcripts and demonstrates the difficulty of assessing witnesses on the answers set out in transcripts. There was a clutch of yes/no errors in Vano’s cross examination in particular at T5/33-39.

[172]That led me to comment (T5/42):- “MR JUSTICE PETER SMITH: I detected two "yes"/"no's". Can you check? [Draft] Page 36, not putting any money in, he answered "yes"; [draft] page 39, he had no interest in the Blue company, answer "yes". Can you check that when he said "yes" he meant "no" on both of those?”

[173]Equally I bear in mind the informality of arrangements in Georgia. In so doing however there is no magic of that; businessmen throughout the world make informal arrangements often based on trust which then fall apart afterwards. It is certainly the case that Badri’s business relationships were informal. Mr Crow QC was correct to identify in annex B to his written closing that there were instances when Vano gave answers where he had plainly misunderstood the question. I take that into account.

[174]I have come to the conclusion that I cannot accept Vano’s evidence as regards the arrangements that he puts forward. Nor can I accept that there is any basis for finding that he honestly believed that those were the arrangements in place.

[175]My reasons for this are based on a number of factors. First there is the Claimants’ documentary evidence which is utterly inconsistent with Vano’s case culminating in Badri’s own Liechtenstein returns. None of that documentary evidence as regards the ownership and structure of the Claimants and the shareholding and the trusts bears it out. Second it is not supported by the evidence of GK, Mr Baker and Tamaz in particular. Third it is not supported by Vano’s documentary evidence. He has no documentary evidence to support his case. Further his case is contrary to his asset returns in 2004 and 2005. In addition (for example) he produced no documentation to support his case that he purchased the realty assets through his bank. I found his reasons for not having produced the documentation unimpressive; I do not believe he seriously tried.

[176]Finally the activities that Vano has described that he carried out appear to me to be entirely consistent with the arrangements put forward by the Claimants.

[177]All of the above have led inexorably to my conclusion.

SUMMARY OF FACTS

[178]It follows that I reject Vano’s case as to all of his arrangements and determine that all of the assets in question were held by the companies and that their shareholding ultimately belonged to Badri via the Nile Trust.

[179]Second I determine that Vano had the power to deal with these assets but not in his own right but on behalf of Badri pursuant to their arrangements.

[180]Third I determine that GK and Mr Baker when they received instructions from Vano as regards disposal of assets or any other dealing thought they were doing nothing more than implementing the pre-arranged arrangements. They certainly did not implement them on the basis that they were acting on behalf of Vano as beneficial owner of the shares in the Claimants (I should mention that in closing Vano abandoned the claim that there was any trust in his favour in respect of the assets of the Claimant companies because the concept of trust is not known in Georgian law). That was not a concession that seriously affected his case because his alternative case (which I reject) is that the BVI companies’ shares were held upon trust for him where such a concept is known.

[181]Neither GK nor Mr Baker were aware that when Vano was giving instructions it was part of his design to expropriate the assets for himself. They therefore had no knowledge merely because they were implementing the instructions that they were doing anything other than responding to the directions of the person who Badri had given authority so to act. Nothing put them on enquiry.

[182]It follows therefore that I determine that Vano has wrongfully taken the assets for himself. In English law that would be an act of conversion. There is however no proprietary claim in this action. Nor is there an English cause of action. It must be shown that(1) Vano’s action is wrongful and

(2) any claim in respect of such alleged wrongful acts is not barred under the limitation procedures in Georgia. Third as I shall set out below it must be shown that under CPR 17 the amendments which I granted in April 2015 can be relied upon by the Claimants.

[183]In addition to the above I determine that neither Mr Baker nor GK acted in breach of any of the duties that they owed to the Claimants.

[184]The result of those findings in my view is that the Claimants can only win this action if they can demonstrate that Vano acted in breach of some duty and that that claim is open to them in Georgian law and (importantly on their pleaded case).

CLAIMANTS’ CASE

[185]The Claimants’ pleaded case is that the claims are governed entirely by Georgian Law.

[186]The primary claim against Vano is paragraph 7 of the Re-Amended Particulars of Claim as follows:- “By procuring that assets to which he was no the owner (whether directly or indirectly) and at which he had no other entitlement for possession were transferred to companies beneficially owned or controlled by him, as set out below alternatively by reason of having caused [GK] to act without authority or in breach of duty in executing such transactions, [Vano] unlawfully intentionally or negligently caused harm to the claimants and is therefore liable under the provisions for deliteral obligation (torts) in Article 992 of Chapter 1 of Section 3 of the Civil Code of Georgia. He is accordingly liable (including by reason of Article 408 (1) to compensate the claimants for the harm thereby caused and pay damages accordingly.”

[187]The Claim before the re-amendment was that he was liable for causing GK either to act without authority or in breach of duty in executing such transactions.

[188]The re-amendment added the claim that Vano was liable in the tort for effecting the transfers whether or not GK was in breach of any duty.

[189]A number of matters arise from that. First the Defendant submits (and this is accepted) there is no tort in Georgia of inducing a person to breach his duty.

[190]Second I have determined that GK and Mr Baker did not act in breach of any duty when they followed or acknowledged the transactions directed by Vano. I have also determined that they were not put on enquiry by Vano directing the transactions either. In either case they were merely implementing the instructions given by the person who was authorised to give them.

[191]Vano therefore gave directions on the assumption that his directions would be accepted without challenge and implemented without query Badri trusted him and Mr Baker and GK knew better than to challenge him. This is how Vano achieved his design and that enabled him to misappropriate the Claimants’ property.

[192]I also reject the argument put forward in paragraph 12 (b) of the Defendant’s closing which says this:- “The Claimants alternative case that it is unlawful under Georgian law to cause someone to transfer property that the transferee does not own, without needing to show anything more is wrong. Causing a transfer of property that you do not own might be unlawful if it amounts to theft but the Claimants consented to the transfers through [GK] so no question of theft arises. No other rule rendering the conduct unlawful has been identified and no other provision of Georgian law is referred to the expert evidence. ”

[193]I reject that analogy as it is not applicable to the present facts. What happened here is that Vano was the manager. As such he had the power to direct and GK and Mr Baker had the obligation to implement what he directed them to do. However, Vano’s wrong is not in telling them to do things which he had authority to do but is in misappropriating the assets for his own benefit once those directions are implemented. The consent of the Claimants to my mind is irrelevant. Without there being any suspicion, GK and Mr Baker had an obligation to accede to Vano’s requirements. It is submitted by the Defendant that consenting to a transfer is not theft. I am not going to become embroiled in that but I do not accept that that proposition is correct. It is not relevant. It is Vano’s subsequent appropriation after the transfer of assets which he knew were not his to deal with as if he owned them beneficially. He knew they belonged to Badri.

[194]Equally I reject the submission in paragraph 12(c) that Vano was or reasonably believed himself to the beneficial owner of the Claimants. He reasonably believed himself at times to have the power of control or disposition of assets. That is not however the point; he was not entitled by exercising that power to arrogate for his own benefit the assets over which he had the managerial control.

[195]I do accept that it is not open to the Claimants on their pleading to allege that Vano deceived GK by causing him to believe that the transfer of the assets had been agreed with Badri. However that is not the end of the matter. The original agreement between Badri and Vano was that Badri provided the assets and Vano provided the expertise to improve those assets and in such capacity was given full control over the same. GK and Mr Baker were there to implement what Vano directed. The fact that GK and Mr Baker did not question what Vano was doing is irrelevant; it was not their job to question where “big cheeses” were concerned. Their role was limited to implementation of what Vano told them to do. There is nothing to put them on enquiry and it is unrealistic for Vano to plead that they had notice or were put on enquiry as to his improper actions. He does not so allege. He alleges that they are aware of the transactions but that in my view is not enough; it is the improper intent of Vano behind those transactions to be operating to arrogate the assets for himself. The agreement put forward by the Claimants does not involve Badri agreeing to every transaction that is required to be done. Self evidently as the Defendants says in his closing (86) (c) Badri would not give authority to transactions after his death. Equally of course a power of attorney given by Badri lapses on his death. However the point of creating the corporate structure such as is the Claimants and the Nile Trust is that the death of the ultimate beneficiary does not impact of the structure and control. It can still carry on until the new beneficiaries decide what to do. Thus there was no reason to question Vano in carrying on and completing the transfers after Badri’s death if it was done as he said to protect the AP Family. Of course I have decided that it was done to strengthen his position but there was nothing to suggest that was the operation behind the transactions to Mr Baker or GK. It follows from the above analysis in my view that the Claimants only surviving claim is that set out in the Re-Amendment a direct tortious claim against Vano.

THE LAW

[196]Article 992 provides as follows:- “Article 992-concept A person who unlawfully, intentionally or negligently causes damage to another person shall compensate the damage to the injured party.”

[197]It is important in my view to understand the gestation of the Georgian Civil Code because I am of the opinion that that gestation points to the differences between the two respective experts quite significantly. Georgia was part of the Soviet Union until 1991 when it became independent. It is a presidential republic with an elected government which represents the people. It is a member of the Council of Europe. In 1993 the Georgian Government created an official working group under the Ministry of Justice which was given the task of drafting a new Georgian Civil Code. Professor Knieper, the Claimants’ Georgian law expert was a member of the working group. The core of the working group consisted of 5 members, including in addition to Professor Knieper two Georgian lawyers who studied German law in Germany and were fluent in German. The drafting took 4 years and became law in 1997. Most of the first draft of the code was prepared by Professor Knieper in German. It was translated into Georgian and then subject to review and submission by the working party. The adoption of the code was a milestone in Georgia’s legal history. Its enactment represented “An escape of the country from a dismal legacy of the totalitarian state [made possible] through legislative establishment and enhancement of democratic institutions. The code embraced concept values which simply did not exist under Soviet law – private property, freedom of contract of association, freedom of doing business. It is clear that the Georgian Civil Code derived from the German Civil Code and reflected it is said the fact that Georgian law has been passed to the continental European family of law (lost that under the Soviet Union).

[198]Professor Knieper’s role clearly gives him authority to speak on issues arising from the civil code. However being part of the creator of the code is not definitive (see in trust law for example see Rabin v Gerson Burger Association Limited

[1986] 1WLR 526

). However in the present case the Defendant’s expert is a well known expert on Soviet and Russian law in respect of which he is authoritative. However his experience is such that his perspective is coloured by that law. I accept the Claimants’ criticism of this in their closing. The fact that he had “decades of experience with Soviet legal heritage” is destructive of his use to me as an expert on current Georgian Law. It is quite clear that Georgia intended to wipe the slate clean and create an entirely new Civil Code. The Code appears to have been based on the German Civil Code. Thus it was shedding all the concept and principles from the Soviet era. Given that it seems to me that it is quite wrong to contaminate this Georgian Code and frustrate the intent behind the new Code by introducing Soviet law concepts into the debate. Professor Butler has no experience of a significant amount of Georgian law.

[199]The experts were asked to answer 6 questions:- 1. What are the requirements for a valid joint venture agreement under Georgian Law? Do the factors referred to by the Claimants at paragraph 10(2) of the Reply mean that there was no effective joint venture under Georgian law in the present case? 2. What are the requirements for a valid trust under Georgian law? Would the trust alleged in paragraph 6 of the Defence be invalid or void as a matter of Georgian law for the reasons set out at paragraph 12 of the Reply? 3. Does Article 130 of the Georgian Civil Code apply to claims in delict? Is it sufficient to start time running for the purposes of Georgian limitation law in a claim in delict that the Claimant, by its directors, ought to have been aware of the harm caused to it or is it necessary to show that the Claimant was in fact aware of the harm caused to it? 4. For the purposes of determining whether the claim is time-barred under Article 1008 of the Georgian Civil Code, would Mr Kavtaradze’s knowledge be attributed to the Claimants in the circumstances set out in sub-paragraphs 14(3)(a) and 14(3)(b) of the Reply? 5. As matter of Georgian law, by what date ought(a) Mr Kavaradze and/or

(b) the directors of the Claimants to have been aware that the Claimants had suffered harm, and that such harm had been caused by the Defendant, for the purposes of Article 130 of the Georgian Civil Code? 6. Would the acts complained of by the Claimants give rise to an actionable claim against the Defendant under Article 992 or Article 998 of the Georgian Civil Code?

[200]The experts agreed in respect of items 1 and 2 that there was no such thing as a joint venture under Georgian law although there were such things as contracts of joint activity which might also be called partnership agreements but they are not partnerships in English law because they are contracts which confer no property rights and do not have any proprietorial consequences. They also agreed there is no direct equivalent of English law trust under Georgian law. In any event trust agreements under Georgian law have to be made in writing. If not in writing they are void “non existent”. Finally it was agreed that under Georgian law guarantees must be in writing under Article 426.

ARTICLE 992

[201]The difference between the experts is that Professor Knieper expressed the view that the tort was freestanding and did not require the infringement of some other provision of the criminal code (cf. Professor Butler). Professor Knieper identified five requirements (second further supplemental report E7/3 as follows):- “7. The cumulative five requirements for a claim under Article 992 are as follows (I think the requirements to facts as presented by the Claimants, assuming that these facts are proven or not in dispute): a) A person: that can be Vano or Mr Kavtaradze but not necessarily both. In the present dispute it is Vano because Vano is the Defendant. b) Causes: The causing act is Vano’s instruction of Mr Kavtaradze to execute the different transactions. The chain of causation is not interrupted by the fact that Vano used Mr Kavtaradze as an intermediary or an instrument. It is true that Mr. Kavtaradze “causes” also but his acts to not reflect back to Vano’s causing act. It is therefore not necessary to qualify Mr Kavtaradze’s conduct as (un-)lawful, excess of authority or breach of contract. It is also not necessary to determine that in Georgian law a delictual claim can be brought in parallel to a contractual claim. All these issues would only be relevant if the Claimants had decided to bring a claim against Mr Kavtaradze, which is not the case. c) Damages: The damage is the Claimants’ loss of property rights without adequate compensation, the fixation of prices under value at Vano’s instruction. d) Unlawfully: Damage will be caused unlawfully when a person takes property from the owner without being entitled or authorized to do so. In view of the request that the Claimants have made for clarification of this point under Georgian law, I expand on it below. e) Intentionally or negligently: Only when and if it is established that a person caused damage to another person’s property will it have to be determined whether the action was intentional or negligent. It is sufficient for a delict to exist when either of the alternatives was in evidence. In the present case, both alternatives are ventilated on the evidence. I will base my opinion on the alternative assumptions. Only the instigator’s conduct will be scrutinized for intention or negligence, irrespective of an intermediary’s intervention. 1st alternative: Vano knew that he was not the beneficial owner. This conduct would qualify as causing harm intentionally. It would not make a difference whether he discussed the issue with Mr Kavtaradze and whether he misrepresented the (lack of) entitlement to him. It would equally not make a difference whether Mr Kavtaradze was aware of Vano’s lack of entitlement. The qualification of Mr Kavtardaze’s conduct is not at stake. His good or bad faith do not reflect back to the appreciation of Vano’s conduct. 2nd alternative: Vano believed to be the owner because he did not know the law. He had the duty to inform himself of the legal situation. The failure to do so qualifies as negligence. Again it is irrelevant whether Mr Kavtaradze assumed that Vano acted negligently in assuming that he had an entitlement. The Claimants have to allege and prove either of the alternatives. The fact that they first rely on intention and then on negligence does not change the character of the claim. The qualification of Vano’s actions as intentional or negligent is not affected by him knowing or not knowing that Mr Kavtaradze acted in breach of his duties.” 1st alternative: Vano knew that he was not the beneficial owner. This conduct would qualify as causing harm intentionally. It would not make a difference whether he discussed the issue with Mr Kavtaradze and whether he misrepresented the (lack of) entitlement to him. It would equally not make a difference whether Mr Kavtaradze was aware of Vano’s lack of entitlement. The qualification of Mr Kavtardaze’s conduct is not at stake. His good or bad faith do not reflect back to the appreciation of Vano’s conduct. 2nd alternative: Vano believed to be the owner because he did not know the law. He had the duty to inform himself of the legal situation. The failure to do so qualifies as negligence. Again it is irrelevant whether Mr Kavtaradze assumed that Vano acted negligently in assuming that he had an entitlement. The Claimants have to allege and prove either of the alternatives. The fact that they first rely on intention and then on negligence does not change the character of the claim. The qualification of Vano’s actions as intentional or negligent is not affected by him knowing or not knowing that Mr Kavtaradze acted in breach of his duties.”

[202]It seems to me that those five requirements are all made out. Vano gives an instruction to GK in accordance ostensibly of his authority derived from his arrangement with Badri. GK implements the instructions without question. On the face of that instruction and its implementation there is nothing to put on enquiry.

[203]That latter point is important because in my view it is fatal to the Defendant’s limitation pleas. Professor Butler agreed that if GK was told and believed that the transactions were for the benefit of the Claimants then he did not know that harm was being done and he did not know that Vano was a wrongdoer. Accordingly he would not have the knowledge necessary to satisfy (for example) Article 1008 T10/64. That exchange also contains acknowledgement by Professor Butler that if GK was participating in the wrongdoing that knowledge would not be attributable to the Claimants under Georgian law echoing my decision (approved by the Court of Appeal) in the Attorney General of Zambia v Meer Care & Desai

[2007] EWHC 952

(Ch.)paragraph 4, 1 and 11 – 418.

[204]My finding that neither Mr Baker nor GK knew nor ought to have known that there was anything wrong in Vano’s instructions means that the Defendant’s limitation plea (below) fails. His plea (paragraph 9 of his Defence and Counterclaim) that the Claimants knew of the wrongdoing at the time of the transactions or shortly thereafter (i.e. 2007/2008 or ought to have been aware of them is incorrect and I reject it.

[205]The present proceedings were commenced on 8 February 2013. The three year limitation period runs back to February 2010. There is no suggestion put forward by the Defendant that the Claimants had the requisite knowledge before that period save in respect of the period that I have rejected above. GK merely by carrying out his power of attorney as agent for the claimants in implementing transactions that Vano directed him to implement is not by that alone aware of Vano’s wrongdoing. Vano’s wrongdoing is his silent desire to misappropriate his assets.

[206]Mr Crowe QC and I had an exchange about the question of harm in this context (T12/124-125). There is not enough in my view to put either Mr Baker or GK on enquiry because the transfers were for no consideration. As I said in that exchange if Vano says he has done these transactions for no consideration to protect the assets from the potential degradations of Mr Berezovsky or Mr Kay or even the Georgian government then there is no reason to suppose that when everything is safe that he will not cause the assets to be re-transferred. That is the point made by the Claimants in paragraph 133 of their closing and what Professor Butler agreed. It comes back to the central propositions. First the agreements that were made were made orally between Badri and Vano and them alone. I have determined that the original agreement still applied. All that GK and Mr Baker know is that as a result of arrangements made between Badri and Vano (about which they know nothing) Vano has full power to deal with the companies and their assets and they have to follow unquestionably. This is what they did. There is no reason on their part therefore to suppose that what he told them to do (for example) in 2008 after Badri’s death for the purpose identified that he was doing anything in breach of the arrangements that he had with Badri. The damage is sustained when he misappropriates the assets for his own benefits or fails to account for them in accordance with the original agreement but that is not known to the Claimants at that time.

[207]Professor Knieper in his second supplemental report (paragraphs 12-15; E/7 3-4) sets out his opinion under Article 992 and he says:- “12 In applying the principles to the facts of the dispute it is crucial to determine whether in fact Vano was the beneficial owner of the assets. 13 If this was true, his instruction would not be unlawful under Article 992. 14 If he was not the beneficial owner, the instruction would be unlawful, regardless of Mr Kavtaradze’s state of mind and irrespective of its execution under a valid power of attorney. It would not make a difference whether Vano discussed the issue of ownership with Mr Kavtaradze and justified the instruction before him. Such discussion may have had repercussions for the qualification of Mr. Kavtaradze’s conduct. However, Mr Kavtaradze’s conduct is not at stake. He may have acted within the realm of the power of attorney conferred to him; he may have breached his duties arising from the contract of mandate or not. The question is not there; it is only to determine whether Vano acted unlawfully. Just as with causation, Mr Kavtaradze’s conduct and the qualification of his intervention do not reflect back to the qualification of Vano’s conduct. 15 In the same vein it is not relevant for the determination of Vano’s action as unlawful whether he believed or did not believe to be the beneficial owner of the assets. That is an issue with regard to the determination of intention or negligence. The eventuality of whether Vano conveyed his beliefs to Mr Kavtaradze and whether Mr Kavtaradze believed in turn or not that Vano was entitled to the assets do not reflect back to the qualification of Vano’s conduct as unlawful or lawful under Article 992.”

[208]Professor Butler in his second supplemental report dated 4 May 2015 (E/8 pages 2-3) responds to Professor Butler’s report. He remains of the view that for an action under Article 992 there must be harm caused by an unlawful act which the defendant commits with the necessary fault and he contends Professor Knieper does not identify any provision of Georgian law which makes it unlawful for someone to transfer property with the transferee that he does not own or have a right to possess. That is the point which was relied upon by Vano in his closing which I have rejected above. It seems to me to be plain that in a case like this where Vano has the control over the direction of assets and exercises that control he acts unlawfully when he uses that power to appropriate assets for his own use and benefit. That is what he does. I do not see how it can be said that that is not unlawful. It is not negligent. It is deliberate misappropriation of the Claimants’ property for his own benefit.

[209]There is no question of negligence or gross negligence in this case. Vano cannot have had any grounds for believing he had the right to take these assets for himself. I have rejected his claim that there was an agreement as he contended. I have rejected his claim that he was actually the beneficial owner of the companies either from the start or later. He can have no misunderstanding about his. There is therefore no room for any alleged honest belief that he was the owner.

[210]Professor Butler was cross-examined about his view of Article 992. He was insistent that the claim had to be either contractual or if brought under 992 could only be brought if the act complained of amounted to a criminal case: see in particular T10/67-73.

[211]I can see no basis for fettering the clear wording of Article 992 in that way. Various examples were put to him as the consequences of his opinion which he did not to my mind answer satisfactorily. His linkage to a criminal case would for example emasculate 992. Thus in the present case the Claimants referred the complaint to the Criminal Prosecutor who investigated and decided not to prosecute. According to Professor Butler because there was no criminal prosecution and conviction there would be no claim under 992. It seems to me that in so contending he was reverting to concepts under the old Soviet law. An example was his answer given at T10/100 where he referred to the 1923 Civil Code and a decree in 1942 under the Supreme Court under USSR. When I put to him that he was apparently suggesting that I should construe the new code in the light of decrees made in the Soviet era 70 years earlier he said “no, gracious, not my Lord. I am not doing anything of the sort” but in fact that is what he was doing. Ultimately Mr Smouha QC put to him (T10/108) that:- “Q: Would this be a fair summary of the disagreement between you and Professor Knieper “you say that this element of article 992 requires it to be shown that there has to be some breach of some other provision of the code or other law? A: Other than 992, Yes. Q: And Professor Knieper says this provision doesn’t look for breach of law from elsewhere; it is definitional effectively it says anybody who causes damage without justification or entitlement intentionally or negligently is liable and you disagree? A: Well, he puts it more extensively than I do. Q: I am not sure he does put it more extensively. Professor Knieper says that someone who takes property without entitlement intentionally or negligently is committing the tort. A: To my mind he is committing a crime. Q: And also committing a tort. A: There may be civil liability connected with it, but I wouldn’t necessarily say it is a tort. It is not, in my view, conceived of primarily in tort terms; It is conceived in criminal terms. That’s the violation of the law.”

[212]Mr Smouha QC (T10/112) gave an example of a surgeon asked to perform an operation on a child and he does that negligently. He put to Professor Butler that the child could bring a claim even though not in contractual relations with the surgeon under Article 992. Professor Butler’s answer was “my reaction was to ask who was the doctor” and Mr Smouha QC posited “a private doctor” so Professor Butler said that would be a “private contract”. He accepted that the child could bring a claim despite the fact that there was no contract and that it might not have been a crime. His answers were unpersuasive in my view. Professor Butler’s stance in my view was shown in that period of cross examination to be untenable. This was because his view was coloured by the pre-code Soviet era and he was unable to accept what in my view is clear namely that the code intended to create a freestanding cause of action. It seems to me when you look at it the cause of action occurs in two possibilities where a person who unlawfully intentionally or negligently causes damage. That provides two clear causes of action and is surely something that the draftsman of a code for the first time would wish to establish where it is clear. They would not wish to fetter it with a requirement of their being an established crime for the reasons I have set out above nor would they wish to contaminate it with suggestions that involved finding a contract. As was explained in argument and debate in this country there are parallel claims in tort and contract although it took several decades of cases to establish that. I should say that the unlawfulness is that identified in Professor Knieper’s Second Supplemental Report when he distinguished between Vano taking assets of which he was the beneficial owner (not actionable) and taking assets where he was not the beneficial owner.

[213]It is true that Professor Knieper in response to a question that I put to him (paragraph 87 of the Defendant’s closing) (T9/141) said:- “MR JUSTICE PETER SMITH: I'm sorry. It seems to me to be much simpler than that. Let's take an example. You have a very successful business on the high street. I open a rival business next door and I undercut your prices and I put you out of business. That's not actionable, is it? A. It would not be actionable, no. MR JUSTICE PETER SMITH: If, on the other hand, when I did that I did that having left your employment and gave a covenant that I wouldn't compete on the high street, that would be actionable. A. Yes. MR JUSTICE PETER SMITH: So there's got to be some wrongdoing for it to be actionable, hasn't there? A. Well -- MR JUSTICE PETER SMITH: That is what the article 10.2 says. You can do anything as long as it's not proscribed by law. We have a constitution like that in this country for the moment which says that if you -- you can do anything you like as long as the constitution doesn't prohibit it, unless you're the Lord Chancellor. A. We have a test normally in our legal system where we use this term which is not -- the unlawfulness is not a good translation for what we call "unrightfulness"; it's a different matter. If the person which is -- into which rights – into whose rights a tortfeasor infringes or -- it would not be allowed to reject that and to object to the infringement, then it would certainly be lawful. But this is a question we would ask. We would not say, "Give me the norm which positively prohibits me to do this". Your first example, the person who just competes with the other ice-cream seller, he does not enter into a direct contact with the other ice-cream seller, he doesn't steal his ice-cream, he doesn't steal his recipes, he simply opens a business and that is covered by article 10. But as soon as he infringes upon the other person's right and the other seller's right, the situation changes, and you -- in our law, in the continental law, in the Georgian law, in the German law, you do not ask, "Is there a norm which prohibits me to do that against the other person?" You would say, "Is there a positive authorisation, an entitlement? Do you have the better right? Are you authorised by the holder of the right? Are you acting in legitimate defence?" In all these cases, there is an authorisation. It is not unrightful. I'm sorry to use this term. For me it says something. Perhaps it doesn't for you. MR CROW: Sorry, with the greatest of respect, your argument is entirely circular because you keep using the expression "if there's a violation" or "if I steal" or "if I infringe". That's the whole question that his Lordship is asking. A. Absolutely. Q. What I'm trying to ask you: what is it that makes something a violation unless it is a prohibited act? What provision of law prohibits something being done? What makes it a violation? A. Okay, what I have tried to explain in the report is that a person who takes the property from another person violates the other person's property unless there is an entitlement. A person that damages another person's property violates the other person's property unless he is entitled to. A person that infringes – that violates my health and my liberty violates my rights unless there is an entitlement. That is the reasoning that we do and I don't find it circular at all. MR JUSTICE PETER SMITH: There's no argument on the facts of this case applying that principle. There is no dispute what Vano did. The issue is as to whether or not it was agreed by Badri or not. So if Badri agreed it, then Vano wins because, although he has taken the property, he didn't infringe any wrong because it was always understood that it was going to be his property. A. My Lord, that is exactly what I want to say. MR JUSTICE PETER SMITH: If, on the other hand, there was no such agreement, then he's expropriating Badri's property. A. That is what I want to say. There must be positive entitlement. If it is an authorisation by the holder of the right, you –”.

A. Well --

[214]I have expanded on the quote from paragraph 87 of the Defendant’s closing because it seems to me that Professor Knieper is actually indicating that there must be some kind of unlawfulness in the sense that the person is doing something which he is not entitled to do. He emphasised that if Vano was not the beneficial owner he was not entitled to appropriate them and he was thus acting unlawfully. If on the other hand he was the beneficial owner he was entitled to do it, he intended to do it but it was not lawful. Professor Knieper’s view is clear when the full extent of the cross examination on this point is set out and I accept and agree with it. It reflects what he said in his second supplemental report at paragraphs 12 and following as set out above.

[215]Equally the question of whether Article 992 covered gross negligence as opposed to ordinary negligence does not apply because Vano’s conduct in my view was neither gross negligence nor negligence; it was intentional. If I am pressed on that point I would refer to the numerous Articles in the Code put to Professor Butler by Mr Smouha QC in cross examination where the word gross negligence is used expressly. I reject Professor Butler’s suggestion that the word gross should be implied. It seems to me that the draftsmen of the code intended to require a gross negligence breach in some cases and an ordinary negligence breach in another. The draftsmen were well aware of the difference hence the insertion of the word gross in some articles but not in Article 992. When I put a Donoghue v Stevenson analogy to him (T10/124-5) his answers again demonstrated that he was reverting to Soviet era law. He said:- “MR SMOUHA: Professor Butler, I suggest to you that article 992 does not require it to be shown as a precondition of liability that there has been some breach of the criminal law or breach of other part of the code or of the law. A. What I'm suggesting to you is that the practice has been25 very much along those lines for a very long period of time. Q. You're referring again to Soviet and post-Soviet legal doctrine? A. Yes.” Q. You're referring again to Soviet and post-Soviet legal doctrine? A. Yes.”

Q. You're referring again to Soviet and post-Soviet legal doctrine?

[216]I do not accept that it is legitimate to incorporate pre-code concepts from a different era. That would in the case of Article 992 seriously emasculate its intent and is unnecessary and anathema to the purpose to which the code was created. I therefore reject Professor Butler’s opinion.

[217]There is no case law to assist me in this. Further as is usual under a codified system the decisions do not (unlike the common law systems) operate on the basis of binding precedent.

[218]I therefore conclude that the Claimants have established that they have a claim against Vano for the misappropriation of assets that belonged to them contrary to Article 992. In fact for the reasons I have set out earlier in this judgment that cause of action is a freestanding one and does not require breaches of duty by GK for example. Thus the claim that is successful is the one that was produced by amendment in April this year.

PROCEDURAL BAR TO CLAIM

[219]In paragraph 9 of the Re-Amended Defence and Counterclaim Vano pleads that under Article 1008 there is a limitation period in respect of such claims of 3 years from the moment when the Claimants became aware of the harm or of the identity of the person liable to pay compensation for it. The actions of which the Claimants complain took place in 2007 and 2008 and any harm occurred immediately. The Claimants therefore(a) were aware of the harm at that time or shortly afterwards (Vano attributing GK’s knowledge to the Claimants) and

(b) ought to have been aware at or shortly after that time which was sufficient to start the limitation period under Article 130 of the Georgian Civil Code and finally

[220]Article 1008 of the Georgian Civil Code provides:- “Article 1008 – Limitation period on claims for damages The limitation for claims for damages caused by tort is 3 years from the moment when the victim knows of the damage or of the person liable for the damages. ”

[221]That was the translation provided to me by the translator (T10/23).

[222]Another provision which was debated before me was Article 130 which provides:- “Article 130 – Commencement of the period of limitation Limitation shall commence from the moment at which the claim arises. The claim should be deemed to have arisen from the moment which the person became or ought to have become aware of the violation of the right.”

[223]The parties are agreed that Articles 1008 is one of the applicable provisions; the Defendant contended that it is read with Article 130. Time runs from the moment he becomes aware of the damage and the person liable for the damages. The Defendant in his closing (paragraph 118 and following) differentiates between harm as being a requisite requirement and knowledge that the harm was caused by an unlawful act or that the person committed the unlawful act intentionally or negligently. It is not necessary the Defendant submits that the victim needs to know that last point. What the Defendant contends appears to depart from what he believed was common ground in their opening (paragraph 74). I agree with the Defendant that it is a failure to distinguish between damage and wrongfulness. The Defendant following up on that put to Professor Knieper that a transfer made for no consideration would constitute damage for the purposes of Article 1008 (T9/127). The example given and conceded by Professor Knieper was if money left the bank for no consideration or was stolen by another person that is harm. The Defendant then uses that as a platform for submitting (paragraph 122 of the closing) that if GK or Mr Baker knew the assets of the Claimants were being transferred to other companies for no consideration or nominal consideration then they knew that the Claimants had suffered damage.

[224]That in my view is a fundamental failing in this case. It might be that the case is unique but nevertheless in my view that is not sufficient. Take for example the transfers that were effected post Badri’s death. Vano said he did it to protect the assets. Thus the transactions were for no consideration. The mere fact of the transfers being of no consideration does not cause damage to the Claimants given his reassurance and his power of control over the assets. What causes the damage is the subsequent misappropriation of those assets by Vano for his own benefit. The Claimants were not aware of that damage merely because of the transfers. It comes back to the fundamental proposition that Vano has the authority from the arrangement with Badri basically to direct what he requires to be done in respect of the Claimants’ assets. It is not for Mr Baker or GK to question. Therefore the fact that there is no consideration is not of itself in my view an indication of damage because they do not know what is Vano’s scheme. I therefore reject the Defendant’s analysis of Article 1008 on this point applicable to the facts. Neither Mr Baker nor GK were aware that the Claimants suffered damage merely because they followed directions of Vano. It follows from that the Claimants are not aware of the damage.

[225]I accept as the Defendant contends that GK’s knowledge will be attributed in this case. There is no claim that GK has acted in breach of any duty nor that he was collusive (these arguments were effectively abandoned when GK gave evidence). The Claimants do no suggest otherwise in reality. The Defendant in its closing (paragraph 134) submits that it is common ground that harm for the purpose of limitation period occurred immediately upon transfer of the assets from the companies for no or nominal consideration. The basis for that submission is said to be paragraph 14 (1) of the Re-Re-Re-Amended Reply and Defence to Counterclaim. However that is not in my view a correct analysis of the pleading. In the requisite sub paragraph the Claimants say “The effect of Article 1008 of the Georgian Civil Code is accurately summarised. It is admitted that the harm resulting from the Defendant’s actions occurred immediately.” However sub paragraph (3)says “The Defendant is required to prove that [GK] became aware in 2007 and 2008 that harm had been done to the Claimants.”

[226]It follows that the Claimants do not accept the proposition in paragraph 134 of the Defendant’s closing. They accept that harm was sustained when the assets were transferred but deny that GK knew about it. He did not know about it because he did not know what was going on in Vano’s mind when he directed him to give effect to his instructions. It is the same point again but put slightly differently as I have set out above. As Vano can control the destination of any of the assets and the form of the transfer of those assets the fact that it is for no consideration is not enough.

[227]The same is equally applicable to Mr Baker for the same reason. Neither of them knows the motivation of Vano in directing them to carry out these transactions.

[228]I therefore conclude that at the time alleged by the Defendant in his pleading (2007/2008 or shortly thereafter) the Claimants through GK and Mr Baker did not know that damage had been sustained. Therefore in my view the limitation plea in Article 1008 is not made out because it refers only to actual knowledge and not constructive knowledge.

CONSTRUCTIVE KNOWLEDGE OF THE POTENTIAL CAUSE OF ACTION

[229]This is relied upon by the Defendant and is derived from Article 130 the time will run from the moment which the person “became or ought to have become aware of the violation of the rights.”

[230]The first question therefore is whether Article 130 applies to a claim under Article 992.

[231]It seems to me that Article 130 is not incorporated in the section dealing with torts. The section of the Code is section 3 Torts and sets out the provisions starting with the concept and various bases for liability.

[232]The Civil Code contains a general limitation period of 10 years (Article 128 (3)). Professor Butler accepted that unless specific provision is made for a type of claim elsewhere that applies. He also accepted that Article 130 sets out the date from which time runs for claims falling within Article 128 (T10/6). However throughout the Code different claims have different limitation periods. When that is done, as the Claimants say, the applicable limitation period is set out at the end of the chapter. Examples can be found in Article 655 and Article 1171 for example. Thus the Claimants say the limitation period for tort is Article 1008. Both experts accept that that is mandatory.

[233]There are throughout the Code examples of where the words are “ought to have become aware” or are simply “aware”. In the case of Article 655 Professor Butler in cross examination accepted Article 130 would not apply there (T10/10).

[234]Professor Butler was cross examined on his opinion that Article 130 was incorporated (T10/12 and following). His evidence was that Article 130 may sometimes apply. He discerned this from a review of Georgian Judicial practice which suggested to him that the Georgian Courts were prepared in some cases to consider both articles together. He was unable to give any examples as to when Article 130 would apply to a tort claim. I asked him to give me some bases for applying Article 130 in the present case (T10/16-17). His answers were illuminating:- “MR JUSTICE PETER SMITH: In the present case, then, what features do you suggest that ought to militate in favour of an inclusion of 130, which is what the defendant wishes, isn't it? A. One of the factors you might consider would be what are the implications of applying the period of limitation? MR JUSTICE PETER SMITH: That would be applicable to every limitation principle. A. It would, and would it bar proceedings in the case? Would it bar an outcome in the case that on balance you consider to be inappropriate in light of the totality of the evidence? One of the great debates that they had in Soviet legal doctrine was whether, if there were a period of limitation applicable or not, it should preclude the filing of the case; in other words, could alleged expiry of the period of limitations preclude the plaintiff from even going to court? And ultimately they rejected that view, but it had very strong support for a long time. Others were whether -- if the period of limitations was potentially applicable, did it have to be invoked by one of the parties to the case or could the court invoke it independently if they were aware of it? What would happen if nobody saw the issue of limitation and the case went to a complete outcome? Should it be invoked on appeal? These are issues that have exercised Soviet and post-Soviet jurists for seven or eight decades.”

[235]To my mind this showed the fallacy of Professor Butler’s approach harking back as it is to the Soviet era. In fact there were no cases that decided this issue that were of assistance to me. I asked Professor Butler expressly about this (T10/27) as follows:- “MR JUSTICE PETER SMITH: ……..Is there any case where it's as sophisticated as that or are you simply drawing it from the fact that these provisions are referred to and a decision is made? A. It is the second, my Lord. One would not see the first in their judicial practice. They don't do that, alas.”

[236]He accepted that none of them had given reasons but as an academic as I am applying Georgian law when the Judges do not apparently give reasons that it would be of assistance if I did. He concluded that I would be entitled to apply Article 130 and Article1008 together and treat them as complimentary if I considered that being appropriate in any given case. I cannot see that is a sensible way to apply the limitation period. Some tortious actions might have different limitation periods. I cannot believe that was intended by the draftsmen of the Code and I reject it. He said that if done by me would appear to be a practice that I have distilled from various cases.

[237]None of the cases referred to involved a comparison between Article 1008 and Article 130. Mr Smouha QC on going through the cases successfully established that.

[238]In my view the limitation issue in the tort section is entirely self contained. It follows from that that I do not accept Article 130 has any application. I therefore determine that for the case to be time barred the Claimants must have actual knowledge of the damage and the person liable for the damages. That latter point was accepted by Professor Butler because Article 130 dealing with constructive knowledge does not extend to the identity of the person.

[239]I have concluded that GK did not have any actual knowledge of the matters set out in Article 1008 nor did Mr Baker. There is therefore no knowledge to attribute to the Claimants for the purposes of limitation.

[240]If I am wrong and Article 130 is imported I do not accept that the Claimants ought to have known there was any damage. It is true that the Defendant established that Mr Baker in particular was to put it mildly not particularly inquisitive about what was going on but the reason for that is in the nature of the trust. Neither he nor GK are expected to inquire about things. There is no basis therefore when they are not expected to investigate affixing them with constructive knowledge. Seeing all the matters that they did there is nothing in my view to suggest that the Claimants were suffering damage because they did not know and could not have found out that Vano was secretly taking the assets for himself.

[241]I therefore conclude that the Claimants’ claim under Article 992 was not statute barred as contended for by the Defendant in the period 2007/2008 or shortly thereafter.

AMENDMENT ISSUE

[242]The surviving claim in this action is the direct claim against Vano under Article 992. That arose by an amendment in April 2015. Applying the Georgian limitation law the claim would be time barred if the requirements of Article 1008 were satisfied more than 3 years before April 2015 i.e. April 2012. The Claimants accept that they had knowledge of Vano having harmed them in February 2010. It follows therefore that if it is a new claim the cause of action is time barred in April 2015 and the amendment should not be allowed because the amendment ordinarily relates back to the commencement of the action and it would not be time barred at that time. That is why in April it was agreed that I would allow the amendment without prejudice to the ability of the Defendant to challenge this point.

[243]It seems to me that I apply the practice of this Court in dealing with limitation issues but I apply the Georgian law of limitation.

[244]The Defendant contends that it is a new claim and would be so regarded under English law. The amendment makes, the Defendant contends, a new previously un-pleaded allegation that Vano acted unlawfully by taking the property he did not own.

[245]I do not accept that this is a new claim. In my view the original claim brought by the Claimants was a breach of Article 992. That is the same now. What has happened is that the Claimants introduced further particulars of the breach of Article 992. It is therefore not raising a new claim see Savings & Investments Bank Ltd (In Liquidation) v Fincken

[2001] EWCA Civ 1639

C.A. This is but the addition of another way in which the Claimants seek to establish a breach of Article 992.

[246]If I am wrong then the Claimants rely upon CPR 17.4 (2) “The Court may allow an amendment whose effect will be to add or substitute a new claim but only if the new claim arises out of the same facts or substantially the same facts as the claim in respect of which the party applying for permission has already claimed a remedy in these proceedings”. The Defendant submits that it involves different facts from the original claim. I cannot see there are any facts that are different. All that has happened is that the Claimants have removed in the alternative plea the necessity to establish a breach of duty by GK. The actions of Vano are precisely the same namely that he had no entitlement to the assets. That is still the same issue to be gone into and turns entirely on whether or not Vano establishes his entitlement. It arises out of substantially the same facts in my view. There is no prejudice to the Defendant (beyond the loss of a limitation claim) and the refusal would deprive the Claimants’ of a successful claim.

[247]The Defendant submitted that I should not exercise my discretion because no good reason had been given as to why the amendment were advanced and that it involved a major change in direction of the claim that required the consent of the Defendant if it were to be attempted in Georgian proceedings. The latter point is irrelevant; the question is the procedural principles applicable in this Court where the action is being heard. I do not apply Georgian procedural law. The practice on late amendments is somewhat difficult at the moment. I refer to the White Book paragraph 17.3.7. The difficulties presented by the case of Swain-Mason v Mills & Reeve were considered by me in the case of JW Spear v Zynga

[2013] EWHC 1640 (Ch)

. I will not set out the various arguments that I set out in the judgment. In my view there is a real issue over whether or not Mills & Reeve was correctly decided. Nevertheless for the abundance of caution I will apply both criteria. Before Mills & Reeve there would be no difficulty in granting permission to this amendment although it is made late because there is no prejudice shown whatsoever; there is no lengthening of the trial there is no change in the course of direction of the case and no fresh evidence is required.

[248]After Mills & Reeve I have to bear in mind the fact that the application is late and no explanation is given for the lateness of the application. The Claimants have a “heavy onus” to justify the amendment. It is undoubtedly the case those are factors which can be taken into account to refuse the amendment. However in the present case those factors whilst significant are not significant enough to overturn the other factors which militate in favour of entertaining the application although it was late. The Claimants have satisfied that onus in my view. The consequence is that the Amended Claim is deemed to have been brought at the date of the original Claim i.e. February 2013 and is accordingly not statute barred. Alternatively for the reasons set out above I ought to exercise discretion under CPR 17.4 (2).

THE FOUR JUDICIAL QUESTIONS

[249]At the end of the evidence I raised 4 questions and the parties provided me with answers. I do not need to go into those they have been disposed of in this judgment.

LIST OF ISSUES

[250]Similarly a large list of issues was provided at the start and the end. I do not propose to go through them seriatim; the answers appear in this judgment.

CONCLUSION

[251]I therefore conclude that the Claimants have established their case and that Vano is liable for paying damages to them for breach of Article 992 and his Counterclaim should be dismissed.

[252]I would ask Counsel to agree in advance of the formal hand down directions for the further conduct of this action arising out of that decision.

[253]I am grateful to all the lawyers in the case for the careful preparation and presentation of this case. IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION B E T W E E N :(1) BLUE TROPIC LIMITED

(2) COPPELLA VENTURES LIMITED Claimants and IVANE CHKHARTISHVILI Defendant DRAMATIS PERSONAE INDIVIDUALS Name Description Joel Adler Partner of Mishcon de Reya solicitors who met with Giorgi Kavtaradze in Istanbul in September 2011. Kavtaradze 2 [73], Ghvamberia 2 [10] Zurab Alavidze Individual from whom Coppella purchased Universal Department Store and real estate at Lilo and Kolmeurneoba Square on 30 December 2004. Particulars of Claim ("PoC") [29] Worked at United Georgian Bank from 1995 until 2008/2009. In 2004 was assistant to the General Director and manager of a brokerage company owned by United Georgian Bank Alavidze [3-4] . Currently director of a hydroelectric company in Georgia. Alavidze [1] The Universal Department Store and surrounding land was transferred into his name by United Georgian Bank (which held these assets as a result of a default on a loan) before being transferred to Coppella. Alavidze [5-6] Chrystalla (Stalo) Antoniou Client Services Director of Mutual Trust Cyprus. Baker [7] David Ashfield Worked at London International Bank. Baker [6] Andrew Baker Professional trustee and solicitor of the Senior Courts of England and Wales. Managing director of Miselva Establissement (now known as Griffin Trust AG). Sole director of Blue Tropic and Coppella between 1 July 2007 and 20 July 2011 (give or take a few days). Baker [1-2] Yves Baumann Former partner at Swisspartners who acted in relation to Blue Tropic and Coppella from July 2011 until March 2014. Graetz [9] Giorgi Bedineishvili Representative of CenterInvest and Salford Georgia who worked alongside Irakli Rukhadze. Kavtaradze 2 [29], Rukhadze 1 [8] Lasha Birkaia Practising Georgian lawyer representing Blue Tropic and Coppella and members of Badri Patarkatsishvili's family in proceedings commenced against them by Vano Chkhartishvili in Georgia. Birkaia [1] Ian Brooks Managing Director of Mutual Trust Cyprus. Baker [7] Irakli Bochoridze Individual who represented Pasquini Management Corporation which purchased Smart Group from Vano's children on 22 March 2011. F10/3305-3307, F10/3311-3313 Nana Chachua Levan Jgharkava's mother. Patarkatsishvili [4] Nestor Chepkhodze A relative of Tamaz Chkhikvishvili who, in 2004, held shares in Prometko/GE-ES-CO on his behalf and for his benefit. Chkhikvishvili [29] Ivane Chkhartishvili, known as Vano Defendant in these proceedings. Together with a number of partners, founded Georgian Commercial Bank in 1993. In 1994, appointed director of the state Georgian Savings Bank. In 1997, privatised the bank and re-named it United Georgian Bank. Chairman of the bank's supervisory board from 1997 to 2005. Chkhartishvili 1 [3] Held the post of a deputy in a government ministry from 1999 to 2000. Minister of Economics from 2000 to 2001. Member of Georgian Parliament 2004-2008. Chkhartishvili 1 [4] Director of United Georgian Bank until 2005. Mikheil Chkhartishvili Vano’s son. Until 22 March 2011, owned 49% shares in Smart Group Limited. PoC [22], F10/3305-3307 Natalia Chkhartishvili Vano’s wife. Chkhartishvili 1 [20] Natia Chkhartishvili Vano’s daughter. Until 22 March 2011, owned 51% shares in Smart Group Limited. PoC [22], F10/3305-3307 Tamaz Chkhikvishvili A businessman operating in Georgia. Founder and former shareholder of Prometko and GE-ES-CO. Chkhikvishvili [1] Irakli Chubini (Irakli Chubinishvili) Businessman of Georgian origin. Resident in the United Kingdom. From 1999 was twice elected as a Member of Parliament in Georgia. In February 2004, appointed to serve as Chief of Staff to President Saakashvili. In April 2005, appointed Georgia's ambassador to the Russian Federation. Resigned in early 2008 and moved to the UK. Chubini [3] On 21 March 2011, entered into a Put and Call Option Agreement with Inna Gudavadze and Vano in relation to GTML. F10/3284-3304 Kakhaber (Kakha) Damenia In December 2010, he was asked by a government minister to pass on the message to Konstantine Osipov (who had recently acquired Poti Mill assets from TBC Bank) requesting him to pay compensation to Vano. Damenia [3] In the second half of 2011, he was asked by a government minister to arrange a meeting between Mr Osipov and Badri's family. Damenia [4-5] Ruslan Fomichev Formerly representative of Badri and Boris Berezovsky. Samuelson [5] Dmitri Gabunia Lawyer who represented Coppella, Sonata and Smart in proceedings in Georgia brought by Avtandil Tsereteli in relation to Georgian Tobacco Manufacturing Limited. Kavtaradze 3 [16] Rati Ghvamberia Said by Vano to have run several of his business interests. Chkhartishvili 1 [21] Currently Chief Financial Officer of Smart Capital Georgia and a director of Sonata Alliance Inc. Ghvamberia 1 [1] In early 2006, became involved in Poti Mill, monitoring the financial performance of the company and reporting to George Japaridze. Ghvamberia [7] In September 2006, was promoted and appointed as director of Management Consulting Limited. Ghvamberia [1, 5] Robin Graetz Professional trustee and partner at Swisspartners. Manager of SP Trustees GmbH since 27 March 2014. Authorised signatory and director of SP Directors S.A. Graetz [1], [4] Inna Gudavadze Widow of Badri Patarkatsishvili. Gudavadze [1] David Gvinepadze Director of GTML, having formerly been a director of CenterInvest. From late 2007, held the position of Director General of GTML. Tsereteli [29], [31] Ladislav Halacka (Halachka) Director of Prometko from 2003 to November 2006. Chkhikvishvili [9], F4/894-898 George (Giorgi) Jaoshvili From around 1989, worked with Badri as: - deputy director of the Georgian branch of LogoVAZ from 1989 until 1991; - deputy director of LogoVAZ in Russia from 1991; - worked for Badri at ORT TV in Russia; Returned to Georgia from Russia with Badri in May 2001 and until Badri's death in 2008 assisted with managing Badri's assets in Georgia. Jaoshvili [1], [3-8] George Japaridze (Georgi Japardze) Formerly Chief Financial Officer of CenterInvest, to whom Rati Ghvamberia reported from July 2005 to September 2006. In September 2006, moved to SOCAR. Ghvamberia [4-5] Levan Jgharkava Formerly commercial director of the commercial port of Poti; senior administrator of the military port of Poti; and Executive Director of Prometko and GE-ES-CO (2006-2012). Jgharkava [3-4], F4/886-888 Giorgi (George) Kavtaradze A Georgian lawyer. At various times, worked as Vano's lawyer, a member of the supervisory board of JSC Poti Mill as well as Director General and lawyer for CenterInvest. PoC [4], Kavtaradze 2 [29] Mr Kavtaradze's evidence Kavtaradze 2 [37] – disputed by the Defendant Chkhartishvili 2 [20-23] – is that he also considered himself to be assisting Badri. Director of the Georgian representative office of Coppella. PoC [15] Currently Head of Legal Department at SOCAR Energy Georgia. Kavtaradze 2 [38] Between 2004 and 2007, was granted a number of powers of attorney on behalf of Blue Tropic and Coppella. Joseph Kay Arkady (Badri) Patarkatsishvili's half-cousin. Sole director of London International Bank. Baker [6] Was in charge of the operations of Badri's office in London. Chkhartishvili 1 [31] From 1993 to 2001, claims to have been Badri's junior partner in most of his businesses in Russia. Claimed various of Badri's assets to be his own following his death, which have since been determined by various courts to have belonged to Badri/Badri's family Chkartishvili 1 [19], Gudavadze [20-23] In 1993, worked as an adviser to Badri. In 1995, was appointed as Deputy Director of Commerce of the Russian TV station, ORT. Kay 1 [3] Koba Kvantaliani Georgian lawyer, one of the founding partners of the law firm Birkaia & Kvantaliani acting for Blue Tropic, Coppella and individuals who represent Badri Patarkatsivhili's estate. Kvantaliani 1 [1] Beserion Kirkitadze Possibly a minority shareholder in Prometko and GE-ES-CO in October 2012. Kvantaliani 1 [7] Daniel Lam Worked at London International Bank at the relevant time. Baker [7] Shalva Lezhava Tamaz Chkhikvishvili's brother-in-law who held 50% of the shares in Prometko as his nominee in 2003-2004. Chkhikvishvili 1 [8], [29] Mikheil Lomadze A relative of Tamaz Chkhikvishvili who, in 2004, held shares in Prometko/GE-ES-CO on his behalf and for his benefit. Chkhikvishvili 1 [29] Mahir Mammedov General Manager of SOCAR. Chkhartishvili 2 [10] Nodar Managadze Owner of the Universal Department Store and surrounding real estate (Lilo and Kolmeurnoba Square), who in 2004 defaulted on his loan to United Georgian Bank, as a result of which the bank repossessed the Store. Chkhartishvilii 1 [41], [46] Vano Merabishvili Minister of Internal Affairs of Georgia in March 2011, who is said to have sent Mr Bochoridze to visit Avtandil Tsereteli in Spain. Tsereteli [57(a)] Currently in prison. Tsereteli [62] Maya Motzerelia Badri's secretary. Kavtaradze 2 [33] Paata Namshuridze Worked as Badri's assistant from 2001 until February 2008. Namshuridze 1 [1] When Badri returned to Georgia in 2001, worked as Badri's assistant. His job was to take care of Badri's bank accounts in Georgia (both personal and business), and to take care of Badri's administrative affairs, including arranging the incorporation of companies for Badri. Namshuridze 1 [5-6] Zurab Nogaideli Georgian Minister of Finance from December 2003 to February 2005. Prime Minister from February 2005 to November 2007. Nogaideli [2] Natalia Nosova Employee of Boris Berezovsky. In the early days of the Nile Trust, had given instructions in respect of the "O" Structure companies. Baker [8] Konstantine (Koki) Osipov Georgian businessman with substantial interests in the wheat business. On 22 December 2010, purchased the assets of JSC Poti Mill which had been put up for sale at auction by TBC Bank for $2,878,000. Chkhartishvili 1 [27] Arkady (Badri) Patarkatsishvili Wealthy Georgian businessman for whom Mutual Trust and then Andrew Baker came to administer a number of trusts and companies at the relevant time. Baker [6] Sole beneficiary of the Nile Trust Baker [11], F1/138-139 . Died on 12 February 2008. Gudavadze [1] Iya Patarkatsishvili Daughter of Badri Patarkatsishvili and Inna Gudavadze. Gudavadze [1] Nana Patarkatsishvili Sister of Badri Patarkatsishvili Patarkatsishvili [1] Natela Patarkatsishvili Mother of Badri Patarkatsishvili. Gudavadze [1] Tengiz Peradze (Feradze) Avtandil Tsereteli's son-in-law, to whom the benefit of $4.2 million of the principal amount of GTML loan was assigned in the summer of 2010. Ghvamberia 1 [33] Archil Pirtkhalava Chief Lawyer at SOCAR Georgia Petroleum Ltd from 2007 until mid-February 2015. Prtikhalava [2] Bhavini Pithava Group Legal Assistant at London International Bank (effectively a paralegal role). Kay 2 [3] Irakli Rukhadze Adviser to the AP Family. Partner at Hunnewell Partners LLP assisting with asset recovery and asset management work on behalf of the AP Family. Rukhadze 1 [3], [6] Worked with Badri from 2004 until Badri's death in 2008 through his role at Salford Georgia. Rukhadze 1 [11] Christopher Samuelson Chairman of the Mutual Trust group of companies from 1984 to the present day. Samuelson [1] Natalia (Natasha) Shachkova (Shashkova) Employee at Joseph Kay’s London office who assisted with setting up new companies. Kay 1 [8] Dato Shonia One of the representatives of Badri's family in Georgia. Kavtaradze 2 [66] Zaza Sioridze Georgian businessman working in construction and oil imports. Previously: – member of Georgian Parliament (1995 to 2003); – together with Vano, one of the principal shareholders of United Georgian Bank and member of the Supervisory Board of the bank (from 1995). Sioridze [1], [3-4] Jean Carlo Spirito Director of GE-ES-CO from 2003 to November 2006. Chkhikvishvili [9], F4/886-888 Mr Treshelashvili Individual who was said to have sent Mr Bochoridze to Spain in March 2011. Tsereteli [57(a)] Avtandil Tsereteli Businessman operating in Georgia. Held a senior managerial role in Georgian Tobacco Manufacturing Limited from 2000 to March 2011. Tsereteli [1] Formerly owned 100% of the shares in GTML and transferred them to Coppella in January 2007, Tsereteli [18], [21], [22] Held the position of Director General of GTML until late 2007, when he became Chairman of the Supervisory Board. Tsereteli [29] Zurab Tsomaia Director of Poti Mill from 2004 until 2011. Ghvamberia [7], Tsomaia [3] Current position: assistant director of SOCAR Georgia Investments LLC. Tsomaia [1] Koba Tughushi From 2004, an investor and minority shareholder in GE-ES-CO. Currently beneficial owner of 10% shares in GE-ES-CO. Tughushi [1] Liana Zhmotova Daughter of Badri Patarkatsishvili and Inna Gudavadze. Gudavadze [1] Ilia Zhordania Tamaz Chkhikvishvili's brother-in-law who, in mid-2004, transferred Mr Chkhikvishvili's 45% shares in Prometko to an offshore company, Morilius LLP. Chkhikvishvili 1 [19] COMPANIES AND ORGANISATIONS Name Description Black Sea Cold Limited Company which, in 2009 and 2010, was interested in buying Poti Mill land for use as a refrigerated warehouse. Chkhartishvili 1 [30], Ghvamberia 1 [18] Blue Tropic Limited The First Claimant. A company incorporated in the BVI (Reg. No. 597370) PoC [1] on 18 May 2004 F2/235 . Incorporated as a means to hold shares in Poti Mill. Chkhartishvili 1 [13] The company was founded on Badri’s direction. Chkhartishvili 1 [19] Brooklane Management Ltd BVI corporate services company. Registered owner of the shares of Coppella from 10 October 2006 until 6 July 2007. Defence [4(d)], F10/3741 Registered owner of the shares in Blue Tropic from 10 October 2006 until 6 July 2007. Defence [5(d)], F10/3463 Carlina Overseas Company in respect of which the AP Family issued a 'stop notice' against Vano in July 2011 seeking to prevent his alienation of shares in it. Kavtaradze 2 [88] This was followed by litigation between the AP Family and Vano in the BVI. Kavtaradze 2 [93] CenterInvest (Center Invest) (CentreInvest) Company founded in 2003 by Badri and Vano and owned by them as to 70% and 30% respectively. Chkhartishvili [8] Cipco International Inc (Cipco International Limited) Offshore (BVI) vehicle of Tamaz Chkhikvishvili which received funds following the purchase by Coppella of 50% shares in Prometko and GE-ES-CO. Kavtaradze 2 [55(d)], Chkhikvishvili 1 [30] Claren Ventures Limited A company beneficially owned by Vano's children. In late 2011, entered into an agreement with Irakli Chubini by which his company agreed to pay a profit share to Claren. It received $700,000-$800,000 under that agreement. Claren Ventures Limited was subsequently dissolved. Chubini [11] Coppella Ventures Limited The Second Claimant. A company incorporated in the BVI (Reg. No. 604521) PoC [2] on 2 July 2004 F2/245 . Courtvale Holdings Limited Company held on trust for Jorum Kvantaliani [14-14], F7/1851 . Dok TransShipment Poti Stevedore company founded by Tamaz Chkhikvishvili and his business partner, Mr Dokeril, which won the tender for the operation of Terminal 6 at Poti Seaport in 1999. On 1 January 2005, Dok TransShipment Poti transferred operational rights of Terminal 6 to Prometko. Chkhikvishvili [6], [10] Finsbury Nominees Limited Held 50% shares in Courtvale F3/647 . In May 2008, its shareholding in Courtvale was transferred to Miselva Establissement, to be held on trust for Jorum, a Liechtenstein entity found by a Liechtenstein court in July 2009 to be owned by Badri's estate. Kvantaliani 1 [15], F7/1850, F7/1851 Gedeoni Limited Company from which Coppella purchased the Store and real estate at Lilo and Kolmeurneoba Square on 30 December 2004. PoC [16], [29] GE-ES-CO (JSCo) (Georgian Scrap Corporation) A company incorporated in Georgia in 2000 which at all material times held long-term lease agreements for Terminals 3, 4 and 6 of the Poti Seaport, which enabled it to receive payments for vessels wishing to berth. PoC [25], Chkhikvishvili 1 [8] Worked together with Prometko as a single entity, namely a stevedore company which loaded and transported goods. Jgharkava [7] Georgian Investment Group Limited A broker instructed on 5 March 2008 by Giorgi Kavtaradze on behalf of Blue Tropic to put up for sale the 92.85% shareholding owned by Blue Tropic in Poti Mill. Kavtaradze 2 [62] Georgian Tobacco Manufacturing Limited (GTML) (GTM) A company incorporated in the BVI. PoC [19] Owns a tobacco factory in Georgia. Defence [19(a)] Recently renamed 'JSC Tbilisi Tobacco'. Tsereteli [2] Georgian United Bank See United Georgian Bank. GGAW Ltd BVI corporate services company. Registered owner of the shares of Coppella from 13 July 2004 until 10 October 2006. Defence [4(d)], F10/3471 Registered owner of the shares in Blue Tropic from the date of Blue Tropic's incorporation on 18 May 2004 until 10 October 2006. Defence [5(d)], F10/3463 Jorum Establishment A Liechtenstein entity to which Valmet Nominees Limited and Finsbury Nominees Limited transferred their respective 50% shareholdings in Courtvale. F7/1850 In 2009, a Liechtenstein court found Jorum to be owned by Badri's estate. Kvantaliani 1 [15] JSCo See GE-ES-CO Kolmeurneoba Square (also referred to as Farmers Square) A 138m 2 land plot at 3 Pkhovi Street which Coppella purchased on 30 December 2004 and sold to Management Consulting Limited on 16 August 2006. PoC [29(b), 30], Defence [29-30] Lacarpa Enterprises Limited Company set up by Badri. The company was involved in selling Vano's share in United Georgian Bank to VTB Bank in 2005 and 2006. Chkhartishvili 1 [34] LIB See London International Bank. Lilo, Lochini Settlement Location of a piece of land measuring 3577m 2 along with buildings covering 610.9m 2 which Coppella purchased on 30 December 2004 and sold on to SAGL on 6 March 2008. PoC [29(a), 31], Defence [29-30] London International Bank Limited (LIB) Badri's private office in London, run by Joseph Kay (its sole director). Samuelson [17]; Baker [6] The company was put into liquidation in May 2010 by creditors including the AP Family. Rukhadze 1 [36(a)] Management Consulting Limited (Management Consultant Limited) Holding company beneficially owned by the Defendant which purchased real estate at Kolmeurneoba Square from Coppella on 16 August 2006. PoC [30], Defence [30] Metalex Company in which Tamaz Chkhikvishvili was a shareholder and which in 2003 won a tender for the operation of Terminal 5 of Poti Seaport. Chkhikvishvili 1 [7] Miselva Establissement SA Corporate services company incorporated in Liechtenstein. Defence [4(d)] Sole trustee of the Nile Trust (from 1 July 2007 Baker [6] until 20 July 2011 Defence [4(f)] ), and sole shareholder in both Blue Tropic and Coppella between 6 July 2007 and 20 July 2011. Defence [4(d)], Reply [2(2)] and Baker [1] In December 2012, changed its name to Griffin Trust AG. Baker [2] Morilius LLP Offshore company to which Tamaz Chkhikvishvili's 45% share in Prometko were transferred by his brother-in-law Ilia Zhordania in mid-2004. Chkhikvishvili 1 [19] Mowat Georgia (Motav Georgia) (Movat Georgia) Company to which Coppella sold the Store on 17 August 2007 for $12.275m. PoC [17], Chkhartishvili 1 [44], Ghvamberia 1 [20] Mutual Trust group of companies Group of companies providing trustee and other financial services to wealthy individuals and companies including Badri and Mr Berezovsky. The group administered the Nile Trust until July 2007. Samuelson [1-2] Nile Trust (previously known as the Octopus Settlement / Sun Trust) A discretionary settlement established on 25 July 2000 between Valmet Corporate Services Limited (as settlor) and the Valmet Trust Company Limited (as trustee). Reply [2(1)], Baker [5], F1/1-39 The trust is governed by the laws of Gibraltar (except that between 5 July 2003 and 24 March 2004 it was governed by the laws of the BVI). Baker [10], F1/269-270, F1/273, F1/275 Between 28 September 2000, and his death in February 2008, Badri was the sole named beneficiary. Baker [11], F1/138-139 Octopus Settlement Previous name of the Nile Trust (25 July 2000 to 23 October 2002). Reply [2(1)], Baker [5], F5/1340 Ormwood Associates Limited Directors of Coppella from 13 August 2004 until 6 July 2007. F2/437 Osprey Holding Limited A company owned by Irakli Chubini. In September 2011, the benefit of around half of the GTML loan was assigned to this company. Ghvamberia 1 [34], F10/3512-3513 Paneaux Limited First directors of Coppella, appointed on 9 August 2004, resigned on 13 August 2004. F2/429, F2/433 JSC Poti Mill A company owning a milling factory close to Poti Sea Port. In 2004, Blue Tropic bought a 93% share in the mill for $1.5m. F2/363, F2/382, Chkhartishvili 1 [11] Prometko Georgia Limited (Prometko LLC) (Promethko) (Production Metal Corporation) A company incorporated in Georgia in 1998 which at all material times held long-term lease agreements for Berths NN3, 4 and 6 of the Poti Seaport, which enabled it to receive payments for vessels wishing to berth. PoC [25], Chkhikvishvili 1 [8] Worked together with GE-ES-CO as a single entity, namely a stevedore company which loaded and transported goods. Jgharkava [7] Sevaront Commercial Limited Company beneficially owned by Vano. The benefit of the loan to GTML was assigned to this company by Coppella on 7 March 2008. PoC [21(c)] and Defence [20(b)], Ghvamberia 1 [32], Tsereteli [48], F7/1897 Sevaront assigned the benefit of the loan to Claren in August 2009. Ghvamberia 1 [32], F9/2997-2999 Simply Trading Inc A trustee company related to the Mutual Trust Group. Trustee of the Nile Trust until 1 July 2007. Baker [6], F5/1285-1287 Smart Group Limited A company which, until 22 March 2011, was owned by Vano’s children, as to 51% by daughter Natia Ckhartishvili and as to 49% by son Mikheil Chkhartishvili. PoC [22] Acquired real estate at Kolmeurnoba Square from Management Consulting Limited. PoC [30], Defence [30] Acquired the shares in GTML from SAGL on 3 June 2008. PoC [22], Defence [22] SOCAR Energy Georgia Company in which, until November 2011, Vano held a 24.5% shareholding and which has employed Giorgi Kavtaradze since September 2006. Kavtaradze 2 [38] Established in 2006 as a joint venture project between the Republic of Azerbaijan and Vano, who was a minority shareholder. Pirtkhalava [3] SOCAR Georgia Petroleum Ltd One of the largest oil companies in Georgia. A wholly-owned subsidiary of SOCAR Energy Georgia. Pirtkhalava [2-3] Sonata Alliance Georgia Limited (SAGL) Company incorporated in Georgia on 29 August 2007 F6/1492 with Reg. No. 205219672. Owned 100% by Sonata Alliance Inc (SAI), a company beneficially owned by Vano. PoC [11], Chkhartishvili 1 [21], F6/1484, F6/1491 Sonata Alliance Inc (SAI) Company incorporated in the Seychelles whose ultimate owners were Vano and his family. Chkhartishvili 1 [20] Currently owns 96% of Poti Mill shares. Chkhartishvili 1 [22] SP Directors S.A. Sole director of Blue Tropic and Coppella. Graetz [1] SP Trustees GmbH Corporate services company incorporated in Switzerland. Operated by Swisspartners. Registered shareholder of Blue Tropic and Coppella from 20 July 2011 to the present day. Defence [4(f)], Reply [9(4)] Current trustee of the Nile Trust. Graetz [1] Sun Trust Previous name of the Nile Trust (23 October 2002 to 24 March 2004). Reply [2(1)], Baker [5] Swisspartners Swiss asset management company of which Robin Graetz is a partner. Graetz [1] TBC Bank Georgian bank which in October 2008 provided a loan to Prometko and GE-ES-CO secured against the assets of JSC Poti Mill. Chkhartishvili 1 [16] United Georgian Bank (Georgian United Bank) Bank which was created in 1995 as a result of the privatisation and merger of three state-controlled banks (Georgian Savings Bank, Ex-Im Bank and Industrial Bank). From 1995 Vano was one of the principal shareholders of the bank and a member of its Supervisory Board. In 2005 Vano sold his shares to Russian bank VTB. Sioridze [3], [5]; Chkhartishvili 1 [5], [34] In 2005, the bank lent $1.36 million to Poti Mill. Ghvamberia 1 [9] Valmet Group (see Valmet entities below) Corporate services group which worked for Badri and Boris Berezovsky in late 1999. Samuelson [5] In January 2001, it was sold to Mutual Risk Management. Samuelson [10] Valmet Corporate Services Limited Original settlor of the Octopus Settlement (now known as the Nile Trust). Samuelson [9], F1/1-39 Valmet Nominees Limited Held 50% shares in Courtvale F3/646 . In May 2008, its shareholding in Courtvale was transferred to Miselva Establissement, to be held on trust for Jorum, a Liechtenstein entity found by a Liechtenstein court in July 2009 to be owned by Badri's estate. Kvantaliani 1 [15], F7/1850, F7/1851 Valmet Trust Company Limited Company incorporated in Gibraltar. Original trustee of the Octopus Settlement (now known as the Nile Trust). Samuelson [9] Valmet Trustees Limited Company incorporated in Canada. Original protector of the Octopus Settlement (now known as the Nile Trust). Samuelson [9] Appendix 5: Key Transactions Poti Mill

Appendix 5: Key Transactions

[1]92.85% shareholding in JSC Poti Mill acquired by Blue Tropic in June 2004 for $1.5 million.

[2]Shares transferred on 5 March 2008 to Sonata Alliance Georgia Limited (“SAGL”). [D/146] [PoC, paras. 10 to 11; Def para. 11]

Real Estate

[3]Universal Store (“Supermarket”) and associated land, and buildings at Lilo and Kolmeurneoba Square acquired by Coppella from(1) Zurab Alavidze and

(2) Gedeon Limited for $900,000, $200,000 and $100,000 respectively on 30 December 2004.

[4]Coppella transferred Kolmeurneoba Square to Management Consulting Limited on 16 August 2006. [D/52, 58] [PoC, para. 30; Def, para. 30]

[5]On 17 August 2007 Coppella sold the Supermarket to Movat Georgia for $12.275 million. That money was paid into Coppella’s account with JSC Bank of Georgia.

[6]Coppella transferred $10 million, being the proceeds of sale after deduction of tax, to SAI’s account with Alpha Bank Cyprus [D/100-1] [PoC, para. 17, Def. para. 17]

[7]Coppella transferred Lilo to SAGL on 6 March 2008. [D/151][PoC, para. 31, Def. para. 30]

Georgian Tobacco

[8]100% of shares in Georgian Tobacco Manufacturing Limited (“GTML”) acquired by Coppella from Avtandil Tsereteli on 17 January 2007.

[9]Shares in GTML transferred on 6 March 2008 by Coppella to SAGL. [D/147]; [PoC, para. 21(b); Def para. 21]

[10]Benefit of loan agreement assigned by Coppella to Sevaront Commercial Limited on 7 March 2008. [D/156]; [PoC, para. 21(b); Def, para.

Prometko / GE-ES-CO

(b) ] Prometko / GE-ES-CO

[11]50% shareholding in each of Prometko Limited and GE-ES-CO Limited acquired by Coppella on 7 October 2004 from Tamaz Chkikvishvili and Koba Tughushi.

[12]In June and October 2007 Coppella acquired further 16% shareholdings in each company.

[13]Shareholdings in each company transferred by Coppella to SAGL on 10 March 2008. [D/159 (Prometko) D/164 (GE-ES-CO)]; [PoC, para. 26, Def para. 26]

Cited in 1 later judgment

Blue Tropic Ltd & Anor v Chkhartishvili 2016