Dar Al Arkan Real Estate Development Company & Anor v Al-Sayed Bader Hashim Al Refai & Ors [2014] EWHC 1055 (Comm)

Case No 2012-834[2014] EWHC 1055 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 11/04/2014
Before
MR JUSTICE ANDREW SMITH
Between
Dar Al Arkan Real Estate Development Company and anorClaimantsMajid Al-Sayed Bader Hashim Al Refai and orsDefendants
Charles Béar QC and James Sheehan(instructed by Addleshaw Goddard LLP) for Claimants and Sheikh AbdullatifCraig Orr QC, Nicholas Sloboda and Sophie Weber(instructed by Slaughter and May) for Kroll Associates UK LimitedHearing Hearing dates: 28 February and 21 March 2014
Judgment
[1]The questions before me are about the management of a committal application dated 7 October 2013 brought by the second defendants, Kroll Associates UK Limited (“Kroll”), against the claimants. They seek: i) Declarations that the claimants are in contempt of court in that they broke a so-called “preservation undertaking” (an undertaking to preserve some hard drives) and a “drives delivery order” (an order to deliver the drives to Dechert LLP (“Dechert”), the claimants’ then solicitors, for safekeeping); and ii) Orders that the claimants be fined and for the imprisonment of Sheikh Abdullatif Al Shalash (“Sheikh Abdullatif”), the managing director of the first claimants, Dar Al Arkan Real Estate Development Company (“DAAR”), and a director of the second claimants, Bank Alkhair BSC (“BA”). The preservation undertaking was given and the drives delivery order was made at the start of this litigation in June 2012, when the claimants obtained interlocutory orders against the first three defendants. Kroll allege that in breach of them the claimants failed to keep the drives intact and Sheikh Abdullatif deleted two files from one of them.[2]The questions are: i) When the court should hear the committal application. Kroll contend that it should be heard well before the trial in the action, whereas the claimants and Sheikh Abdullatif contend that it should be heard after the trial; ii) Whether, as the claimants contend, I should recuse myself from hearing the committal application; and iii) What, if any, use may be made on the application of my judgment in these proceedings dated 12 December 2012 ([2012] EWHC 3539 (Comm)).[3]I described the proceedings in my December 2012 judgment, and the committal application in another judgment dated 20 December 2013, [2013] EWHC 4112 (Comm), and I shall not repeat those descriptions. I have managed this litigation since November 2012, when I heard over six days an application (the “discharge application”) to set aside ex parte orders on the grounds that when they were made the claimants(i) had not made full and frank disclosure and had misled the court and(ii) had not complied with the preservation undertaking and the drives delivery order. The claimants’ case on the discharge application was that, as he accepted in his evidence, Sheikh Abdullatif had deleted two documents from one of the drives before delivering it to Dechert on 2 July 2012, but he thought that he was acting properly and in accordance with the claimants’ duties to the court. Having heard oral evidence from Sheikh Abdullatif and two other witnesses called by the claimants, Dr Salahuddin Almajthoob, BA’s Managing Director, Special Projects, and Dr Abdulrehman H Al Harkan, the General Manager of DAAR, I rejected that explanation. In my December 2012 judgment (at para 85), I discharged most of the interlocutory orders against the defendants, having concluded that the claimants had broken the preservation undertaking and the drives delivery order and that “Sheikh Abdullatif deleted the documents knowing that this was a breach of the preservation undertaking and that he did so because they would reveal that DAAR and BA had had the drives, or at least [one of them], before April 2012” (when they had claimed to have received the first drive).[4]At a case management hearing on 22 November 2013 I ordered that there be a split trial of the claims and that certain issues, which have been labelled the “iniquity issues”, be heard first, and the trial of the iniquity issues is listed to begin before me in March 2015. The claimants are challenging my order for a split trial in the Court of Appeal. On 29 November 2013 I directed that the committal application be provisionally listed for a hearing beginning on 19 May 2014, and reserved it to myself. This was because there was not enough time at hearings in November 2013 (or for some time thereafter) for argument about when the committal application should be heard: the date in May 2014 was “pencilled in” so that Kroll would not be prejudiced as a result. The claimants, then represented by Mr Anthony Trace QC, did not argue in November 2013 that I should not hear the committal application and urged me to hear the trial.

When should the contempt application be heard?

[5]In JSC BTA Bank v Ablyazov (No 7), [2011] EWCA Civ 1386 the claimant bank applied to commit Mr Ablyazov on the grounds that he was in breach of a freezing order (civil contempt) and had made false statements in response to an ancillary order for disclosure of assets (criminal contempt). Teare J directed that some of the bank’s allegations of contempt should be determined before the trial. On appeal Gross LJ said (at para 47) that the decision was “for the judge’s case management discretion” and that “there is certainly no rule of law as to the timetable to be adopted”.[6]When civil contempt by way of disobedience to a court order or breach of an undertaking is alleged, a committal application has several purposes: to punish the contemnor if contempt is proved; to deter others from contravening orders and undertakings; to deter contemnors from further disobedience; and sometimes to provide an incentive for belated compliance: Lightfoot v Lightfoot, [1989] 1 FLR 414, 416/417 per Donaldson MR, and JSC BTA Bank v Solodchenko (No 2), [2011] EWCA Civ 1241 at para 45 per Jackson LJ. The last purpose is probably not in point here: if in 2012 the claimants did not properly preserve the drives and deliver them for safekeeping, they might well no longer be in a position to do so. Mr Craig Orr QC, who represented Kroll, submitted that the contempt application should be heard before the trial so that, if the allegations are established, the court’s sentence can meet the other three purposes. He argued that: i) In view of the gravity of the contempt, it is in the public interest that the court upholds its authority, and this demands that it respond promptly and decisively, and is seen so to act, so as to deter other litigants from similar conduct. ii) Unless the application is heard before trial, the court will not be able to impose any effective and appropriate sentence because the claimants and Sheikh Abdullatif will otherwise ignore the contempt proceedings: in reality, as Mr Orr put it, it is “now or never”. iii) An early hearing will bring it home to the claimants that they must obey the court’s orders, and so improve the prospects of the defendants having a fair trial.[7]Kroll’s allegations are of serious and deliberate contempt. They say that the claimants launched this litigation in a campaign against the first defendant, Mr Majid Al-Sayed Bader Hashim Al Refai, and obtained ex parte orders including a freezing order against Mr Al Refai and orders against him, Kroll and the third defendant, Mr Alexander Richardson, that they deliver to BA documents said to contain confidential business information. For this purpose, they relied on material on hard drives which, as Kroll allege, they had obtained unlawfully by hacking into Mr Al Refai’s email accounts, including accounts containing private and legally privileged information.[8]In essence, Kroll allege that, while invoking the court’s authority against the defendants, the claimants defied the court’s efforts to achieve a proper balance between the parties and to preserve potentially important evidence held on the drives. They also allege that the claimants aggravated their contempt by giving dishonest evidence on the discharge application to cover this up. Mr Orr cited my judgment in December 2012, where I said (at para 85) that “although the claimants have proffered apologies for not complying with the court’s requirements, I cannot accept that the apologies were sincere because they still have not given an honest and candid explanation for their actions”; and he said that, despite my judgment, the claimants and Sheikh Abdullatif refuse to recognise what they had done, and continue their attempts to hack into computers. I accept Mr Orr’s submission that, if these allegations are established, the court should be seen to respond decisively, both to punish the contempt and to deter others.[9]What of Mr Orr’s “now or never” argument? The claimants are outside the jurisdiction: DAAR are a Saudi Arabian company, BA are incorporated in Bahrain and Sheikh Abdullatif lives in Saudi Arabia. The claimants do not, I infer, have substantial assets here, and there is no evidence that they have assets in a jurisdiction in which a sequestration order or a fine could be enforced. (The English court would not enforce a fine made by a foreign court, and, although the law is not entirely clear, it might well not enforce an order for sequestration: Dicey, Morris & Collins, The Conflict of Laws (15th Ed, 2012) para 5R-019, Larkins v NUM, [1985] IR 671, 688-689.) Mr Orr argued that, if the allegations of contempt are established, the court will be better able to impose sanctions if these proceedings are still afoot and the claimants are still pursuing their claims: otherwise they could, he said, simply ignore contempt proceedings (at least if their claims have been dismissed and they are not seeking the court’s assistance to enforce a judgment).[10]If in practice the court’s powers to punish contempt would be significantly compromised by the application being heard after the trial, this is an important consideration in deciding when the committal application should be heard. The court cannot stand by if litigants, whether domestic or foreign litigants, deliberately break their undertakings or court orders. In KJM Superbikes Ltd v Hinton, [2008] EWCA Civ 1280, it was alleged that an Australian had given a deliberately false witness statement intended for use in civil proceedings, and the Court of Appeal gave permission for criminal proceedings for contempt. Moore-Bick LJ said (at para 26) “The international business community conducts a large amount of litigation in this country …. The integrity of the system as a whole would be undermined if it were thought that foreign witnesses were not subject to the same discipline as witnesses from this country”. Similarly the integrity of the system would be undermined unless the court exercises proper discipline over foreign litigants and imposes effective sanction for contempt when it is called for.[11]How does the timing of the committal application affect the position? I consider the position with regard to(i) financial orders that might be made against the claimants,(ii) an order committing Sheikh Abdullatif to prison, and(iii) striking out the proceedings as an abuse of process. I need hardly emphasise that, although I assume for the purposes of assessing Mr Orr’s argument that it will be proved that the claimants are guilty of contempt and deserve serious punishment, this is only assumption: I express no view about the merits of the application.[12]First, how does the “now or never” argument apply to financial orders, whether by way of sequestration or fines or orders for costs? The claimants are apparently enormously wealthy, and I suspect that realistically any financial penalties that the court could properly impose, whether before or after a trial, will have limited impact on them. However, I am not persuaded that it would be as easy as Kroll suggest for the claimants to ignore orders made after the trial. In a witness statement dated 17 March 2014, Sheikh Abdullatif said that DAAR need access to the London capital markets and depend on the London financial and legal systems for their debt programmes, and in any case they would not compromise their reputation, credibility and ability to access capital markets and international investors elsewhere by not complying with court orders and to pay judgments and fines if ordered to do so. DAAR, he said, have and will have continuing and future ties with this jurisdiction, and it would make no commercial sense for DAAR to disregard determinations of the English court.[13]Mr Orr sought to answer this by referring to the sukuks that DAAR (or their subsidiaries) have issued, and to their listings, in particular the listing on the London Stock Exchange of the fourth programme, Sukuk IV, which is due for repayment in July 2015, well before these proceedings are likely to be concluded. In 2013 an associate company of DAAR issued a further programme, under which it was originally intended to issue certificates to the maximum value of $750 million, a limit later increased to $1.2 billion. (The programme was referred to as sukuk V, but two tranches of certificates have been issued and the second tranche is sometimes also referred to as sukuk VI.) These certificates, which do not mature until 2016 or 2018, have been listed on the Irish Stock Exchange and not on the London Stock Exchange. The prospectus has been approved by the Central Bank of Ireland, and states that it should not be distributed to or passed on to the general public in the United Kingdom. Kroll suggested, as I understand it, that DAAR were avoiding a London listing in order to sever connections with the United Kingdom.[14]The exchange on which certificates are listed is no real sign where DAAR expect to raise funding or hold assets, and I take it that the statement about distribution of the prospectus in the United Kingdom is designed to avoid contravention of the provisions about collective investment schemes in the Financial Services and Markets Act, 2000. The evidence of Sheikh Abdullatif in a witness statement dated 17 March 2014 shows that DAAR had other cogent reasons for preferring the Irish listing and were following the professional advice that they had been given. In any case, the certificates are governed by English law and disputes about them are subject to English jurisdiction (albeit not exclusively in the case of proceedings brought by holders of certificates). Mr Béar argued that the jurisdiction clause in the sukuk V certificates itself shows that DAAR contemplated being engaged in litigation in the English courts. Strictly the certificates were issued not by DAAR but by an associated company, but I am not persuaded that, if their claims in these proceedings are dismissed, the claimants will be unconcerned about the committal proceedings. First, if they were held guilty of contempt, it might well make the more difficult their position in any future litigation in the jurisdiction. Secondly, any assets that they had in the jurisdiction from time to time would be vulnerable. More generally, it would damage their commercial standing.[15]In my judgment of December 2013 I decided that, although Sheikh Abdullatif is outside the jurisdiction, the court has power to imprison him to punish the claimants’ contempt and the proceedings have been served on him. That decision is under appeal, but I must proceed on the basis of what I decided. There is no convincing reason to think that after the trial Sheikh Abdullatif (or any officer of either claimant) would come to the jurisdiction to serve a custodial sentence. In his witness statement he said that before these proceedings he made visits to the country for business reasons associated with DAAR, but he does not indicate that he would come here to serve a custodial sentence and I am sceptical that he would do so. What if the committal proceedings are heard first? Kroll’s argument is that a custodial sentence against Sheikh Abdullatif would be more effective because he is likely to be an important witness for the claimants and they will wish him to come to London to give evidence. Again, the position is not as clear as Kroll suggest: if a custodial sentence were imposed before the trial, it does not necessarily mean that the claimants would be deprived of Sheikh Abdullatif’s evidence if he therefore declined to come to the jurisdiction. The court will sometimes allow even a fugitive from justice to give evidence by video-link: Polanski v Condé Nast Publications Plc, [2005] UKHL 10. This might not be permitted where a witness is avoiding a punishment for contempt in the proceedings, but it is premature to express any view about that. But I am not persuaded that Sheikh Abdullatif is likely to come to the jurisdiction to give evidence if he has already been sentenced to a term of imprisonment.[16]The Court has power to strike out a claim where a party has intentionally and contumeliously broken an order of the court: Birkett v James, [1978] AC 297, 318. Mr Orr, citing Summers v Fairclough Homes Ltd, [2012] UKSC 26, submitted that the court would be very unlikely to exercise the power after the trial, and I accept that. More importantly, the power would obviously be ineffective if the claims had already been dismissed at trial. Kroll do not seek an order striking out the claim in their present application, but the power would be available to the court and, if the application is heard before the trial, it might be exercised to uphold the court’s authority. Without anticipating the outcome of any application to strike out the proceedings, the court might, for example, consider doing so if the claimants refused to pay fines or were responsible for Sheikh Abdullatif refusing to serve a custodial sentence.[17]In summary, in my judgment the “now or never” argument was overstated. It would not be as easy for the claimants to ignore the committal proceedings as Mr Orr suggested, and it might be right to receive Sheikh Abdullatif’s evidence at trial even if he refuses to come to the jurisdiction. I do, however, accept that the court would have more leverage before the trial to make appropriate orders to punish any contempt and to uphold its authority.[18]I come to the argument that it would enhance the prospects of a fair trial if the committal application is heard soon and it is impressed on the claimants that they must obey court orders. Otherwise, it is said, they cannot be trusted to respect the court’s procedural requirements: the court cannot be confident that they will make proper disclosure, that their witness statements will be truthful and that they will give honest evidence at trial. In the Ablyazov case, the decisive consideration that led Teare J to order that contempt allegations be heard and determined before the trial was the importance of making effective the court’s order, there a freezing order. This assessment was endorsed by Gross LJ, who said (at para 48):
“For my part, I think Teare J was right. It was of paramount importance here for the court to do and to be seen to be doing, all it could to ensure the efficacy of the freezing order”
. The allegations in this case are no less grave than breach of a freezing[19]I therefore accept that Kroll have presented cogent arguments for an early hearing of the committal application. Against them the claimants and Sheikh Abdullatif contend that the court should not hear a contempt application of this kind before the trial of the action except for very good reason, and that Kroll’s arguments are insufficient. On the contrary, they say, the application turns on matters in issue in the main proceedings, and it would be unfair to the claimants for it to be heard before the trial. They also argue that the contempt application is “a tactical manoeuvre, designed to advance [Kroll’s] private interests as a defendant in this litigation”; and that Kroll should not be allowed to divert the focus of the litigation from the claims against them or to use court resources on unnecessary and unprofitable “satellite litigation”.[20]The most recent authority on which the claimants and Sheikh Abdullatif rely is JSB BTA Bank v Ereshchenko, [2013] EWCA Civ 829. The leading judgment was given by Lloyd LJ, but Elias and Beatson LJJ in their concurring judgments made these observations: Elias LJ said (at para 68), “where the party initiating contempt proceedings has also brought substantive proceedings against the same defendant, it should only be in exceptional cases that the court should allow the contempt action to be heard ahead of the trial”; and Beatson LJ (at para 70) referred to, “the problems of an application to commit which is heard … before the trial of the substantive dispute between the parties where (as will be common) there is an overlap between the issues relevant to the application and those which arise in the substantive dispute”. Citing the judgment of Sir Richard Scott V-C in Malgar Ltd v R E Leach (Engineering) Ltd, [2000] FSR 393, he continued (at para 72), “while committal before trial might be appropriate in a very clear case, it might be better, in many cases, for the application to take place after the trial when the evidential position would be clearer.” In the Malgar case Sir Richard Scott declined permission for criminal contempt proceedings on the basis that it would be “highly undesirable that at the same time as [the] proceedings are being prosecuted there should be outstanding a committal application”; and that in that case “the committal application would constitute an undesirable and unnecessary interference in those proceedings” and would “obstruct the sensible disposal of what remains outstanding between these parties”.[21]In JSC BTA Bank v Ablyazov (No 7), [2011] EWCA Civ 1386 the Court of Appeal considered whether and how an overlap between the issues on a contempt application and those in the main proceedings is relevant to management of committal applications. In that case the claimant bank applied to commit Mr Ablyazov on the grounds that he was in breach of a freezing order and had made false statements in response to an ancillary order for disclosure of assets. Therefore both criminal contempt, for which the court’s permission was required, and civil contempt, for which no permission was required, were alleged. Teare J allowed the bank to have some of their allegations of contempt determined before the trial and the bank chose allegations that overlapped with issues in the main proceedings. Mr Ablyazov argued on appeal(i) that the bank should not be allowed to pursue their selected allegations first and be free later to bring forward their further allegations, and(ii) that matters in issue in the main proceedings should not be determined on the contempt application in advance of the trial. Gross LJ, with whom Sir Andrew Morritt C and Moses LJ agreed, rejected these arguments: he said (at para 42) that “… overlap, of itself and without more, does not necessitate postponing the determination of a contempt application until after the trial. It is, instead, a factor to be taken into account; the weight to be given to it – and the pointer if any it gives to the decision to be taken – must depend on the facts of the individual case”.[22]In the Ereshchenko case the court had made a disclosure order against Mr Ereshchenko by way of Norwich Pharmacal relief. The bank alleged that he had made false statements in his witness statement in response, and they were permitted to bring proceedings for criminal contempt. By the time that the contempt application was heard, Mr Ereschenko had been made a defendant to the proceedings. On the application Vos J concluded that contempt was not proved: he saw a difference between Mr Ereschenko’s case and that of JSC BTA Bank v Ablyazov, in that there was likely to be available at trial more evidence about whether Mr Ereshchenko had lied in his response to the disclosure[23]Mr Orr submitted that Elias and Beatson LJJ did not intend to detract from what Gross LJ had said in the Ablyazov case, and in particular did not intend to suggest that there is any hard and fast rule about when committal applications should be heard. Their remarks were directed to a case where allegations of criminal contempt gave rise to the concerns identified by Vos J, and this case is different: i) Here there is unlikely to be evidence which is relevant to the allegations of contempt and is not already available. ii) This is a very clear case of contempt. iii) The allegations are of civil contempt, and they can legitimately be pursued in order to vindicate private rights.[24]The allegations of contempt are about how the claimants dealt with the hard drives after they had obtained orders in June 2012 and specifically about Sheikh Abdullatif deleting documents from them. In their defence, Kroll specifically refer to my December 2012 judgment, and allege that the claimants were guilty of “corporate malpractice and dishonesty”, including unlawful hacking and presenting dishonest evidence about how they obtained material to launch the proceedings and applications and also of conspiring from June 2012 to “cover—up their own wrongdoing by swearing and serving numerous further false affidavits, giving false evidence under oath in Court, and breaching Court orders”. They plead that this, rather than what the defendants published about the claimants, damaged their reputation and standing, advancing various legal arguments (for example, that the claimants’ conduct constituted a novus actus interveniens) to dispute the damages claim and relying on this wrongdoing to defend the claims for equitable relief.[25]There is therefore some overlap on the pleadings between the questions with which the committal application will be concerned and issues that will be determined at the trial. Mr Orr argued, however, that the allegations of “corporate malpractice and dishonesty” will not be the subject of dispute at trial. First, he submitted that Kroll’s allegations reflect what I found in my December 2012 judgment, and the claimants are estopped from disputing them. This argument raises questions of some difficulty, I do not need to express any view about them, and I do not do so, not least because they affect parties who were not involved in the committal application and have not had the opportunity to make submissions. Mr Orr also drew attention to the claimants’ pleaded reply: they specifically put in issue whether hacking constitutes a criminal offence in any material way, and deny that the so-called ”corporate malpractice and dishonesty” harmed the claimants’ reputation or bears upon what damage was caused by the defendants’ wrongdoing. But they do not specifically deny hacking into Mr Al-Refai’s computers and giving false evidence on the discharge hearing. Mr Orr invited me to infer that there is unlikely to be a significant factual enquiry at the trial into matters in issue on the committal hearing. The fact remains that the allegations of “corporate malpractice and dishonesty” are traversed, that they would have to be proved at trial and those same matters are in issue on the committal application. But I agree with Mr Orr that these issues do not go to the heart of the main dispute between the parties. Indeed, I rather suspect that they will prove to be peripheral at the trial, but that cannot be more than a tentative assessment at this stage.[26]Nevertheless, I accept that the position here about overlapping issues is different from in the Ereshchenko case. First, in my judgment there is no realistic chance that the timing of the application will affect what evidence apparently will be available to the claimants. The defendants are not themselves in a position to know or to give evidence about what the claimants did with the drives, and they are not likely to have relevant documents to disclose. They presented evidence by way of an analysis of the drives on the discharge application and will do so on the contempt application, and their evidence of this at trial is unlikely to go any further. Mr Béar submitted that new evidence given at trial about the allegations of “corporate malpractice and dishonesty” might have a bearing on the issues in the contempt proceedings, but he did not indicate what it might be or why it would not be available earlier. On 21 September 2012 Teare J ordered that the claimants disclose documents about receiving the drives and what they did with them, and as a result of it they disclosed just four documents.[27]Mr Orr argued that this is a “very clear case” of the kind referred to in the Malgar case. Given the extent of the admissions made by the claimants and indeed by Sheikh Abdullatif on the discharge application, as things stand this would appear likely. The real question on the committal application might well be not whether the claimants were in contempt but about the claimants’ culpability: whether the claimants broke the undertaking and the order deliberately or as a result of a misunderstanding.[28]Thirdly, Ereshchenko was a case of criminal contempt where the claimants were pursuing criminal proceedings and the litigation at the same time. In Ereshchenko Beatson LJ made clear that his remarks were directed to proceedings for criminal contempt (in which, he explained, a public wrong was alleged and the primary purpose of which is not to vindicate a private right: loc cit at para 71). Although Elias LJ did not expressly confine his observations to cases of criminal contempt, it would be wrong, I think, to translate them without modification from that context. Here Kroll are not bringing civil claims against the claimants (even by way of counterclaim), and have brought the committal application, at least in part, to compel the claimants to fulfil their obligations in pursuing their claims.[29]In the KJM Superbikes case (cit sup) Moore-Bick LJ, having observed (at para 16) that the court will “wish to have regard to whether the proceedings would be likely to justify the resources that would have to be devoted to them”, said (at para 17,18) that “There is an obvious need to guard carefully against the risk of allowing vindictive litigants to use such proceedings to harass persons against whom they have a grievance, whether justified or not … It is important not to allow satellite litigation of this kind to disrupt the progress of the substantive proceedings and it may not be possible to assess the strength of the complaint until those proceedings have concluded”. (See too the Ereshchenko case per Beatson LJ at paras 72 and 74.) Again those observations were about criminal contempt proceedings, but civil contempt proceedings raise like considerations. This litigation is being fought, at least between the claimants and Kroll, tenaciously and vigorously by large teams of lawyers. I am conscious that contempt applications of this kind might be brought out of vindictiveness or in order to avoid or defer the trial, and also that these proceedings have called heavily upon court resources, and I am concerned that they should not continue to do so without proper reason. However in this case I do not consider this sufficient reason to delay the committal hearing. Kroll have advanced sensible and apparently reasonable grounds for pressing for an early hearing, and I see no reason to dismiss their professed reasons as other than genuine. Their allegations of contempt are specific and of limited compass, and the hearing of the committal application can be managed within the timetable of the litigation.[30]I do not overlook Mr Béar’s observation about the position of the parties’ lawyers, and I recognise that this case is placing very heavy demands particularly on those advising and acting for the claimants. But the particulars of claim were signed by seven barristers, and, while there have been changes, large teams of lawyers are still acting. I do not give this consideration much weight.[31]I balance the considerations that I have explained, and bear in mind the guidance in Ereshchenko as well as Ablyazov. In my judgment, the committal application should be heard well before trial: this timetable is preferable in order to uphold the court’s authority and to work fairness between the parties.

Recusal

[32]In their application notice the claimants say that I should recuse myself from hearing the committal application “because in light of the findings made by [me] in [my] judgment dated 12 December 2012, a fair minded and informed observer would conclude that there was a real possibility that [I] might have pre-judged a major part of the issues in the Contempt Application”. This phraseology in part echoes the test of so-called apparent bias stated by Lord Hope in Porter v Magill, [2001] UKHL 67 at para 103 (“The question is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased”), and is perhaps reminiscent of his observation in Davidson v Scottish Ministers, [2004] UKHL 34 at para 47 that bias includes “an inclination or pre-disposition to decide the issue only one way, whatever the strength of the contrary argument”. Kroll did not oppose the recusal application, but identified reasons that I might refuse it.[33]The governing principles were not controversial: i) The test of apparent bias laid down in Porter v Magill reflects Strasbourg jurisprudence, and there is no relevant distinction between the common law and the requirements of article 6 of the European Convention on Human Rights. ii) Apparent bias is not demonstrated by “the mere fact that a judge, earlier in the same case or a previous case, has commented adversely on a party or a witness, or found the evidence of a party or witness to be unreliable”: per Bingham LCJ, Lord Woolf MR and Sir Richard Scott V-C in Locabail (UK) Ltd v Bayfield Properties Ltd, [2000] QB 451 at para 25. iii) However, there are circumstances in which, as it was put by the High Court of Australia in Livesey v New South Wales Bar Association (1983) 151 CLR 288, 300, “... a fair-minded observer might entertain a reasonable apprehension of bias by reason of pre-judgment if a judge sits to hear a case at first instance after he has, in a previous case, expressed clear views either about a question of fact which constitutes a live and significant issue in the subsequent case or about the credit of a witness whose evidence is of significance on such a question of fact”. iv) Cases in which there is any real ground for doubt should be resolved in favour of recusal. v) A judge should decline to hear a case only for proper and sufficient reason to do so: recusal is not an excuse for avoiding embarrassment. I was referred to a number of authorities about when a judge should stand aside, but in the end the enquiry is fact specific: see the Locabail case at para 25.[34]Mr Béar put the application wholly on the basis that in my December 2012 judgment: i) I rejected as dishonest evidence of the claimants’ witnesses, and ii) As a result I reached conclusions adverse to the claimants and Sheikh Abdullatif on specific issues that are important to the committal application. I set out at paragraph 3 above what is probably my most important finding for present purposes. My criticisms of the claimants’ witnesses (to refer to only some of examples on which Mr Béar relied) included these:
“I was driven to conclude from the cross-examination of Sheikh Abdullatif and Dr Almajthoob that they were dishonest witnesses and that their evidence was untruthful”
(at para 49 of my December 2012 judgment); “I reject Sheikh Abdullatif’s account of deleting the documents and his explanation for doing so, and do not accept that the claimants have now given a full and honest explanation about how and why they were deleted” (at para 66); and “I am driven also to reject as dishonest other parts of the evidence of the claimants’ witnesses, including parts of their oral evidence when cross-examined” (at para 69).[35]These findings and this conclusion really go to the heart of the contempt application. If they are correct, the claimants are guilty of a serious breach of at least the preservation undertaking. Of course, as Mr Orr emphasised, on the committal application Kroll will have to prove their allegations to the criminal standard, and in my December 2012 judgment I was concerned with proof to the civil standard. But, as Keene LJ said in Sengupta v Holmes, [2002] EWCA Civ 1104 at para 44, what matters is whether “a judge in reality is having to decide the same question on which he has previously reached a determination”. The allegations were of dishonesty and other impropriety, and therefore the evidence had to be the more cogent to establish them to the civil standard (see para 45 of my judgment) and I do not consider that “in reality” the standard of proof is a telling distinction. It is, if anything, more “tenuous” than the difference that in Hauschildt v Denmark, (1989) 12 EHRR 266 the European Court of Human Rights thought insufficient to prevent an appearance that the court was not impartial (esp at paras 52 and 53).[36]I conclude that I should recuse myself. I have not simply expressed views about issues that will arise on the committal application and witnesses who might well give evidence when it is heard. My judgment of December 2012 goes beyond that: my views about the credibility of the witnesses were detailed and specific, and I have reached conclusions adverse to the claimants not only on some questions that might arise on the hearing of the committal application, but on issues that are likely to be crucial and possibly on all the real issues that will arise. Moreover, although I do not know and Mr Béar understandably declined to say what evidence might be adduced by the claimants and Sheikh Abdullatif in response to the committal application, it seems likely that it will depend on essentially the same evidence as I heard on the discharge application, and it might well be that the submissions will also be largely similar. (I considered deferring my decision on recusal until all the evidence was served, but this would cause practical listing difficulties and I can properly proceed, I think, on the basis that the evidence would not much affect my decision. It is more realistic to make it now.)[37]Of course, the notional observer is something of a paragon. Not only is he fair-minded and impartial, but he has diligently educated himself about the circumstances of the case: Helow v Sec of State for the Home Dept, [2008] UKHL 62, para 3. Here he is taken to know that I myself first invited the parties to consider whether I should hear the committal application on 11 October 2013, and, when it was listed for hearing before me in November 2013, the claimants did not object. He will also know that the claimants have urged me to hear the trial despite my December 2012 judgment. And the observer also trusts that judges can look at matters afresh despite findings on another occasion. But it is one thing for the fair-minded and impartial observer to have faith that a judge will reassess his views with an open mind when presented with new evidence and argument. It is asking more of the observer’s faith when similar evidence and arguments are presented to assess the same issues. There comes a point when he is entitled to think that, though “o’ independent mind”, a judge is “a man for a’ that”. In this case the claimants and Sheikh Abdullatif are entitled to have another judge decide the contempt application.

The admissibility application

[38]The claimants and Sheikh Abdullatif apply for these directions about how my December 2012 judgment may be used at the hearing of the contempt application: i) A declaration that it is inadmissible in evidence, or at least inadmissible as evidence of the facts that I found. ii) A direction that Kroll may not rely on the conclusions in it. iii) An order that “the Discharge Judgment and references to the findings in it be excluded from [Kroll’s] evidence”. Mr Béar submitted that the proper approach is that explained by Lord Hope in Three Rivers District Council v Bank of England (No 3), [2001] UKHL 16 where he said at para 32 that the findings made in Bingham LJ’s report, being inadmissible as evidence, were “incapable either of being led in evidence at the trial or of being used by either side in any way in support of the competing arguments”.[39]I shall not rule on these questions. I am not persuaded that I should refuse to allow Kroll to make any reference at all to the judgment, and, if I directed that no reference be made to my “findings” or my “conclusions”, it would inevitably lead to endless argument about whether individual sentences constitute (in part or in whole) a “finding” or a “conclusion”. In any case, questions of admissibility of evidence and comparable matters are generally best decided by the judge conducting the hearing, and I have recused myself from it. I reject any suggestion that these questions should be decided before the hearing in order to prevent the judge from reading my judgment lest (s)he be improperly influenced by it: no judge would be so influenced. No less importantly, the questions on which directions are sought depend on what exactly is in dispute on the contempt application, and it is not yet clear what is in issue and what Kroll will have to prove. Nor is it yet clear for what purpose and how Kroll will seek to use the judgment. Certainly the evidence in support of the application, specifically the first affidavit of Mr Jonathan Cotton, a partner of Slaughter and May, Kroll’s solicitors, refers to my judgment, but no doubt Kroll’s advisers will consider whether all the evidence in the affidavit is admissible in light of the objections that have been raised. It is premature to make directions of the kind sought.

order

the preservation undertaking and the drives delivery order were important to strike a fair balance between the parties in the pre-trial proceedings. If the allegations of contempt against the claimants are established, the court must bring home to them that procedural fairness and just process requires the court to enforce its rules and orders. Otherwise the defendants will understandably question whether the proceedings are fair. order: “If the substantive case against Mr. Ereshchenko is proved at a trial, the court would undoubtedly be in a better position at that stage to determine whether what he said about his recollection and access to documents in December 2010 was clearly false” (at para 135); and (at para 160) “If the Bank had left this committal application over until after the trial, things might, as I have repeatedly said, have looked different. I know not” ([2012] EWHC 1891 (Ch)).

Cited in 3 later judgments