Otkritie International Investment Management Ltd & Ors v Urumov & Ors [2014] EWHC 1323 (Comm)

Case No 2011 Folio 1182[2014] EWHC 1323 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 29 April 2014
Before
MR JUSTICE EDER
Between
OTKRITIE INTERNATIONAL INVESTMENT MANAGEMENT LTDOTKRITIE SECURITIES LTDJSC OTKRITIE FINANCIAL CORPORATIONOTKRITIE BANK (JSC)OTKRITIE FINANCE LIMITED ClaimantsGEORGY URUMOVand othersDefendants
MR NATHAN PILLOW (instructed by Steptoe & Johnson) for ClaimantsMr Georgy Urumov, unrepresented
Judgment

Introduction

[1]Following the trial in these proceedings, I delivered my Judgment on 10 February 2014 (the “Judgment”). Thereafter, the claimants issued applications seeking permission to proceed with committal proceedings against a number of the individual defendants, including Mr Georgy Urumov. I have fixed a date for the hearing of those applications on 29 April 2014.[2]Meanwhile, Mr Urumov (who is now a litigant in person) applied (by email of 24 March 2014) that I should recuse myself in relation to the claimants’ application for permission to make a committal application against him and generally with regard to any committal proceedings against him. Thereafter, pursuant to my order, the claimants and the Mr Urumov both served written submissions (the “first round submissions”). Following receipt of such written submissions, I became aware of a decision of Andrew Smith J in Dar Al Arkan v Majid Al-Sayed Bader Hashim Al Refai [2014] EWHC 1055 (Comm) (“Dar”) which he delivered on 11 April 2014 and which I considered might be of relevance to the present recusal application. I therefore invited the parties to serve further written submissions which were duly served (the “second round submissions”). The basis of Mr Urumov’s recusal application[3]In the first round submissions, Mr Urumov advances three main grounds in support of his recusal application which were, in summary, as follows. Ground 1: Prejudgment ?[4]First, Mr Urumov says that this is a case of “apparent bias” because there is a “complete overlap” between the issues I determined in my Judgment and the claimants’ intended committal proceedings. In particular, Mr Urumov says that it is obvious and beyond any doubt that any “reasonable observer” who reads the Judgment will find that I have already formed my opinion on the future committal proceedings since I effectively “pre-judged” them. In that context, he refers to various authorities including: Livesey v. New South Wales Bar Association (1983) 151 CLR 288, Bahai v. Rashidian [1985] 1 WLR 1337, Symphony Group v. Hodgson [1994] QB 179, Locabail (UK) Ltd v. Bayfield Properties Ltd [2000] QB 451, In re Medicaments and Related Classes of Goods (No 2) [2001] 1 WLR 700, Sengupta v. Holmes [2002] EWCA Civ 1104, Porter v. Magill [2002] 2 AC 357, Lawal v. Northern Spirit [2003] HRLR 29, Phillips v. Symes (No 3) [2005] 1 WLR 2986, AWG Group Ltd v. Morrison [2006] 1 WLR 1163, Helow v. Secretary of State for the Home Department [2008] 1 WLR 2416, and Secretary of State for the Home Department v. AF (No 2) [2008] 1 WLR 2528. In addition, he refers to three authorities in the European Court of Human Rights, namely Hauschildt v. Denmark (1989) 12 EHRR 266, Thomann v. Switzerland [1996] ECHR 17602/91, and Morel v. France (2000) 33 EHRR 47.[5]Further, Mr Urumov says that the issues which arose at trial and which I have already considered in my Judgment “totally overlap” with those which I will (unless I recuse myself) have to decide at any committal proceedings. Thus Mr Urumov states in his email:
“These committal proceedings are nothing more than an attempt to re-run and re-litigate the same trial issues that were already considered by the Judge and to have a second bite at the cherry. I consider these committal proceedings as vexatious and I believe I am entitled to “Protection from Harassment Act 1997”
. The strong evidence of pre-judgement in respect of the committal proceedings is a good enough reason for recusal in itself. In fact the issues that the Claimants are seeking to persuade [Eder J] to find me in contempt were already determined by [Eder J] at trial and hence are pre-judged by Mr Justice Eder ...”[6]In particular, Mr Urumov refers specifically to the four “grounds” which are the subject-matter of the claimants’ application for permission to proceed with committal proceedings viz that he: i) Knowingly and deliberately gave false information as to(i) proprietary funds; and(ii) assets, pursuant to and in breach of disclosure orders made ancillary to a freezing order (Ground 1); ii) Breached the terms of the said freezing order by deliberately dissipating assets after being on notice of the terms of the order (Ground 2); iii) Made a false disclosure statement (for which he signed a false statement of truth) without an honest belief in their truth, (i) disclosing as genuine documents which he knew were fakes or shams or both; and (ii) failing to disclose documents he knew he was required to disclose (Ground 3); iv) Made false statements in a statement of case (for which he signed a false statement of truth), knowing them to be false and therefore without an honest belief in their truth (Ground 4).[7]As to Ground 1, Mr Urumov says that I have already “pre-judged” this issue: see para 309 of my Judgment. As to Ground 2, Mr Urumov accepts that this is not “pre-judged” but that it relates to an insignificant amount ie £40 and that it would be completely disproportionate and unconscionable to send him (or indeed anyone) to prison for any failure in respect of such amount in the particular circumstances of the present case. As to Ground 3, Mr Urumov says that I have again already “pre-judged” this issue: see para 98 of my Judgment. Further, he submits that my conclusion as set out in that paragraph is, in effect, obviously wrong and that this shows an apparent strong bias against him and an obvious reason for me to recuse myself. As to Ground 4, Mr Urumov says that I have again already pre-judged this issue: see para 319 of my Judgment. On this basis, Mr Urumov submits that there is no doubt that any fair minded and informed observer would conclude that there is “inevitable bias” in relation to subsequent committal proceedings. Ground 2: “Beyond Reasonable Doubt” ?[8]Second, Mr Urumov says that many of the conclusions which I reached in my Judgment were, in effect, expressed in terms of a heightened level of certainty i.e. “no reasonable doubt”. In particular, he refers (by way of example) to paras 34, 133, 138, 151, 189, 192, 207, 209, 240, 309, 319, 331 and 332 of my Judgment. Given this level of expressed certainty, Mr Urumov says that, unless I recuse myself, I would be “undoubtedly biased” against him in the committal proceedings; that any fair minded and informed observer would conclude that there is inevitable bias in relation to subsequent committal proceedings; and that there is no doubt that, unless I recuse myself, I am effectively being asked to “seal the deal” now by sending Mr Urumov to prison without a fair trial. Ground 3: Apparent bias: alleged unpunished claimants’ breaches ?[9]Finally, Mr Urumov says that this is a case of “apparent bias” because the claimants’ lawyers have failed in their duty as officers of the court by “withholding” relevant authorities; that this will no doubt cause him “irremediable damage”; but that such failings have gone “unpunished”. Mr Urumov also says that the claimants have been guilty of breaches of their own disclosure obligations and repeated perjury which have not only gone unpunished but have been “complimented” by me. In that context, Mr Urumov refers to three “examples” by reference to paragraphs 94 and 102 of my Judgment and to what Mr Urumov says is “perjured evidence” in the 7th affidavit of Mr Dooley, the claimants’ solicitor. As to the latter, the main thrust of Mr Urumov’s complaint is that I failed to criticise Mr Dooley or initiate committal proceedings against him or the claimants; and that it is “absolutely obvious” that the claimants have good reasons to believe that they had and will continue to enjoy “favouritism” and “charitable views” from me. Although advanced under the heading “apparent bias”, it seems to me that this last allegation is, in effect, tantamount to an allegation of actual bias which is a very serious allegation indeed.[10]In his second round submissions, Mr Urumov submits that Dar greatly reinforces his earlier submissions. In particular, Mr Urumov draws my attention to paragraphs 32-38 of Dar including the reference in paragraph 32 to Porter v Magill and Davidson v Scottish Ministers [2004] UKHL 34 and the summary of the governing principles as stated by Andrew Smith J at paragraph 33 of his Judgment viz. “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.”[11]Mr Urumov’s second round submissions also include a separate second section headed “Actual Judicial Bias”. Under that heading, Mr Urumov submits that there are two obvious examples of “actual bias” by me viz(i) my endorsement in my Judgment of the claimants’ submission that Mr Urumov had control of the Dunant box contents in December 2012 when in fact there was undisputed evidence to the contrary as I knew; and(ii) my conclusions in paragraphs 336-337 of my Judgment which in effect rejected “centuries old principle and law governing early termination”. The first example is broadly similar to one of the examples previously given by Mr Urumov in his first round submissions; but the latter example is a new allegation. Discussion[12]In very broad terms, the essential question in the present context is whether there are circumstances which would lead a fair-minded and informed observer to conclude that there was a real possibility that I was biased. As to the applicable principles, I do not propose to review in detail the relevant authorities. For present purposes, it seems to me sufficient to refer generally to the detailed review to be found in the judgment of Rix LJ in JSC BTA Bank v Ablyazov (Recusal) [2012] EWCA 1551 although that case was, of course, concerned with the question of alleged “prejudgment” pre-trial rather than, as in the present case, post-trial. Nevertheless, that review, the conclusions which Rix LJ draws from the authorities and his observations in relation thereto at paragraphs [65]-[74] are, in my view, of particular assistance in the present context. As there stated, although the principles of apparent bias are now well established, the application of them is wholly fact sensitive.[13]As to Grounds 1 and 2 (which can conveniently be considered together), it is certainly true that I reached clear conclusions in my Judgment which were adverse to Mr Urumov. Indeed, I concluded that he had not only acted fraudulently in a number of respects; but that he had also given dishonest evidence in Court and created false documents to seek to hide his fraud. It is also true to say that in some respects at least, I expressed myself in my Judgment in terms which were to the effect that I was “sure” or had “no doubt” about certain of the conclusions which I had reached. To be clear: I reached those conclusions not because of any extraneous considerations nor any “favouritism” to the claimants but on the basis of my assessment of the evidence which I heard in the course of the trial. The reasons for my conclusions as stated in my Judgment speak for themselves; and it is noteworthy that (so far as I am aware) no application for leave to appeal has been made to the Court of Appeal – although the latter may be incorrect.[14]I also accept that there is a very substantial overlap between the issues which I determined following the trial in my Judgment and the grounds which the claimants wish to rely on in the intended committal proceedings.[15]However, I remain unpersuaded that, if these features stood alone, any fair-minded and informed observer having considered the facts would conclude that there was apparent bias. In reaching that conclusion, I bear in mind the following: i) It is, in my view, clear from the authorities that 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 paragraph [25]. To similar effect is the passage from the judgment of Rix LJ in JSC BTA Bank v Ablyazov at paragraph 70. ii) I do not consider that the fact that I have expressed myself in part in “clear” terms would necessarily justify any different conclusion. Indeed, it would, in my view, be odd if the position were otherwise. iii) As to the question of “overlap” or “identity of issue”, the highpoint of the argument in favour of recusal is the observation of Keene LJ in Sengupta v Holmes [2002] EWCA Civ 1104 at paragraph 44 where he stated that what matters is whether “…a judge in reality is having to decide the same question on which he has previously reached a determination”; and see also Hauschildt v Denmark (1989) 12 EHRR 266 (ECHR). However, as stated by Rix LJ in JSC BTA Bank v Ablyazov at paragraph 72 of his judgment, although “identity of issue” is a test easier to apply than “analogy” or “overlap”, absolute identity will lead in the direction of issue estoppel (at least in civil matters) and will not matter. iv) In any event, quite apart from any issue estoppel and consistent with the observations of Rix LJ in paragraph 69 of JSC BTA Bank v Ablyazov, my findings are part of the res gestae of the proceedings which would need to be considered for any relevance in the context of any committal proceedings. As Rix LJ asked rhetorically: What then is the difference between the judge who bears in mind his own findings and observations, and another judge who reads what the first judge has written, as he must be entitled to do? v) I recognise that the passage quoted by Andrew Smith J in paragraph 33(iii) of Dar from Livesey v New South Wales Bar Association (1983) 151 CLR 288, 300 when taken in isolation might suggest a different conclusion. However, for the reasons given by Rix LJ in paragraph 63 of JSC BTA Bank v Ablyazov, there were “special circumstances” in Livesey which are not present in the present case. vi) I also recognise that the decision of Andrew Smith J in Dar including the reasons he gives at paragraphs 36-37 of his Judgment would, at first blush, also appear to favour recusal in the present case. However, as emphasised by Rix LJ in JSC BTA Bank v Ablyazov, the question of apparent bias ultimately turns on the specific facts of each case and I doubt that much, if any, assistance is to be gained by reference to the decision of another judge on the facts in such other case. In any event, as submitted by the claimants, the circumstances in Dar were very different from those in the present case. In particular, the conclusions as expressed in my Judgment were reached(i) after disclosure and exchange of witness statements and(ii) following a full trial over some 6 months during which Mr Urumov was legally represented at all material times and gave oral evidence. In contrast, it would appear from paragraph 48 of the first judgment of Andrew Smith J. in Dar with reference [2012] EWHC 3539 (Comm) that there had been no reciprocal disclosure or exchange of witness evidence in that case and a guillotine had been imposed on the interlocutory cross-examinations of about 3 hours in total. (In addition, the claimants submitted that there was a further difference in that in Dar, Andrew Smith J was concerned that there was a risk that it might appear that he was coming to the trial itself with certain pre-conceptions which for that reason might engage the principles in cases like Hauschildt v Denmark; but, in my view, such consideration appears to play little, if any, part in the reasoning of the Judge.) vii) In the ordinary course, the recent observations of Lord Clarke (giving the judgment of the Supreme Court) in Summers v Fairclough Homes Ltd [2012] 1 WLR 2004 support the approach that absent “special circumstances”, it is appropriate and indeed preferable for the trial judge to hear subsequent contempt proceedings. In that case, the defendant applied to strike out the claim against it on the basis that the claimant had deliberately and dishonestly exaggerated his claim (as the trial judge concluded he had). The Supreme Court held that the Court had power to strike out claims on such grounds even after trial; but declined to do so on the facts in that case. In reaching that decision the Court had regard to other measures that might be taken including contempt proceedings as to which the observations of Lord Clarke were as follows:
“59. The defendant indicated some reluctance to proceed by way of proceedings for contempt. We, however, see no difficulty in proceedings by way of contempt in such cases, provided of course that the relevant facts can be proved. It was submitted in the course of argument that there might be difficulties in inviting the trial judge to hear applications for permission to bring proceedings for contempt. However, in the absence of special circumstances, we cannot see any difficulty in the trial judge hearing both the application for permission and, if permission is granted, the proceedings themselves. On the contrary, it seems to us that the trial judge is likely to be best placed to hear both. Such an approach is likely to be both the most economical and the most just way to proceed. The only circumstances in which that would not be the case would be where there was apparent bias on the part of the judge: see eg Wilkinson v S [2003] EWCA Civ 95; [2003] 1 WLR 1254, per Hale LJ at para 25.”
This passage reinforces the fourth point identified by Rix LJ in paragraph 65 of his judgment in JSC BTA Bank v Ablyazov where he stated:
“Fourthly, although no doubt matters of mere convenience cannot palliate the appearance of bias, and the application of the doctrine of apparent bias is not a matter of discretion (as distinct from assessment on all the facts of the case), it is relevant to consider, through the eyes of the fair-minded and informed observer, that there is not only convenience but also justice to be found in the efficient conduct of complex civil claims with the help of the designated judge.”
Further, the claimants drew my attention to the specific facts in Summers as referred to in particular in paragraphs 5, 6, 15 and 16 of the Supreme Court Judgment (including the Judge’s conclusion in paragraph 59 of his Judgment) that the wrongdoing in that case had been established to the criminal standard i.e. beyond reasonable doubt. On this basis and as submitted by the claimants, it seems to me that Summers was, in relevant respect, on all-fours with the present case.[16]For these reasons, I would reject Mr Urumov’s application that I should recuse myself to the extent that such application is advanced on the basis of Grounds 1 and 2.[17]However, it seems to me that Ground 3 is more problematic. As I have said, Mr Urumov has raised matters under this head which are discrete from the arguments of “prejudgment” and are tantamount to an allegation not merely of apparent bias but actual bias in relation to other matters; and such allegation has not only been expressly confirmed in Mr Urumov’s second round submissions but extended as indicated earlier in this judgment (although I am very conscious that the claimants have not been able to respond to such new allegation). In my judgment, the specific points relied on are entirely groundless; and to recuse myself in such circumstances in the face of what I consider to be spurious allegations would arguably be similar to what Lord Bingham MR considered to be the “indulgence” given to Dr Hashim in Arab Monetary Fund v. Hashim as referred to by Rix LJ in paragraph 65 of his judgment in JSC BTA Bank v Ablyazov. For these reasons, there is perhaps a strong argument in favour of a robust approach and that I should simply deal with these allegations, explain my reasons why these points are groundless and refuse to recuse myself. However, regardless of my own views, it seems to me that such allegations (even in their more limited form in the first round submissions) are so serious that the appropriate course is that I should recuse myself.[18]I reach that conclusion with extreme reluctance. However, it seems to me that such course is the more appropriate for the following reasons. First, given the nature of the allegations, it is consistent with previous authority including the approach of Lord Clarke in Summers. Second, it seems to me that this decision is also consistent with the observations of the Court in Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451 at paragraph 25 that “… if in any case there is real ground for doubt, that doubt should be resolved in favour of recusal …”otherwise described by Rix LJ in paragraph 75 of his judgment in JSC BTA Bank v Ablyazov as the “precautionary principle” i.e. “it is better to be safe than sorry”. Third, although I agree with Lord Clarke that, as the trial judge and any allegation of bias apart, I am likely to be best placed to hear both the application for permission to pursue committal proceedings and, if permission is granted, to hear any committal proceedings and that such an approach is likely to be both the most economical and the most just way to proceed, I am satisfied that these matters can be dealt with as necessary by another Commercial Court Judge. As to the application for permission, I have checked the position with the Commercial Court Listing Office and have been informed that although the position cannot be guaranteed, it should be possible to fix an early date so as to avoid any unnecessary delay. Conclusion[19]For these reasons, I have reluctantly decided that I should accede to Mr Urumov’s application that I should recuse myself from hearing the application for permission to pursue committal proceedings against him and, if permission be granted, from any involvement in any actual committal proceedings. It follows that the hearing presently fixed in respect of the application for permission against Mr Urumov currently fixed for 29 April 2014 must be adjourned. Other matters ?[20]It remains to consider whether, in the light of this decision, I should also recuse myself in respect of the other intended committal proceedings against Mr Pinaev, Mr Gersamia and Mrs Jemai. I should make plain that there is no application by any of these individuals that I should recuse myself; and the basis upon which I have decided that I should recuse myself in relation to the intended applications against Mr Urumov (i.e. Ground 3) does not apply to these other individuals. Nevertheless, it seems to me that similar issues will inevitably need to be considered – for example, whether it is in the public interest that these proceedings should be brought having regard, in particular, to the observations of Moore-Bick LJ in KJM Superbikes Ltd v Hinton [2009] 1 WLR 2406 at paragraphs 16-17. On this basis, there is, in my view, a strong argument that I should recuse myself from these intended proceedings as well; that the application for permission to pursue these proceedings should also be heard by the same Judge who deals with the application against Mr Urumov; and that the hearing presently fixed for the hearing of such applications on 29 April should also be adjourned. However, I have not heard any submissions from any of the parties to these applications; and, unless it can be agreed, this aspect will have to be addressed at the outset of that hearing.

Cited in 1 later judgment