Otkritie International Investment Management Ltd & Ors v Gersamia & Anor [2015] EWHC 821 (Comm)

[2015] EWHC 821 (Comm)Case No 2011 Folio 1182
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 25 March 2015
Before
MR JUSTICE EDER
Between
(1) OTKRITIE INTERNATIONAL INVESTMENT MANAGEMENT LTDApplicants(2) OTKRITIE SECURITIES LTDApplicant(3) JSC OTKRITIE FINANCIAL CORPORATIONApplicant(4) OTKRITIE BANK (JSC)Applicant(5) OTKRITIE FINANCE LTDApplicant(1) VLADIMIR GERSAMIARespondents(2) OLESSIA JEMAIRespondent
MR PAUL STANLEY QC (instructed by Steptoe & Johnson) for ApplicantsMR BART CASELLA (instructed by Kaim Todner) for the First Respondent for The Second Respondent did not attend and was not represented.Hearing Hearing dates: 20 March 2015
Judgment
[1]There are before the Court two applications in relation to alleged contempts by Mr Vladimir Gersamia and Mrs Olessia Jemai. The alleged contempts arise against the background of a trial that I heard in the latter part of 2013 which resulted in a judgment which I delivered in February 2014 reported as [2014] EWHC 191 (Comm). I deal with each in turn.

Vladimir Gersamia

[2]The original application by the applicants for a committal application against Mr Gersamia was issued on 11 March 2014. That application was supported by the 6th affidavit of Mr Neil Patrick Dooley a solicitor then in the employ of Hogan Lovells International LLP. The application was made in respect of three alleged grounds of contempt. Ground 1 did not require permission to bring committal proceedings. Grounds 2 and 3 did require permission.[3]On 5 December 2014, I granted the applicants permission to bring committal proceedings in respect of grounds 2 and 3 to be managed and heard together with the proceedings in respect of ground 1. My reasons were set out in a Judgment reported at [2014] EWHC 4489 (Comm). Thereafter, by application notice dated 15 January 2015, the applicants issued a further committal application in relation to additional grounds viz grounds 4 and 5, permission not being required in respect of those grounds.[4]Thereafter the applicants abandoned their contempt application in respect of grounds 2 and 3.[5]The present application is therefore limited to contempt proceedings in relation to grounds 1, 4 and 5 in respect of which Mr Gersamia made certain written admissions as set out in Appendix 2 to this Judgment. Those admissions were made on or about 4 February 2015. The present hearing so far as Mr Gersamia is concerned is therefore limited to the question of what, if any, sanction is to be imposed against Mr Gersamia in respect of such admitted contempts.[6]The applicable principles were summarised by Mr Paul Stanley QC in a helpful Note which I attach as Appendix 1 to this Judgment. There was no dispute by Mr Casella as to the applicable legislation and powers as summarised in paragraphs 1-6 of this Note; and the guidelines summarised at paragraphs 7-14 were also accepted by Mr Casella on behalf of Mr Gersamia. In addition I should mention that Mr Casella referred to certain additional matters derived from the cases, in particular(i) the Court may also adjourn the hearing;(ii) the Court should make due allowance for the encouragement or renewing of better thoughts and the purging of contempt;(iii) the Court may consider whether the applicants have been prejudiced by virtue of the contempt and whether the prejudice is capable of remedy; and(iv) the Court may consider whether the contemnor appreciates the seriousness of the breach. He derived these points from a number of the authorities which it is unnecessary to refer to in any detail because, as I understood, they were not disputed by Mr Stanley.[7]In addition, Mr Casella submitted that there should be a discount of up to one third of any sentence where the contemnor admits guilt. In particular, Mr Casella submitted that this is consistent with the approach taken to sentencing offenders in cases of criminal contempt: see Sentencing Council Guidelines Reduction in Sentence for Guilty Plea (2007). Further, Mr Casella submitted that such reduction is effectively underpinned by public policy (B2.2 Guidelines) and may be appropriate in even “overwhelming cases” (5.2-3 Guidelines); where not appropriate a reduction of 20% should be allowed (5.4). I was not referred to any authority on this point; but it was not disputed by Mr Stanley and I proceed on this basis.[8]The one main area of dispute that did arise concerned the powers of the Court to suspend any sentence of immediate imprisonment. It was common ground that the Court had a general power to suspend. However, Mr Stanley submitted, at least initially, that the Court could not or at least should not exercise the power of suspension if and to the extent that such suspension would involve imposing imprisonment for non-payment of a debt by the back door. In support of that submission, he referred me to the decision of the Court of Appeal in Gulf Azoz Shipping v Chief Humphrey Irikeee Idisi [2001] EWCA Civ 21 at paragraphs 67-73. However, he accepted that it would at least be open for the Court to suspend a custodial sentence if, for example, this might provide an opportunity for a contemnor to show that he had (in Mr Stanley’s words) changed the colour of his spots.[9]Applying the principles summarised in Appendix 1, the key questions (apart from any personal mitigation on behalf of Mr Gersamia) are questions of culpability and harm. As to ground 1, the acts in question were breaches of a freezing order made on 1 March 2012 and were admittedly deliberate and contumacious and involved funds that were subject to a proprietary injunction. The breaches occurred immediately after the Order was granted and after Mr Gersamia had been advised by his then solicitors about the effect of the Order, so there was and could be no excuse for his immediate breach of it. However, I bear in mind that the sums involved under ground 1 were small in absolute terms and also relative to the amount in issue to the case and some at least might have been regarded as potentially justifiable as “living expenses” if properly disclosed though others could not be.[10]As to ground 4(a), the acts in question were breaches of a freezing order dated 1 March 2012 and were admittedly deliberate and contumacious and involved funds that were subject to a proprietary injunction. The sums involved were substantial and the breaches took place over a prolonged period and at a time when Mr Gersamia can have been in no doubt whatsoever about the obligations imposed by the Order. As well as using third parties to disguise the true origin of the funds (including cash payments of US$ 1.2m made in late 2012/early 2013), Mr Gersamia then recycled the monies and used it to fund his solicitors (in excess of £850,000).[11]As to ground 4(b), this was a breach of a freezing order dated 14 March 2014 and was admittedly deliberate and contumacious. The sum involved was substantial. Mr Gersamia laid the ground for the breach by giving evidence at trial that he knew to be false. The breach occurred immediately after judgment and when Mr Gersamia must have understood the effect of a freezing injunction and involved the dishonest use of money being the traceable proceeds of his fraud to which he knew that he was not entitled.[12]As to ground 5, the failure to disclose assets and the other information in breach of the freezing order were serious and prolonged breaches of obligations of disclosure, made more serious by the fact that there was not simply a failure to provide any response, but by the fact that deliberate incomplete or false information was provided (in particular relating to US$ 3.7m of the fraud proceeds transferred to Jaspen and Mr Supranonok) and by the fact that Mr Gersamia admits that those assets were in fact misused by him.[13]Mr Stanley submitted, and I accept, that looked at overall, the contempts occurred repeatedly and over a long period of time. They cannot be characterised as a lapse of judgment but demonstrate a persistent and ingrained attitude of continual non-compliance with the Court’s orders.[14]If ground 1 had stood alone, I do not consider that a custodial sentence would have been appropriate. However, the other grounds are, in my judgment, extremely serious in terms of culpability and harm for the reasons already stated above. In light of the authorities referred to in Appendix 1 and subject to personal mitigation, it is my conclusion that a custodial sentence is inevitable and that given the nature and seriousness of the contempts, the appropriate sentence is one towards the very top of the range i.e. a starting point of 20 months.[15]As to personal mitigation, Mr Casella advanced a number of points which he urged the Court to take into account, in particular: i) No previous convictions; ii) Genuine remorse; iii) Co-operation in the recovery of assets, in particular(a) the sum of approximately US$ 41,000 in May 2014 (being the value of an Aston Martin motor vehicle originally purchased with the fraud proceeds); and(b) the assistance provided in releasing the sum of approximately US$ 700,000 in July 2014 from an account in Switzerland; iv) Lost employment/impact on his life from proceedings including restriction on his liberty while deprived of his passport for almost 3 years; and v) The fact that he is still facing extremely serious criminal proceedings arising from the same facts as the main proceedings.[16]Despite Mr Casella’s forceful submissions, I do not consider that these points justify much “credit” by way of personal mitigation. I accept that Mr Gersamia has never been to prison before but given my findings in the main trial, it would, in my view, be wrong to say that he was a man of previous good character. As to Mr Gersamia’s supposed co-operation in relation to the recovery of the assets referred to above, such assistance as Mr Gersamia provided appears to have been very late indeed and in circumstances where he had little, if any, alternative. The fact is that on my findings, Mr Gersamia’s share of the fraud proceeds amounted to approximately US$ 10m. Of that sum, some US$ 2.5m was paid over to Mr Gherzi; and a further sum of US$ 3.5m has more recently been recovered from Jaspen. That leaves a balance of an amount in excess of US$ 3m that remains unaccounted for even now. In these circumstances, the suggestion that Mr Gersamia is genuinely remorseful is, in my judgment, hollow. Nor do I accept the suggestion that it would be right to say that his life has been adversely affected by the proceedings. In truth, his life has been adversely affected by his own fraudulent conduct. Notwithstanding, I do accept that he has endured a restriction on his liberty over the past 3 years which I can and should take into account. Bearing all the matters that Mr Casella has pleaded by way of mitigation in favour of Mr Gersamia, I would allow a modest “credit” of 2 months against my starting point of 20 months. I would then allow a further discount of 1/3 on the basis of his admission of the alleged contempts which, Mr Stanley accepted, were made at the earliest opportunity. The result in my judgment is a custodial sentence of 12 months imprisonment.[17]I turn then to deal with Mr Casella’s further submission that this custodial sentence should be suspended. In particular, Mr Casella submitted that Mr Gersamia was hopeful that he would be able to repay the remainder of his share of the proceeds i.e. US$ 3.1m within 120 days. On that basis he submitted that the custodial sentence should not take effect if that sum of money was paid within that period of time.[18]I was very reluctant to accede to that submission, in particular because(i) the underlying frauds were committed some years ago and Mr Gersamia has had ample opportunity to make good the losses which the applicants have suffered; and(ii) there was not a scrap of evidence before me as to how Mr Gersamia might obtain the money. Notwithstanding, Mr Stanley made plain that he had no objection in principle to the proposal; and for that reason alone I have decided to suspend the custodial sentence on terms that the sum of US$ 3.1m be repaid within 120 days.

Olessia Jemai

[19]The applicants alleged that Mrs Jemai was and is in contempt of court in six respects as set out in two application notices dated 14 March 2014 and 19 December 2014 respectively. In the event, Mr Stanley informed the Court that the applicants did not intend to proceed on grounds 1 and 4 and restricted themselves to grounds 2(a) and (b) (concerning allegedly false disclosure statements); ground 3 (concerning an allegedly false statement of truth on Jecot’s defence); and ground 5 (concerning Mrs Jemai’s failure to comply with disclosure obligations on a freezing injunction made against her on 14 March 2014). Those grounds are set out in full in Appendix 3 to this Judgment.[20]The applicants required permission to proceed in relation to grounds 2 and 3. There is no doubt that the first application was duly served on Mrs Jemai and that she was fully aware of the contempt proceedings against her. The position with regard to the second application is somewhat complicated for reasons which Mr Stanley fairly explained to the Court. In particular, it appears that the applicants’ sought permission to serve that second application against Mrs Jemai in the same way as the first application i.e. by email to Mrs Jemai’s email addresses (as they were then known) but no order was made to that effect. Nevertheless, Mr Stanley confirmed that service had been effected in that way. A further complication is that it is arguable that the first application was, on its face, deficient in seeking an order only to commence committal proceedings. In those circumstances, it seems to me that the appropriate course would be to grant permission retrospectively pursuant to CPR 81.10(4) and also to give Mrs Jemai a right to apply to set aside my Order.[21]Mrs Jemai has not served any evidence in relation to these contempt proceedings and did not participate in the hearing. I have considered carefully whether it would be appropriate to adjourn this hearing to give Mrs Jemai a further opportunity to participate. However, it seems plain to me that Mrs Jemai has deliberately decided to ignore these proceedings; and for that reason I have decided that it would not be appropriate to permit any further time.[22]Notwithstanding, as Mr Stanley accepted, the burden lies on the applicants to establish that each alleged contempt was committed by Mrs Jemai and that this must be established to the criminal standard i.e. so that the Court is sure that the alleged contempt(s) was/were committed.[23]In relation to grounds 2 and 3, the applicants rely on my Judgment dated 10 February 2014 following the lengthy trial. In that context, Mr Stanley accepted that the Judgment did not create any issue estoppel as between the applicants and Mrs Jemai because she was not herself a named party. He also accepted that the opinions expressed in that Judgment are not, as such, admissible by virtue of the rule in Hollington v Hewthorn [1943] KB 587. Notwithstanding, he submitted that the Court is entitled to have regard to matters of primary fact recorded in that Judgment and if those matters of fact justify the conclusions reached in that Judgment the Court is entitled to reach the same conclusion. That submission was based on the analysis of Leggatt J in Rogers v Hoyle [2013] EWHC 1409 (QB), [2014] EWCA Civ 257, [2014] 2 WLR 148 especially at [53]-[55], [58]-[59] and [79]-[90] and [100]-[104] of Leggatt J’s judgment and [39]-[40] of Christopher Clarke LJ’s judgment. I accept that submission.

Ground 2

[24]Ground 2 concerns disclosure statements. It is divided into two parts viz 2(a) which concerns making a positively misleading statement; and 2(b) which concerns failure to give disclosure. As to ground 2(a), Mr Stanley submitted and I accept that the following facts as detailed in his skeleton argument are beyond reasonable doubt (para 13): i) On 31 January 2013, Mrs Jemai signed a disclosure statement on behalf of Jecot. ii) In that statement she certified that she understood the duty of disclosure and that to the best of her knowledge Jecot had carried it out. iii) That disclosure statement had attached to it a list of documents. iv) Entry 65 on that list was described as ‘Loan Agreement between Sergey Kondratyuk and Jecot SA’, said to have a date of 20 March 2011. v) In fact, for the reasons given at paragraph 509 of the Judgment, that agreement was a fake or a sham. Mrs Jemai has not put forward any evidence or argument in response to this application to the contrary. vi) Entry 69 of that list was described as ‘Profit Sharing Agreement between Jecot SA and Sergey Kondratyuk’, said to have a date of 7 April 2011. vii) In fact, for the reasons given in paragraphs 531–534 of the Judgment, that document was also a forgery. Mrs Jemai has not put forward any evidence or argument in response to this application to the contrary. viii) Entry 70 of that list was described as ‘Profit Sharing Agreement between Jecot SA and FO Firmly Oceans Corporation’. ix) Again, and for the reasons given in paragraphs 531–534 of the Judgment, that document was also a forgery. Mrs Jemai has not put forward any evidence or argument in response to this application to the contrary. x) Entry 71 of that list was described as ‘Contract No: 011/CC-7’ and said to be dated 7 April 2011. In fact that was a reference to the Annex to the Profit Sharing Agreement dated 7 April 2011. Regardless of its exact title, it was plainly put forward as a genuine document. xi) In fact, again for the reasons given in paragraph 531–534 of the Judgment, that document was also a forgery. Mrs Jemai has not put forward any evidence or argument in response to this application to the contrary. xii) The disclosure statement asserted that Jecot ‘has control of the documents numbered and listed’ in part A of the list, as set out above. In each of the cases set out above, the document in question was mis-described and mis-dated. I am satisfied so as to be sure that Mrs Jemai knew when she signed the disclosure statement that this was so.[25]As to ground 2(b), Mr Stanley submitted and I accept that the following facts as detailed in his skeleton argument are beyond reasonable doubt (para 15): i) Mrs Jemai signed the disclosure statement in which, as set out above, she certified that she believed Jecot had carried out its duty of disclosure and that the list she produced “is a complete list of all the documents which are or have been in [Jecot’s control] which it is obliged under the said order to disclose.” ii) There were three documents (in particular) that were not included on the list: the Hinduja bank account statements, the contract between Jecot and Carbones dated 1 March 2012, and the Jecot invoice for the pig iron. iii) There can be no doubt that Mrs Jemai knew of the existence of those documents. iv) Mrs Jemai has not put forward any evidence or argument to the Court in response to this application to explain the omission of those documents from the list. v) Mrs Jemai must have known about the relevance of such documents because it was Jecot’s case that it had used money received from Firmly Oceans to purchase pig iron from Donetsksteel and that the said pig iron was in a warehouse in Ukraine, when in fact (as Mrs Jemai knew) it had been sold to Carbones in March 2012 for US$4.5 million and the proceeds paid to Jecot’s secret account at Hinduja bank: paragraph 41 of Jecot’s defence. vi) Mrs Jemai purported to put forward an explanation as to the Carbones’ transactions in her sixth witness statement dated 21 November 2013 but as recorded in paragraph 529 of the Judgment, that statement was implausible and substantially and dishonestly untrue.

Ground 3

[26]As to ground 3, Mr Stanley submitted and I accept that the following facts as detailed in his skeleton argument are beyond reasonable doubt (para 18): i) Mrs Jemai signed a statement of truth on Jecot’s Defence on or around 14 December 2012. ii) That Defence asserted (at para 34) that ‘with effect from 7 April 2011, Mr Kondratyuk on behalf of Firmly Oceans and Mrs Jemai on behalf of Jecot entered into a Profit-Sharing Agreement’, and (para 35) that Jecot received five payments totalling $34.5 million between April and June 2011 ‘pursuant to the Jecot-Firmly Oceans PSA’. iii) That Defence (at para 44) also referred to the annex to that document, which was said to have been signed on 27 September 2011. iv) On 30 January 2013, Mrs Jemai signed a statement of truth on further information. Response 22 of that document stated that the Profit-Sharing Agreement had been ‘negotiated between Mrs Jemai and Mr Kondratyuk’ in the ‘days preceding the date of the Agreement’ and executed by the Panamanian Directors of Firmly Oceans ‘several days’ after that date. v) In fact, for the reasons given at para 531–534 of the Judgment, the purported Profit Sharing Agreement was a fabrication, produced retrospectively by Mrs Jemai, and money had not been paid pursuant to it. Mrs Jemai has not, in response to this application, put forward any evidence or argument to explain or excuse the facts set out in the Judgment. vi) The Defence was in that respect false to Mrs Jemai’s knowledge. She cannot have believed it when she signed the statement of truth.

Ground 5

[27]As to ground 5, Mr Stanley submitted and I accept that the following facts as detailed in his skeleton argument are beyond reasonable doubt (para 20): i) On 14 March 2014, this Court made a freezing injunction against Mrs Jemai. ii) That injunction (para 7) required Mrs Jemai to provide information as to her assets within 72 hours of service. iii) The injunction provided for substituted service to be effected as set out in para 15 of the Order, and expressly provided that personal service should be dispensed with pursuant to CPR 81.8. It was prominently endorsed with a penal notice. iv) The order was continued by Mr Justice Flaux on 28 March 2014. The continued order also provided for substituted service. v) The order of 14 March 2014 was duly served in accordance with its provisions. It was returned ‘not known at this address’ from the address for postal service; but it was also served by email. vi) The order of 28 March 2014 was similarly so served. (The order having first been served on Mrs Jemai by email and by post on 28 March 2014.) Mrs Jemai has admitted in correspondence that she is aware of the freezing injunction and committal proceedings. vii) She has refused to disclose any information, purportedly because she takes the view that she has not been correctly served as a matter of Swiss Law. But she has made no application to set aside the order. And an application she made contesting the jurisdiction of the court in relation to her joinder to the proceedings was dismissed because of irregularities in the way it was made.[28]In my judgment, it is therefore beyond any reasonable doubt that Mrs Jemai is in persistent, continued and contumacious contempt of the Orders made on 14 and 28 March 2014 as set out above. She has neither apologised nor sought further time to comply or made any pretence of compliance.[29]Turning then to the question of sentence, Mr Stanley submitted and I accept that the following matters are relevant bearing on culpability in relation to grounds 2 and 3 viz(i) they were deliberate;(ii) they were persisted in over a long period of time;(iii) there has been neither acknowledgement nor remorse;(iv) their intention was to resist a just claim dishonestly but they did not succeed in that respect;(v) there is no evidence that Mrs Jemai was acting under pressure or for anything other than a thoroughly wicked motive. In addition, with regard to ground 5, the contempt has been persistent and continuing. No reasonable explanation has been given. In general, Mrs Jemai has made no admissions, no apology and no amends. She continues to flout the Court’s orders.[30]In these circumstances, it is in my judgment appropriate to impose against Mrs Jemai a substantial period of imprisonment towards the top end of the range i.e. 20 months. APPENDIX 131. CONTEMPT SENTENCING32. CLAIMANTS’ NOTE ON PRINCIPLES

Applicable legislation and powers

[1]The most serious penalty for contempt is committal to prison. Under s 14 (1) of the Contempt of Court Act 1981 (White Book, Vol 2, 1557), a committal order must be for a fixed term, and may not on any one occasion exceed 2 years. A person committed is entitled to unconditional release after serving half the sentence under the Criminal Justice Act 2003, s 258.[2]Committal may serve two distinct purposes (Lightfoot v Lightfoot [1989] 1 FLR 414, 416–417 (Lord Donaldson MR)):(a) punishment of past contempt; and(b) securing compliance.[3]It may be good practice, if the court’s sentence includes elements of both, to make clear what period of committal is regarded as appropriate for punishment alone, i.e. what period would be regarded as just if the contemnor were promptly to comply with the order in question. JSC Bank v Soldochenko (No 2) [2011] EWCA Civ 1241, [2012] 1 WLR 350 at [56].[4]Committal may be suspended: CPR 81.29. This is a matter of discretion. Suspension may be appropriate:(a) as a first step, with a view to securing compliance with the court’s orders: Hale v Tanner [2000] 1 WLR 2377, 2381;(b) in view of cogent personal mitigation: Templeton Insurance Ltd v Thomas [2013] EWCA Civ 35.[5]The court may impose a fine. There is no statutory limit to the amount of a fine. Contempt of Court Act 1981, s 14 (2). If a fine is an appropriate punishment it is wrong to impose a custodial sentence because the contemnor could not pay the fine (Re M (Contact Order) [2005] EWCA Civ 615, [2005] 2 FLR 1006).[6]Sequestration is also available as a remedy for contempt.

Guidelines

[7]Contempt sentences are fact specific. There are no formal sentencing guidelines. Shah v Patel [2008] EWHC 1360 (Ch).[8]With that caveat, the cases do at least indicate the following matters as relevant.[9]As a general matter, the Court should bear in mind the desirability of keeping offenders, in particular first-time offenders, out of prison (see Templeton Insurance v Thomas at [27], referring to R v Kefford [2002] Cr App R (S) 106 and R v Seed and Stark [2007] 2 Cr App R (S) 69). Imprisonment is ‘only appropriate where there is serious, contumacious, flouting of orders of the court’: Gulf Azov Shipping v Idisi [2001] EWCA Civ 21, at [72].[10]As one would expect, key questions (apart from any mitigation made on the contemnor’s behalf) are questions of culpability and harm.[11]In relation to breaches of freezing injunctions that consist of the dissipation of assets, the following matters appear relevant:(a) In principle, deliberate breaches of such orders are regarded as serious, and a sentence of imprisonment is likely to be necessary: see Templeton Insurance at [42]: ‘whereas it will always remain appropriate to consider in individual cases whether committal is necessary, and what is the shortest time necessary for such imprisonment, and whether a sentence of imprisonment can be suspended, or dispensed with altogether: nevertheless, it must now be accepted that the attack on the administration of justice which is made when a freezing order is breached usually merits an immediate sentence of imprisonment of some not insubstantial amount’.(b) Relevant matters must include: (i) how far the breaches were deliberate or planned; (ii) how prolonged and extensive they were; (iii) what role the particular contemnor had in those breaches (for instance, whether he instigated them or acted under pressure from others); (iv) what the risk of harm was; (v) whether any actual harm resulted.[12]In relation to non-compliance with disclosure orders:(a) JSC Bank v Soldochenko (No 2) [2011] EWCA Civ 1241, [2012] 1 WLR 350 at [55] treated such breaches alongside other breaches of freezing injunctions, indicating that ‘condign punishment normally means a prison sentence’, and that in cases of continuing failure to disclose relevant information ‘the court should consider imposing a long sentence, possibly even the maximum of two years, in order to encourage future co-operation by the contemnor’.(b) Relevant matters must include: (i) the extent of the failure to disclose; (ii) how long it has lasted; (iii) how far it has caused or might have caused harm; (iv) whether it was deliberate, and the reasons for it; (v) whether it has been accompanied by positively misleading disclosure (e.g. pretence that disclosure has been given).[13]In relation to false disclosure statements:(a) In South Wales Fire and Rescue Service v Smith [2011] EWHC 1749 (Admin), dealing with a false personal injury claim, Moses LJ said that ‘Those who make such false claims if caught should expect to go to prison’ [5], though because of delay no prison sentence was there imposed. Such sentences have been imposed in other cases. For example in Lloyds TSB v Shanley [2013] EWHC 4603 (Ch), a sentence of 3 months was imposed (it would have been longer but for mitigation) and in Nield v Loveday [2011] EWHC 2324 (Admin), [2011] 4 Costs LO 470 a sentence of 9 months was imposed in a personal injury case.(b) Relevant factors include: (i) how prolonged and extensive the contempt was; (ii) the motive: while it is not a defence (as in Shanley) that a false document is put forward in support of a bona fide claim, it is obviously worse where a claim is wholly false; (iii) the extent or risk of harm (bearing in mind that there is always harm to the public interest in such cases).[14]In all cases, relevant mitigating factors include:(a) whether, and if so when, the defendant has admitted the contempt;(b) whether the defendant has expressed remorse;(c) whether the defendant has, so far as he is able to, complied belatedly with the order or otherwise made amends for the wrong;(d) the defendant’s character and antecedents. APPENDIX 2 (original numbering maintained)

Grounds for Committal against Vladimir Gersamia ("Mr Gersamia")

[2]On 1 March 2012, Mr Justice Flaux made the Freezing Order, which included the following provisions:(a) Paragraph 4 provided that Mr Gersamia “… must not … dispose of, deal with or diminish the value of … the US$160,000,000, being the traceable proceeds of [the Argentinian Warrants Fraud].”(b) Paragraphs 5 and 6 provided that Mr Gersamia had to disclose and verify on affidavit “… the location, nature and value of all assets which represent in whole or in part, or are derived from the proceeds or fruits (including any interest earned thereon) of, the US$213,468,750 paid during the period 16 to 18 March 2011 …”.(c) Paragraph 7.2 provided that Mr Gersamia “… must not in any way dispose of, deal with or diminish the value of any of his assets whether they are in or outside England and Wales.”(d) Paragraphs 11 and 12 provided that Mr Gersamia had to disclose and verify on affidavit “the value, location and details of …”all of his “… assets worldwide (exceeding £10,000 in value) …”.(e) Paragraphs 23 and 24 provided that the Freezing Order could be served on Mr Gersamia at the office of SCA, and the requirement for personal service was dispensed with pursuant to RSC Order 45, rule 7(7).[3]The Freezing Order contained a penal notice in the following form:
“If you Vladimir Gersamia disobey this order you may be held in contempt of court and may be imprisoned, fined or have your assets seized.”
[4]The Freezing Order was continued by Mr Justice Teare on 16 March 2012 on the same terms.[5]The Freezing Order was served on Mr Gersamia, at 1.38pm on 2 March 2012 by a trainee solicitor at Hogan Lovells, Swaroop Kadambari, who attended the offices of SCA and left a copy with SCA in accordance with paragraph 23(b) of the Freezing Order. SCA acknowledged service of the Freezing Order by letter of 5 March 2014. Mr Gersamia was present at the offices of SCA on 2 March 2012, he was informed about the order, its terms were explained to him, and he understood them, as he has admitted in his evidence at trial.[6]At all times Mr Gersamia controlled Tremlett International Limited (“Tremlett”) and the funds held by Tremlett in accounts at Clariden Leu, Zurich; and was an account signatory of the Tremlett accounts (as he has admitted in his evidence at trial.[7]The Tremlett accounts were expressly referred to at Schedule B5 of the Freezing Order. They contained proprietary funds (within the meaning of the Freezing Order), as Mr Gersamia knew at the time and has since admitted at trial.[8]Credit cards linked to Tremlett's account at Clariden Leu were issued in the names of Mr Gersamia’s father (the Eleventh Defendant, Mr T. Gersamia) and mother (Mrs Nino Tsintsadze), as Mr Gersamia admitted in his evidence at trial. The credit card issued in the name of Mr Gersamia's father was used at all times by Mr Gersamia and Mr Gersamia had signed the back of the credit card, as Mr Gersamia admitted in his evidence at trial.[9]Clariden Leu's terms of business in relation to the Gersamia Card (in the English language) included the following:(a) There was a guarantee issued by Tremlett over its account at Clariden Leu for €250,000 on account of spending on the Gersamia Card;(b) Clariden Leu was authorised to use the guarantee to discharge any debt incurred on the Gersamia Card; and(c) Tremlett pledged all assets held by Clariden Leu as security for the debt so incurred on the Gersamia Card.[10]Mr Gersamia signed those terms in June 2011, having expressly acknowledged that he had read and understood them. Therefore, he was at all material times aware of them.[11]After he became aware of the terms of the Freezing Order and after it was served upon him, Mr Gersamia spent the following sums using the Gersamia Card:(a) 3 March 2012: £3,519 at the Cuckoo Club, London W1B;(b) 3 March 2012, £115 at the Novikov Bar and Grill, London;(c) 3 March 2012, £34.40 at FDFE Gatwick;(d) 4 March 2012, €4,351 at a gentlemen's club in Dusseldorf;(e) 23 March 2012, US$1,889.67 at the Viceroy Miami Hotel; and(f) 23 March 2012, US$1,889.67 at the Viceroy Miami Hotel.[12]Mr Gersamia did not tell the Claimants about these payments before spending money. In addition, the aforesaid payments were not permitted payments of ordinary living expenses pursuant to paragraph 13 of the Freezing Order because they relate to payments at nightclubs or similar establishments, restaurants and for foreign holidays (and, in any event, the payments greatly exceeded the amount that Mr Gersamia was permitted to spend each week on living expenses, even had these been permitted expenses).[13]By so using the credit card Mr Gersamia acted in breach of paragraphs 4 and 7.2 of the Freezing Order and he did so deliberately and in contumelious defiance of it.

(a) Breach of the Freezing Order

[1]The Freezing Order included the following provisions (pages 14, 16-19 of NPD6):(a) Paragraph 4 provided that Mr Gersamia“... must not...dispose of, deal with or diminish the value of ... the US$160,000,000, being the traceable proceeds of [the Argentinian Warrants Fraud” (hereafter, “the Proceeds of the Fraud”)”.(b) Paragraph 7.2 provided that Mr Gersamia“... must not in any way dispose of, deal with or diminish the value of any of [his] assets whether they are in or outside England and Wales.”(c) Paragraph 8 provided that “Paragraph 7 applies to all the Respondents’ assets whether or not they are in their own name, whether they are solely or jointly owned and whether the Respondents are interested in them legally, beneficially or otherwise. For the purpose of this order the Respondents’ assets include any asset which they have the power, directly or indirectly, to dispose of or deal with as if it were their own, The Respondents are to be regarded as having such power if a third party holds or controls the asset in accordance with the Respondents’ direct or indirect instructions.”(d) Paragraph 13(1) provided that Mr Gersamia was not prohibited from “... spending a reasonable sum on legal advice and representation, provided that (a) any money so spent does not come or derive from the moneys and/or assets frozen pursuant to the proprietary injunction set out in paragraph 4 above; and (b) in any event, before spending any money the Respondent must tell the Applicant's legal representatives where the money is to come from.”(e) Paragraph 13(2) provided that Mr Gersamia was not prohibited “... from dealing with or disposing of any of [his] assets in the ordinary and proper course of business except for the moneys and/or assets frozen pursuant to the proprietary injunction set out in paragraph 4 above. However, before doing so the Respondent must tell the Applicant's legal representatives.”[2]The Freezing Order contained a penal notice in the following form: “If you ... disobey this order you may be held in contempt of court and may be imprisoned, fined or have your assets seized. Any other person who knows of this order and does anything which helps or permits any Respondent to breach the terms of this order may also be held to be in contempt of court and may be imprisoned, fined or have your assets seized”.[3]As noted in paragraph 9 above, the Freezing Order was served on Mr Gersamia on 2 March 2012 in accordance with paragraph 23(b) of the Freezing Order. Mr Gersamia was thereby on notice of the Freezing Order.[4]The Freezing Order was continued by Mr Justice Teare on 16 March 2012 on the same terms (pages 40-62 of NPD6).[5]At all material times Mr Gersamia controlled Templewood and the funds held by Templewood in accounts at Clariden Leu, Bahamas (pages 278-297); and was the authorised account signatory of the Templewood (pages 295). In his evidence under cross-examination as to his assets pursuant to the Freezing Order, Mr Gersamia admitted that he was and always had been the sole beneficial owner and controller of Templewood: see page 298.[6]The Jaspen Payments were not, as Mr Gersamia asserted in his evidence as set out above and in his defence at trial, lost by Jaspen on trading in corn futures. Rather, this money at all times remained under the control of Mr Gersamia and was an asset falling within the scope of the Freezing Order, and he gave instructions to Jaspen and Mr Supranonok as to its dissipation in breach of it.[7]After he became aware of the Freezing Order and after it was served on him, Mr Gersamia caused Jaspen and Mr Supranonok to make the payments referred to at paragraph 27 above namely:(a) US$95,000 to Mr Giorgi Kalandarishvili on or about 12 April 2012;(b) US$50,000 to Miss Ilma Zubakhina on or about 20 May 2012;(c) US$50,000 to Miss Memanishvili on or about 31 August 2012;(d) US$77,095.16 to Eastport Systems Inc on or about 26 October 2012;(e) US$53,338.41 to Official Trading Limited on or about 26 October 2012;(f) US$71,250 to Official Watches on about 6 November 2012;(g) US$1,112,089 on FX Trading;(h) £6,732.28 for holidays for Mr Supranonok and Mr Piniazhyn in March/April 2012;(i) US$1,200,000 in cash payments made in late 2012 and early 2013.[8]The payments referred to in paragraph 39 were part of the Proceeds of Fraud and were made in breach of paragraph 4 of the Freezing Order.[9]In further breach of paragraph 13(1) the Freezing Order, Mr Gersamia caused some or all of the payments referred to at paragraph 39 above to be transferred to SCA as referred to in the schedule attached at page 299-300 (“the SCA Schedule”). Although the SCA Schedule records that the payments to SCA were being made by third parties in the form of loans or gifts, in fact the monies derived from the Proceeds of Fraud, as admitted by Mr Gersamia.[10]Mr Gersamia did not tell Otkritie about the payments referred to in paragraph 39 or the payments to SCA before making them. In addition, the aforesaid payments were not permitted payments of ordinary living expenses, his legal costs, or made in the ordinary and proper course of business, pursuant to paragraph 13 of the Freezing Order; and/or in any event they derived – as Mr Gersamia knew – from the monies misappropriated from Otkritie and were subject to the proprietary injunction contained at paragraph 4 of the Freezing Order.[11]By so making or causing the payments referred to above to be made, Mr Gersamia dealt, disposed of or diminished the value of his assets and/or the Proceeds of Fraud and thereby acted in breach of paragraphs 4 and 7.2 of the Freezing Order and he did so deliberately and in contumelious defiance of it.

(b) Breach of the Second Freezing Order

[12]The Second Freezing Order included the following provisions (pages 3-4 of NPD6):(a) Paragraph 5 provided that Mr Gersamia “... must not ... dispose of, deal with or diminish the value of [his] assets whether they are in or outside England and Wales up to the Total Sum Frozen”, being US$129,262,866.(b) Paragraph 6 provided that paragraph 5 applies to “…all [Mr Gersamia’s] assets whether or not they are in [his] own name, whether they are solely or jointly owned and whether [Mr Gersamia is] interested in them legally, beneficially or otherwise… [and] include any asset which [he has] the power, directly or indirectly to dispose of or deal with as if it were [his] own.”[13]The Freezing Order contained a penal notice in the following form:
“If you ... disobey this order you may be held in contempt of court and may be imprisoned, fined or have your assets seized. Any other person who knows of this order and does anything which helps or permits any Respondent(s) to breach the terms of this order may also be held to be in contempt of court and may be imprisoned, fined or have your assets seized.”
[14]The Second Freezing Order was served on Mr Gersamia on 26 March 2014 in accordance with paragraph 24.5 of the Second Freezing Order (page 57). Mr Gersamia was thereby on notice of the Second Freezing Order.[15]As noted above, at all material times Mr Gersamia controlled Templewood and the funds held by Templewood in accounts at Clariden Leu, Bahamas; and was the authorised account signatory of the Templewood (as he admitted). In his evidence under cross-examination as to his assets pursuant to the Freezing Order, Mr Gersamia admitted that he was and always had been the sole beneficial owner and controller of Templewood: see page 298. The Jaspen Payments were not, as Mr Gersamia asserted in his evidence as set out above and in his defence at trial, lost by Jaspen on trading in corn futures. Rather, this money at all times remained under the control of Mr Gersamia and was an asset falling within the scope of the Second Freezing Order.[16]Mr Gersamia caused Jaspen and Mr Nesteruk to carry out the transactions referred to at paragraph 27 above namely US$1,112,089 on FX trading, and those transactions continued after the Second Freezing Order was made on 14 March 2014, as evidenced by the documents referred to at paragraphs 29(e).[17]Mr Gersamia did not tell Otkritie about these payments before spending money. In addition, the aforesaid payments were not permitted payments of ordinary living expenses, or his legal costs, or made in the ordinary and proper course of business, pursuant to paragraph 14 of the Second Freezing Order because – as Mr Gersamia knew - they derived from the monies misappropriated from Otkritie.[18]By so causing Jaspen and Mr Supranonok to make the payments referred to above, Mr Gersamia caused them to deal, dispose of or to diminish the value of his assets and/or the Proceeds of Fraud and thereby acted in breach of paragraph 5 of the Second Freezing Order and he did so deliberately and in contumelious defiance of it.

Ground 5: Failure to disclose assets and other information in breach of the Freezing Order

[19]The Freezing Order also included the following provisions (pages 15-16 and 18 of NPD6):(a) Paragraph 5 provided that Mr Gersamia “must within 72 hours of service … to the best of [his] ability and after making all reasonable enquiries inform the Applicants’ solicitors in writing of the location, nature and value of all assets which represent in whole or in part, or are derived from the proceeds or fruits … of, the US$213,468,750 paid during the period 16 to 18 March 2011…”.(b) Paragraph 11(1) provided that Mr Gersamia “… must … inform the Applicants’ solicitors of all [his] assets worldwide (exceeding £10,000 in value) whether in [his] name or not and whether solely or jointly owned, giving the value, location and details of all such assets.”(c) Paragraphs 6 and 12 provided that Mr Gersamia must verify on affidavit within 5 working days the information disclosed pursuant to paragraphs 5 and 11 respectively.[20]After he became aware of the terms of the Freezing Order, Mr Gersamia failed, in further deliberate and contumelious breach and defiance of it:(a) to disclose the whereabouts of the Fraud Proceeds, or such assets that represented in whole or in part, or were derived from the Fraud Proceeds, as required by paragraph 5;(b) to swear and serve on the Claimants an affidavit setting out the whereabouts of the Fraud Proceeds, or such assets that represented in whole or in part, or were derived from the Fraud Proceeds, as required by paragraph 6;(c) to disclose all of his assets worldwide whether in her own name or not and whether solely or jointly owned, giving the value, location and details of all such assets exceeding £10,000 in value as required by paragraph 11, in that he deliberately omitted reference to the monies and other assets being held for him by Jaspen and Mr Supranonok as referred to in paragraphs 27 above;(d) to swear and serve on the Claimants an affidavit setting out all of his worldwide assets as required by paragraph 12, in that he deliberately omitted reference to the monies and other assets being held for him by Jaspen and Mr Supranonok as referred to in paragraphs 27 above;(e) to disclose how he is paying for his legal costs as required by paragraph 13, in that he gave deliberately false and misleading information about the source of monies being used to pay SCA, as set out in the SCA Schedule, knowing such information to be false, as referred to in paragraphs 41 above. APPENDIX 3 (original numbering maintained) Grounds for Committal against Olessia Jemai (“Mrs Jemai”)[7]On 31 January 2013, Mrs Jemai made a disclosure statement on behalf of Jecot. The disclosure statement was verified by a statement of truth signed by Mrs Jemai on or about 31 January 2013.

(a) : Disclosure of fake documents as genuine

[8]By that disclosure statement, Jecot disclosed, inter alia, the following documents:(a) A document purportedly dated 20 March 2011 and described as a loan agreement between Jecot and Mr Kondratyuk (see entry 65 of Jecot's disclosure list)(b) A document purportedly dated 7 April 2011 and described as the Profit Sharing Agreement between Jecot S.A. and Sergey Kondratyuk (see entry 69 of Jecot's disclosure list);(c) A document purportedly dated 7 April 2011 and described as the Profit Sharing Agreement between Jecot S.A. and Firmly Oceans Corporation (see entry 70 of Jecot's disclosure list); and(d) A document purportedly dated 27 September 2011 being an Annex to Profit Sharing Agreement and described as Contract 011/CC-7 (see entry 71 of Jecot's disclosure list).[9]By disclosing the documents as described in the disclosure statement and by verifying that statement with a statement of truth, Mrs Jemai represented to the Claimants and to the Court that she believed them to be genuine documents as described.[10]In fact, for the reasons given by Mr Justice Eder in the Judgment:(a) The purported Kondratyuk-Jecot Loan Agreement is a fake or a sham or both created by Mrs Jemai from pre-signed blank sheets of paper (paragraph 509);(b) The purported Jecot-Firmly Oceans PSA and the purported Jecot-Kondratyuk PSA are patently documents prepared for a corrupt purpose (paragraph 531); and(c) The purported Annex to the Jecot-Kondratyuk PSA is a forgery (paragraph 533).[11]Mrs Jemai knew that those documents were fakes, shams and/or forgeries when she made the disclosure statement and signed the statement of truth verifying it, which were in those respects false to her knowledge. Mrs Jemai knew these matters as a result of her knowledge of and involvement in the preparation of the said documents and the laundering the Proceeds of the Fraud, including her knowledge that:(a) the monies transferred by Arcutes Holding Inc (“Arcutes”) to the Sixteenth Defendant (“Vantax”) and by the Ninth Defendant (“Firmly Oceans”) to Jecot were parts of the Proceeds of the Fraud and were transferred in order to distribute and launder the same to those involved in the fraud (including Mr Jemai and Mr Kondratyuk); and(b) there were no genuine commercial agreements between Arcutes, Jecot, Firmly Oceans and/or Mr Kondratyuk.[12]Mrs Jemai therefore signed a false statement of truth on a false disclosure statement by which she disclosed those documents (or caused them to be disclosed) as genuine when in truth, as she knew, they were fakes, shams and/or forgeries; and she therefore had no honest belief in their truth.

(b) : Deliberate concealment of relevant documents

[13]In its disclosure statement, Jecot did not disclose, inter alia,any of the following documents:(a) bank statements for the Hinduja Account;(b) the sale contract between Jecot and Carbones dated 1 March 2012; and(c) the Jecot Invoice for the price of the pig iron sold to Carbones dated 13 March 2012.[14]Mrs Jemai knew from her control of Jecot and her involvement in and knowledge of:(a) the establishment and operation of the Hinduja Account; and(b) the negotiation, preparation and/or execution of the said sale contract and invoice, that these documents were in the control of Jecot; and she knew (because she knew of their existence and contents) that Jecot was required to disclose them; but she deliberately failed (and caused Jecot to fail) to search for and/or to disclose them.[15]Mrs Jemai therefore signed a false statement of truth and made a false disclosure statement on behalf of Jecot, in that she purported to confirm in the disclosure statement that:(a) she had undertaken a reasonable search for all documents in Jecot's control that it was obliged to disclose;(b) Jecot's list of documents was a complete list of all documents in its possession or control which it was obliged to disclose; and(c) to the best of her knowledge, Jecot had carried out its duty of disclosure, when in truth, as she knew for the reasons set out above, there were other documents that Jecot was obliged to disclose but had not disclosed; and she therefore had no honest belief in their truth.[16]Jecot served a Defence dated 14 December 2012 verified by a statement of truth signed by Mrs Jemai. In that document, Mrs Jemai caused Jecot to refer to and rely upon as genuine the purported Jecot-Firmly Oceans PSA (paragraphs 32-36) and the Annex to the purported Jecot-Firmly Oceans PSA (paragraphs 44-45).[17]Jecot served a Reply to a Request for Further Information dated 30 January 2013 verified by a statement of truth signed by Mrs Jemai. In that document, Mrs Jemai caused Jecot to refer to and rely upon as genuine the purported Jecot-Firmly Oceans PSA (paragraph 22).[18]In fact, for the reasons given by Mr Justice Eder in the Judgment and set out in paragraph 10 above, these statements of case were, as Mrs Jemai knew, false because to her knowledge:(a) the monies paid by Firmly Oceans to Jecot were not paid pursuant to any legitimate or commercial transaction, and at no stage did Mrs Jemai believe that to be the case; and(b) the purported Jecot-Firmly Oceans PSA and the Annex to the purported Jecot-Firmly Oceans PSA were not genuine nor part of any genuine or commercial transaction, and at no stage did Mrs Jemai believe that to be the case.[19]Mrs Jemai therefore knew, when she signed the statements of truth verifying those statements of case, that the statements above, and the statements of truth, were false; and she had no honest belief in their truth.[9]The OJ Freezing Order included the following provisions (pages 27-28):(a) Paragraph 7 provided that Mrs Jemai “… must within 72 hours of service of this order and to the best of her ability inform the Applicant’s solicitors of all her assets worldwide (exceeding £10,000 in value) whether in her name or not and whether solely or jointly owned, giving the value, location and details of all such assets.”(b) Paragraph 8 provided that Mrs Jemai must “within 5 working days after being served with this order… swear and serve on the Applicant’s solicitors an affidavit setting out the information referred to in paragraph 7 above.”(c) Paragraph 9 provided that Mrs Jemai “… shall, having made all reasonable enquiries and to the best of her information and belief, inform the Claimants in writing by 5pm on the tenth business day after any payment being made in respect of her legal costs or expenses in any jurisdiction …”.(d) Paragraph 9 provided that “This order does not prohibit the Respondent from spending £1,000 a week towards her ordinary living expenses and also a reasonable sum on legal advice and representation, provided that before spending any money the Respondent must tell the Applicant’s legal representatives where the money is to come from.”[10]The OJ Freezing Order contained a penal notice in the following form: “If you ... disobey this order you may be held in contempt of court and may be imprisoned, fined or have your assets seized. Any other person who knows of this order and does anything which helps or permits any Respondent to breach the terms of this order may also be held to be in contempt of court and may be imprisoned, fined or have your assets seized” .[11]After she became aware of the terms of the Jecot Freezing Order, Mrs Jemai failed by the time specified in the Order or at all:(a) to disclose her assets worldwide whether in her own name or not and whether solely or jointly owned, giving the value, location and details of all such assets exceeding £10,000 in value as required by paragraph 7;(b) to swear and serve on the Claimants an affidavit setting out her worldwide assets as required by paragraph 8;(c) to disclose how she is paying for her legal costs, including those of her Swiss lawyers who have continued to act extensively for her in connection with pending criminal charges as required by paragraph 9; and(d) to disclose before paying her ordinary living expenses where the money was to come from as required by paragraph 11(1).

Cited in 34 later judgments

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