National Bank Trust v Elena Pishchulina [2025] EWHC 1807 (Comm)

[2025] EWHC 1807 (Comm)Case No CL-2016-000095
IN THE HIGH COURT OF JUSTICE
THE BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES
KING'S BENCH DIVISION
COMMERCIAL COURT
Venue Rolls Building, Royal Courts of JusticeDate 15/07/25
London
Before
THE HON MR JUSTICE ROBIN KNOWLES CBE
Between
(6) ELENA PISHCHULINADefendant/ Respondent
David Davies KC (instructed by Steptoe International (UK) LLP) for Claimant/ ApplicantJames Willan KC and Adam Board (instructed by PCB Byrne LLP) for Defendant/ RespondentHearing Hearing date: 25 March 2025
JUDGMENT

Robin Knowles J, CBE:

[1]By an application dated 18 October 2024 the Claimant (“the Bank”) has sought an order that the Sixth Defendant (“Ms Pishchulina”) be committed for contempt of court for an alleged breach of a Worldwide Freezing Order made by Leggatt J on 11 February 2016 and continued by Bryan J on 23 January 2020 (the “Committal Application”).[2]By a cross-application dated 25 November 2024 Ms Pishchulina has sought an order to strike out the Committal Application as an abuse of process and for an award of costs summarily assessed on the indemnity basis (the “Strike-Out Application”)[3]On 25 March 2025 I heard Leading Counsel for each of the parties. I indicated that the Committal Application shall not proceed further for reasons to follow in writing. In this judgment I give those reasons.

The litigation

[4]The Bank formerly operated as a large retail bank in Russia. Mr Fetisov is one of the three former majority owners of the Bank. Ms Pishchulina is his wife.[5]The Bank failed in 2014. After a trial before Bryan J, Mr Fetisov was found to have defrauded the Bank and was ordered to pay compensation amounting to around US$ 900 million. The three former majority owners were held to have given false evidence during the trial including by denying their beneficial ownership of a series of offshore companies that had borrowed and not repaid money from the Bank.[6]The Bank alleged that Mr Fetisov had in 2015 transferred a 50% beneficial interest that he had in three properties to Ms Pishchulina for no consideration as part of an exercise to avoid the consequences of a judgment against him. This included a house in Surrey.[7]The Worldwide Freezing Order was granted on 11 February 2016. Ms Pishchulina was required to give asset disclosure in response to the Worldwide Freezing Order. She disclosed a villa in Bali (“the Villa”), on the basis that it was her personal asset.[8]The Bank claimed that the Villa, registered in the sole name of Ms Pishchulina, was held on behalf of Mr Fetisov. However, as it was put by the Bank at the hearing before me:
“… the Bank did not ultimately pursue the case in relation to the Bali Villa at trial because it was purchased a number of years prior to the collapse of the Bank”
. Notwithstanding, the Villa remained subject to the Worldwide Freezing Order. The Bank did pursue the case in relation to the three other properties including the house in Surrey.[9]Judgment after the trial was handed down by Bryan J on 23 January 2020. The Worldwide Freezing Order was continued to a hearing at which there would be time to deal with matters consequential on the judgment. That consequentials hearing followed on 27 February 2020. At the consequentials hearing the Court replaced the Worldwide Freezing Order with a new post-judgment Worldwide Freezing Order to which Ms Pishchulina was not a party and which did not affect any dealing by her with the Villa.[10]In his judgment Bryan J found that Mr Fetisov’s transfers of his 50% beneficial interest in the three other properties in June 2015 (including the house in Surrey) for no consideration were intended to protect him from an adverse judgment, and that Mr Fetisov had in fact retained his beneficial interest in those properties. The judge did not believe material evidence by Mr Fetisov at trial. Ms Pishchulina did not herself give evidence at trial.

The alleged breach

[11]The Bank alleges that, on 17 February 2020 and without its knowledge at the time, Ms Pishchulina authorised her agent to sign a binding sale and purchase agreement in respect of the Villa (“the Bali SPA”), and also received a large part of the purchase consideration.[12]This was whilst the Worldwide Freezing Order continued in effect against her, in the period between the handing down of the judgment and the consequentials hearing. There is no dispute that Ms Pishchulina could have lawfully entered into the Bali SPA after the Worldwide Freezing Order was discharged against her on 27 February 2020.[13]On the evidence the Bank became aware of the alleged breach in September 2024.[14]From time to time during the course of the litigation, issues arose about the sale of properties subject to the Worldwide Freezing Order. On 12 November 2019, Ms Pishchulina’s solicitors wrote to the Bank’s solicitors referring to the receipt of an offer to purchase the Villa for US$ 905,000. This letter stated: “We therefore request your client’s consent to vary the Freezing Order, in accordance with paragraph 10(2), to permit a sale of [the Villa] for the sum of $905,000”.[15]The Bank’s solicitors responded asking for more information about the proposed sale including a copy of any draft sale agreement. Ms Pishchulina’s solicitors responded stating that there was as yet no draft sale agreement. On 13 November 2019 the Bank’s solicitors wrote: “Subject to receiving details as to what will happen to the proceeds of sale, your clients’ undertaking and a copy of the draft sale contract, our client does not object in principle to the sale of [the Villa]”.[16]The Bank’s solicitors chased for a response on 29 November 2019, but in the event, nothing further was heard from Ms Pishchulina at that point about the proposed sale.[17]After the judgment was handed down on 23 January 2020, correspondence took place between solicitors as to the form of the order to be made at the forthcoming consequentials hearing in February. In particular, the Bank’s solicitors circulated a draft Order and post-judgment Worldwide Freezing Order on 30 January 2020. As regards Ms Pishchulina, the draft envisaged that the post-judgment Worldwide Freezing Order would apply only to those specific properties that featured in the judgment and therefore not to the Villa.[18]On 6 February 2020, Ms Pishchulina’s solicitors responded with detailed comments including proposing that the Order contain a specific provision that claims not pursued at trial, including in relation to the Villa, be dismissed. It was also proposed that the proposed post-judgment Worldwide Freezing Order exclude Ms Pishchulina on the basis that she would give undertakings in relation to the house in Surrey.[19]On 11 February 2020, Mr Dooley of the Bank’s solicitors served a Witness Statement, his 17th. This attached a draft Order providing for the dismissal of the claims not pursued at trial, including in relation to the Villa. The draft post-judgment Worldwide Freezing Order still included Ms Pishchulina as a party, but only in relation to the house in Surrey.[20]On 17 February 2020, without informing the Bank, Ms Pishchulina authorised the signature of the Bali SPA. It is not disputed that the Bali SPA was signed by her agent and on her instructions.[21]The Bali SPA provided for the sale of the Villa to an individual who, the Bank accepts, appears to have been acting as an agent of the person who had made the offer in November 2019. By Article 1, the Bali SPA stated that “the First Party binds itself to sell the Second Party as the Second Party hereby binds itself to purchase from the First Party”. By Article 2, the price was said to be equivalent to US$ 905,000 and that, after fees and taxes, Ms Pishchulina was to be paid US$ 826,879.40 by bank transfer split into eight instalments of US$ 98,000 and a final instalment of US$ 42,879.40. Ms Pishchulina’s account to receive such payments was identified as her Metro Bank account in the UK and the whole price was required to be paid within 30 working days from the signing of the SPA.[22]Payments of the US$ 98,000 instalments to Ms Pishchulina commenced on 18 February 2020. Two instalments of US$ 98,000 were received by Ms Pishchulina on 18 February 2020, with further instalments of US$ 98,000 on 24 February, 25 February, 26 February and 27 February 2020 (the day of the consequentials hearing). These sums went to an account or accounts that were themselves frozen by the Worldwide Freezing Order. The Court and the Bank were not informed, and it is likely that her solicitors were not either.[23]On 27 February 2020, the consequentials hearing took place before Bryan J. The Order he made included an undertaking from Ms Pishchulina in relation to the house in Surrey, the Judge having accepted Ms Pishchulina’s argument that this undertaking should be accepted in place of a post-judgment Worldwide Freezing Order against her. The Order also included the dismissal of the claims not pursued at trial, including as to the Villa. A post-judgment Worldwide Freezing Order was granted on the same date but Ms Pishchulina was not a party to it.[24]On 4 March 2020, Ms Pishchulina received the final instalment of the purchase consideration for the Villa due under the Bali SPA. On 9 March 2020, the full purchase price having been received, a deed was executed by which title to the Villa transferred to the purchaser.

Later events

[25]I turn to later events because it is the Bank’s case that these give context to its decision to bring the Committal Application.[26]The Bank sets out in some detail the subsequent history of Ms Pishchulina’s involvement in bankruptcy proceedings concerning her husband and how the Bank came to discover, in September 2024, that the Villa had been sold. I have had full regard to this material. I shall take later events largely from the way the Bank presented them.[27]On 9 April 2020, Mr Fetisov, and a co-Defendant Mr Yurov, declared themselves bankrupt on the basis that they were unable to pay the judgment against them. On 12 May 2020, trustees in bankruptcy (the“Trustees in Bankruptcy”) were appointed.[28]The bankruptcies proceeded and, during April 2022, the Trustees in Bankruptcy made a disclosure application under section 366 of the Insolvency Act 1986 against Ms Pishchulina and a number of banks. The order sought against Ms Pishchulina was to disclose details about the sale of the Villa including “the purchase price, identity of the buyer and a copy of the sale and purchase agreement and any accompanying transactional documents and bank statements showing the receipt and subsequent transfer of the sales proceeds”.[29]In a later witness statement, Mr Thomas (one of the Trustees in Bankruptcy) explained that the Trustees in Bankruptcy were investigating the sale of the Villa and whether the bankruptcy estate of Mr Fetisov had a claim against the sale proceeds on the basis that the position under Russian matrimonial law was understood to be that all assets received by a spouse during marriage were jointly owned irrespective of the name in which those assets were registered. The Trustees in Bankruptcy were investigating whether 50% of the sale proceeds of the Villa belonged to Mr Fetisov and therefore fell within the bankruptcy estate.[30]On 24 June 2022, directions were given in relation to the section 366 application. On 20 January 2023, a consent order was signed by the Trustees in Bankruptcy, Ms Pishchulina and the relevant banks in relation to it. This consent order required Ms Pishchulina to disclose to the Trustees in Bankruptcy, within 14 days of the order (i.e. by 3 February 2023) copies of the sale contract and any related documents (and any translation that she had) relating to the Villa, and copies of all bank statements showing the receipt and subsequent transfer of the sale proceeds of the Villa.[31]No disclosure was received from Ms Pishchulina by 3 February 2023. On 7 February 2023 her solicitors wrote attaching a copy of the Bali SPA, but it was undated. No bank statements were provided. Further correspondence then followed.[32]On 14 February 2023 Ms Pishchulina stated through her solicitors that the undated version of the Bali SPA was “the only version in our client’s possession”and that Ms Pishchulina “cannot recall the precise date on which the agreement was executed” but that she “infers it was either late February or early March 2020”. Only later and in the context of this Committal Application, was a dated version of the Bali SPA, bearing the date of 17 February 2020, produced.[33]Also on 14 February 2023, Ms Pishchulina’s Metro Bank statements were supplied. These showed the receipt of the sale proceeds for the Villa and that the first instalment had been received on 18 February 2020.[34]On 11 April 2023, the Trustees in Bankruptcy amended their section 366 disclosure application. The amended version of the application was made against Ms Pishchulina and Revolut Bank and sought, among other things, disclosure of Ms Pishchulina’s Revolut Bank statements, a copy of a Deed of Release, bank statements of two companies and an explanation of the reasons why the sale proceeds of the Villa had been transferred to these companies. The order was sought to “assist the Trustees [in Bankruptcy] in discharging their statutory duties in circumstances where (at the very least) there is an arguable case that Mr Fetisov’s estate had an interest in the sale proceeds of [the Villa], being in excess of US$400,000”.[35]On 30 June 2023, Ms Pishchulina, by her solicitor, served evidence in response to the amended section 366 disclosure application. Her solicitor explained that “in the interests of trying to avoid the time and expense of a contested hearing, [Ms Pishchulina] has volunteered the disclosure sought by this application, insofar as the documents sought are within her possession or control”. Bank statements for one company were disclosed which showed that the majority of funds were transferred to a second company’s account with Wells Fargo in the United States. It was explained that the second company had been dissolved “some time ago” and its account with Wells Fargo was now closed.[36]On 7 July 2023 the Trustees in Bankruptcy, by their solicitors, provided a draft consent order for the amended section 366 disclosure application and indicated that the application was maintained in respect of the second company’s bank statements, which had not been provided.[37]On 29 August 2023, Ms Pishchulina was cross-examined in court in Switzerland in relation to various asset recovery claims instigated there by the Bank. During her cross-examination, Ms Pishchulina claimed that the Villa had been a gift from Mr Fetisov and that it had been sold “in 2020” with the sales proceeds being paid into the Metro Bank account.[38]In the bankruptcy proceedings in England & Wales, on 6 October 2023 there was a hearing before ICC Judge Mullen. The section 366 disclosure order had largely been agreed by this point. The Judge observed that there had been, on the part of Ms Pishchulina, an “unwillingness to cooperate” and a “fairly relaxed” approach to obligations to provide information. The Judge concluded that a costs order against Ms Pishchulina was justified because there had been a “degree of obstruction” by Ms Pishchulina in “providing the information in a prompt way or offering constructive alternative suggestions” and “non-compliance with the January 2023 consent order” and a “degree of caginess … in correspondence” about the second company.[39]On 26 February 2024, the Trustees in Bankruptcy sent a letter before action to Ms Pishchulina in which they asserted a claim on behalf of Mr Fetisov’s bankrupt estate (as now vested in them as Trustees in Bankruptcy) to 50% of the sale proceeds of the Villa.[40]The Bank requested documents from the Trustees in Bankruptcy, who took the position that the proper course was for the Bank to make an application to access the documents from the court file. On 18 March 2024, the Bank made an application in the bankruptcy proceedings for access to the amended section 366 disclosure application of 11 April 2023 together with supporting evidence and skeleton arguments filed in respect of the hearing on 6 October 2023. On 28 August 2024, the Court granted the Bank’s application for access to the court file and the Bank obtained the relevant documents on 11 September 2024. It was at this point that the Bank saw, for the first time, the Bali SPA and the Metro Bank statements showing the receipt of the sales proceeds by Ms Pishchulina.[41]On 1 October 2024, the Bank’s solicitors wrote to Ms Pishchulina’s solicitors noting that documents recently obtained by the Bank from the bankruptcy proceedings showed that Ms Pishchulina had sold the Villa whilst the Worldwide Freezing Order was in effect and had therefore, it was alleged, acted in breach of it. Draft grounds of contempt were attached to the letter and Ms Pishchulina’s current address for service was requested.[42]On 25 January 2025, Deputy Insolvency Judge Parfitt handed down judgment on an application of the Trustees in Bankruptcy to make a distribution to the Bank in respect of the bankruptcies of Mr Fetisov and Mr Yurov. The judgment records that, in Mr Fetisov’s bankruptcy, gross realisations of £2.65 million had been made by May 2023 and, in Mr Yurov’s bankruptcy, gross realisations of £3.3 million had been made by February 2024. The Bank had not received any dividends from the bankruptcies and these sums realised represented only a fraction of the judgment debt owed by Mr Fetisov and Mr Yurov to the Bank. Permission was given to the Trustees in Bankruptcy to pay an initial dividend to the Bank.[43]At the request of the Bank and Ms Pishchulina, the Committal Application and the Strike-Out Application were listed for a full day hearing. The costs schedules that have been exchanged indicate that almost £300,000 of legal fees have been incurred by them on the Committal Application and the Strike Out Application.

The Bank’s position

[44]At the centre of the Bank’s position is the proposition that the Court’s orders should be complied with at all times.[45]The Bank states in its written argument that:
“The Bank has a legitimate interest in drawing a past breach to the Court’s attention by means of this [Committal Application], including because doing so will tend to deter future breaches by Ms Pishchulina and others involved in the bankruptcy proceedings.”
[46]There is an argument whether what happened was a “dealing” with or “disposal” of an asset with the terms of the Worldwide Freezing Order, but the Bank’s position is that it is clear that it was. The Bank further points to what is said on Ms Pishchulina’s behalf by her solicitor: “… she always understood that while the Freezing Order was in place against her she could not enter into a binding commitment to sell [the Villa] (although she could market it for sale), without first obtaining [the Bank’s solicitors’] agreement or an order to vary the Freezing Order so as to permit the sale”.[47]The Bank argues:
“The situation as at 11 February 2020 was therefore clear: (i) the Worldwide Freezing Order remained in effect but (ii) Ms Pishchulina could expect that, once the consequentials hearing had taken place on 27 February 2020, there would no longer be a freezing order against her in respect of the Bali Villa and she would be free to sell it. All she had to do therefore to ensure that she acted properly and in compliance with the Court’s orders was to wait until 27 February 2020.”
Ms Pishchulina showed, argues the Bank, “a strikingly casual attitude to compliance with the Court’s orders”. The degree of prejudice caused by the breach is, argues the Bank, a matter that is relevant to sentence and not whether a breach occurred.[48]The Bank accepts in its written argument: “It is clear on the facts of this case that, when the Bali SPA was signed on 17 February 2020, completion of the sale and transfer of title could not be expected to happen until after the [Worldwide Freezing Order] ceased to have effect on [Ms Pishchulina].” (original emphasis)

Decision and reasons

[49]In the present case the Court’s rules did not require permission to bring the Committal Application. The Bank therefore had a choice whether to bring it. It will have had the opportunity to take advice on that course.[50]Of course, the Bank is correct that the Court’s orders are to be complied with at all times. Further, I acknowledge that there is authority for the proposition that an applicant who has obtained an order has a private interest in the outcome of an application to commit. Carr LJ said inNavigator Equities v. Deripaska [2021] EWCA Civ 1799 at [135] (Asplin and Snowden LJJ agreeing):
“A private applicant for civil contempt, even where it is no longer necessary to seek enforcement of an order or undertaking, still has a proper private interest in the outcome of the application. Any private litigant will have an interest in the enforcement of a court order or undertaking which has been made to protect its interests. Apart from having this private interest in principle in the upholding of its rights under the order or undertaking, perhaps the most obvious private interest is that of deterrence for the future. That is of particular relevance on the facts here, where the parties continue to be embroiled in other ongoing litigation.”
[51]However, “a committal application must be proportionate (by reference to the gravity of the conduct alleged) …”: Navigator (above) at [82(ii)], and see Sectorguard plc v Dienne plc [2009] EWHC 2693 (Ch) at [44]-[46] (Briggs J). Claimants “should give careful consideration to proportionality in relation to the bringing and continuance” of contempt proceedings: Public Joint Stock Company Vseukrainskyi Aktsionernyi Bank v Maksimov [2014] EWHC 4370 (Comm) at [22] (Hamblen J).[52]The overriding objective under the Civil Procedure Rules is that of enabling the court to deal with cases justly and at proportionate cost. CPR 1.1(2) provides in terms that dealing with a case justly and at proportionate cost includes, so far as is practicable, “enforcing compliance with rules, practice directions and orders”. But the rule also provides that dealing with a case justly and at proportionate cost includes, so far as is practicable, “dealing with the case in ways which are proportionate … to the importance of the case” and “allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases”.[53]The authorities refer to a function of an application to commit as “bringing to the court’s attention a serious rather than purely technical breach”: Sectorguard (above) at [47] and [53]; considered in Navigator (above), especially at [114]). “Serious” and “technical” lie at separate points on what is a spectrum, with the result that there will be cases where neither word fits well. When an application to commit reaches a Judge, it is for the Judge to consider what the circumstances require, including what is just and what is proportionate.[54]An applicant will set out what it wishes to say, and the Court will have the advantage of that. But nothing compels the Court to proceed further where to do so would be inappropriate in the circumstances of the case. Where the sound administration of justice requires that an application not proceed further the Court should say that as soon as it has the opportunity to do so. The private interest of an applicant in the outcome of the application is not an interest that entitles it to more.[55]The present case is not, as in some of the authorities, one in which an applicant proceeds for an improper collateral purpose. I do not conclude in the present case that it was an abuse of the process for the Bank to issue the Committal Application and by that means to draw the matter to the Court’s attention.[56]However, the point has now been reached where the Court has been appraised of the alleged breach and its circumstances. Having reviewed those, and heard from the Bank by Mr David Davies KC on its behalf, in the present case I conclude that it would be disproportionate to proceed further, and that to proceed further would require there to be allotted to the Committal Application an inappropriate share of the Court’s resources.[57]To proceed further in the present case would do nothing to promote compliance with orders. It is quite clear that the present case was never going to need, or attract, punishment or the Court’s coercive powers.[58]Nor is it realistic to see the continuation of the Committal Application, in the circumstances of the contempt alleged in the present case, as serving the objective of deterrence of future breaches, whether by Ms Pishchulina or others. The Bank refers to the bankruptcy proceedings against Ms Pishchulina’s husband, but there the bankruptcy court has its own full powers, and it has been using them where appropriate. The Trustees in Bankruptcy are entitled to refer the bankruptcy court to the facts, including Ms Pishchulina’s actions and her understanding of the Worldwide Freezing Order, should they be relevant to reinforcement of any measures in the bankruptcy proceedings.[59]The just way of dealing with the case is for the Court to declare that in the present case the Committal Application is not to proceed further. I appreciate that the Bank has committed time and money to the Committal Application. But it did so in full knowledge of the particular circumstances of the case. I highlight four points.[60]First, although the Worldwide Freezing Order was in the terms it was, from the moment of the judgment by Bryan J (if not before) the Bank had no underlying basis on which to retain the Villa within a worldwide freezing order. Indeed, on the face of things, it was for the Bank, as the original applicant for the Worldwide Freezing Order, to take steps to remove that Order in any respect where it should not continue.[61]Second, although I acknowledge that the Bali SPA may have become specifically performable once entered into, the Bank had by then provided a draft Order for the dismissal of the claims in relation to the Villa. The Bank further accepts, as noted above, that when the Bali SPA was signed, completion of the sale and transfer of title could not be expected to happen until after the Worldwide Freezing Order ceased to apply.[62]Third, the Bank had no grounds on which to object to the Bali SPA had it been asked (as it had been earlier). Permission would, as a certainty, have been granted. Indeed, whilst the Order continued, had the Bali SPA been prevented then the Bank would itself have been exposed to the risk of an application to enforce against the Bank the cross undertaking in damages it was required to give to the Court when the Worldwide Freezing Order was made.[63]Fourth, the Bali SPA did not reduce the assets frozen by the Worldwide Freezing Order. The sale would replace one asset (the Villa) with another (money and the right to receive money, with the money held in frozen bank accounts whilst the Worldwide Freezing Order continued). There is no question in the present case of the price being too low. As Mr James Willan KC and Mr Adam Board for Ms Pishchulina put it, pithily: “that is the opposite of dissipation”.