JSC BTA Bank v Ablyazov and another [2018] EWHC 1368 (Comm) (8 June 2018)
The Second Defendant in this matter was subject to a worldwide freezing order which had been made in previous litigation between the Claimant and the Defendant. The First Defendant had also been subject to the same freezing order however took no further part in the litigation.
The subject matter of this part of the action was that the Claimant alleged that the Second Defendant had been involved in diminishing the value of the First Defendant’s assets, thus conspiring with him to prevent the Claimant from making recoveries in respect of the monies misappropriated from the Claimant in the litigation. The worldwide freezing order restrained dealings both with the Second Defendant’s personal assets and the First Defendant’s assets.
A brief review of the details of this litigation will highlight that the case has been before the Courts a significant number of times since July 2015 and it was very much considered litigation on a grand scale.
The matter has now been back before the Court to hear an Application by the Claimant for an Order that the Second Defendant provide full and proper disclosure regarding the way in which his legal expenses in the proceedings are being funded.
The Second Defendant had outlined that his mother was funding his legal expenses. The Claimant’s Application was made on the basis that she did not appear to have sufficient means of her own to do so and that there was reason to believe she was funding her son’s legal expenses from funds belonging to the First Defendant, which are subject to both of the WFOs. A secondary argument was thereafter developed by the Claimant that the Second Defendant may have concealed his own assets and that, in any event, there were therefore sufficient grounds for concluding that disclosure should be ordered to ensure the freezing Order could be properly policed.
The Claimant’s evidence
Doubt was cast by the Claimant over the suggestion that the Second Defendant’s mother was funding the litigation when noting that there was little evidence to suggest she was significantly wealthy or would have the funds to pay for such extensive legal fees. In addition to this evidence was outlined which suggested an intention by the Second Defendant to transfer assets for the use of his mother.
The evidence of the Defendant’s mother stated that the funds used to pay her son’s legal expenses were 100% hers but failed to provide any further detail on the basis that the information was confidential to her, providing it would be an unjustified intrusion and she was concerned that the authorities in the Republic of Kazakhstan would make use of it to further persecute and intimidate her being a party to the proceedings.
The matter had been before the Court where most recently the evidence as provided by the Second Defendant had been considered false and/or to contain untruth and in had been noted that he had lied in his personal disclosure regarding his assets.
The decision made:
After listening to the evidence presented, which took into account previous hearings and decisions of the Court, it was considered by the Judge that the Claimant had shown there to be a real risk that the freezing Orders may have been or will be breached by channelling to the Defendant’s mother and/or to Vilder Company SA funds which may belong to the First Defendant. In view of this the risk to the Claimant and to the effective policing of the freezing Order was considered a reasonable one for the Claimant to seek to probe beyond the assertion that the Second Defendant’s litigation was being funded by his mother. By seeking disclosure from the Defendant of the ways and means by which the funding of the litigation was being achieved, against which the truth of the assertion could then be tested.
The Second Defendant was therefore ordered to provide the disclosure requested and the Claimant’s Application was successful.
A good and/or strong reason must be established to successfully pursue an Application for disclosure to the level seen here however this was an issue raised within such a large claim where conspiracy to defraud and/or move monies contrary to a freezing Order were already suspected. In light of this, and in the context of previous deception from the Second Defendant, strong reason has been established here which will result in an in depth review of the funding position and source of available monies.