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England and Wales Court of Appeal (Civil Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Shalabayev v JSC BTA Bank [2016] EWCA Civ 987 (07 October 2016) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2016/987.html Cite as: [2016] EWCA Civ 987, [2017] 1 WLR 603, [2016] WLR(D) 517, [2017] WLR 603 |
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[New search] [Printable RTF version] [View ICLR summary: [2016] WLR(D) 517] [Buy ICLR report: [2017] 1 WLR 603] [Help]
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION, COMMERCIAL COURT
Mr Justice Teare
Strand, London, WC2A 2LL |
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B e f o r e :
LADY JUSTICE GLOSTER
and
LADY JUSTICE KING
____________________
| SALIM SHALABAYEV |
Appellant |
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| - and - |
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| JSC BTA BANK |
Respondent |
____________________
Stephen Smith QC and Emily Gillett (instructed by Hogan Lovells International LLP) for the Respondent
Hearing dates : 26, 27 April 2016
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Crown Copyright ©
Gloster LJ:
Introduction
Factual and procedural background
"It is difficult to imagine a party to commercial litigation who has acted with more cynicism, opportunism and deviousness towards court orders than Mr Ablyazov. Rix LJ has described in trenchant terms the factors which cause me to express myself in this way. There can be no complaint that Teare J decided that the court's powers should be deployed so as to put the maximum pressure on Mr Ablyazov to comply with its orders so as to endeavour to prevent its fair procedures from being subverted."
"16. Before summarising the parties' respective cases it is necessary to note three matters. The first is the manner in which Mr. Ablyazov "holds" his assets. In my judgment on the receivership application, [2010] EWHC 1779 (Comm) at paragraph 7, I described it in these terms:
"7. Mr. Ablyazov does not hold his assets in his own name. Rather, a trusted associate appears to hold shares in a holding company on his behalf and by that means controls the shareholdings in a chain of other companies at the bottom of which chain is an operating business. The use of a nominee and of companies registered in offshore jurisdictions makes it difficult to trace his assets. He says that the elaborate scheme by which he owns his assets is necessary to protect him from unlawful depredations by the President of Kazakhstan."
17. Assets held in this way are assets of Mr. Ablyazov within the wide definition of assets in the WFO. They are assets which Mr. Ablyazov has the power indirectly to dispose of as if they were his own. Although not the registered owner of any shares in a company he is the "ultimate beneficial owner" of them ("the UBO") and can dispose of the assets held by the company as if they were his own by reason of being able to instruct his nominee.
18. Mr. Alexander Udovenko was one of Mr. Ablyazov's most trusted associates until sometime in late 2009 (when, it seems, he disappeared). He was a Russian lawyer who had practised with an American firm in Moscow and had then worked for an American bank in Moscow. From 2001-2003 he studied in London obtaining a diploma in law and an MBA. From 2003 he worked at Eastbridge Capital Limited in London. He appears to have provided his services to Mr. Ablyazov in London at the offices of Eastbridge. He was the nominee UBO of at least some of Mr. Ablyazov's companies and as such made use of corporate service providers in off-shore jurisdictions, in particular in Cyprus and the BVI. He was assisted by Syrym Shalabayev, Mr. Ablyazov's brother-in-law who, in the Autumn of 2008, replaced Mr. Udovenko as the nominee "beneficial owner" of at least some of Mr. Ablyazov's companies and was perceived by at least one person familiar with the workings of Eastbridge as Mr. Udovenko's "successor". The family connection was continued by the assistance given from time to time by Salim Shalabayev, a younger brother of Syrym, whose name was either used or suggested as a nominee UBO of at least two companies. In the Autumn of 2009, after the WFO had been granted and Mr. Udovenko had disappeared, Syrym Shalabayev appears to have transferred the work of Eastbridge Capital in London to Euroguard in Cyprus.
……
The second allegation (part one): English Real Estate
24. It is the Bank's case that Mr. Ablyazov is the true UBO of four properties in England: Carlton House on The Bishop's Avenue, Oaklands Park in Surrey, a flat in Elizabeth Court in St. John's Wood and a flat in Alberts Court, also in St. John's Wood.
25. The Bank says that the only reasonable inference to be drawn from a number of matters is that Mr. Ablyazov is and was the true beneficial owner of the shares in the companies who were the registered proprietors of the aforesaid four properties and that he lied to the court when he said, under cross-examination on oath, that he was only the short-term tenant of Carlton House and the flat in Elizabeth Court and that all his residential property was listed in his schedule of assets, which schedule did not include the shares in the registered proprietors of the four properties.
26. Mr. Ablyazov's case is that Syrym Shalabayev is the true UBO of Carlton House, Oaklands Park and Elizabeth Court and that Salim Shalabayev is the true UBO of Alberts Court. Accordingly he did not lie on oath.
……
The Defendant's oral witnesses
54. Salim Shalabayev gave evidence through an interpreter. He is a Kazakh national who came to this country in 2008 and is a brother-in-law of Mr. Ablyazov. He gave evidence that he is the owner of Bensbourogh Trading Inc. which is the registered proprietor of the flat in Alberts Court.
55. It is, however, undeniable that he is prepared to lie on oath. He gave clear evidence that he had not seen his brother Syrym Shalabayev in 2011. When confronted with photographs of him with his brother in Latvia in 2011 he agreed that his evidence was untrue. It is said that he lied in order to keep secret the location of his brother (who has been sentenced to 18 months imprisonment for contempt of court but has not served his sentence) and that therefore his evidence about other matters, not affected by the same motivations, should not be disbelieved merely because he was prepared to lie to assist his brother. It is probably the case that he lied to protect the location of his brother's house in Latvia but the fact that he was prepared to lie so blatantly means that I must exercise very great caution before accepting anything else he says.
56. In addition, other aspects of his evidence did not inspire confidence in him as a witness. He has, from time to time, been asked to sign documents by his brother. It appears that he does so willingly. Thus he signed a document declaring that he was the UBO of Millenium Support Group Limited when he was not the true UBO. He is therefore willing to make written statements which he must know to be untrue. He also authorised payment by that company of the sum of US$25m. When asked about Millenium he at first said that he was unable to assist the court as to why he was the UBO of that company or why he authorised payment by it of US$25m. to another company. Yet the next day he gave an account of how it had come about that he was named as the UBO and had authorised the transfer of US$25m. His explanation for not having first mentioned these matters was that the matters were confidential and that he "did not remember everything exactly". However, he did not rely on confidentiality when first asked. I consider that either he lied when first saying that he could not assist or, if he could not assist, he spoke to someone overnight as to how he might answer such questions in breach of my direction to him not to discuss his evidence with anyone. Either way he proved himself to be an unreliable witness.
57. In these circumstances the court is unable to accept his evidence unless it is supported by reliable documentary evidence.
…….
Alberts Court
165. The registered proprietor of the flat in Alberts Court was at all material times Bensbourogh Trading Inc., a company incorporated in the BVI on 6 March 2008. The flat was bought for £965,000 on 27 June 2008. Thus it was bought some 6 years after Elizabeth Court was purchased and some 2 years after Carlton House and Oaklands Park were purchased.
166. Salim Shalabayev claims to be the UBO of the shares in Bensbourogh Trading and hence the beneficial owner of the flat. However, on 15 October 2009 he was made the UBO of Rocklane which owned the flat in Elizabeth Court and yet nobody claims that he was the true beneficial owner of the shares in that company and on 16 October 2009 an email was sent which contemplated naming him as the UBO of a new company which would own the shares in Mount Properties, the owner of Carlton House. That these arrangements were even contemplated illustrates that no reliance can be placed on any evidence which purports to show that Salim Shalabayev was the UBO of Bensbourogh Trading. Rather it suggests that Mr. Salim Shalabayev may be made to appear to be the UBO of a company at the direction of others.
167. The Bank's case is that the shares in Bensbourogh Trading are held as trust for Mr. Ablyazov. His case is that they are held on trust for Salim Shalabayev. Mr. Matthews developed his case in relation to Alberts Court between pp. 177 and 181 of his Closing Submissions.
168. The Bank's case is supported by the fact that despite the addition of the shares in Bensbourogh Trading to the receivership on 8 April 2011 no independent third party has sought to challenge the addition of the shares to the receivership which suggests that the property is not beneficially owned by an independent third party. On 26 April 2011 Piper Smith Watton contacted the Bank on behalf of Mount Properties (the registered owner of Carlton House) and Bensbourogh Trading (the registered owner of Alberts Court) which suggests that each is in common ownership. Since Carlton House is beneficially owned by Mr. Ablyazov this is evidence that the flat in Alberts Court is also beneficially owned by him.
169. The Bank also relied upon three aspects of Salim Shalabayev's evidence. The first was that when asked about a document evidencing a proposed lease of Alberts Court to him he said that he was proposing to rent the flat "from myself". The second was that he said that he allowed Mr. Ablyazov's driver to live at Alberts Court with his wife free of rent. In the meantime he lived at Carlton House. When the driver and his wife (who had given birth in May 2009) moved out Salim Shalabayev moved to Elizabeth Court. The third was that he claimed little involvement in the purchase of the property. He bought it without viewing it or even knowing whether a survey had been carried out. His brother Syrym selected the property, negotiated the price and provided the purchase price. Mr. Smith submitted that in circumstances where Syrym Shalabayev had not claimed ownership of the property himself he must have purchased it on behalf of Mr. Ablyazov.
170. In response it was said that Salim Shalabayev had given evidence of his ability to purchase a property like 17 Alberts Court and that the involvement of his brother Syrym in the purchase was what one expects of an older brother. It was "frank and credible" that Salim, having been advised to pay rent for tax reasons, intended to rent the flat from his own company. With regard to the driver he had invited him to live at the flat in order to learn English but the driver had moved in with his pregnant wife and Salim had not felt able to ask them to leave. Salim was however able to move into Carlton House. He had since tried to sell the flat and discovered that he could not because of the receivership and had therefore decided to challenge the receivership order over Bensbourogh.
171. The Bank's case that Mr. Ablyazov was the true beneficial owner of the flat in Alberts Court was not as strong as its case with regard to Carlton House and Oaklands Park but it did raise a prima facie case. However, Salim Shalabayev's evidence that he purchased the flat was unpersuasive. It is not credible that he would purchase a flat for almost £1m. without viewing it, even if his elder brother was purchasing it for him. He did not produce any documentary evidence that he had funded the purchase. Yet if he had purchased it in 2008 there is no apparent reason why some documentary evidence of such purchase could not have been provided to the court. He does not appear to have lived in it after Mr. Ablyazov's driver had vacated the flat and instead appears to have lived in the flat in Elizabeth Court and to have paid rent for doing so. That is an odd thing to do if he is the owner of a flat in the same development. In the result I was unable to accept his evidence that he was the owner of the flat in Alberts Court. Moreover, I did not consider that his evidence might be true.
172. The evidence of Syrym and Salim Shalabayev as to the former's role in purchasing the flat means that Syrym must have purchased it on behalf of himself, a third party or Mr. Ablyazov. The possibility that he purchased it on behalf of himself or a third party can be discounted because Syrym Shalabayev does not claim to have done so. In those circumstances the flat must have been purchased on behalf of Mr. Ablyazov. I therefore conclude that Mr. Ablyazov was the true beneficial owner of the shares in Bensbourogh Trading and hence of the flat in Alberts Court.
173. As with the allegations concerning Carlton House and Oaklands Park the evidence that Alberts Court is owned by Mr. Ablyazov is circumstantial. But I am persuaded so that I am sure that the only reasonable inference to be drawn from that evidence is that Mr. Ablyazov was the beneficial owner of Alberts Court. His evidence that all the properties he owned had been listed in his schedule of assets was therefore untrue. He did not have any belief in the truth of what he said. It must have been given with the intention of interfering with or impeding the course of justice. His evidence was therefore given in contempt of court."
"89. As for Alberts Court: the points raised on behalf of Mr Ablyazov are a straightforward attempt to reargue the judge's assessment of the evidence of Salim and Syrym Shalabayev, witnesses who for the careful reasons given by the judge had no credibility with him. While the judge accepted that the case in respect of this property was not as strong as in the case of Carlton House and Oaklands Park (I would comment, if only because the purchase prices were not as outstandingly large), the facts show that there was nothing to tie Salim Shalabayev with this property other than the say-so of the two brothers. However, he never lived there, although Mr Ablyazov's driver and his wife had lived there. If, therefore, the property was not Salim's, it must have been Mr Ablyazov's. Syrym, who had selected it, and negotiated for and paid for it, did not say that he bought it for himself."
i) an order pursuant to CPR r.19.2(2) that he be added as a respondent to the Bank's application dated 16 April 2013 for a final charging order over the property;
ii) an order pursuant to CPR r.73.8(2)(d) that the Bank's application for a final charging order be adjourned pending trial of the issue of his ownership of the property;
iii) an order that directions be made inter alia for the service of evidence and a trial of the ownership issue before a judge of the Commercial Court other than Teare J with a time estimate of two days.
i) as a matter of law, he held that statement of principle by Sir Andrew Morritt V-C[5] in Secretary of State for Trade and Industry v Bairstow [2004] Ch 1 as to what constituted abuse of process based on collateral attack on a previous judgment was wide enough to encompass the situation in the present case, where Mr Shalabayev had merely appeared as a witness; that was supported by dicta of this court in Conlon v Simms [2008] 1 WLR 484; the case of Hunter v Chief Constable of West Midlands Police [1982] AC 529 had made it clear that the circumstances in which abuse of process can arise are very varied;
ii) he held that the issue determined in the committal proceedings, namely the ownership of Alberts Court, was the same as the issue of which Mr Shalabayev was now seeking determination;
iii) although not a party to the committal proceedings, Mr Shalabayev had been a witness, and his evidence had been disbelieved;
iv) the issue of the ownership of Alberts Court had been considered "in considerable detail over many days and at considerable expense";
v) he considered it "deeply improbable" that any further evidence on the issue would come to light in future;
vi) the committal judgment had been considered and upheld by the Court of Appeal; and
vii) Mr Shalabayev was "someone who, along with his brother Syrym Shalabayev, assists or has assisted Mr Ablyazov in various ways".
i) dismissed Mr Shalabayev's application to intervene and for a determination of the ownership issue;
ii) made a final charging order in relation to Mr Ablyazov's alleged interest in the property;
iii) refused Mr Shalabayev permission to appeal.
"10. By a Respondent's Notice issued on 8 January 2014 the Bank invited this court to exercise its discretion not to hear Mr Shalabayev's appeal against the order of Teare J dated 17 May 2013 on the basis that he is now a committed contemnor whose contempts are unpurged. A hearing for directions was listed. We heard the Bank's application on 16 October 2014. At the conclusion of the hearing we announced that we would not exercise our discretion to decline to hear Mr Shalabayev's appeal and that the Bank's application in that regard was accordingly dismissed. These are my reasons for having joined in that decision.
Mr Shalabayev's contempt
11. Mr Shalabayev is not party to any substantive proceedings brought by the Bank. The Bank has not asserted any cause of action against him. Apart from this dispute over the ownership of Alberts Court, Mr Shalabayev's main involvement as a party in this vast litigation was as a respondent to a Norwich Pharmacal application made against him by the Bank in December 2011. He was served with that application on 6 December 2011 whilst temporarily in London to give evidence on the Bank's committal application against Mr Ablyazov, as I described in paragraph 4 above. In fact, he was served at the conclusion of his evidence with a Disclosure Order made by Andrew Smith J.
12. The Disclosure Order related to Mr Shalabayev's role as nominal ultimate beneficial owner of two companies in the Seychelles, Millennium and Proteus, a role he performed at the request of Mr Ablyazov. Mr Shalabayev was sole signatory on accounts held by these companies at banks in Cyprus. As a result he was involved in two transfers of large amounts of money from Millennium to Proteus in early 2011. The effect of the second transfer, made in suspicious circumstances so far as concerns its timing, was to remove US$23 million from Millennium to Proteus and thus out of the scope of protection ordered by the court through freezing and receivership orders over Mr Ablyazov's assets. It was that transfer which underlay the orders for disclosure made against Mr Shalabayev.
13. On 20 December 2011 Field J dismissed an application by Mr Shalabayev to discharge or set aside the Disclosure Order by reason of Mr Shalabayev's privilege against self-incrimination and/or material non-disclosures by the Bank in its application therefor. Field J remade the Disclosure Order and also imposed restrictions on the ability of Mr Shalabayev to leave the jurisdiction, requiring surrender of his passport to his solicitors and a prohibition on applying for any travel document until after he had complied with the Disclosure Order.
14. On 15 February 2012 Mr Shalabayev was cross examined before Cooke J as to his compliance with the Disclosure Order. On 16 February 2012 Cooke J delivered a judgment expressing the conclusion that Mr Shalabayev had not fully and properly complied with his Disclosure Order obligations under the 20 December 2011 order and he continued the travel restrictions pending proper compliance.
15. It seems that thereafter Mr Shalabayev left the jurisdiction in March 2012. At around the same time he applied for and obtained a new Kazakh passport which he failed to surrender to his solicitors. In October 2013 Eder J made the findings of contempt to which I have already referred.
16. It should be pointed out at the outset of the discussion that there is no direct connection between the findings of contempt against Mr Shalabayev and the issue of beneficial ownership of Alberts Court which arose in connection with the charging order proceedings. Mr Stephen Smith QC for the Bank suggests that there is nonetheless a real connection in that proper disclosure concerning the Millennium-Proteus transfer could have assisted in tracing misappropriated property which would have rendered it unnecessary to seek to enforce the Bank's judgments against other property such as Alberts Court. As to that, it is pointed out by Mr James Sheehan on behalf of Mr Shalabayev that the Bank has never yet asserted any more than that it "may well" have a proprietary claim to the misappropriated funds and has not yet established that, absent such a claim, the funds transferred belonged to Mr Ablyazov and were thus available for enforcement. It has also been said by the Bank that certain of the information sought from Mr Shalabayev has now been obtained from other sources. Less compelling is Mr Sheehan's point that there is no reason to think that breach of the travel and passport restrictions has in practice affected the prospect of the Bank obtaining information. The travel and passport restrictions were designed to enforce compliance with the disclosure obligation. However, Mr Sheehan's overall point that there is no very real connection between Mr Shalabayev's contempts and the subject matter of the charging order of proceedings is I think well-made. Still less is there any connection between Mr Shalabayev's contempts and the question whether his attempt to intervene in the charging order proceedings represents a collateral attack upon the earlier findings and is an abuse of process.
20.……..Nonetheless, whilst Mr Shalabayev's contempt has impeded the course of justice in ascertaining the truth concerning the Millennium-Proteus transfer, his continuing contempt is of little consequence to the just resolution of the question of beneficial ownership of Alberts Court, or the enforcement of the charging order if that is upheld.
21. Teare J was invited to decline to hear Mr Shalabayev's application to be joined as an intervener, albeit at a stage before Eder J had found the contempt proved. Teare J expressed himself as "particularly exercised by the question whether it would be disproportionate to decide not to hear Mr Shalabayev in response to the charging order in circumstances where the property which is the subject of the charging order is not the subject of the orders for disclosure or the subject of the orders that he not leave the jurisdiction and deliver up his passports." He concluded "I am not persuaded that it would be a proportionate exercise of the court's jurisdiction to debar Mr Salim Shalabayev from making submissions in circumstances where the property in question is not the subject of the orders in respect of which he is said to be in breach."
22. For my part I am also concerned that Mr Shalabayev has had no proper opportunity to establish his claim to ownership of Alberts Court by being a party to any relevant judicial process. Being a witness in Mr Ablyazov's committal proceedings did not entitle him to address the court upon the conclusion to be derived from the totality of the evidence. Whilst Teare J entertained Mr Shalabayev's application to intervene in the charging order proceedings, his ultimate decision was that Mr Shalabayev should not, for reasons unconnected with his contempt, be permitted to challenge the findings made in the earlier proceedings as to the beneficial ownership of Alberts Court. To decline to hear his appeal against that decision, in circumstances where Teare J had entertained but rejected his submissions, is in my view disproportionate and moreover introduces an unsatisfactory element of inconsistency. There has been no real change of circumstances since Teare J made his decision. Eder J's conclusions were inevitable, as Cooke J had already pointed out. To decline now to entertain an appeal from a decision to the making of which Teare J permitted Mr Shalabayev to contribute, in the sense of addressing argument on the merits, seems almost capricious. It would be disproportionate, because Mr Shalabayev has had no opportunity to establish his claim to Alberts Court, something he seeks to do not offensively but purely as a defensive response to the application of the Bank to charge it with the indebtedness of Mr Ablyazov. Where the only question at issue is whether he should be permitted that opportunity, and he wishes to challenge a decision at first instance rejecting his argument that he should, it does seem a disproportionate or at any rate an inappropriate consequence of his unrelated contempt that he should be denied the right to challenge Teare J's conclusions. I do not say that because Teare J heard him, so should we. But it is my conclusion that Teare J having entertained his application, it would be a highly unsatisfactory outcome that we should decline to hear his appeal against its rejection. To my mind that would of itself be a conclusion which could bring the administration of justice into disrepute. And as will be apparent, Teare J was in my view quite right to entertain Mr Shalabayev's application. It will now be for this court to decide whether Teare J was right to conclude that it would be an abuse of process for the court to permit Mr Shalabayev to be joined as a party to the Bank's application for a final charging order with a view to challenging the findings in the earlier proceedings to which he had not been party. "
As can be seen from the passages in the judgment which I have highlighted in bold, the Court did not regard there as being any real connection between Mr Shalabayev's contempts and the subject matter of the charging order proceedings or this appeal.
The parties' arguments on this appeal
Mr Shalabayev's case
(1) Abuse of process:
i) Mr Sheehan's first argument was that the doctrine of abuse of process by reason of a collateral attack on a previous decision applied only to a litigant who was party to the previous decision or the privy of such a party; accordingly, the judge was wrong in law to conclude otherwise.
ii) He submitted that the proper scope of the doctrine of collateral attack, and its limits, could be ascertained from the decision of the House of Lords in Hunter v Chief Constable of West Midlands Police [1982] AC 529.
iii) The meaning of the phrase "collateral attack" was subsequently explained in Smith v Linskills (a firm) [1996] 1 WLR 763. This demonstrated that later proceedings brought by a person who had no right of appeal against the earlier decision (which Mr Shalabayev did not in the case of the committal judgment), and thus no other way of challenging that decision directly, could not properly be described as amounting to a collateral attack.
iv) That approach was supported by the decision of Sir Andrew Morritt V-C[8] in Secretary of State for Trade and Industry v Bairstow, supra. In every one of the seven previous[9] cases examined by the Vice-Chancellor in formulating his four principles and in which a finding of abuse was reached, and in Bairstow itself, the party against whom the finding operated had been a party to the previous proceedings. Thus the submission made below by the Bank, that, had the Vice-Chancellor intended to limit the principle of collateral attack to cases involving parties to previous proceedings, he would have said so in terms, looked at the matter the wrong way round. Given the context within which the Vice-Chancellor's conclusions were expressed, it was for the Bank to point to something in Bairstow which justified an extension of the principle beyond previous parties. There was no such justification present.
v) The correct approach to the present case was shown by the decision of the House of Lords in Re Norris [2001] 1 WLR 1388. There were obvious similarities between this case and Re Norris. To similar effect was Great Wealth Telecom Ltd v Simtel Communications Ltd [2007] EWHC 95 (Ch).
vi) Since Mr Shalabayev's appeal skeleton argument was filed in 2013, there had been two first instance decisions in which a litigant was prevented from pursuing proceedings on the basis that they amounted to a collateral attack on a previous decision to which the litigant was not party: Melford Antiques Warehouse Ltd v Frost (unreported, June 2014 Master Fontaine) and SoS for BIS v Weston [2014] BCC 581 (HHJ David Cooke). To the extent that they purported to extend the doctrine of collateral attack beyond previous parties or privies, both decisions were wrong and per incuriam; in neither case did Great Wealth appear to have been cited.
vii) Accordingly, the judge's decision was wrong in law, because it was based on the erroneous proposition that the principle of collateral attack was capable of applying on the facts of this case.
(2) Failing to take into account or to give proper weight to relevant factors
viii) Mr Shalabayev's second complaint (which was in the alternative to his first ground) was that the judge reached an impermissible decision by failing to take into account (or to give proper weight to) factors which he should have taken into account (or to which proper weight should have been given).
ix) First, Mr Sheehan submitted, Mr Shalabayev was not a party to the committal proceedings, and there was no finding by the judge that Mr Shalabayev was a privy of any such party.
a) Even if Mr Shalabayev's primary position under ground (1) was wrong, it was clear from the authorities that the circumstances must be exceptional in order to justify a finding of collateral attack by a non-party; see Re Norris.
b) Although the judge referred in the judgment to the fact that Mr Shalabayev was not a party to the committal proceedings he gave no express consideration to whether the facts of this case were sufficiently exceptional to outweigh this important pointer against a finding of abuse.
x) Second, Mr Shalabayev having had no opportunity to be heard on, or joined to, the contempt application, was consequently subject to considerable disadvantages, including:
a) having no notice or appreciation that the Bank would seek to use the judge's findings in the committal judgment against him on a future charging order application;
b) had no control (save to a limited extent in respect of his own evidence) over the evidence adduced in opposition to the Bank's allegations;
c) had no opportunity to have the Bank's witnesses cross-examined, or submissions made, on his behalf, in the committal proceedings; and
d) had no right of appeal against the findings made in the committal judgment or to be heard on any such appeal.
Although the judge referred to the above factors in passing in the judgment (in paragraph 27) - save for the absence of any right of appeal he gave no reasoned consideration as to their application. They should have been decisive factors in Mr Shalabayev's favour.
xi) Moreover, there was no suggestion by the judge that Mr Shalabayev was at fault for not having sought to have himself joined to the committal proceedings, and nor could any such suggestion properly have been made. Since the only purpose of the committal proceedings was to establish the status of Mr Ablyazov as a contemnor, and those proceedings had nothing to do with the rights now afforded to the Bank as a judgment creditor, there was no reason why Mr Shalabayev should have sought to have himself joined.
xii) If the Bank had intended at the time of the committal proceedings to use them as a means of locating property against which a future judgment could be enforced, then it was for the Bank to seek to join Mr Shalabayev so that any findings made in the committal judgment were binding on him. If the Bank failed so to proceed at the time, there is no injustice in the court requiring it to prove its case against Mr Shalabayev now that it has decided to seek to enforce against Alberts Court.
xiii) Third, in seeking to resist the charging order application, Mr Shalabayev was not seeking to initiate or prosecute litigation of his own, but instead to defend proceedings brought by BTA. The judge gave insufficient weight to this factor, and gave no reasons for dismissing it.
xiv) The judge overlooked the line of authority demonstrating the importance of distinguishing between defendants and claimants in the application of the doctrine of collateral attack; see in particular Bragg v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1982] 2 Lloyd's Rep 132; Nawrot v Chief Constable of Hampshire Police (Official Transcript 4 December 1991; The Independent, 7 January 1992; and Conlon v Simms.
xv) Fourth, the purpose of the committal proceedings and that of the charging order proceedings was different. This was an important basis for the decision of the House of Lords in Re Norris, and was also a strong indicator that Mr Shalabayev could not be blamed for not having sought to intervene in the committal proceedings. It was not a factor to which the judge made any reference in his judgment.
(3) Taking into account (or giving undue weight to) certain inappropriate factors
xvi) First, the judge relied on the fact that he had disbelieved the evidence of Mr Shalabayev in the committal proceedings. The above authorities (and in particular Re Norris and Conlon) did not suggest that this in itself was a relevant factor in deciding whether there was any abuse; on the contrary, they indicate that it was not.
xvii) Second, although the judge emphasised that the issue of ownership of Alberts Court had been "considered…in considerable detail over many days and at considerable expense" during the committal proceedings, in fact that particular issue, which formed the subject matter of one of nine allegations of contempt[10] levied against Mr Ablyazov, took up only a small part of the committal proceedings, and was dealt with substantively by the judge in only nine paragraphs of a 244-paragraph judgment. In any event the length of time spent on the issue of ownership of Alberts Court was not an important factor; see e.g. Conlon v Simms and Bragg.
xviii) Third, the judge relied on his own finding that it was "deeply improbable" that there could be any further evidence relating to the ownership of Alberts Court in the charging order proceedings. Precisely the same points had been raised against Mrs Norris in Re Norris (see [22] at p1399F) and against Simms in Conlon v Simms (see e.g. [97]), and in both cases the decisions of the lower courts which had placed weight on these factors were overturned. Moreover, since the findings made by the judge in the committal judgment were inadmissible against Mr Shalabayev as evidence of the facts on which those findings were based (as per the rule in Hollington v Hewthorn [1943] KB 587]), the overlap of evidence was in principle irrelevant; something more was needed before a finding of abuse could be justified.
xix) Fourth, the judge wrongly considered it important that his decision in the committal proceedings had been considered and upheld by the Court of Appeal. That was of no relevance to the question whether Mr Shalabayev's conduct should be branded abusive. The appeal from the committal judgment was a process in which Mr Shalabayev did not (and was not able to) play any part.
xx) Fifth, the judge appears to have placed reliance on an observation made by him in the course of the judgment that Mr Shalabayev was "someone who, along with his brother Syrym Shalabayev, assists or has assisted Mr Ablyazov in various ways". However, he gave no explanation for the significance of this observation. In any event, reliance on this was unfair and unjustified: it concerned findings made in proceedings to which Mr Shalabayev was not a party, and thus assumed the answer to the very question at issue before him, namely whether Mr Shalabayev should effectively be bound by those findings; and it had an air of punishment about it.
(4) Disproportionate interference with Mr Shalabayev's rights under Article 1 of the First Protocol ("A1P1"); and under Article 6 of the European Convention on Human Rights
xxi) On the assumption that Mr Shalabayev was the owner of Alberts Court, the effect of the charging order and its execution would be to deprive Mr Shalabayev of his possessions, namely of valuable real property belonging to him; although A1P1 contains no explicit procedural requirements, before there is any proportionate interference with property rights, an individual must be afforded a reasonable opportunity of putting his case to the responsible authorities for the purpose of effectively challenging the measures interfering with the rights guaranteed by A1P1: Jokela v Finland (2003) 37 EHRR 26 at [45].
xxii) There had been no compliance with Article 6 since Mr Shalabayev had been denied the opportunity to assert his property rights in relation to Alberts Court. The effect of the charging order, if it became enforceable, would be to deprive Mr Shalabayev of those rights altogether, and without compensation, since the net proceeds of sale of Alberts Court would be exhausted in part satisfaction of the Bank's judgment against Mr Ablyazov.
xxiii) On the face of it, that amounted to a clear infringement of Mr Shalabayev's rights under both Article 6 and A1P1.
The Bank's case
i) If a trial of the ownership issue were ordered, Mr Shalabayev would in reality not turn up for the trial; he had three outstanding prison sentences against him and so would be arrested when he arrived in the jurisdiction. Any application to give evidence by video link would be opposed by the Bank. His behaviour in relation to the committal and other proceedings had been almost as heinous as that of Mr Ablyazov. He had been held to have been a liar and a contemnor.
ii) The probability was that at any such trial Mr Shalabayev would not give proper disclosure in relation to the property ownership issue. He had failed to do so in the past in relation to the Millennium-Proteus transfer. He did not cooperate unless it was in his interests to do so. The likelihood was that any pleading of his would be struck out.
iii) As to the new evidence produced by Mr Shalabayev ("the 2015 evidence"), its substance was not new and ought not to have an important influence outcome on the appeal. Moreover it supported the conclusion reached by Teare J as to Mr Ablyazov's beneficial ownership of Alberts Court. Mr Shalabayev had failed to explain the origin/source of some of the documents now forming the 2015 evidence and had given an inadequate explanation for his purported inability to adduce it at previous related hearings in the Commercial Court in 2011, 2013 or 2014. Further he had given no explanation for the delay in adducing the 2015 evidence since the hearing in 2013.
iv) Mr Shalabayev had adduced no new evidence over and above that which was adduced for the committal proceedings on the subject of the beneficial ownership of Alberts Court – a property in which he did not live. The judge was entirely right to observe that "it seems to me deeply improbable that there could be any further evidence relating to the flat in Alberts Court which was not brought before the court in previous proceedings."; see the judgment at paragraph 20.
v) In effect, Mr Shalabayev was asking for a re-hearing on old evidence which had already been disbelieved by Teare J when applying the higher standard of criminal proof and finding Mr Shalabayev to be an incredible witness.
vi) Although he had learnt about the restriction over Alberts Court and the appointment of receivers over the shares in Bensbourogh in about April 2011, Mr Shalabayev did nothing to challenge the receivership or the restriction on the property. It was incumbent upon him to have applied for the issue to be determined in the committal proceedings (which he knew raised the question of the beneficial ownership of the property) or to have applied to have taken the Bensbourogh shares, or, at the very least, the property, out of the receivership.
vii) Any rehearing would consume further considerable resources of the Court and the Bank.
viii) In the event (which in the absence of fresh evidence must be in the highest degree unlikely) that the rehearing were to result in the Bank failing to persuade a court to the civil standard of proof what it has already persuaded Teare J to accept on the criminal standard, (viz that Mr Shalabayev was not at any material time the ultimate beneficial owner of Alberts Court), that new ruling would be inconsistent with the Mr Ablyazov Committal Judgment and the decision of the Court of Appeal. The inconsistency in the judgments would inevitably bring the administration of justice into disrepute.
i) As to Mr Shalabayev's allegation that he had had no "opportunity to be heard in those proceedings, or to be joined as a party", the reality was that his evidence had been heard by Teare J and relied upon by Mr Ablyazov. He had had the opportunity to intervene in the proceedings to assert his claim to ownership, had he wished to do so. But even more than that, he could – and the Bank submitted should – have applied in the receivership to take the shares of Bensbourogh out of the receivership after they were added in April 2011.
ii) As to Mr Shalabayev's allegation that he had had no control over the evidence adduced in opposition to the Bank's allegations of contempt against Mr Ablyazov, whilst he did not have formal control, Mr Shalabayev nonetheless had influence over the evidence to be adduced. His was the principal testimony on which Mr Ablyazov relied as regards the property. If Mr Shalabayev's complaint now was that there was evidence available to him at the time of trial which was not adduced and which was of significance, the point might have had more merit. But in the absence of such a contention, the point appeared to be a forensic one only.
iii) As to Mr Shalabayev's allegation that he had had no opportunity to have the Bank's witnesses cross-examined, it is probable that had Mr Shalabayev wished to exert influence as regards the questions to be asked in cross-examination he would have been able to do so. Given that the Bank did not call any witnesses who were able to give direct evidence as regards the ownership of Alberts Court, and its case was essentially proved by inference from the documents it relied upon, and the written evidence and oral answers of Mr Ablyazov and his witnesses, the point has no merit.
iv) As to Mr Shalabayev's allegation that he had had no right of appeal against the findings made in the committal judgment, whilst that was correct, Mr Ablyazov did have a right of appeal which was exercised (unsuccessfully), and there was nothing to prevent Mr Shalabayev from applying to intervene on Mr Ablyazov's appeal in order to make his points, if he had wished to do so.
Ground 1 – abuse of process
i) As to Mr Shalabayev's contention that Teare J should have held that the doctrine of abuse of process by collateral attack could only apply to a party to the previous decision or a privy of that party, the argument that the doctrine of collateral attack abuse of process was limited in its scope and that such limits precluded the doctrine being applied to Mr Shalabayev, a witness, was wrong.
ii) A correct analysis of Hunter v Chief Constable of West Midlands Police [1982] AC 529 and the subsequent cases demonstrated this. Smith v Linskills was merely an application of the doctrine to the facts of that case in which the claimant sought to bring a new action which would amount to a collateral attack on an earlier decision to which he was a party. There was no consideration of the application of the doctrine to witnesses. Therefore, the passage relied upon by Mr Shalabayev in his skeleton argument should not be read as a rejection of the application of the doctrine to different facts or the rejection of the possibility of its wider application.
iii) As Sir Andrew Morritt V-C explained in Secretary of State for Trade and Industry v Bairstow [2004] Ch 1 at [38], the doctrine of abuse of process could and did operate in circumstances where the parties to the later proceedings were not parties, or privies of the parties, to the earlier proceedings. Accordingly, Mr Shalabayev's argument that, correctly interpreted, Bairstow did not establish that the collateral attack doctrine can be applied to a witness from an earlier action, was wrong. Further support for the Bank's submission could be found in Conlon v Simms. Although the Court of Appeal did not find an abuse of process on the facts of that case, the Court did not cast any doubt on the Bairstow principle (d) and did not dismiss in limine the argument that an abuse of process could arise in cases where the subsequent litigation involved different parties from those involved in the earlier litigation.
iv) Consequently, there was no limited interpretation or restricted application of the doctrine of collateral attack arising from Hunter, as Mr Shalabayev contended. Rather the correct analysis was summarised by Anthony Mann QC (albeit obiter) in Re Cedarwood Productions Ltd [2004] BCC 65 where he stated (at p 74C-D):
"The jurisdiction to stay or strike out proceedings as an abuse of process on the footing that a point has been decided in earlier proceedings is not a jurisdiction that will be exercised lightly…This point is even stronger where the person who is sought to be debarred in the second set of proceedings was not even a party to the first set. While a non-coincidence of parties is not necessarily a bar to a finding of abuse, it must be an important pointer against it."
Teare J's judgment did not offend these principles.
v) Further or alternatively, if this Court were minded to find that there must have been a "full opportunity" for the alleged collateral attacker to have been heard in the earlier litigation giving rise to the prior decision, the Bank submitted that Mr Shalabayev had had that full opportunity or a sufficient opportunity such that it was just and fair to prevent him from bringing a collateral attack on the committal judgment. In particular, he had provided two written affirmations in the committal proceedings setting out his case on his ultimate beneficial ownership of Alberts Court. If he had wanted to state anything further or adduce any other documentary evidence to support his claims he had ample opportunity to do so.
vi) Mr Shalabayev attended Court in person and gave oral evidence to Teare J about his alleged beneficial ownership of Alberts Court. At the conclusion of his cross-examination there was no suggestion that Mr Shalabayev had been restricted in the evidence he had given about the ultimate beneficial ownership of Alberts Court for any reason.
vii) Furthermore, Mr Shalabayev was forced to stay in the jurisdiction after he had finished giving evidence until approximately early March 2012 and was here for the remaining duration of the hearing of the committal proceedings. Had there been any further evidence or documentation which supported his claims (and therefore supported and assisted Mr Ablyazov's defence of the committal proceedings) it is reasonable to assume that, at the least, an application to adduce such further evidence would have been made by Mr Ablyazov's able and well-staffed legal team. However, nothing further materialised and still has not materialised even in the context of this appeal.
viii) Given that Mr Ablyazov relied upon the evidence given by Mr Shalabayev in his defence of the committal proceedings and given the same aim and purpose which the brothers-in-law had in establishing to the court's satisfaction that Mr Shalabayev was the ultimate beneficial owner of Alberts Court, it overlooked the reality of the situation to say that Mr Shalabayev had "no control" in circumstances where he was intimately involved in the committal proceedings on the issue of the ultimate beneficial ownership of Alberts Court.
Grounds of Appeal 2 and 3 – factors taken or not taken into account or afforded too much or too little weight
ix) In relation to Mr Shalabayev's contention that the judge reached the wrong conclusion because he did not accord weight (or sufficient weight) to certain factors or accorded weight (or too much weight) to others which he should not have taken into account or should not have relied on as much, Mr Smith submitted that the court's inquiry into whether the circumstances of a particular case gave rise to an abuse of process by collateral attack will necessarily involve an assessment of a wide range of factors and the weighing of those factors within the context of that case and that the manner and method in which Teare J went about identifying and weighing the factors in this case were unimpeachable.
Ground of Appeal 4 – breaches of Mr Shalabayev's rights under A1P1 and Article 6 of the ECHR
x) There had plainly been no breach of Article 6. Mr Shalabayev was represented by leading and junior counsel at the hearing on 17 May 2013, and it could not be (and was not being) suggested that that hearing was unfair. The upshot, that Mr Shalabayev was not to have a further opportunity to be heard at first instance, was no more a breach of his human rights than would be a finding that proceedings should be struck out as an abuse, or following non-compliance with an unless order; see in this respect the Court of Appeal's ruling on the appeal against the committal judgment, [2013] 1 WLR 1331, per Rix LJ at [154]-[192]).
xi) Following the Jackson reforms, there was renewed emphasis in the CPR on justice being seen to be done to all litigants, and an enhanced appreciation that court time taken up by one abusive litigant meant that the same amount of court time was lost to litigants who did not abuse the system. It was certainly not the case that every litigant was always entitled to a full hearing on the merits of his complaints (see especially [2013] 1 WLR 1331, per Rix LJ at [164]).
xii) As regards A1P1, it could not sensibly be said that the judge's ruling deprived Mr Shalabayev of his possessions. What "deprived" Mr Shalabayev was a combination of the committal judgment and Mr Shalabayev's own previous inertia.
The Bank's appeal: ground 1: issue estoppel and privity of interest
i) The judgment from which the estoppel was said to arise must be a final judgment. This requirement was clearly met here as the committal judgment was upheld by the Court of Appeal.
ii) There must be identity of subject matter in the litigation resulting in the judgment from which the estoppel was said to arise, and the later litigation. That requirement was likewise satisfied in this case. The issue of who ultimately owned the beneficial title to Alberts Court was one of the issues determined in the committal judgment and precisely the same issue was raised by Mr Shalabayev in his application to intervene in the Charging Order Proceedings.
iii) Finally, there had to be "identity of parties". This included the situation where, even though a litigant was not a party to the action from which the earlier decision arose, he was a "privy" to a party who was bound: see Nana Ofori Atta II v Nana Abu Bonsra II [1958] AC 96.
iv) In this case, in relation to the question of the ultimate beneficial ownership of Alberts Court and the finding in relation to that issue in the committal judgment, there was a privity of interest between Mr Ablyazov and Mr Shalabayev such that the latter was (also) bound by an estoppel arising from that judgment. Mr Smith submitted, on the basis of the decision in Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853, that privity of interest could arise: "in many ways" but it was "essential that the person now to be estopped… must have some kind of interest in the previous litigation or its subject-matter" (see per Lord Reid at p 910 C). He also referred to the decision of Sir Robert Megarry V-C in Gleeson v J Whippell & Co Ltd [1977] 1 WLR 510; that of Briggs J in Secretary of State for Business, Innovation and Skills v Potiwal [2012] EWHC 3723 (Ch); and that of Warren J in Dadourian Group International Inc v Simms [2006] EWHC 2973 (Ch) at [721] to emphasise that the question whether one person was privy to the interests of another was highly fact-dependent.
v) Mr Smith submitted that the following points established privity in the present case:
a) the identity of interest, aim and purpose which Mr Shalabayev and Mr Ablyazov shared in establishing to the court's satisfaction during the committal proceedings that Mr Shalabayev was the ultimate beneficial owner of Alberts Court; that was the same interest that Mr Shalabayev had in applying to intervene in the charging order proceedings;
b) although Mr Shalabayev knew that the beneficial interest in Alberts Court was in issue in the committal proceedings and had travelled to London to give oral evidence in those proceedings to the effect that he was the ultimate beneficial owner, he did not take any steps to intervene at that stage (or earlier) to protect his own alleged property rights; he had relied on Mr Ablyazov defending the committal proceedings on the issue of the ultimate beneficial ownership of Alberts Court;
c) there was good reason to believe that Mr Shalabayev applied to intervene in the charging order proceedings at the instigation of Mr Ablyazov, on the latter's account or authority or for the latter's benefit, such that it was Mr Ablyazov who was the "real" applicant seeking to intervene in the charging order proceedings; that could be seen from the fact that Mr Shalabayev was informed about the proceedings by Mr Ablyazov;
d) Mr Shalabayev's legal fees had been funded by the same "third party funder" who funds (or funded) Mr Ablyazov's legal fees[11];
e) the close family ties between Mr Ablyazov and Mr Shalabayev;
f) Mr Shalabayev's instruction of Mr Ablyazov's solicitors and counsel.
The Bank's appeal: ground 2: estoppel by conduct/ failure to intervene earlier
i) The rules in CPR Part 19 permitted the addition of Mr Shalabayev as a new party to the committal proceedings, had he wished to be joined. Accordingly, if Mr Shalabayev intended in the future to challenge an adverse decision reached by the court in the committal proceedings concerning the ownership of Alberts Court, he should have made an application under CPR 19.2 to be joined. Mr. Smith rejected the notion that the Bank should have taken the initiative to join Mr Shalabayev to the committal proceeding. It was not for the Bank to try to pre-empt possible satellite litigation from Mr Shalabayev at a time when there was no suggestion that Mr Shalabayev would adopt the approach he now has and in the context of proceedings which were already costly and time consuming.
ii) Mr Shalabayev had also failed to procure Bensbourogh, the registered proprietor of Alberts Court, to raise a challenge to its inclusion in the receivership over Mr Ablyazov's assets, notwithstanding that it was included in the receivership by an order made in April 2011.
(B) The Bank's appeal: ground 3: abuse of process
Discussion and determination
The short route to my conclusion
i) Mr Ablyazov is the ultimate beneficial owner of the property, either because he is the ultimate beneficial owner of Bensbourogh, the registered proprietor of the property, or because, whatever that company's ultimate beneficial ownership, it held the property as a nominee, or upon trust, for him;
ii) that accordingly the Bank is entitled to a charging order over the property to secure part payment of its judgment.
i) "It is not credible that he would purchase a flat for almost £1m. without viewing it, even if his elder brother was purchasing it for him…."; and
ii) "He does not appear to have lived in it after Mr. Ablyazov's driver had vacated the flat and instead appears to have lived in the flat in Elizabeth Court and to have paid rent for doing so. That is an odd thing to do if he is the owner of a flat in the same development."
Abuse of process
"The circumstances in which abuse of process can arise are very varied; those which give rise to the instant appeal must surely be unique. It would, in my view, be most unwise if this House were to use this occasion to say anything that might be taken as limiting to fixed categories the kind of circumstances on which the court has a duty (I disavow the word discretion) to exercise this salutary power."
"There can be no catch-all formula for identifying an abuse of process, since each case will depend on its own facts."
In other words, it all depends on the particular circumstances concerned as to whether the principle is engaged.
"d) If the parties to the later civil proceedings were not parties to or privies of those who were parties to the earlier proceedings then it will only be an abuse of the process of the court to challenge the factual findings and conclusions of the judge or jury in the earlier action if (i) it would be manifestly unfair to a party to the later proceedings that the same issues should be relitigated or (ii) to permit such relitigation would bring the administration of justice into disrepute."
That statement is wholly contrary to Mr. Sheehan's submission and is binding on us. It follows that I do not accept that HH Judge Mackie QC's analysis in Great Wealth Telecom Ltd v Simtel Communications Ltd, at paragraphs 20 – 23, of Sir Andrew Morritt's articulation of the principle in Bairstow was correct.
"10. …… In February 1999 an ex parte application was made by HM Customs and Excise, the respondents to this appeal, to Latham J sitting as a judge of the High Court for the appointment of a receiver under s.11 of the Act and other orders. Latham J made the orders asked for on 4 February. One of the orders made was a declaration:
"that the defendant [Mr Clifford Norris] holds the beneficial interest in 7 Berryfield Close, Chislehurst Road, Bickley, Kent, title number SGL 42481".
7 Berryfield Close was the house in which Mrs Norris and her three sons lived. They had lived there since she bought it in July 1984. She was registered as having the unencumbered title to the property. The order also required any person having possession of Mr Norris's assets forthwith to deliver up the same to the receiver, subject only to a period of 28 days from the date of the order being allowed before the requirement to deliver up 7 Berryfield Close should take effect.
11. Mrs Norris had only heard about the ex parte application a few days before as the result of a telephone call from Mr Norris's solicitors. She attended the hearing before Latham J but it is not suggested that she was then in a position to take any part. She was not represented. Following the making of the order, she took legal advice. She swore an affidavit dated 4 March 1999, with accompanying exhibits, and applied for the order to be varied so as to recognise her title or interest in 7 Berryfield Close. Her application was met by the response from the Customs and Excise that it was an abuse of process for her to make any such application the matter having been concluded by the order of Judge Brown. Latham J upheld the objection of the Customs and Excise and dismissed Mrs Norris's application without considering its merits. Her appeal to the Court of Appeal was likewise dismissed [2000] 1 WLR 1094. She has appealed here with your Lordships' leave."
"16. The second type of power conferred upon the High Court is directed to realising the value of realisable property and applying the proceeds so that the sum payable under the confiscation order can be fully discharged. This is achieved through a receiver appointed by the High Court under s.11. The drafting of s.11 and the associated sections 12 and 13 acknowledge that others besides the defendant and the donee of a gift caught by the Act may have an interest in the relevant property and that, whilst the receiver is given the power to take possession of the relevant property and realise its value, the order does not override or confiscate the interests of others in the value of that property. S.13(4) expressly provides that the powers shall be exercised with a view to allowing any person, other than the defendant or the recipient of a gift caught by the Act, "to retain or recover the value of any property held by him". This would be implicit even in the absence of an express provision since the confiscation order only applies to the convicted defendant and, indirectly through such defendant, donees caught by the Act. To apply it so as to confiscate the property of innocent third parties would be not only exorbitant but also outside the purpose of the Act. Any such confiscation would now also raise Human Rights issues. Sections 11 and 12 support this scheme by providing for others to make representations to the High Court. S.11(8) is expressed in mandatory terms:
"The court shall not in respect of any property exercise the powers conferred by subsection (3)(a), (5) or (6) above unless a reasonable opportunity has been given for persons holding an interest in the property to make representations to the court."
The "court" which has the powers referred to is the High Court: see subsection (1). The respondents before your Lordships surprisingly sought to argue that in subsection (8) the court to which such persons were to have a reasonable opportunity to make representations was the Crown Court not the High Court. This argument had been advanced in the Court of Appeal and rightly rejected by Tuckey LJ ([2000] 1 WLR at p 1100G). The relevant court is clearly the High Court seised of the enforcement proceedings. The person entitled to make representations is any person holding any interest in relevant property. The High Court must be prepared to hear representations from any such person (s.11(8)) and allow him to retain or recover the value of his interest in the property (s.13(4)). Again, this requirement of the Act has been carried through into RSC Order 115: rule 8(1) applies (inter alia) rules 4 and 5 to the exercise of the powers under s.11.
17. The scheme of the Act is thus to enable the monetary order made against the convicted defendant to be enforced by effecting recovery from the defendant's property including property which he has given away during the six year period. This extension of the statutory powers takes into account the obvious possibility that those engaging in drug trafficking may transfer their wealth to others in order to try and frustrate the attempts of the authorities to recover them but without affecting the trafficker's expectation that he will ultimately be able to benefit from the proceeds of his trafficking. The concept of realisable property is used both as a measure of the defendant's current wealth for the purpose of fixing the monetary amount of the confiscation order made and for defining what assets can be used for the purpose of enforcing the order and recovering the relevant sum. Property "held" being widely defined so as to include property in which any relevant person has an interest, it must be contemplated that there is realisable property in which two or more people will have an interest. It is therefore part of the structure of the Act that questions may have to be determined as to the respective interests of different persons in the same property. Although the extent of the defendant's interest is relevant to the Crown Court's assessment of the value of his realisable property, the question of what other persons, if any, have an interest and what is the extent of their interests must be decided by the High Court in the exercise of its jurisdiction."
" 22. In the Court of Appeal, the Customs and Excise did not seek to uphold the decisions of Buxton and Latham JJ in so far as they said that the High Court had no jurisdiction in any circumstances to reopen the findings of the Crown Court on the application of a third party: [2000] 1 WLR 1094, 1098G The Court of Appeal considered that this concession was rightly made and the judgment of Buxton J could not be supported. I agree with the Court of Appeal on this point. The argument on the construction of the Act having been abandoned, the Customs and Excise based their case on a different submission that there was a spectrum of possible situations and the relevant consideration was abuse of process. Counsel submitted that Mrs Norris fell on the wrong side of the line."
"The wife's interests were identical to those of the defendant at the hearing in the Crown Court where the wife had the opportunity to give her evidence and have her case argued by counsel. The fact that she was not formally a party to the proceedings or represented is unimportant." (p. 1099)
He relied upon Hunter v Chief Constable of the West Midlands Police [1982] AC 529 and Ashmore v British Coal Corporation [1990] 2 QB 338. Tuckey LJ accepted this argument. He considered that "if the third party has had a fair opportunity to put his or her case at the earlier hearing there is nothing unfair" in preventing him or her relitigating an issue which had been decided in proceedings to which he or she was not a party. Referring to s.11(8) he said:
"The requirement will obviously be satisfied if having been given notice of the application a third party chooses not to appear. If the third party does appear, he or she is entitled to make representations including a request to reopen issues decided by the Crown Court. But the subsection does not require the court to accede to such a request. It may do so if, for example, it is persuaded that there is fresh evidence which entirely changes the aspect of the case or that the Crown Court's decision was wrong in law." (pp. 1100-1)
Tuckey LJ distinguished this from the situation where the third party has had a "fair opportunity to put his or her case to the Crown Court and is asking to relitigate issues decided in the Crown Court on the same or substantially the same evidence and submissions". He described this as an abuse of process.
" I do not attach great importance to the fact that the third party is not a party to the criminal proceedings. Where the third party participates in the Crown Court hearing the likelihood is that he or she will be making common cause with the defendant. The typical case will be that of husband and wife. In such a case the third party's interests are fully represented through the defendant. True it is that the defendant has a right of appeal against any confiscation order which is made to the Criminal Division of the Court of Appeal and the third party does not. However, in practice, the defendant has little or no prospect of appealing against findings of fact made by the Crown Court."
Applying this reasoning to the facts of the case, he concluded that the interests of Mrs Norris were "adequately represented" by leading counsel for the defendant. She and the defendant were making common cause about their respective interests in the house. The evidence she gave in the Crown Court was substantially the same as that she wants to give in the High Court; she was disbelieved in the Crown Court. The Court of Appeal dismissed Mrs Norris's appeal from the order of Latham J refusing to entertain her case that she had an interest in 7 Berryfield Close.
23. My Lords, the reasoning and decision of the Court of Appeal depends upon the view which they took of the breadth of the principle of abuse of process and their assessment of what had occurred in the Crown Court. I consider that neither can be supported. Underlying their reasoning on both aspects was their failure fully to respect the view they had rightly taken of the legislation. Once the view taken by Buxton J was shown to be erroneous and the requirement of the High Court to hear the representations of interested parties recognised, the Court of Appeal should have given effect to the division of responsibility and function between the Crown Court exercising the criminal jurisdiction and the High Court exercising the civil jurisdiction. The criminal jurisdiction is concerned alone with what order to make under sections 1 to 4 of the Act. The procedure of the criminal court is solely concerned with the parties before it, the prosecution and the defendant. In some situations the Crown Court may also make compensation or restitution orders in favour of third parties who are given a right to apply (eg under sections 148 and 149 of the Powers of Criminal Courts (Sentencing) Act 2000), order property to be forfeited (eg vehicles used in the commission of the relevant crime) or to be returned to the loser (eg under the Theft Acts). But it is well established that these powers are only to be used where there is no disputed civil law right or similar issue which needs to be determined (eg s.148(5) of the Act of 2000). If there is such an issue, the proper course for the Crown Court to take is to leave the relevant person interested to pursue his or her civil remedy in the civil courts: R v Ferguson (1970) 54 Cr App R 410 and R v Calcutt (1985) 7 Cr App R (S) 385. The English system of criminal justice does not itself confer any civil jurisdiction upon the criminal courts and it takes a clear and express provision in a statute to achieve that result. The 1986 Act does not contain any such provision; indeed, as already explained, its clear intention is to preserve the distinction between the respective jurisdictions. The time and place for Mrs Norris to assert her civil law rights over 7 Berryfield Close was when the Customs and Excise attempted in the High Court to deprive her of her interest. It is at this stage that she becomes directly affected and has the right to invoke the remedies of the court in the defence of her civil law rights. In the criminal court she was a mere witness with no right of representation and no control of the proceedings and no right of appeal. It is relevant to observe that Lord Hoffmann remarked upon the same division of jurisdiction between the criminal and civil courts in Government of the United States of America v Montgomery [2001] HL1§22.
24. It was wrong to say that her interests were identical with those of her husband. Indeed their proprietary interests were in principle opposed to each other. They were competing rights of property giving rights to one spouse against the other. It was in the interest of the defendant to put forward in the Crown Court the interest of his wife because he could use it to get a reduction in the confiscation order which was going to be made against him. But the wife's interests were not and are not the same as those of her husband. She wishes to preserve for herself and her children her right to live at Berryfield Close against her husband if necessary and against anyone claiming through him. The defendant also had an interest in mitigating the sentence of imprisonment which he was going to receive. The proceedings in the Crown Court were for the benefit of the defendant and the Customs and Excise, not Mrs Norris.
25. These points are further reinforced by the reasons given by Judge Brown (which I have quoted in paragraph 10) and in particular by the parts I have italicised. Judge Brown placed the burden of proof upon the defendant to satisfy him that the amount that might be realised was less than the assessed proceeds: s.4(3). He treated himself as entitled to make presumptions against the defendant. He took into account the whole of the evidence which had been given in the course of the criminal trial. He discredited Mrs Norris as a witness because the defendant's counsel had elicited from her her belief in her husband's innocence. In the civil proceedings the starting point is that Mrs Norris is the registered freehold owner of the property and in occupation of it. Her apparent title has to be displaced by evidence. If she is considered to have only a partial interest, which she recognises is a possible view, the extent of that interest has still to be determined. No presumptions are to be made against her. The burden of proof is upon the Customs and Excise. The only case now being made against her is the claim to 7 Berryfield Close. In order to identify what are the beneficial interests in that property, it will be necessary to trace where possible the history of the contributions made to the sequence of properties which preceded the purchase of 7 Berryfield Close. It appears from the affidavit she has now sworn and the exhibits to it that at least some of the presumptions made by Judge Brown may be wrong and that his wholesale rejection of her evidence may have been unjustified. She has evidence to raise an arguable case that she has at least an interest in 7 Berryfield Close and it would appear that what happened in 1984 when Oakdene Road was sold and Prince Consort Drive purchased may arguably have involved a contribution from the defendant as low as £18,750 or 15 % of the purchase price of £120,000. The evidence admissible against her will be the evidence adduced in the High Court proceedings. Judge Brown was not engaged in an exercise of determining her rights in accordance with the civil law. Because of this, she was never given, nor was it intended that she should be given, the right in the Crown Court to place before Judge Brown, though counsel representing her and supported by the documentary and other evidence which she chose, her civil case. The issues to be determined in the Crown Court and in the High Court are related but are not the same. To adapt the language of Lord Diplock in the Hunter case [1982] AC 529, at 536 and 541, the question decided in the Crown Court was not on any view "identical" to that to be decided in the High Court nor was the Crown Court a "competent court" to decide against Mrs Norris what are her rights. Mrs Norris is not "misusing" the procedure of the High Court; she is making the proper use of the civil jurisdiction of the High Court to protect her proprietary rights as the 1986 Act contemplates that she should.
26. The principles applied in the cases of Hunter and Ashmore do not apply. In Hunter the plaintiff was engaged in trying to relitigate in a civil court a factual issue which had already been decided against him in a criminal case in which he had been a party. It involved a collateral attack upon a decision in previous proceedings to which he had been a party, fully represented and with complete control over the evidence he wished to put before the court. The plaintiff had "had a full opportunity of contesting the decision in the court by which it was made": per Lord Diplock at p 541. The present case does not have those features. The Ashmore case is essentially a case of the marshalling of litigation. Where a civil court (or tribunal) is faced with an incident for which a defendant may be liable and which injured a large number of people or some situation where a large number of people similarly placed wish to make a contested claim against another, as was the case with the sex discrimination claim against the British Coal Board being made in the Ashmore case, the court, as a necessary part of the administration of justice, has to be prepared to make orders requiring the interested parties to come forward so that appropriate cases can be selected for trial and the parties can address the court upon whether their case raises any different issues from those selected. Each party has an opportunity to persuade the court that its case requires special treatment and should not follow the result of the selected cases. Any aggrieved party may seek to appeal such a procedural order. Where some interested party has been content not to intervene and awaits the outcome of the substantive trial, he must abide by the result, even if adverse, save possibly for seeking belatedly to intervene in order to support an appeal against the substantive decision. Simply to seek to relitigate the whole thing over again is an abuse of process and will not be allowed, as is more fully explained in the judgment of Stuart-Smith LJ in that case, [1990] 2 QB 338, at 345-355. These are illustrations of the principle of abuse of process. Any such abuse must involve something which amounts to a misuse of the litigational process. Clear cases of litigating without any honest belief in any basis for doing so or litigating without having any legitimate interest in the litigation are simple cases of abuse. Attempts to relitigate issues which have already been the subject of judicial decision may or may not amount to an abuse of process. Ordinarily such situations fall to be governed by the principle of estoppel per remjudicatem or of issue estoppel (admitted not to be applicable in the present case). It will be a rare case where the litigation of an issue which has not previously been decided between the same parties or their privies will amount to an abuse. As previously explained, the present case does not involve such relitigation nor is there evidence to support the more simple types of abuse. Your Lordships were also referred to the recent decision of the Court of Appeal in Gokal v Serious Fraud Office [2001] EWCA Civ 368, a case under the comparable provisions of the Proceeds of Crime Act 1995. The Court of Appeal distinguished between the position of the defendant who in the Crown Court, with the burden of proof resting upon him, could seek to satisfy that court that the amount which might be realised at the time the confiscation order is made would be less than the amount of benefit he had from the relevant offence or offences, who had a right of appeal and was thereafter bound by the outcome (§17) and the position of a third party such as Mrs Norris (§41). For the defendant to seek to reopen the decision by which he is bound was an abuse of process.
27. A different procedural remedy might have been available to the Customs and Excise if the case had justified it. This is best illustrated by the Civil Procedure Rules, Part 24. If a party to litigation is pursuing a case with no real prospect of success, the court can recognise that situation and proceed to give judgment in accordance with the inevitable outcome of the litigation. If a case is patently and inevitably not going to succeed, the court is empowered to cut out the later formalities and proceed straight to judgment. A predecessor of Part 24, RSC O.14, followed a similar logic of adopting procedures which enable justice to be done without undue delay and expense. There are some similarities between these remedies and striking out for abuse of process but they are not the same. Before your Lordships, the Customs and Excise have urged your Lordships to dismiss this appeal since to fail to uphold the judgment of the Court of Appeal would be to create an inappropriate hindrance in the way of the enforcement of confiscation orders through the civil courts. But this is not so. If the third party is seeking to resist enforcement on grounds which can be seen to be bound to fail, then there is no reason why enforcement should be held up. If, on the other hand, there is something in the third party's defence in the civil proceedings, it should be determined in accordance with the normal civil procedures. In the present case, the Customs and Excise sought to treat the previous decision of the Crown Court as conclusive of any question which Mrs Norris might raise in the High Court. They did not at all enter upon the merits of what she was deposing to in her affidavit. The Customs and Excise were wrong in the stand that they had taken, as the had to concede in the Court of Appeal. But this does not mean that in other cases where the third party's case is manifestly without substance, summary procedures under Part 24 may not meet the needs of speedy justice.
28. My Lords, I consider that the appeal should be allowed and that Mrs Norris be allowed to proceed with her defence to the claim which the Customs and Excise are making against her. The Customs and Excise must prove their case against her.
"2. The Court of Appeal held that Mrs Norris had a fair opportunity to put her case in the Crown Court where she and her husband were making common cause and she gave evidence. It was on that basis that Tuckey LJ said that it would be an abuse of process for her to relitigate the same issues in the High Court: [2000] 1 WLR 1094, 1101E-F. But, as my noble and learned friend has explained, the proceedings in the Crown Court and those in the High Court are designed to serve different purposes and the interests of Mrs Norris and her husband in the matrimonial home are not the same. Mrs Norris was not a party to the proceedings in the Crown Court, nor did the procedure which the statute lays down require her case that she had a beneficial interest in the property to be put at that stage.
3. At the stage when the proceedings were in the Crown Court the only question which had to be resolved was the value of the husband's interest in the house. The question for that court was the amount of the defendant's realisable property, as this was the upper limit on the amount of money which he could be ordered to pay under section 1(5) of the Drug Trafficking Offences Act 1986 by that court. It was not the function of the Crown Court to make any order which affected the interests that any third parties might have in the property whose value it took into account when determining the amount of the defendant's realisable property.
4. The scheme of the Act, so far as third party interests are concerned, is for their claims to be resolved in the High Court. The question for the High Court, when the proceedings reach this stage, relates not to the amount of money which the defendant must pay - that has already been fixed by the order made in the Crown Court - but to the powers which the receiver is to be authorised to exercise. It is at this stage that third parties are entitled to have their claims heard and determined. This is when, as a matter of both substance and procedure, representations may be made as to their interests, if any, in the property which the receiver wishes to realise. This is provided for expressly by section 11(8) of the Act, consistently with which RSC, Ord 115, r 7(4) lays down the procedure by which those holding any interest in the realisable property are to be notified.
5. Provisions designed to protect the interests of third parties are conspicuously absent from the rules of procedure that apply at the stage of the hearing in the Crown Court. Third parties are not entitled to participate in the criminal proceedings in that court. But the issue for the Crown Court is not whether any property in which a third party might have an interest is to be confiscated. The order which it makes is an order which is directed against the defendant only, and it is simply an order for the payment of a sum of money. The question of realisation, if the exercise of powers by a receiver is needed in order to make good the order which the defendant is required to satisfy, is reserved for the High Court.
6. I do not therefore, with respect, agree with the observation by Tuckey LJ that the situation which has arisen in this case is exactly that which the doctrine of abuse of process is designed to prevent: [2000] 1 WLR 1094, 1101F. The scheme of the Act itself shows that this proposition must be unsound. It cannot be an abuse of process for a third party holding an interest in property, to whom a right is given by section 11(8) of the Act to make representations to the High Court, to seek to exercise that right just because he or she gave evidence in the Crown Court in support of the defendant's case that the property was not to be valued and taken into account as realisable property. I agree with my noble and learned friend, Lord Hobhouse that there may be other cases where the position which a third party wishes to adopt may be regarded as an abuse of process which should not be allowed to stand in the way of the enforcement of a confiscation order. But, for all the reasons which he has given, that has not been shown to be the position in this case."
i) In re Norris, there was a substantive distinction between, on the one hand, the procedure in the Crown Court for obtaining a confiscation order, and, on the other, the procedure in the High Court authorising receivers to exercise powers to realise property in order to satisfy the defendant's obligation to make payment under the confiscation order. Likewise, in the present case, there is a substantive distinction between, on the one hand, the statutory scheme governing the Bank's application against Mr Ablyazov for a committal order under CPR Part 81 on the grounds that, as a defendant to an action, he was in breach of an order, had lied on oath in the course of cross-examination, or in a statement of truth, and, on the other, the statutory scheme governing the Bank's entitlement to apply for a charging order, pursuant to CPR Part 73 and section 1 of the Charging Orders Act 1979, over Mr Ablyazov's alleged interest in the property in order to realise such beneficial interest to satisfy its judgment debt.
ii) Whilst the application for a committal order in the present case was not criminal in nature, its purpose was penal in the sense of punishing the contemnor for his contempt of court. The aim of the contempt proceedings, in other words, was to establish that Mr Ablyazov had been lying on oath so that he might be subjected to a term of imprisonment or a fine. The only relevance of the issue relating to his ownership of the property was to establish whether he had lied or not. Similarly, in In re Norris, the aim of the confiscation proceedings was to identify the amount in respect of which the Crown Court should make a financial order against the defendant. In neither case was the aim or purpose of the proceedings to resolve the question as to whether a third party was entitled to a proprietary interest in property which the Bank or the state wished to realise in order to secure payment of a (future) judgment debt or fine owed (or to be owed) to it.
iii) Whilst (in contrast with the position in In re Norris) the Commercial Court has jurisdiction both to make the committal order and the final charging order, the detailed and strict procedure for obtaining a committal order laid down in CPR Part 81 (not surprisingly) contains no provision for the applicant party, as part of its committal application, to obtain the resolution as against a third party (not party to the main proceedings or to the committal application) of a property dispute, followed by a charging order for the purpose of executing judgment against the contemnor. Although theoretically, I suppose, an application could have been made pursuant to CPR Part 19.4 and/or Part 3.1 and/or other relevant rules for the direction in those committal proceedings of a separate issue as to Mr Shalabayev's beneficial ownership (if any) in the property and/or Bensbourogh, for his joinder as a respondent to the contempt application for that purpose and for the making of some sort of restraint order against the property, it is in my judgment unlikely in the extreme that such an order would have been made. The committal proceedings as it was took some 14 days to hear; there were three detailed allegations made by the Bank against Mr Ablyazov, which in turn involved the resolution of numerous sub-allegations. Any joinder of Mr Shalabayev would necessarily have required his separate representation and possibly an adjournment so as to afford him an opportunity to obtain representation to prepare his evidence. Moreover, the Bank did not need the interlocutory protection of any further specific order against the property, or Mr Shalabayev, as it had already registered the restriction against the register, on the basis of the freezing order against Mr Ablyazov and the Bensbourogh receivership.
iv) A contempt application is treated as a self-contained procedure. It does not lend itself to the resolution of other disputes which may arise in relation to the potential execution of future judgments nor for joinder with an application for a charging order. Indeed, as at that date, the Bank had not obtained any judgment against Mr Ablyazov which could have been the subject of a charging order. Further, as Lord Hope pointed out in In re Norris (at paragraph 2) in relation to the Crown Court proceedings in that case, the committal procedure prescribed by CPR 81 did not require Mr Shalabayev, merely because he was appearing as a witness, to put his case that he had a beneficial interest in the property at that stage.
v) As in In re Norris, the time and place for Mr Shalabayev to assert his civil law rights over the property was when the Bank attempted by the application for the charging order to deprive him of his claimed interest in it or Bensbourogh. Although Mr Shalabayev became aware in the spring of 2011 of the restriction placed by the Bank on the proprietorship register relating to the property on 18 April, 2011, as described in his affirmation dated 18 October 2011, I see absolutely no reason why it was incumbent upon him, at the stage, to spend money, which according to him he could not afford, in engaging in a full-scale war with the Bank. He would have had to have challenged the receivership order over Bensbourogh, so as to remove the restriction on the property, at a time when the Bank had not obtained a judgment against Mr Ablyazov, and in circumstances where no doubt the onus would have been on Mr Shalabayev to establish that the Bank could not justify its claim to what at that stage was merely interlocutory freezing order relief against Mr Ablyazov and Bensbourogh. Indeed, unless Mr Shalabayev could have demonstrated that he had needed to sell, or raise finance on, the property at that stage, the court may well have approached the question on the balance of convenience and adjourned the determination of the substantive issue as to ownership until after such time as the Bank had obtained judgment against Mr Ablyazov.
vi) It was at the stage of the Bank's application for a charging order, in circumstances where the onus was on it to prove that Mr Shalabayev had no interest in the property that he became "directly affected" and (as Lord Hobhouse said in In re Norris) "had the right to invoke the remedies of the court in the defence of [his] civil law rights". Thus it was at the charging order stage that the Bank was required to establish under sections 1(1) and 2(1) of the 1979 Charging Orders Act that Mr Ablyazov had a beneficial interest in the property and that Mr Shalabayev had no such interest in the property or in Bensbourogh. The Bank was only entitled to a charging order under section 2(1) over such interest as its judgment debtor had. Moreover, under both the Act (section 3(5)) and CPR Part 73.10A, Mr Shalabayev, as a party claiming to be interested, had a right to object to the making of a final charging order and, at the very least, to invite the judge to direct the determination of an issue relating to the ownership of the property. Adapting what Lord Hope and Lord Hobhouse said in In re Norris (at paragraphs 6 and 25 respectively), it cannot be an abuse of process for a third party claiming an interest in property, to whom a right is given by the 1979 Act and CPR Part 73 to make representations to the High Court, to seek to exercise that right just because he or she gave evidence in committal proceedings (to which the third party was not a defendant) in support of the defendant's case that he had not lied and that the property was not his. Mr Shalabayev is not "misusing" the procedure of the High Court; he is making the proper use of the civil jurisdiction of the High Court to protect his alleged proprietary rights as the 1979 Act and the CPR both contemplate that he should.
vii) Like Mrs Norris in the criminal proceedings against Mr Norris, in the committal proceedings against Mr Ablyazov, Mr Shalabayev was a mere witness with no right of representation, no control of the proceedings and no right of appeal. In those circumstances, the judge's reliance on the fact "that the committal judgment had been considered and upheld by the Court of Appeal" was clearly wrong. Not only did Mr Shalabayev have no right of appeal against the committal judgment, and was not represented at the appeal hearing, but necessarily the Court of Appeal would have been extremely unlikely to have upset the judge's finding in relation to one relatively small and discrete finding of fact in a lengthy committal judgment, in the absence of focussed argument on Mr Shalabayev's behalf.
viii) As in In re Norris, Teare J's reliance upon the fact that Mr Shalabayev was "someone who, along with his brother Syrym Shalabayev, assists or has assisted Mr Ablyazov in various ways", with the underlying assumption that his interests were aligned with those of Mr Ablyazov, was a wrong approach. Although, as his brother in law, Mr Shalabayev no doubt wished to assist Mr Ablyazov, and may have lied to the court in so doing, the suggestion that the former's interests were identical with those of the latter is unsustainable. Again, adapting what Lord Hobhouse said at paragraph 24 in In re Norris, Mr Shalabayev's and Mr Ablyazov's proprietary interests were in principle opposed to each other. They were competing rights of property giving rights to one [brother-in-law] against the other. It was in the interest of Mr Ablyazov to put forward in the committal proceedings the interest of Mr Shalabayev, because he could use the latter's alleged interest to reduce the allegations of contempt alleged against him and also had an interest in mitigating the sentence of imprisonment which he was likely to receive. But Mr Shalabayev's interests were not, and are not, the same as those of Mr Ablyazov. The committal proceedings and the defence of those proceedings were for the benefit of Mr Ablyazov and the Bank, not Mr Shalabayev.
ix) Contrary to Mr. Smith's submissions on the Bank's appeal, nor is there any other basis for a "simple" abuse of process. As in In re Norris, the evidence put forward by Mr Shalabayev, and, in particular, his later evidence produced since the hearing, demonstrates that he has, at least prima facie (and subject to any further argument which the Bank might wish to put forward on a summary judgment or strike out application) a proper evidential basis for his claims. In my judgment, at the hearing of the charging order application, the judge, based on his wide experience in the committal proceedings and the main proceedings, was too greatly influenced by his adverse views of Mr Ablyazov and of Mr Shalabayev and his brother, whom he regarded as the former's assistants in inequity, to reach a balanced view of the evidence relating to the discrete issue of ownership of Alberts Court. He was thus unable, in my view, objectively to consider whether Mr Shalabayev was entitled to a proper opportunity to vindicate his claim to the property, either through his beneficial ownership of Bensbourogh, or on the basis that it held the property as his nominee.
"It will be a rare case where the litigation of an issue which has not previously been decided between the same parties or their privies will amount to an abuse."
Although the judge paid lip service to this principle in his judgment, he did not to my mind provide adequate reasons why the present case was "a rare case". It was unfortunate that he was apparently not referred to In re Norris. In my judgment not only was he wrong as a matter of principle but also, as Mr. Sheehan submitted, he took into account and gave undue weight to inappropriate factors.
Issue estoppel and privity of interest
i) that there was an identity of subject matter between the two proceedings, since the issue of who ultimately owned the beneficial title to Alberts Court was one of the issues determined in the committal judgment and precisely the same issue was raised by Mr Shalabayev in his application to intervene in the charging order proceedings; and
ii) that there was an "identity of parties" in the two sets of proceedings because Mr Shalabayev was a privy of Mr Ablyazov.
Estoppel by conduct/failure to intervene earlier
Disposition
Lady Justice King
Lord Justice Jackson
Note 1 [2012] EWHC 237 (Comm). [Back] Note 2 Maurice Kay, Rix and Toulson LJJ; [2012] EWCA Civ 1411. [Back] Note 3 By the time of this appeal Withers LLP were acting as solicitors for Mr Shalabayev. [Back] Note 4 Which does not appear to be available on Bailii. [Back] Note 5 With whom Potter and Hale LJJ agreed. [Back] Note 6 Tomlinson and Christopher Clarke LJJ [2015] EWCA Civ 70. [Back] Note 7 All emphasis in quoted text in bold is mine. [Back] Note 8 With whom Potter and Hale LJJ agreed. [Back] Note 9 Reichel, Hunter, Phosphate Sewage, North West Water, Re Thomas Christy, Brinks Ltd and Smith v Linskills. [Back] Note 10 Three of the remaining allegations concerned ownership of other English real property, and the remaining five concerned ownership of companies. [Back] Note 11 Addleshaw Goddard letter dated 2.7.13 [2/33/427] [Back] Note 12 At page 536 C-D; that was a case where the plaintiff (one of the alleged Birmingham bombers) sought to relitigate an issue that had been determined against him in his criminal trial. [Back] Note 13 With whom Potter and Hale LJJ agreed. [Back] Note 14 Ashmore v British Coal Corp is an example of a case where the unsuccessful claimant had not been a party or privy to the previous proceedings. [Back] Note 15 See also per Anthony Mann QC as he then was (albeitobiter) in Re Cedarwood Productions Ltd [2004] BCC 65 (at p 74C-D). [Back]
