Kerry Underwood

DISCLOSURE OF FUNDING ARRANGEMENTS

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In JSC BTA Bank v Ablyazov and another [2018] EWHC 1368 (Comm) (8 June 2018)

the Commercial Court ordered the second defendant, who was subject to a Worldwide Freezing Order, to provide full disclosure of how his legal expenses were being funded.

The court applied principles established in

JSC BTA Bank v Ablyazov [2011] EWHC 2664 (Comm)

and

JSC Mezhprom Bank v Pugachev [2017] EWHC 184i7 (Ch).

The second defendant claimed that his mother was funding the litigation.

The claimant bank did not believe that she had sufficient assets, and said there was reason to believe she was using funds belonging to the first defendant, who was also subject to Worldwide Freezing Orders.

The judge noted that it was for the claimant to show adequate grounds,as in Ablyazov and Pugachev.

She rejected the claimant’s submission that she could adopt findings in litigation against the first defendant to which the second defendant was not party, provided this “was not unfair”.

Nor did she consider that Eder J, in Okritie v Gersamia [2015] EWHC 821 (Comm), intended to say that findings of fact by an earlier court entitle a later court to arrive at the same conclusions without exercising its own judgment.

The claimant’s evidence showed a real risk of the Worldwide Freezing Orders being breached, which made it reasonable “to probe beyond” evidence in the second defendant’s mother’s witness statement.

Although the evidence did not raise a strong (as opposed to a good arguable) case of breach, the importance of maintaining the effectiveness of the court’s orders was a “potent factor” weighing heavily in favour of an order.

It was not oppressive for the second defendant to disclose information he knew or could reasonably find out.

The second defendant’s mother’s concerns about information being used against her in other proceedings could be addressed through a confidentiality club.

At the hearing, the claimant alternatively submitted that undisclosed assets of the second defendant might be funding the proceedings.

Initially, the judge saw some force in an objection based on the late addition of this point, but she found it impossible to ignore the fact that, since the hearing, the Court of Appeal had found a good arguable case that the second defendant had lied in disclosure regarding his personal assets.

It was not unfair to take account of these findings, which were binding on the second defendant, and it would be “wrong in principle” to ignore them.

Disclosure was necessary and appropriate to establish whether either of the scenarios applied.

 

 

 

 

 

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Written by kerryunderwood

July 27, 2018 at 8:26 am

Posted in Uncategorized

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