This is an appeal by the appellant, Salim Shalabayev (“Mr Shalabayev”) against an order of Mr Justice Teare (“the judge”) dated 17 May 2013 (“the order”), by which the judge dismissed Mr Shalabayev’s application to intervene in an application by the respondent, JSC BTA Bank (“the Bank”), a Kazakhstan bank, for a final charging order over a property situate at Flat 17, Alberts Court, 2 Palgrave Gardens, London NW1 6EL (“Alberts Court” or “the property”) and made a final charging order over the property. The registered proprietor of the property is Bensbourogh Trading Inc (“Bensbourogh") a company incorporated in the British Virgin Islands. It purchased the long leasehold title to the property on 27 June 2008 for £965,000.

The Bank applied for a charging order on the basis of two judgment debts in its favour which it had obtained in proceedings brought against the first defendant, Mukhtar Ablyazov (“Mr Ablyazov”), totalling approximately US$1.6 billion. In the charging order proceedings, the Bank contended, based on a finding by the judge made in a judgment (“the committal judgment”) in committal proceedings heard in December 2011 and brought by the Bank against Mr Ablyazov (“the committal proceedings”), that Alberts Court belonged to Mr Ablyazov.

Mr Shalabayev’s position was and is that he is the beneficial owner of Alberts Court and Bensbourogh, and that the property does not belong to Mr Ablyazov. He contends that, on that basis, the court had no jurisdiction to grant a charging order over Alberts Court in favour of the Bank.

The judge refused an application by Mr Shalabayev to be joined to the Bank’s application for a final charging order, on the basis that Mr Shalabayev’s position amounted to “as plain a case as there could possibly be of a collateral attack [on the judge’s own findings in the committal proceedings] which would bring the administration of justice into disrepute”. Accordingly, he held that Mr Shalabayev’s application to have the issue of ownership litigated was an abuse of the process of the court.

The issue on this appeal is therefore whether the judge was right to refuse Mr Shalabayev’s application to intervene in the Bank’s application for a final charging order in respect of Alberts Court and to have the ownership issue determined.

On the appeal Mr James Sheehan appeared on behalf of Mr Shalabayev and Mr Stephen Smith QC and Miss Emily Gillett appeared on behalf of the Bank.

This application arises out of long-running proceedings brought by the Bank against, primarily, its former Chairman, Mr Ablyazov, alleging the fraudulent misappropriation of monies from the Bank. Mr Shalabayev is not a party to any of the substantive proceedings, although he has been a respondent to numerous interlocutory applications made by the Bank.

The following is a summary of the proceedings against Mr Ablyazov, including the involvement of Mr Shalabayev.

The Bank now has judgments against Mr Ablyazov totalling in excess of US$ 4 billion, including a summary judgment granted by Henderson J on the merits on 26 November 2013 for approximately US$400 million including interest. According to the Bank’s evidence, the value of Mr Ablyazov’s disclosed assets, in contrast, amounts to a small fraction of the value of the judgments obtained against him. The Bank has made numerous interlocutory applications in an attempt to track down and secure Mr Ablyazov’s undisclosed assets. In the underlying proceedings in the Commercial Court, a freezing order was first granted against Mr Ablyazov in August 2009; a receivership followed after a very hotly contested hearing in 2010 (“the freezing order” and “the receivership order”).

The Bank’s case has always been that Mr Ablyazov used a large, complicated network of offshore companies, incorporated in jurisdictions such as the British Virgin Islands, the Seychelles, Cyprus and the Marshall Islands, to administer and conceal his assets. The receivership order has been extended six times to include over 900 companies believed to belong to Mr Ablyazov. As the judge explained in his judgment in the committal proceedings, the judge found that Mr Ablyazov had been assisted in the management of these companies by his trusted family members, friends and associates, including his two brothers-in-law, the appellant Mr (Salim) Shalabayev and his brother, Mr Syrym Shalabayev (“Mr Syrym Shalabayev”).

In the course of the litigation against him, Mr Ablyazov has: repeatedly breached court orders; given false evidence under oath; fled the jurisdiction in breach of court order upon being provided with the draft committal judgment; and has left over £1m worth of costs orders in favour of the Bank unpaid. Although his departure from the jurisdiction was suspected by the Bank as at February 2012, it was not until December 2012 that this was admitted to the court by letter from his solicitors. At the end of July 2013, he was found in the south of France and arrested upon a red Interpol notice. In January 2014, the French courts determined that he should be extradited to Russia or Ukraine. He remains in custody in France. He has not purged any of his contempts nor has he served any of his three concurrent 22 month sentences of imprisonment imposed upon him. As a result of his continuing contempts, both the Court of Appeal and the Commercial Court have refused to hear argument on his behalf. Mr Ablyazov’s conduct provoked the following observation from Maurice Kay V-P upon his appeal against the committal judgment ([2013] 1 WLR 1331 at [202]):

The committal proceedings against Mr Ablyazov were heard before Teare J in the course of approximately three weeks in December 2011. One of the issues between the Bank and Mr Ablyazov in the committal proceedings was whether Mr Ablyazov was the ultimate beneficial owner of Alberts Court. The significance of this was that Mr Ablyazov had been cross-examined as to his assets in October and November 2009, and had stated that all the residential properties he owned were included in his schedule of assets which he had submitted in compliance with a freezing order; that schedule did not make any reference to (inter alia) Alberts Court. He was thus said to have given false evidence on oath in this and other respects. The issue of ownership fell to be decided in those proceedings for the purpose of establishing whether or not Mr Ablyazov was in contempt of court.

Mr Ablyazov called Mr Shalabayev as a witness in the committal proceedings. The latter appeared in court and gave evidence (inter alia) that he was the owner of Alberts Court. He was cross-examined for a little less than a day. In the committal judgment (Footnote: ¹), the judge found Mr Shalabayev to be an unreliable witness, principally because he admittedly gave false evidence in order to protect the whereabouts of his brother Mr Syrym Shalabayev. Accordingly, the judge did not accept Mr Shalabayev’s evidence that he was the owner of Alberts Court and duly found that Mr Ablyazov was in contempt in relation to his non-disclosure of the property.

Mr Ablyazov also called Mr Syrym Shalabayev as a witness in the committal proceedings. But, unlike Mr Shalabayev, Mr Syrym Shalabayev refused to come to London to give evidence and, instead, gave evidence by video-link from a foreign location which was not disclosed to the Bank. He was cross-examined for over two days. On several occasions during his cross-examination, Mr Syrym Shalabayev refused to answer questions put to him. In reaching his conclusions in the Ablyazov committal judgment, Teare J rejected Mr Syrym Shalabayev’s evidence and found him to have acted as one of Mr Ablyazov’s nominees.

I quote the following paragraphs from the committal judgment which are relevant for present purposes:

On 16 February 2012, Teare J sentenced Mr Ablyazov on each of the three proven contempts to 22 months in custody concurrently and subsequently made an unless order whereby Mr Ablyazov would be debarred from defending the claims made against him and his defences would be struck out unless he surrendered to custody and made proper disclosure of his assets and his dealings with his assets.

On 6 November 2012 this Court (Footnote: ²) handed down judgment dismissing Mr Ablyazov's appeal against the committal judgment as well as the sentence imposed upon him. It upheld the judge’s conclusions in relation to the credibility of Mr Ablyazov, Mr Syrym Shalabayev and Mr Shalabayev. In relation to Alberts Court Rix LJ said as follows:

On 23 November 2012, Teare J entered judgment against Mr Ablyazov in the two sets of substantive proceedings identified above, Claim Nos. 2009 Folio 1099 and 2011 Folio 79, in a total sum equivalent to approximately US$1.6 billion. Mr Shalabayev is not concerned with those judgments and does not dispute the Bank’s entitlement in principle to enforce them.

On 16 April 2013, the Bank applied for an interim charging order on the beneficial interest of Mr Ablyazov, as judgment debtor, in Alberts Court. The application stated that, based on the findings contained in the committal judgment, the Bank believed Mr Ablyazov to be the beneficial owner of the property. The application form stated that the joint receivers of the registered proprietor of the property, Bensbourogh, and of the property itself, partners in KPMG appointed as receivers on the application of the Bank, “have or may have an interest in the property” and that they were appointed as such because Mr Ablyazov “could not be trusted to comply with the terms of a freezing injunction made against him by Mr Justice Teare on 21 August 2009 (as subsequently amended).” It is not clear whether the receivers were served with a notice of the application for an interim charging order but, despite the fact that the Bank and its solicitors, Hogan Lovells International LLP (“Hogan Lovells”), were well aware of Mr Shalabayev’s claimed interest in the property, Mr Shalabayev was not served with a copy of the interim order. Mr Hardman, the partner in Hogan Lovells acting on behalf of the Bank, in his 56th affirmation in support of the Bank’s application, stated that no attempt would be made by the Bank to bring the application for a charging order to Mr Shalabayev’s attention. On the following day, 17 April 2013, Teare J made an interim charging order charging the interest of Mr Ablyazov in the property and ordering that the application for a final charging order would be heard on the first available date. In fact, Hogan Lovells obtained a hearing date for the application on 17 May 2013.

Bensbourogh itself was not informed of the Bank’s application until a letter dated 1 May 2013, notifying it of the interim order, was apparently served by hand in the British Virgin Islands. Mr Shalabayev himself only got to hear of the interim order because he was informed by Mr Ablyazov on 8 May 2013 that it had been made. Mr Shalabayev had in fact been unrepresented by English solicitors since July 2012. He immediately, on 8 May 2013, contacted solicitors, Addleshaw Goddard LLP (“Addleshaws“) which had not previously acted for him, although they had acted for Mr Ablyazov (Footnote: ³). Addleshaws were required to conduct pre-engagement checks as a result of which their formal retainer by Mr Shalabayev occurred on 16 May 2013 when he instructed them and counsel (Mr Duncan Matthews QC and Mr Sheehan) for the purpose of resisting the Bank’s application for a final charging order. On the same date an application notice was issued on his behalf for:

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;

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;

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.

The hearing of the Bank’s application for a final charging order came on before Teare J on Friday, 17 May 2013 at 10:30am. It appears from the transcript of the proceedings that the judge had not had an opportunity prior to the hearing to read the written skeleton argument presented by Mr Duncan Matthews QC and Mr Sheehan on behalf of Mr Shalabayev. Mr Smith, on behalf of the Bank, invited the judge not to hear Mr Matthews on behalf of Mr Shalabayev on the grounds of the latter’s unpurged contempts. The judge rejected that application. Argument was then presented by Mr Matthews to the effect that the judge’s decision in the committal judgment did not amount to any binding finding against Mr Shalabayev that he was not the beneficial owner of the property, and that, contrary to the Bank’s argument, Mr Shalabayev’s application did not amount to an abuse of process. In particular, Mr Matthews submitted that the principle of collateral attack did not apply in the case of somebody, who like Mr Shalabayev, was merely a witness. Accordingly, Mr Matthews submitted that the proper course was for the judge to direct a trial of the ownership issue in relation to the property in accordance with the guidance of the Court of Appeal to that effect in Rosseel NV v Oriental Commercial and Shipping (UK) Ltd (The Times, 11 October 1991; official transcript 8 October 1991).

However, Teare J rejected those arguments. He gave an ex tempore judgment (Footnote: ⁴) accepting the Bank’s submission that Mr Shalabayev’s application to intervene was an abuse of the process of the Court, because it amounted to a collateral attack on his own decision in the contempt proceedings. He refused to adjourn the proceedings and dismissed Mr Shalabayev’s application. He reached that decision essentially for the following reasons:

as a matter of law, he held that statement of principle by Sir Andrew Morritt V-C (Footnote: 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;

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;

although not a party to the committal proceedings, Mr Shalabayev had been a witness, and his evidence had been disbelieved;

the issue of the ownership of Alberts Court had been considered “in considerable detail over many days and at considerable expense”;

he considered it “deeply improbable” that any further evidence on the issue would come to light in future;

the committal judgment had been considered and upheld by the Court of Appeal; and

Mr Shalabayev was “someone who, along with his brother Syrym Shalabayev, assists or has assisted Mr Ablyazov in various ways”.

Accordingly, the judge, by his order sealed on 6 June 2013:

dismissed Mr Shalabayev’s application to intervene and for a determination of the ownership issue;

made a final charging order in relation to Mr Ablyazov’s alleged interest in the property;

refused Mr Shalabayev permission to appeal.

Permission to appeal the order was granted to Mr Shalabayev by Tomlinson LJ on 15 August 2013 but subject to the condition that Mr Shalabayev should provide security for costs of the appeal. By order dated 15 October 2013 Tomlinson LJ assessed the sum to be provided by way of security in an amount of £70,000 and this was duly provided.

It was common ground before this court that Mr Shalabayev had breached court orders; had been held to have given false evidence under oath; had left the jurisdiction in or around March 2012, although that was not admitted by him until October 2013, in the context of the committal proceedings brought against him; and has left costs orders of over £150,000 in favour of the Bank unpaid.

On 18 October 2013, after this court had given Mr Shalabayev permission to appeal in this appeal, Eder J determined in Mr Shalabayev's absence (he having chosen shortly before the hearing neither to attend in person nor to be represented) that he had been guilty of contempt of court in respect of breaches of several orders of the court, breaches aggravated by lying to this court in 2012 about his then whereabouts. Eder J imposed three concurrent sentences of 22 months imprisonment. So far as is known Mr Shalabayev has not been within the jurisdiction since March 2012. He has withdrawn an appeal against his sentence and has not sought to challenge the findings of contempt. No attempt has been made to purge his contempt and there is no suggestion that he intends to do so.

As a result, the Bank applied to this court for an order in this appeal that, because Mr Shalabayev was a committed contemnor whose contempts were unpurged, Mr Shalabayev should be barred from being heard. In a judgment (Footnote: ⁶) given by this court on 10 February 2015 when giving reasons for the earlier dismissal of the Bank’s application, Tomlinson LJ, having summarised Mr Shalabayev’s contempts and role in the main proceedings against Mr Ablyazov, said (Footnote: ⁷):

By its order dated 16 October 2014 this court also ordered that (insofar as permission was required) the Bank should be at liberty to contend that the judgment under appeal should be upheld on two new grounds not advanced by the Bank below. These were (a) that Mr Shalabayev was bound by the findings made in the committal judgment in relation to Alberts Court because he was a privy of Mr Ablyazov; and (b) that Mr Shalabayev was bound by the finding of Mr Ablyazov’s ultimate beneficial ownership of Alberts Court made in the Ablyazov committal proceedings because he was estopped by his own conduct in failing to take any steps prior to the handing down of the Ablyazov committal judgment to intervene to protect his own alleged property rights, by virtue of which he has knowingly acquiesced in or relied upon Mr Ablyazov alone defending the Ablyazov committal proceedings on the issue of the ultimate beneficial ownership of Alberts Court.

It also ordered that Mr Shalabayev had permission to adduce further evidence by a date in November 2014 in relation to the Bank’s grounds of appeal (i.e. abuse of process, privity and estoppel) with the Bank having the ability to object to the admission of any such evidence. Mr Shalabayev duly served his 8^th witness statement dated 28 November 2014 pursuant to this order.

By an application notice filed on 19 August 2015 Mr Shalabayev sought permission to adduce further evidence, namely his 9^th witness statement dated 27 July 2015 and the exhibit thereto, comprising some 41 pages. The parties agreed that the application should come on to be heard at the same time as the appeal before us. That evidence contained materials which had not been previously obtained for the purposes of the contempt proceedings.

I should also mention that Mr Shalabayev’s elder brother, Mr Syrym Shalabayev, is also an unpurged contemnor who has not served any of his prison sentences (for 18, 6 and 6 months) imposed upon him by Briggs J in June 2011 for failure to comply with the disclosure provisions of a freezing injunction served upon him in Cyprus. According to the Bank’s evidence, he refuses to enter the jurisdiction and seeks to conceal his whereabouts from the Bank.

Mr Sheehan, on behalf of Mr Shalabayev, presented four principal arguments in support of his contention that the judge was wrong to conclude that Mr Shalabayev was not entitled to a trial of the issue of ownership of the property. In summary these arguments were based on four grounds:

Abuse of process:

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.

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.

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.

That approach was supported by the decision of Sir Andrew Morritt V-C (Footnote: ⁸) in Secretary of State for Trade and Industry v Bairstow, supra. In every one of the seven previous (Footnote: 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.

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).

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.

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.

Failing to take into account or to give proper weight to relevant factors

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).

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.

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.

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.

Second, Mr Shalabayev having had no opportunity to be heard on, or joined to, the contempt application, was consequently subject to considerable disadvantages, including:

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;

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;

had no opportunity to have the Bank’s witnesses cross-examined, or submissions made, on his behalf, in the committal proceedings; and

had no right of appeal against the findings made in the committal judgment or to be heard on any such appeal.

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.

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.

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.

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.

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.

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.

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 (Footnote: 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.

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.

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.

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.

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].

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.

On the face of it, that amounted to a clear infringement of Mr Shalabayev’s rights under both Article 6 and A1P1.

Finally, Mr Sheehan submitted that Mr Shalabayev’s ninth witness statement, which set out further evidence in support of his case that he was the ultimate beneficial owner of the property the subject of this appeal, was based in substantial part on documents which he had been able to obtain since the hearing below. The court should admit the evidence pursuant to CPR 52.11(2)(b). The evidence could not with reasonable diligence have been obtained for use at the hearing before the judge. The evidence was such that, if adduced, it would probably have an important influence on the outcome of the appeal. One of the grounds on which the judge had decided against Mr Shalabayev was that it was “deeply improbable” that there could be any further evidence relating to Mr Shalabayev’s ownership of 17 Alberts Court. Mr Shalabayev’s primary position was that, even if correct, that was irrelevant But in the alternative, this further evidence demonstrated that the judge was wrong in his anticipation of future developments. The availability of this evidence now was an important additional pointer against the conclusion that Mr Shalabayev’s attempt to have his case resolved at a future trial was abusive.

Mr Smith QC and Miss Gillett supported the decision of the judge broadly for the reasons which he gave. In summary they submitted that the order should be upheld because Teare J was correct to hold that Mr Shalabayev’s attempt to intervene in the charging order proceedings was a collateral attack on the committal judgment and accordingly was an abuse of process.

Mr Smith emphasised the following as preliminary, “overview” points, in relation to what he referred to as “the reality of this appeal”:

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.

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.

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.

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.

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.

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.

Any rehearing would consume further considerable resources of the Court and the Bank.

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.

Mr. Smith submitted that none of Mr Shalabayev’s points arising out of his position as a “non-party” to the committal proceedings had any substance. The Bank’s response to such points was as follows.

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.

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.

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.

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.

In relation to Mr Shalabayev’s four grounds of appeal, in summary Mr Smith submitted as follows:

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.

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.

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.

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):

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.

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.

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.

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.

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.

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]).

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]).

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.

For all these reasons, Mr Smith submitted that Mr Shalabayev’s appeal should be dismissed. He went on to submit that, if, and only if, the court disagreed with his submissions that the order should be upheld for the reasons given in the judgment, should it go on to consider the points made in the Bank’s Respondent’s Notice.

Mr Smith submitted that issue estoppel was now well-recognised as a form of res judicata: see per Lord Sumption in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] 3 WLR 299 (at [17]). In order for an issue estoppel to arise three requirements had to be met:

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.

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.

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.

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.

Mr Smith submitted that the following points established privity in the present case:

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;

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;

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;

Mr Shalabayev’s legal fees had been funded by the same “third party funder” who funds (or funded) Mr Ablyazov’s legal fees (Footnote: ¹¹);

the close family ties between Mr Ablyazov and Mr Shalabayev;

Mr Shalabayev’s instruction of Mr Ablyazov’s solicitors and counsel.

Under this head, Mr Smith relied on the speech of Lord Denning in the Nana Ofori Atta II case, supra at page 102 to support the argument that an estoppel, preventing a litigant from relitigating an issue, could consist of standing by and watching proceedings being fought out or at most giving evidence in support of one side or the other. He submitted that Lord Denning’s approach in Nana Ofori Atta II had been relied upon by Stuart-Smith LJ in House of Spring Gardens Ltd v Waite (No 2) [1991] 1 QB 241 to lead the latter to conclude (at p 254A) that a joint tortfeasor who was “content to sit back and leave others to fight his battle, at no expense to himself” without even giving evidence was “sufficient to make him privy to the estoppel” which bound his co-tortfeasors who had been parties to the earlier litigation.

Mr. Smith submitted that these principles applied to this case to compel the conclusion that Mr Shalabayev was estopped: it was undeniable that Mr Shalabayev had stood by and let Mr Ablyazov fight the battle about the ultimate ownership of Alberts Court with no or only little expense to himself, when he could have intervened in the committal proceedings and/or taken other steps to protect his alleged property rights in Alberts Court before the committal judgment was handed down.

In addition, the Bank relied upon the following.

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.

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.

In the alternative, Mr Smith submitted that Mr Shalabayev’s conduct in not intervening nevertheless amounted to an abuse of process.

In House of Spring Gardens Ltd v Waite (No 2) [1991] 1 QB 241, Stuart-Smith LJ concluded that Mr McLeod’s attempt to re-litigate the question of whether an earlier judgment had been obtained by fraud was an abuse of process, a doctrine which was “untrammelled by the technicalities of estoppel” (at p 254F). The same approach should be taken here, as Mr Shalabayev’s case is a worse abuse than that of Mr McLeod because of his active participation as a witness in the committal proceedings.

In Ashmore v British Coal Corp [1990] 2 QB 338, it was held that there was an abuse of process in Ms Ashmore inviting the court to entertain her application when 14 related sample cases raising similar issues with the same employers had already been held to be unsuccessful. The case established that preventing abuse of process is not limited to cases where the object of the re-litigation is a merely collateral attack. Mr Smith submitted that principles analogous to those in Ashmore apply equally here.

For these additional reasons, Mr Smith invited the court to uphold the order and dismiss Mr Shalabayev’s appeal.

Had it not been for the lengthy arguments in this case, I would have written an extremely short judgment concluding that, whatever the outer limits of the legal principle of collateral attack, this was clearly a case where the appeal should be allowed and Mr Shalabayev should be permitted, in proceedings to which he is formally joined as a defendant, to resist the Bank’s claim that:

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;

that accordingly the Bank is entitled to a charging order over the property to secure part payment of its judgment.

My reasons for reaching such a conclusion are very briefly the following. Like Tomlinson LJ, 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 was a totally different ball game from being a participant as an alleged contemnor. Witness status did not entitle him to address the court upon the conclusion to be derived from the totality of the evidence. There was a limited personal interest, so far as Mr Shalabayev was concerned, in expending his own funds, or perhaps, more importantly, his own time, in obtaining documentary evidence to defend Mr Ablyazov’s position. There was no indication from the Bank at that stage that it would piggy-back on any conclusions reached by Teare J in the contempt proceedings, treat them as binding as against Mr Shalabayev in relation to the property and proceed to enforce against any interest he might have in the property as a result, without affording him any further opportunity to defend his position or adduce any further evidence. The focus of the contempt proceedings was, not surprisingly, upon establishing Mr Ablyazov’s contempt of court so that the court could be invited to make an order punishing that content.

More importantly, the judge’s analysis of the evidence in relation to Alberts Court in the contempt proceedings was to my mind superficial - not least because he did not have available to him the current evidence produced by Mr Shalabayev in 2015 in relation to the purchase of the property and the respective roles of his brother, Mr Syrym Shalabayev, and himself. The judge does not appear to have appreciated that, even in the event that Mr Shalabayev was not the ultimate beneficial owner of Bensbourogh, nonetheless, given the way in which Mr Syrym Shalabayev operated, that company could have easily been utilised by Mr Syrym Shalabayev as a nominee purchaser for Mr Shalabayev. Moreover, the judge’s comments in paragraph 171 of the committal judgment that Mr Shalabayev’s evidence was “unpersuasive” appear to have been based (other than on the judge’s own assessment of his credibility) on: (a) on the fact that he had not produced any documentary evidence that he had funded the purchase; and (b) the somewhat flimsy factual conclusions that:

“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

“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 circumstances where there was indeed evidence before the court that Mr Shalabayev had realized substantial amounts to as a result of the sale of his interest in Bektas Group LLP, that, for perhaps understandable reasons, he wished to leave Kazakhskan and invest the proceeds of his investment elsewhere, that Mr Syrym Shalabayev had considerable experience of real estate investment in England, that Mr Shalabayev decided to rely on the former’s experience and involvement to purchase the property and that transfers of funds had been made by Mr Shalabayev to his brother, Mr Syrym Shalabayev, I do not consider that either of the matters referred to by the judge were “not credible”, or a sufficient basis for rejecting the entirety of Mr Shalabayev’s evidence. It may be that the absence of the type of documentary materials now exhibited to Mr Shalabayev’s ninth witness statement, which have recently been obtained from the conveyancing file of the solicitors who acted on the transaction, was a significant factor, but it also seems to me that the judge’s conclusions in relation to the property were also significantly informed by his overall adverse views in relation to the general dishonesty and lack of credibility of Mr Ablyazov and also that of Mr Shalabayev. However, that did not mean that in relation to the particular issue of ownership of the property Mr Shalabayev was not telling the truth. If the story in relation to the dealings between the two Shalabayev brothers were indeed correct, it would not have been surprising that there was little contemporaneous documentary evidence to support the position. (The fact that the Court of Appeal in 2013, on Mr Ablyazov’s appeal, may have upheld the judge’s conclusions in relation to the ownership issue, does not affect my analysis. The judge’s findings, on different evidence, in proceedings to which Mr Shalabayev was not a party, are not binding on him.)

In all the above circumstances, I do not consider that Mr Shalabayev has had a proper opportunity to put forward his case in proceedings to which he is formally a party and in relation to which the issue is whether he is its ultimate beneficial owner, whether through his beneficial ownership of Bensbourogh, or simply because that company was acting as his nominee for the purposes of holding the property. In my judgment it is for a judge (other than Teare J) properly to evaluate the entirety of the evidence in its correct chronological framework in circumstances where the onus of proof is on the Bank to establish its case. It is for a judge of first instance, not for this court, to determine what the totality of the evidence shows and, in particular, whether the 2015 evidence indeed supports Mr Shalabayev’s case – as, at least at first sight, it appears to me to do. That analysis cannot properly be carried out on an appeal by reference to transcripts of the contempt proceedings and conclusions reached by Teare J in those proceedings, where the canvas of the matters at issue was so much broader and the focus of the proceedings was not who owned the property.

For all those reasons I would have concluded that the judge was clearly wrong to have regarded Mr Shalabayev’s attempt to resist the Bank’s claim to a charging order as an abuse of process.

However out of deference to the judge and to the industry of counsel, I turn to consider briefly the various arguments of law and otherwise which were addressed during the course of this appeal.

As stated above, 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 and, accordingly, the judge was wrong in law to conclude otherwise. However, I do not consider that the principle can be articulated in such bright-line or exclusionary terms. In Hunter (Footnote: ¹²) Lord Diplock said:

Subsequent cases are to similar effect, such as In re Norris, per Lord Hobhouse at para 26 and per Lord Hope at para 6; and Conlon v Simms per Jonathan Parker LJ at para. 141:

Nor do I accept Mr. Sheehan’s submission that the articulation of the collateral attack principles by Sir Andrew Morritt V-C (Footnote: ¹³) in Secretary of State for Trade and Industry v Bairstow, supra should be read as limited to a situation where the party against whom the finding operated had been a party to the previous proceedings. Sir Andrew articulated his fourth principle, as established by the relevant authorities, as follows:

However, I do accept Mr. Sheehan’s submission that an analogy can be drawn between the facts of the present case and those in In Re Norris – which interestingly does not appear to have been cited to the court in Bairstow and, indeed, was not cited to Teare J in the present case. In Norris a convicted drug trafficker had been sentenced to 9½ years imprisonment by the Crown Court on 24 June 1996. At the same time HM Customs and Excise obtained a confiscation order against him under sections 1 and 6 of the Drug Trafficking Offences Act 1986 in the sum of £386,397, with a sentence of 4 years imprisonment consecutive in default. At the confiscation hearing, the defendant’s wife, who was not a party to the confiscation proceedings, gave detailed evidence on the defendant’s behalf that the matrimonial home belonged either wholly or substantially to her since she had contributed to the purchase price of earlier matrimonial homes, the proceeds of which had been used to purchase the property in question. The judge had disbelieved her evidence and had made a confiscation order against the defendant on the basis that the entire value of the house formed part of his realisable property. The defendant did not appeal the order and failed to discharge it. Lord Hobhouse (with whom the other members of the House of Lords agreed) went on to set out the facts as follows:

Having explained the scheme of the Drug Trafficking Offences Act in relation to the making of criminal confiscation orders, and, in particular, to explain that such orders were financial orders ordering a defendant convicted of a drug trafficking offence to pay sums of money to the state, Lord Hobhouse went on to explain the scheme of the relevant sections of the Act in relation to the role of the High Court to realise a defendant’s property in civil proceedings as follows:

Lord Hobhouse then went on to explain how, despite the fact that the wife had given evidence in the criminal confiscation proceedings and been disbelieved by the Crown Court judge, it was not an abuse of process for her to defend the section 11 proceedings brought by HM Custom and Excise in the High Court to realise the property:

The speech of Lord Hope was to similar effect. He said:

I have quoted from the decision in In re Norris at such great length because it seems to me to encapsulate the reasons why Mr Shalabayev’s attempt to defend his, or Bensbourogh’s, alleged proprietary interest in the property in the context of the charging order proceedings cannot be characterised as an abuse on the basis of collateral attack (or indeed otherwise). Shortly stated:

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.

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.

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.

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.

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.

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.

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.

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.

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.

For all the above reasons, including those which I have summarised in paragraphs 48 to 52 above, whilst I do not accept Mr. Sheehan’s proposition that the principle of abuse of process by means of collateral attack does not extend beyond a case where at least one party or his privy was party to the previous proceedings giving rise to the judgment which is allegedly under attack (Footnote: ¹⁴), in my judgment the judge was wrong, as a matter of principle, to conclude that the circumstances amounted to an abuse of process involving a collateral attack on the committal judgment. Mr Shalabayev, in seeking to defend the Bank’s claim to deprive him (or Bensbourogh) of his/its alleged beneficial interest in the property and to obtain a determination in the context of the charging order proceedings as to the ownership of the property, is not acting abusively, or seeking collaterally to attack the committal judgment. This is not a case where it would be unfair to the Bank to litigate the ownership of the property. Its rights to a charging order, and to defeat any beneficial interest of Mr Shalabayev in the property, arise exclusively under the Charging Orders Act 1979; it did not derive any such rights to do so from findings made against Mr Ablyazov in the committal proceedings. Nor, for similar reasons, would the litigation, in proceedings properly constituted as between the Bank, as applicant, and Mr Shalabayev and Bensbourogh, as respondents, of the ownership issue in relation to the property “bring the administration of justice into disrepute.” As Lord Hobhouse said in In re Norris, at paragraph 26 (Footnote: ¹⁵):

For the above reasons, I conclude that the judge was wrong to dismiss Mr Shalabayev’s application for a determination of the ownership issue in relation to the property, on the grounds of abuse of process, whether by reference to the principle of collateral attack or on the other grounds of abuse, as referred to in the Bank’s grounds of appeal.

As summarised above, in its grounds of appeal the Bank contended that Mr Shalabayev was estopped from challenging the committal judgment on the grounds, inter alia:

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

that there was an “identity of parties” in the two sets of proceedings because Mr Shalabayev was a privy of Mr Ablyazov.

For the reasons which I have already given above, based on the decision in In re Norris, those arguments are clearly unsustainable. Although it was something that fell to be decided in order to test whether Mr Ablyazov had lied to the court, the issue in the committal proceedings was not the issue of ownership of the property. Moreover, Mr Shalabayev and Mr Ablyazov had separate and competing interests in relation to the property and on no basis could Mr Shalabayev be regarded as Mr Ablyazov’s privy.

Likewise, for the reasons which I have already given above, the Bank’s submissions, in its own appeal, that Mr Shalabayev was estopped by his conduct in not intervening earlier to have the ownership issue determined are also hopeless. Mr Shalabayev had no obligation to do so. The Bank’s submissions fall foul of the approach adopted In re Norris and mischaracterise the rights and obligations of the Bank so far as overriding the interests of third parties are concerned. Claimants in these sort of proceedings should not assume that, by adopting a relentless excocet-type approach in litigation against alleged and established fraudsters, they can override the property interests of third parties, who are not directly involved in the litigation, simply because, in proceedings involving the principal defendant, such claimants have obtained adverse findings against such third parties. Not least on human rights grounds, in any deprivation of a person’s property rights, due process must be observed. Indeed, had it been necessary to do so, which it is not, I would also have found in favour of Mr Shalabayev on human rights grounds.

For the above reasons I would give Mr Shalabayev permission to adduce his further evidence and would allow this appeal. As sought in Mr Shalabayev’s application notice, I would join Mr Shalabayev as a respondent to the Bank’s charging order application and direct a determination of the issue as to the ownership of the property in the context of that application in front of a Commercial Court judge other than Teare J. Subject to any further argument from counsel, I would also direct that Bensbourogh, as the registered proprietor of the property, should be joined as a respondent to the proceedings. Notwithstanding the fact that the court has appointed receivers in respect of that company, its directors nonetheless have a right to procure the company to defend its claimed beneficial ownership of the property, or its position as nominee for Mr Shalabayev, contrary to the interests of the Bank and the latter’s assertion that the property is beneficially owned by Mr Ablyazov; see Newhart Developments Ltd. v Co-Operative Commercial Bank Ltd. [1978] Q.B. 814.

I agree.

I also agree.