Shalabayev v JSC BTA Bank

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]):

“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.”

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.

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:

“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.”

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:

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:

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

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):

“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.

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:

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”:

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.

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

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:

Under this head, Mr Smith relied on the speech of Lord Denning in the Nana Ofori AttaII 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 Bank’s appeal: ground 3: abuse of process

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:

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:

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:

“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.”

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:

“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.

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:

“d)

If the parties to the later civil proceedingswere 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.

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:

“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.”

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:

“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.”

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:

“ 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.

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

“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 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:

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):

“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.

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:

For the reasons which I have already given above, based on the decisionin 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.