Case No: 2012 Folio 1105
Royal Courts of Justice
Rolls Building
7 Rolls Buildings, London EC4A 1NL
Before :
MRS JUSTICE GLOSTER, DBE
Between:
JSC VTB Bank (a company incorporated in Russia) | Claimant |
- and - | |
(1) Pavel Valerjevich Skurikhin (2) Pikeville Investments LLP (3) Perchwell Holdings LLP | Defendants |
Tim Penny Esq (instructed by PCB Litigation LLP)
for the Claimant
Adam Tolley Esq (instructed by Wedlake Bell LLP)
for the First Defendant
Ms. Elizabeth Weaver (instructed by Charles Russell LLP)
for the Second and Third Defendants
Hearing dates: 3rd and 4th October 2012
Judgment
Mrs Justice Gloster:
Introduction
On these applications, the claimant bank, JSC VTB Bank (“VTB”), seeks the following relief against the three defendants to the action, respectively the First Defendant, Pavel Valerjevich Skurikhin (“Mr. Skurikhin”), the Second Defendant, Pikeville Investments LLP (“Pikeville”), and the Third Defendant, Perchwell Holdings LLP (“Perchwell”) (collectively, “the Defendants”):
by an application notice dated 5 September 2012, the disclosure by each of Mr. Skurikhin, Pikeville and Perchwell of the further information and documentation, as set out in schedule C to the draft order annexed to the application notice (“Schedule C”), in relation to their asset disclosure made pursuant to a without notice injunction granted by Hamblen J on 16 August 2012;
by an application notice dated 12 September 2012 permission to enforce the freezing order injunction granted by Hamblen J (and continued thereafter as set out below) against the assets of Pikeville in Italy.
VTB also issued an application against Perchwell dated 21 September 2012 for permission to enforce the freezing order injunction granted against Perchwell in respect of assets which it held in Cyprus. Perchwell ultimately agreed that this application should be dealt with at the hearing on 3 October 2012. Thus, it was for the Court to decide what was to happen to that application.
The parties
VTB is a state-owned bank registered under the laws of Russia, and, according to the evidence, is the second largest bank in Russia.
The First Defendant, Mr. Skurikhin, is a Russian national who is resident in Russia. He is the founder and apparent controller of a group of companies called the Siberian Agrarian Holding Group (“SAHO”), which he established approximately 12 years ago. SAHO is a large group with a complex corporate structure. It operates in a variety of agricultural businesses including: pesticide production, grain production and processing, bread baking in sales, and the manufacture of bread-making machinery.
Between 2007 and 2009 VTB made a number of substantial loans to various SAHO group companies. The evidence shows that the loans were guaranteed personally by Mr. Skurikhin. His guarantees were first given in 2009 and replaced with fresh guarantees in March 2010. Other companies within the group also provided guarantees and security. In the action VTB contends that there have been defaults in relation to at least 18 of the loans.
Between December 2011 and February 2012, VTB brought proceedings in Russia against the borrowers and corporate guarantors in respect of 18 of the loans. The total sum claimed was equivalent to approximately £12.7 million. To date, judgments had been obtained against various borrowers in respect of certain of the 18 loan agreements; according to VTB’s evidence, none of these judgments has been satisfied. Between 18 May 2011 and 7 November 2011, VTB gave notice of demand to Mr. Skurikhin in respect of 18 of his personal guarantees. On 7 July 2012, and thereafter, VTB started proceedings in Russia against Mr. Skurikhin in respect of certain of the guarantees. On 20 September 2012 judgment was obtained in Russia against Mr. Skurikhin on one of the guarantee claims in a sum equivalent to approximately £600,000. However, as at the date of the hearing before me, no reasons had been given by the Russian court. The Russian law evidence before me was to the effect that the judgment was not enforceable, pending a 30 day period for an appeal and, in the event of an appeal, pending the outcome of the appeal. Mr. Skurikhin apparently intends to appeal the judgment.
The Second Defendant, Pikeville, is a limited liability partnership (“LLP”) which was incorporated in England and Wales on 10 December 2002. The Third Defendant, Perchwell, is an LLP which was incorporated in England and Wales on 8 May 2007. Their designated members are a Mr. Meier and a Mr. Lerch (two Swiss individuals resident in Switzerland) and their other member is a limited company incorporated in Hong Kong (and apparently connected with Messrs Meier and Lerch) called Crown Capital Holdings Limited (“Crown”). VTB claims that Mr. Skurikhin is the ultimate beneficial owner of, or at least has a controlling interest in, Pikeville, Perchwell and Crown.
The evidence established that Pikeville owns a number of Italian properties registered in the Bologna Land Registry (“the Italian Properties”) and that Perchwell is the registered holder of 100% of the issued share capital of Tunnelson Holdings Ltd (“Tunnelson”), a company incorporated under the laws of Cyprus, and that Tunnelson, in turn, was the holding Company some of the companies in the SAHO group.
The procedural background to these applications
On 16 August 2012, on a without notice application, Hamblen J granted the following relief pursuant to section 25 (“s25”) of the Civil Jurisdiction and Judgments Act 1982 (“the Act”) in support of the substantive proceedings between VTB and Mr. Skurikhin in Russia:
a freezing injunction restraining Mr. Skurikhin from removing from England and Wales, or in any way disposing of, dealing with, or diminishing the value of, any of his assets in England and Wales up to the value of £10 million; the injunction applied to all of his assets whether or not they were in his own name, and whether they were solely or jointly owned by him, and whether he was interested in them legally, beneficially or otherwise; such assets included “any asset which he has the power, directly or indirectly, to dispose of or deal with as if it were his own” and that he was to be regarded “as having such power if the third party holds all controls the asset in accordance with his direct or indirect instructions”; the injunction expressly included:
his “interest and/or rights in [Pikeville] and [Perchwell]”; and
any and all indebtedness due to him by Pikeville.
worldwide freezing injunctions against Pikeville and Perchwell respectively restraining them from disposing of, dealing with or diminishing the value of any of their assets wherever held, up to the value of £10 million; the injunctions expressly applied to Pikeville’s interest in the Italian Properties and Perchwell’s “shareholding in Tunnelson”; the order included a similar definition of “assets” as that applying to Mr. Skurikhin as set out above;
disclosure orders requiring:
Mr. Skurikhin to disclose his assets within this jurisdiction, “whether in his own name or not and whether solely or jointly owned, giving the value, location and details of all such assets”;
Pikeville and Perchwell to disclose their assets worldwide in similar terms;
Pikeville to provide the identity of the creditor referred to in its financial statements for the year ended 31 December 2010 as being due the sum of approximately €19 million; and
all three defendants to provide the identity of “… the person or persons who they contend exercise ultimate beneficial control over [Pikeville] [and Perchwell]”.
The order included standard provisions for living expenses and enabling Pikeville and Perchwell to deal with, or dispose of, their assets in the ordinary and proper course of business, subject to an obligation to inform VTB’s solicitors in respect of the disposal of, or dealing with, assets in excess of £15,000 in value.
I was informed by Mr. Tim Penny, counsel for VTB, that the basis on which VTB obtained the injunctions from Hamblen J was that there was at least a good arguable case that Mr. Skurikhin was the beneficial owner and controller of Pikeville and Perchwell and that, accordingly, any judgment which VTB might obtain against Mr. Skurikhin in Russia would be enforceable (save possibly for any ‘penalty’ element of such judgments) “… against Mr. Skurikhin’s interest in Pikeville and Perchwell and thereby against the assets of both Pikeville and Perchwell.”
On 16 August 2012, Hamblen J also gave permission to serve Mr. Skurikhin outside the jurisdiction in Russia and made provisions for alternative service on Mr. Skurikhin. The Claim Form and other documentation were served on Mr. Skurikhin, Pikeville and Perchwell on 22 August 2012. Wedlake Bell LLP, solicitors (“WB”), were instructed on behalf of Mr. Skurikhin and Charles Russell LLP, solicitors (“CR”), were instructed on behalf of Pikeville and Perchwell. At all material times, PCB Litigation LLP, solicitors (“PCB”), were the solicitors instructed by VTB.
Pursuant to Hamblen J’s order, the Defendants served disclosure information by letters from each of WB (for Mr. Skurikhin) and CR (for Pikeville and Perchwell) dated 29 August 2012. By letters dated 30 August 2012 to both WB and CR, PCB sought further disclosure of material information and documentation from the Defendants in connection with the responses to the asset disclosure information. On 5 September 2012, the Defendants served affidavits verifying their asset disclosure. Certain further information was provided in subsequent correspondence.
The first return date of Hamblen J’s order 16 August 2012 was 7 September 2012. The application came on before Popplewell J, who gave directions for a substantive hearing which has been listed for 29-30th of November 2012. At that proposed hearing all three defendants intend to seek to set aside the injunctions and, at least in the case of Mr. Skurikhin, to challenge the jurisdiction of the English court, and VTB intends to seek a continuation of the freezing injunctions until trial. On 7 September, Popplewell J also continued the freezing orders made by Hamblen J with slight modifications over the hearing due to take place in November 2012.
Shortly prior to the 7 September hearing, on 5 September 2012, VTB issued and served its application for further disclosure. The Defendants objected to that application being heard on 7 September 2012, and it was agreed between the parties that it should be adjourned to be heard on 3 October 2012, together with a proposed “Dadourian” application which VTB intended to issue seeking permission to enforce the injunction against Pikeville in Italy (in relation to the Italian Properties).
The evidence as to the Defendants’ assets
At the hearing before me on 3 October 2012, the evidence as to the Defendants’ assets was as follows:
Mr. Skurikhin’s assets
According to a letter dated 29 August 2012 from WB to PCB, subsequently verified on affidavit dated 5 September 2012 by Mr. Skurikhin:
Mr. Skurikhin has no assets within the jurisdiction with a value over £15,000; and
Mr. Skurikhin “understands that”:
the interests of the members of Pikeville (i.e. Messrs Meier and Lerch, and Crown) are wholly owned by a Liechtenstein Foundation called the Berenger Foundation (“the Foundation”), which is controlled by its board of directors and is a discretionary foundation of which Mr. Skurikhin is currently named as one of the discretionary beneficiaries;
the interests of the members of Perchwell (again, Messrs Meier and Lerch, and Crown) are owned 55% by the Foundation and 45% by the Eastbridge Settlement (“the Settlement”), a discretionary trust based in Nevis, of which Mr. Skurikhin is currently named as one of the discretionary beneficiaries and which is controlled by its trustee, Accreda Trustees Limited.
According to VTB’s evidence, and in particular paragraph 7 of the minutes of a loan committee of VTB dated 10 December 2008, Mr. Skurikhin was reported to be the “Beneficiary of the SAHO Group companies”.
According to VTB’s evidence, despite having apparently been identified in December 2008 as the beneficial owner of the SAHO Group of companies and having guaranteed the obligations of the SAHO companies’ liabilities, at a meeting on 6 August 2012 with VTB, Mr. Skurikhin claimed that he had no personal assets and was not in a position to make any proposals regarding the discharge of his guarantee liabilities.
Pikeville’s assets and ownership
According to information provided in various letters from CR and, as to a certain extent, verified by affidavit:
Pikeville owns the three Italian Properties, including one property which has been let to Mr. Meier and then sub-let to Mr. Skurikhin;
Pikeville is the hundred percent shareholder in a company called Paradis de Beauté srl; (according to VTB’s evidence, this company is connected with a beauty parlour in which Mr. Skurikhin’s wife has an interest);
other assets of Pikeville include three loans including a loan to Paradis de Beauté srl; written loan agreements in respect of such loans exist;
the creditor referred to in the accounts of Pikeville for the year ended the 31 December 2010, as being owed the sum of €19.4 million within one year, was Miccros Group Limited (“Miccros”), a company registered in the British Virgin Islands, which was owned as to 45% by the Settlement and 55% by the Foundation; despite the amount of the loan, there was no written loan agreement in respect of it;
the members of Pikeville currently hold their interests in Pikeville pursuant to declarations of trust for the Foundation, the assets of which are held for discretionary beneficiaries one of whom is Mr. Skurikhin; and the Foundation is controlled by its board of directors; from June 2005 the members’ interests in Pikeville were held by Oxnard Management Limited and Oxnard Limited (companies associated with Messrs Meier and Lerch) and then from 2008 by Messrs Meier and Lerch and then from January 2010 by Messrs Meier and Lerch and Crown, as nominees and trustees for the Foundation; copies of the relevant declarations of trust were provided.
Perchwell’s assets and ownership
According to VTB’s evidence, the loan agreements between VTB and each of the borrowers within the SAHO Group companies listed the entities falling within the expression “SAHO Group of companies”; within those entities were Perchwell and its wholly owned subsidiary, Tunnelson.
According to information provided in various letters from CR and, as to a certain extent, verified by an affidavit provided by Mr. Meier:
the “assets” of Perchwell comprised legal ownership of the following assets:
100% of the issued share capital in Tunnelson; Tunnelson had acquired the shares in certain of the SAHO Group companies on 25 March 2009;
100% of the issued share capital in two other companies, Cegasa Intl Chemical Co (“Cegasa”), incorporated in Costa Rica, and Promanda Investments Limited (“Promanda”), incorporated in Cyprus, also described in various loan agreements as being SAHO Group companies;
loans made to Tunnelson, Promanda, and three other Cypriot companies, Cobbtown Enterprises Limited (“Cobbtown”), Gardinwood Holdings Limited (“Gardinwood”) and Braslaton Investments Limited (“Braslaton”), which are probably also described in loan agreements as being SAHO Group companies;
however, pursuant to a nominee agreement dated 27 March 2009 (a copy of which was provided by CR), Perchwell holds certain of its assets under a nominee agreement as nominee for, and for the account of, Shawnee Assets Corporation of Panama (“Shawnee”), which is owned as to 45% by the Settlement and 55% by the Foundation; the nominee agreement listed Cegasa, Promanda, and Tunnelson and two Russian companies within the SAHO Group as subject to the nominee agreement; (whether such agreement also included loans made to such companies or the other loans made by Perchwell was not clear);
the members of Perchwell currently hold their interests in Perchwell pursuant to declarations of trust as to 45% for the Settlement, and as to 55% for the Foundation; the history of the structure was as follows:
between 8 May 2007 and January 2010, Mr. Lerch held 50% of Perchwell as nominee and trustee for the Foundation, Mr. Meier held 45% of Perchwell as nominee and trustee for the Settlement and Mr. Meier held 5% of Perchwell as nominee and trustee for the Foundation;
with effect from 20 January 2010, the interest in Perchwell as a LLP was divided into 15,000 units, of which 6749.99 units are registered in the name of Crown as nominee and trustee for the Settlement, 8,249.99 are registered in the name of Crown as nominee and trustee for the Foundation, 0.01 unit is registered in the name of Mr. Meier as nominee and trustee for the Foundation and 0.01 unit is registered in the name of Mr. Lerch as nominee and trustee for the Settlement.
VTB’s application for further disclosure
By the date of the hearing before me of VTB’s application for further disclosure, certain of the information requested in Schedule C to the application notice had already been provided by the Defendants or, in the case of Pikeville and Perchwell, CR had made clear that the LLPs did not have access to, or control of, the relevant documentation. Thus, at the hearing before me, the further information and documentation sought on behalf of VTB was as follows:
From Mr. Skurikhin
documentation and information relating to the Foundation and the Settlement – paragraphs 1 and 2 of Schedule C:
“1 As to the … Foundation
(a) The registration/incorporation details of the Foundation including the registered number and the date on which the Foundation was incorporated/established
(b) the names, addresses and contact details of the members of the Board of Directors of the Foundation
(c) a copy of the memorandum and articles of association (or equivalent) and any other constitutional documentation of the Foundation in accordance with which the Board of Directors act (Footnote: 1)
(d) the identity of all of the discretionary beneficiaries of the Foundation
(e) a copy of the documentation pursuant to which the discretionary beneficiaries enjoy rights in the Foundation and/or its assets
(f) the precise date(s) on which each of the interests (now said to be held by the Foundation) in each of the Second and Third Defendants were transferred to the Foundation
(g) the identity of the owner(s) of the interests (now held by the Foundation) in each of the Second and Third Defendants immediately before their transfer to the Foundation (i.e. the identity of the transferor, including the beneficial or legal owners)
(h) a copy of the transfer documentation (including any sale and purchase agreements) relating to the transfer of the said interests in each of the Second and Third Defendants into the Foundation
(i) full details of the terms on which the transfers took place in respect of the controlling interests in the Second and Third Defendants, including in particular full details of the consideration (if any) for the transfer of the said interests into the Foundation and details of whether and if so when, by whom, to whom and by what means such consideration was paid
(j) the value(s) of the interests in the Second and Third Defendants as at the date(s) of transfer to the Foundation together with any supporting documentation evidencing such value
(k) full details of the respects if any in which the discretionary beneficiaries of the Foundation are able to control the decisions taken by the Board of Directors of the Foundation;
(l) the identity of the person or persons who give instructions to the Board of Directors of the Foundation on a day to day basis.
(m) what if any powers of revocation exist in relation to the Foundation and/or assets which have been transferred into the Foundation, in terms of any such powers and by whom such powers (if any) may be exercised.
…
2. As to the … Settlement
(a) the date on which the Settlement was incorporated/ established;
(b) the identity of the persons and/or corporations that exercise control over [Accreda] and/or which give instructions to Accreda
(c) a copy of the Deed of Settlement and (if applicable) memorandum and articles of association (or equivalent) and all other constitutional documentation of the Settlement in accordance with which Accreda acts (Footnote: 2)
(d) the identity of all of the discretionary beneficiaries of the Settlement
(e) a copy of the documentation pursuant to which the discretionary beneficiaries enjoy rights in the Settlement and/or its assets
(f) the precise date(s) on which the interest (now said to be held in the Settlement) in the Third Defendant was said to be transferred to the Settlement
(g) the identity of the owner(s) of the interest (now held by the Settlement) in the Third Defendant immediately before its transfer to the Settlement (i.e. the identity of the transferor, including the legal and beneficial owners)
(h) a copy of the transfer documentation (including any sale and purchase agreements) relating to the transfer of the said interest in the Third Defendant into the Settlement
(i) full details of the terms on which the transfer took place, including in particular full details of the consideration (if any) for the transfer of the said interest into the Settlement and details of whether and if so when, by whom, to whom and by what means such consideration was paid.
(j) the value(s) of the interest in the Third Defendant as at the date(s) of transfer together with any supporting documentation evidencing such value
(k) full details of the respects if any in which the discretionary beneficiaries of the Settlement are able to control or influence the decisions taken by Accreda
(l) the identity of the person or persons who give instructions to Accreda on a day to day basis
(m) what if any powers of revocation exist in relation to the Settlement and/or assets which have been transferred into the Settlement, the terms of any such powers and by whom such powers (if any) may be exercised.
…”
documentation and information relating to Shawnee - paragraphs 5 and 6 of Schedule C:
“5. The certificate of incorporation, register of members, register of directors, and the latest company accounts for Shawnee.
6. The date on which the Foundation became a 55% owner of Shawnee and the date on which the Settlement became a 45% owner of Shawnee and the identity of the owner(s) of Shawnee before that date”
documentation and information relating to Miccros - paragraph 8 of Schedule C:
“(a) The date and certificate of incorporation of [Miccros], its register of directors, its register of shareholders and accounts from 2007 onwards
…
(c) The date on which [the Foundation] and [the Settlement] became the owners of [Miccros] and the identity of the owner(s) of [Miccros] immediately prior to that date.”
In submissions this was expanded to include:
“the constitutional documentation for Miccros”.
documentation and information relating to Mr. Skurikhin’s interest (if any) in Pikeville - paragraph 9 of Schedule C:
information as to whether Mr. Skurikhin was the beneficial and/or legal owner and/or controller of Pikeville prior to declarations of trust being executed in relation to the membership interests in Pikeville in favour of the Foundation and the Settlement on 10 June 2005 and documentation relating to any transfer of that interest into the Settlement and/or the Foundation.
From Perchwell:
the nature and value of the assets owned by the wholly owned subsidiaries of Perchwell - paragraph 3 of Schedule C:
“3
(c) The assets held by [Cegasa]
(d) The assets held by [Promanda]
(e) The assets held by [Tunnelson]…”
Application for disclosure against Mr. Skurikhin
I turn to consider VTB’s application for further disclosure against Mr. Skurikhin.
VTB’s submissions
On behalf of VTB, Mr. Penny submitted that:
The purpose of seeking disclosure orders against Mr. Skurikhin in relation, in broad terms, to what VTB alleged was likely to be Mr. Skurikhin’s ultimate beneficial and/or controlling interest in Pikeville, Perchwell, the Settlement, the Foundation, Shawnee and Miccros, was wholly consistent with the purpose of the domestic freezing order granted in relation to his assets within the jurisdiction.
Mr. Penny accepted, at least for the purposes of this application, (without prejudice to any argument which he might wish to raise in a higher court) that normally disclosure should be co-extensive with a freezing order.
The freezing order injunction made by Hamblen J, on its terms, extended to Mr. Skurikhin’s interest in Pikeville and Perchwell, “… on the basis that a beneficial interest in an English LLP is to be regarded as an asset within the jurisdiction”. Indeed, the purpose of the English injunction was precisely to prevent Mr. Skurikhin from disposing of, or dissipating, his controlling/beneficial interest in the two LLPs, so that VTB could ultimately enforce any Russian judgments it obtained against Mr. Skurikhin; that could be done, for example, by appointing a receiver by way of equitable execution over his beneficial interests in Pikeville and Perchwell, and thereby indirectly attaching their assets.
If, for example, under the terms of the Settlement or the Foundation, Mr. Skurikhin retained the power to revoke the Settlement and/or the Foundation (or settlements of assets into either entity), and/or the power to direct the directors of the Foundation and/or the trustee of the Settlement to apply the assets of those entities, including the beneficial interest in Pikeville and Perchwell, in accordance with his directions, such powers would be likely to be regarded by the Court as assets belonging to Mr. Skurikhin which could be the subject of injunctions or the appointment of a receiver by way of equitable execution: see Tasarruf v Merrill Lynch [2012] 1 WLR 1721 (PC), applying Masri v CCI (UK) Ltd [2009] QB 450 (CA). Thus, in Tasarruf, the Privy Council approved the appointment of an equitable receiver over a power of revocation in a discretionary trust, holding that such a power was tantamount to ownership of the assets in the trust. Likewise, in Blight v Brewster [2012] EWHC 165 (Ch), the Deputy Judge (Gabriel Moss QC) held that Tasarruf was applicable to a judgment debtor’s power to elect to take his cash payment from his pension, and therefore the cash payment in respect of which the debtor was entitled to elect should be regarded as his asset and accordingly that s37 would operate so as to require the judgment debtor to exercise that power.
In principle therefore, if Mr. Skurikhin did have powers of revocation or control over the Settlement, the Foundation and/or the assets in the Settlement and/or the Foundation (which assets appear to include a controlling interest in Perchwell and Pikeville):
such powers would be regarded as a matter of English law as an asset of Mr. Skurikhin;
it might well be possible to appoint an equitable receiver in respect of such powers in the Settlement in Nevis (Nevis being a common law jurisdiction which is likely to follow the English approach), and/or to obtain an injunction in Nevis against Mr. Skurikhin in respect of the powers he retains;
VTB would be in a position to consult with lawyers in Liechtenstein to discover whether similar remedies/procedures would be available in that jurisdiction vis a vis Mr. Skurikhin’s powers over the Foundation; and
the English Court might appoint an equitable receiver over Perchwell and Pikeville in addition to any other orders it might make, for example, by way of mandatory injunction requiring Mr. Skurikhin to exercise such powers of control for the benefit of his judgment creditors (at least as regards his ability to control the beneficial interest in Perchwell and Pikeville).
It followed that the purposes of the orders for further disclosure sought against Mr. Skurikhin include the following:
to enable VTB and the English Court to consider in a fully informed manner (a) whether the present relief should be continued, and (b) whether further relief should be granted against the Defendants in this jurisdiction, and
to enable VTB to consider in a fully informed manner whether grounds existed to seek relief against Mr. Skurikhin in Nevis (where the Settlement is incorporated) and/or in Liechtenstein (where the Foundation is incorporated).
The further disclosure sought was for legitimate purposes and was consistent with the underlying purpose of the injunction granted on 16 August 2012 and continued on 7 September 2012.
Mr. Skurikhin has not contended either in evidence or in correspondence that he did not have such documents and information in his control, and the court should therefore proceed on the basis that the disclosure sought is within his control. The absence of any assertion by Mr. Skurikhin that the disclosure sought was not within his control was significant in that it might also give rise to an inference that his role in the Settlement and the Foundation consists of something more than as a mere discretionary beneficiary (since if he were nothing more than a discretionary beneficiary, such documentation might well not be in his control: see (in relation to the law in common law jurisdictions) Schmidt v Rosewood Trust [2003] AC 709.
So far as Shawnee was concerned, the nominee agreement dated 27 March 2009 (which had been disclosed, and which showed that, as from that date, Perchwell held certain of its assets as nominee for Shawnee), was entered into at the same time that the SAHO Group companies were entering into loan agreements with VTB, and Mr. Skurikhin was entering into guarantee agreements with VTB.
Thus, it appeared that control and ownership of key SAHO Group companies were transferred by Perchwell to a Panamanian entity, Shawnee, at the same time that trading companies in the SAHO Group borrowed significant funds from VTB and Mr. Skurikhin entered into guarantees in favour of VTB. If, as VTB will seek to infer, Mr. Skurikhin was directing those transfers, the circumstances strongly suggest that he controls not only the Foundation and the Settlement but also Shawnee, which is said to be owned and controlled by the Foundation and the Settlement. Disclosure of the information and documentation sought at paragraphs 5 and 6 of the Schedule would assist VTB (and the Court) in understanding who controls Shawnee, when it was incorporated and when it became part of the current offshore structure as described in Perchwell’s asset disclosure, and what, if any, level of power Mr. Skurikhin retains in respect of Shawnee.
So far as disclosure of details regarding Miccros was concerned, as set out in paragraph 8 of the Schedule, given the apparent close relationship between Mr. Skurikhin and the Settlement and the Foundation, and the fact that those entities are said to control Miccros, this disclosure would enable VTB and the court to understand the control and/or power (if any) that Mr. Skurikhin has over Miccros.
As to the further information sought in paragraph 9 of Schedule C, such disclosure will also enable the court to understand the control (if any) which Mr. Skurikhin exercises over Pikeville and to make the injunctions effective.
Mr. Skurikhin’s submissions
Mr. Skurikhin did not himself file any evidence in relation to the applications for further disclosure against him. A short affidavit was served on his behalf by a solicitor at WB in relation to the non-enforceability of any Russian judgment against him pending an appeal. His position in relation to the disclosure applications was, in summary that:
He had already complied with the disclosure order made by Hamblen J.
He had already stated that he is a discretionary beneficiary under each of the Foundation and the Settlement.
There was no basis for the court to make any further order for the provision of information which went wider than the ambit of the freezing order, which was strictly limited to assets within England and Wales.
Both the Settlement and the Foundation were trusts located outside England and Wales.
Any further order for disclosure of information relating to the trusts would not be ancillary to the freezing order obtained against Mr. Skurikhin.
There was nothing to connect Mr. Skurikhin to the territorial jurisdiction of the Court.
The “policing” purpose of the disclosure order had already been achieved.
VTB is not entitled to be provided with further information or disclosure so as to enable it to support its own case as to the need for a continuation of the freezing order. No explanation has been given as to the putative “further relief … in this jurisdiction” which might be sought, or as to how the information in question would be relevant to it. Potential applications in Liechtenstein or Nevis were quite clearly outside the scope of the proper purposes of a domestic-only freezing order. This was not a case where fraud was alleged or any proprietary claim made. While it was well-established that in general orders for disclosure should be complied with before the hearing of any such challenge, in the present case the relevant orders for disclosure had been complied with. VTB was seeking additional information and disclosure, none of which can fairly be said to be urgently necessary for the protection of its position.
Prior to the determination of his challenge to the freezing injunction, due to be heard at the end of November, there was no urgency that required disclosure of the additional information sought. Finally he contended that no inference could be drawn to the effect that he had control of the relevant documentation, simply because he had declined to adduce any evidence as to that matter.
In support of Mr. Skurikhin’s position, Mr. Tolley made the following legal submissions:
As a matter of general principle, an order for the provision of information should not be any wider than the freezing injunction to which it relates. So an order for the provision of asset information should generally be limited to the same extent as the freezing injunction. In a case of a freezing injunction limited to England, the requirement to provide information as to assets should also be limited to assets in England.
In support of these propositions Mr. Tolley relied on a number of authorities. First he referred to Ashtiani v Kashi [1987] QB 888, 905C-F, where Neill LJ stated:
“It is important to remember that this is not an action where any proprietary claim is made, nor is it a tracing action. It is an action founded on an alleged failure to pay moneys due under a contract. What basis is there, therefore, for an order for discovery of the defendant’s assets? It is not an order for discovery under R.S.C., Ord. 24. It seems to me that in the present state of the law the only basis for such an order is that it is made in aid of and ancillary to an injunction in the Mareva form. The power to order discovery exists, but it is a power which exists to make the injunction effective. It seems to me to follow that, at any rate prima facie, discovery should be limited, first, to the ascertainment of assets which will be covered by the Mareva order (in other words, the ascertainment of assets within the jurisdiction), and, second, at a later stage, to enable the court to consider any application by the party enjoined to vary the Mareva injunction. Thus, if a party applies to make use of funds which are subject to the Mareva injunction, it may become relevant at that stage for the court to inquire whether there are other assets which are not so subject to which he can have recourse: cf. A.J. Bekhor & Co. Ltd. v. Bilton [1981] Q.B. 923, 935 per Ackner LJ. There may be other cases where a wider discovery is appropriate, but, as the scope of a Mareva injunction is restricted to assets within the jurisdiction, it seems to me to follow that, certainly in the ordinary way, any discovery in aid of the Mareva should be similarly so restricted”
Mr. Tolley accepted that at the time that Ashtiani v Kashi was decided, it was still the position in English law that a freezing injunction would not be made on a worldwide basis. Nonetheless, he submitted that the guidance of Neill LJ was still resonant in that it makes clear the importance of the link between the freezing injunction and the ascertainment of the assets covered by the freezing injunction in establishing the appropriate scope of any order for disclosure.
Second, he referred to similar views expressed by Neill LJ in Derby & Co Ltd v Weldon (Nos 3 and 4) [1990] Ch 65, by which time it had been established that the English courts did have jurisdiction to grant a worldwide freezing injunction. He stated, at 95H-96A:
“It may be open to argument in some future case that in certain circumstances a discovery order can be made with a wider ambit than the Mareva injunction to which it is ancillary. As at present advised, however, I remain of the opinion which I expressed in Ashtiani v. Kashi [1987] Q.B. 888, 905 that the discovery order, if made at all, should not go further than the injunction. The basis of the jurisdiction to make an order for discovery was examined by this court in A. J. Bekhor & Co. Ltd. v. Bilton [1981] Q.B. 923. It was there held by the majority of the court that the order for discovery, being ancillary to the Mareva injunction, should not go beyond the ambit of the injunction. I do not find it necessary in this case to consider further whether, and, if so, in what circumstances, there may be exceptions to this general rule. I would only urge that in this field the court should scrutinise very carefully any submission that its powers are circumscribed more narrowly than the justice of the case demands.”
Third, he referred to Gidrxslme Shipping Co Ltd v Tantomar-Transportes Maritimos LDA [1995] 1 WLR 299, where Colman J held that, in a case where the court’s assistance was sought in aid of enforcement of a judgment or (on the facts) an arbitration award, it was legitimate to make an order for provision of asset information on a worldwide basis even though the freezing injunction in question was limited to England. In so holding, he emphasised, at 310C-G, the important difference between such a case and one in which the court was concerned with a freezing injunction made before any English judgment:
“The extension of the use of the Mareva jurisdiction to assets outside the jurisdiction of the English courts was examined in depth by the Court of Appeal in Babanaft International Co. S.A. v. Bassatne [1990] Ch. 13 and in Derby & Co. Ltd. v. Weldon (Nos. 3 and 4) [1990] Ch. 65. While recognising the power of the English courts to grant Mareva injunctions even in respect of assets outside this jurisdiction in an appropriate case, it was unnecessary in either case to consider the scope of disclosure orders in relation to Mareva injunctions confined to assets within the jurisdiction. However, in Derby & Co. Ltd. v. Weldon Neill LJ., at pp. 94-95, reaffirmed, albeit obiter, his conviction expressed in Ashtiani v. Kashi [1987] Q.B. 888 that disclosure orders should be coextensive with the scope of the Mareva injunction to which they were ancillary. It is to be observed, however, that both in Ashtiani v. Kashi and in Babanaft International Co SA v Bassatne [1990] Ch 13, CA. 9 Derby & Co. Ltd. v. Weldon (Nos. 3 and 4) the courts were concerned with prejudgment orders which included Mareva injunctions. The orders for disclosure were therefore orders ancillary to those injunctions. There was no question of there being any other order in support of which a disclosure order could be justified. Where, by contrast, one has the position that a judgment has been already obtained or an award made and where a Mareva injunction in aid of execution is justified, the jurisdiction to make a disclosure order arises both as a power ancillary to and in support of the injunction and independently of the injunction as a power in support of the execution of the judgment or award. It follows that, whereas it may on the facts of the case in question be inappropriate to extend the Mareva injunction to assets outside the jurisdiction-and it is clear from the two authorities cited that such extensions are likely to be rarely justified-very different considerations may apply to disclosure orders in aid of execution. That being so, there is, in my judgment, a very firm jurisdictional basis for an order, made post-judgment or post-award, which includes both a Mareva injunction confined to assets within the jurisdiction and a disclosure order in respect of worldwide assets.”
Mr. Tolley submitted that, so far as researches have indicated, there is no reported case in which such an order has been made. He referred to Hollander, Documentary Evidence, 10th Edition, paragraph 3-43, where it was stated:
“…
The straightforward disclosure order requires the defendant to identify his assets in the jurisdiction.. It cannot be just and convenient to make an order in aid of asset freezing in a particular jurisdiction, if that order goes beyond the identification of assets within the relevant jurisdiction,137 but if there is a worldwide injunction, no such limitation need arise.. …
137 Ashtiani v Kashi [supra] The position is different for post-judgment freezing orders where the relief can be justified on a basis of assisting the claimant in effecting execution Gidrxslme Shipping Co Ltd v Tantomar-Transportes Maritimos LDA [1994] 4 All ER 507”
Finally, he submitted that the Court should also give proper regard to the general principle that an individual (or company) has privacy and confidentiality rights in respect of personal information as to his (or its) assets.
Decision in relation to the application against Mr. Skurikhin
Subsections 25 (1) and (2) of the Act provide as follows:
“25 Interim relief in England and Wales and Northern Ireland in the absence of substantive proceedings.
(1) The High Court in England and Wales or Northern Ireland shall have power to grant interim relief where -
(a) proceedings have been or are to be commenced in a Brussels or Lugano Contracting State or a Regulation State other than the United Kingdom or in a part of the United Kingdom other than that in which the High Court in question exercises jurisdiction; and
(b) they are or will be proceedings whose subject-matter is within the scope of the Regulation as determined by Article 1 of the Regulation (whether or not the Regulation has effect in relation to the proceedings).
(2) On an application for any interim relief under subsection (1) the court may refuse to grant that relief if, in the opinion of the court, the fact that the court has no jurisdiction apart from this section in relation to the subject-matter of the proceedings in question makes it inexpedient for the court to grant it.”
By the Civil Jurisdiction and Judgments Act 1982 (Interim Relief) Order 1997 (SI 1997/30), made pursuant to section 25(3) of the Act, the effect of section 25(1) was extended to non-Convention countries and to proceedings outside the scope of the conventions. Thus Section 25 now empowers the court to grant all forms of interim relief in aid of foreign courts, unless:
“… in the opinion of the court, the fact that the court has no jurisdiction apart from this section in relation to the subject matter of the proceedings in question makes it inexpedient for the court to grant it.”
The cautious approach which the court should adopt in exercising its jurisdiction to grant relief under section 25 where the relief granted has the potential for extra-territorial effect in the case of non-residents with assets abroad has been repeatedly stated in the authorities. I refer by way of example to the decision of the Court of Appeal in Motorola Credit Corporation v Uzan [2003] EWCA Civ 752 at paragraphs 114-115:
“114. The issue in this case arises because, on the face of it, the only fetter placed upon the otherwise apparently unlimited powers which the court has as a result of the combination of s.37 of the Supreme Court Act, s.25 of the CJJA, and Rule 6.20 of the CPR is its power to refuse to grant relief if its absence of jurisdiction apart from s.25 makes such grant ‘inexpedient’. It is plain that, in relation to the grant of worldwide relief, the jurisdiction is based on assumed personal jurisdiction; as such it has the potential for extra-territorial effect in the case of non-residents with assets abroad. Thus it is likely that the jurisdiction will prove extremely popular with claimants anxious to obtain security against defendants in disputes yet to be decided where they cannot obtain it in the court of primary jurisdiction or the court of the defendants’ residence or domicile, which courts are the natural fora in which to make such applications. There is thus an inherent likelihood of resort to the English jurisdiction as an ‘international policeman’, to use the phrase employed by Moore-Bick J, in cases of international fraud. We would do nothing to gainsay, and indeed would endorse, the observations of Millett LJ in Cuoghi to the effect that international fraud requires courts, within the limits of comity, to render whatever assistance they properly can without the need for express provision by an international convention requiring it. However, even in the case of Article 24 of the Brussels Convention it has been made clear that:
‘ … the granting of provisional or protective measures on the basis of Article 24 is conditional on, inter alia, the existence of a real connecting link between the subject matter of the measures sought and the territorial jurisdiction of the contracting state of the court before which those measures are sought.’ see (Van Uden Maritime B.V. v Kommanditgesellschaft In Firma Deco-Line [1999] 2 WLR 1181 at 1210 para 40).
Further, in so far as ‘police’ action is concerned, policing is only practicable and therefore expedient if the court acting in that role has power to enforce its powers if disobeyed. In that respect the principle in Derby v Weldon already quoted plainly has application and is apt to be applied in cases of this kind.
115. As the authorities show, there are five particular considerations which the court should bear in mind, when considering the question whether it is inexpedient to make an order. First, whether the making of the order will interfere with the management of the case in the primary court e.g. where the order is inconsistent with an order in the primary court or overlaps with it. That consideration does not arise in the present case. Second, whether it is the policy in the primary jurisdiction not itself to make worldwide freezing/disclosure orders. Third, whether there is a danger that the orders made will give rise to disharmony or confusion and/or risk of conflicting inconsistent or overlapping orders in other jurisdictions, in particular the courts of the state where the person enjoined resides or where the assets affected are located. If so, then respect for the territorial jurisdiction of that state should discourage the English court from using its unusually wide powers against a foreign defendant. Fourth, whether at the time the order is sought there is likely to be a potential conflict as to jurisdiction rendering it inappropriate and inexpedient to make a worldwide order. Fifth, whether, in a case where jurisdiction is resisted and disobedience to be expected, the court will be making an order which it cannot enforce.”
Accordingly I approach the question as to whether I should order the further disclosure sought as against Mr. Skurikhin on the basis that I should only do so on the basis that I am satisfied of
“… the existence of a real connecting link between the subject matter of the measures sought and the territorial jurisdiction”
of the English court. I also take into account the other considerations rehearsed in Motorola. None of the Motorola considerations suggest that it would be inexpedient for me to make an order.
I have come to the conclusion that, in the circumstances of this case, I have the power to, and it is appropriate and expedient that I should, as a matter of discretion, require Mr. Skurikhin to provide certain further disclosure in relation to the Settlement and the Foundation, and to Pikeville, at this stage, although not to the full extent of that sought by VTB in Schedule C.
My reasons are as follows:
I accept, as submitted by Mr. Tolley, that normally it is not appropriate for a disclosure order to go “beyond the ambit of the injunction”, at least in circumstances where one is considering a pre-trial freezing order; see Ashtiani v Kashi and Derby & Co Ltd v Weldon (Nos 3 and 4) (supra). Thus, for example, however useful it might be to a potential judgment creditor to have pre-trial disclosure of worldwide assets, absent special circumstances, the court would be unlikely to make such an order where the freezing order only related to assets within the jurisdiction and the defendant was non-resident and had little connection with England and Wales. I also accept the proposition that a disclosure order should, in normal circumstances, only be made as an aid to the effective working of the freezing order, i.e. to assist the claimant in the identification and preservation of assets of the defendant which might otherwise be dissipated and that it should not be used as a means of obtaining some collateral advantage in the litigation or information going to the merits of the claim; see e.g. Jenington International Inc v Assaubayev [2010] EWHC 2351 at paras 22, 60, 65(9),74 .
However, in the present case, the freezing injunction dated 16 August 2012 expressly restrains the disposal or dealing with Mr. Skurikhin’s “interest and/or rights in” Pikeville and Perchwell. Of course that is based on the premise (given the wording of paragraph 6 of the injunction) that such interests or rights are situate within the jurisdiction. Whilst the membership interests in the two English LLPs clearly are choses in action within the jurisdiction whether such rights, if any, that Mr. Skurikhin has to those membership interests (whether, as, effectively, absolute owner, or as someone who is in a position to control any dealings with such membership interests, or as someone who has rights as a discretionary beneficiary) are assets located within the jurisdiction is an entirely different matter. It might be that, for example, discretionary rights as a beneficiary would be located in Nevis or Liechtenstein. On the other hand, if in reality Mr. Skurikhin were the absolute owner, his rights or interests might be situate here. However for present purposes the fact that such rights might be technically situate outside the jurisdiction does not appear to me to matter. The purpose of the injunction is to restrain any disposition or dealings with the membership interests, and ultimately, given that the LLPs are English registered, any such disposition or dealing will have to take effect within the jurisdiction. In other words, what the English court is effectively seeking to restrain is the exercise of any rights of ownership or control which Mr. Skurikhin enjoys, whether directly, or indirectly through the Foundation and the Settlement, in relation to Pikeville and Perchwell, which ultimately will take effect within the jurisdiction since Pikeville and Perchwell are English registered LLPs. Analysed in that way, it seems to me that there is a real nexus between the jurisdiction and the subject matter of the relief sought and that the proposed relief does not go, or least does not go inappropriately, beyond the ambit of the domestic freezing orders granted by Hamblen J. VTB’s ultimate goal was to seek, as part of the ultimate execution process, relief analogous to the appointment of a receiver by way of equitable execution over Mr. Skurikhin’s rights and interests (if any) over the membership interests in Pikeville and Perchwell as was done in Tasarruf v Merrill Lynch [2012] 1 WLR 1721 (PC), applying Masri v CCI (UK) Ltd [2009] QB 450 (CA). In that context VTB is entitled to such information by way of disclosure as will assist it to identify and preserve the relevant rights and interests.
It is in those special circumstances that I consider it appropriate, and expedient, that Mr. Skurikhin should have to give certain further information about his interests in relation to the Foundation and the Settlement. Unless that further information is given, it will be extremely difficult for this court to identify what, if any, precise rights or interests, direct or indirect, Mr. Skurikhin has over the membership interests in Pikeville and Perchwell and what those rights or interests comprise. It also follows that, in the absence of such information, it will be extremely difficult for either the court or VTB effectively to monitor whether there has been any disposition or dealing with such membership interests. It would also be difficult for this court to reach an informed view as to whether it should give leave to VTB to take further proceedings in Liechtenstein or Nevis in relation to any such rights and interests.
Factually, I am satisfied that there is sufficient evidence before the court to show that there is a real likelihood that, at around the time when the guarantees were given and certain of the loans were granted, Mr. Skurikhin was, or least was claiming that he was, the ultimate beneficial owner of the relevant SAHO companies. The evidence also suggests that, at that time, steps were being taken to structure the holding of such interests (and other assets) in a complex web of opaque corporate and trust structures, giving rise to the inevitable inference that Mr. Skurikhin was taking steps to ensure that his personal assets would not be available to satisfy any guarantee liabilities. These are not matters which fall for decision on this application but they form part of evidential background against which I exercise my discretion. In those circumstances I consider that it is proportionate to make an order for further disclosure notwithstanding the fact that it will require Mr. Skurikhin to disclose what he may regard as confidential private information relating to his personal financial affairs. I do not consider that the provision of any such further information will afford VTB an inappropriate collateral advantage in the litigation or provide it with information going to the merits of the claim.
I take into account the fact that Mr. Skurikhin is applying to discharge the order and may also be challenging the jurisdiction of this court at the hearing at the end of November. I nonetheless consider it necessary and appropriate that the further information should be supplied prior to that hearing as a matter of some urgency. I consider that there is a real risk of possible dissipation of the membership interests in Pikeville and Perchwell in the interim, if VTB and the court were not to have a more complete picture of how such interests are held.
In this context it is also relevant to note that both Pikeville and Perchwell have adopted in their publicly filed accounts what can only be described as an extremely coy attitude to the disclosure of the identity of their ultimate controlling party and related party transactions. For example in Pikeville’s audited financial statements for the year ended 21 December 2010 (the latest accounts available to me at the hearing), the auditors qualified their opinion on the accounts on the grounds that they were:
“… unable to obtain sufficient audit evidence as to the ownership and valuation of the investment properties of €17,828,573 …. Also with respect to Financial Reporting Standard No 8 the evidence available to us was limited because the directors have not complied with Financial Reporting Standard No 8 as they are unable to disclose the identity of the ultimate controlling party, transactions related thereto, nor any other related party transactions.”
Similarly, in Perchwell’s audited abbreviated accounts for the year ended the 31 December 2008, the auditors qualified their opinion on the grounds that there had been:
“… disagreement over disclosure of ultimate controlling party
Despite the fact that the ultimate controlling party’s name, the members do not wish this to be disclosed. This is a departure from section 15 of the FRSSE and in our opinion the ultimate controlling party should have been disclosed.”
Perhaps not surprisingly, for the year ended 31 December 2010, Perchwell’s abbreviated accounts were not audited and there was no compliance with the relevant financial standard.
In the exercise of my discretion I also take into account the fact that Mr. Skurikhin has not in his evidence to date suggested that either he, or the relevant SAHO companies, has any defence to VTB’s claims under the guarantees or loans respectively. When asked during the course of argument what, in headline terms, were Mr. Skurikhin’s defences to the guarantee claims, Mr. Tolley said that he was unable to provide any explanation as to what such defences might be. Accordingly I proceed on the basis that there is a real likelihood of further Russian judgments being obtained by VTB in the near future.
However, the further information sought by VTB in relation to the Foundation and the Settlement, as set out in paragraphs 1 and 2 Schedule C, is too detailed and extends beyond what is proportionately required for the current stage of these proceedings. In particular I do not consider it appropriate to require Mr. Skurikhin at this stage (but without prejudice to any further application which VTB might later seek to make ) to provide the extensive evidence sought in relation to the previous transfers to the Foundation of the membership interests in Pikeville and Perchwell, other than the identity of the previous owner. It seems to me that to do so would simply be for the purpose of providing evidence to support VTB’s suggestion that the interests were disposed of as part of a scheme to make Mr. Skurikhin judgment proof. I do not consider that such evidence is necessary at this stage either for the purposes of identifying what if any rights or interests Mr. Skurikhin has in relation to Pikeville and Perchwell, or for policing the injunctions. To require such information to be provided might afford VTB an inappropriate collateral advantage.
I will hear further argument as to the precise form of the order, but, as at present advised, I am only prepared to order the following further disclosure:
relating to the Foundation:
the registration and/or incorporation details of the Foundation including the registered number and the date on which the Foundation was incorporated and/or established;
the postal address, email address and contact details for the Foundation;
a copy of the memorandum and articles of association (or equivalent, such as a foundation deed, trust deed, bye-laws and regulations) and any other constitutional or other documentation of the Foundation in accordance with which the Board of Directors act, including letters of wishes, and mandates;
the identity of the discretionary beneficiaries of the Foundation and the identity of the settlor and any protector (or equivalent);
if not already covered under paragraph (c), a copy of the documentation pursuant to which the discretionary beneficiaries enjoy rights in the Foundation and/or its assets;
the identity of the owner(s) of the interests (now held by the Foundation) in each of Pikeville and Perchwell immediately before their transfer to the Foundation (i.e. the identity of the transferor, including the beneficial or legal owners);
the identity of any person or persons who give or who have in the last year given instructions to the Board of Directors of the Foundation on a regular basis or whose views are or have in the last year been obtained prior to any decision being taken by the Board of Directors;
what if any powers of revocation exist in relation to the Foundation and/or assets which have been transferred into the Foundation, and by whom such powers (if any) may be exercised.
relating to the Settlement:
the date on which the Settlement was incorporated and/or established;
the identity of the persons and/or corporations that exercise control over Accreda and/or which give instructions to Accreda;
a copy of the Deed of Settlement and (if applicable) memorandum and articles of association (or equivalent such as a foundation deed, trust deed, bye-laws and regulations) and any other constitutional or other documentation of the Settlement in accordance with which Accreda acts, including letters of wishes, and mandates;
the identity of the discretionary beneficiaries of the Settlement and the identity of the settlor and any protector (or equivalent);
if not already covered under paragraph (c) a copy of the documentation pursuant to which the discretionary beneficiaries enjoy rights in the Settlement and/or its assets;
the identity of the owner(s) of the interests (now held by the Settlement) in Perchwell immediately before their transfer to the Settlement (i.e. the identity of the transferor, including the beneficial or legal owners);
the identity of any person or persons who give or who have in the last year given instructions to Accreda on a regular basis or whose views are or have in the last year been obtained prior to any decision being taken by Accreda;
what if any powers of revocation exist in relation to the Settlement and/or assets which have been transferred into the Settlement, the terms of any such powers and by whom such powers (if any) may be exercised.
I am not satisfied that it is appropriate at this stage to require Mr. Skurikhin to provide further information relating to Shawnee as sought in paragraphs 5 and 6 of Schedule C, as expanded in submission. Indeed in oral argument Mr. Penny did not press his claim in this respect. It has already been disclosed in evidence that Perchwell, having acquired the shares in Tunnnelson and other SAHO companies on 25 March 2009, immediately executed a nominee agreement in favour of Shawnee, a Panamanian company, stating that it held such assets as nominee for Shawnee; it has also been disclosed that Shawnee is owned 55% by the Foundation and 45% by the Settlement. Apart from the fact that the information sought as to Shawnee does not relate to assets within the jurisdiction (i.e. the membership interests in Pikeville and Perchwell), but rather as to the beneficial ownership of downstream foreign assets held in the legal name of Perchwell, details relating to Shawnee are not required for the purposes of the effective monitoring of the freezing injunctions. The critical information, which VTB already has, is that Shawnee is owned by the Foundation and the Settlement.
The position in relation to Miccros is somewhat different. It is accepted, at least by Pikeville and Perchwell, that the debt which Pikeville owes to Miccros is “treated, in law as being situated here” (Footnote: 3). As appears from the auditors’ qualified report to Pikeville’s accounts for the year ended 2010, it is at least possible that such loan was a related party transaction. The injunction made by Hamblen J expressly included “any and all indebtedness due to [Mr. Skurikhin] from Pikeville.” If, as VTB contends, Miccros is to be treated effectively as a nominee for Mr. Skurikhin, then, on the basis of Pikeville’s concession as to the situs of the debt, there is a very substantial asset potentially belonging to Mr. Skurikhin within the jurisdiction. In my judgment it is highly desirable that there should be clarity, so far as possible, as to the ultimate ownership or control of the debt, not only for the purposes of policing the injunctions, but also when the court comes to consider the continued existence of the injunctions at the end of November 2012. That is particularly so given the “disposals in the ordinary course of business” exception in relation to the injunctions against Pikeville and Perchwell, which might prima facie permit the repayment of such loan. In circumstances where Pikeville has apparently failed to comply, in breach of section 463 of the Companies Act 2006, with the relevant Financial Reporting Standards in relation to ultimate control and related party transactions, and, according to CR is unable itself to provide such information, and where, on the face of the audited accounts there is uncertainty as to the ultimate ownership of Pikeville’s assets, I have little hesitation in ordering Mr. Skurikhin to provide at least certain of the information regarding Miccros, as sought in paragraph 8 of Schedule C, if he is able to do so. It would appear that the loan from Miccros was used to finance the acquisition of the Italian Properties, including that leased to Mr. Skurikhin. The absence of any documentation relating to such loan, notwithstanding the amount, also underlines concerns whether such a “loan” was indeed a genuine loan, being made from a genuine corporate entity, as opposed to Mr. Skurikhin simply channelling funds through various nominee conduits for his own purposes.
Accordingly, I require him to provide the following information and documentation:
the date and certificate of incorporation of [Miccros], its register of directors, its register of shareholders and accounts from 2007 onwards;
the date on which [the Foundation] and [the Settlement] became the owners of [Miccros] and the identity of the owner(s) of [Miccros] immediately prior to that date;
Miccros’ memorandum and articles of association.
If Mr. Skurikhin is unable to provide any of the above information and documentation, then I require him to explain in a witness statement or affidavit, why he is unable to do so and what steps he has taken to try and obtain such information and from whom.
I conclude that such disclosure will assist VTB and the court in monitoring the injunctions as it will assist the understanding of the control and power (if any) that Mr. Skurikhin extends over Miccros.
For similar reasons, I require Mr. Skurikhin to provide the information sought in paragraph 9 of Schedule C, namely information as to whether Mr. Skurikhin was the beneficial and/or legal owner and/or controller of Pikeville prior to declarations of trust being executed in relation to the membership interests in Pikeville in favour of the Foundation and the Settlement on 10 June 2005 and documentation relating to any transfer of that interest into the Settlement and/or the Foundation.
Further disclosure sought from Perchwell
As I indicated during the course of the hearing, I am not prepared to order the provision of the further disclosure sought from Perchwell, namely the nature and value of the assets held by its wholly-owned subsidiaries, Cegasa, Promanda and Tunnelson. The injunction made against Perchwell restrained it from disposing of its assets whether it was interested in them “legally, beneficially or otherwise” including any asset “which it has the power, directly or indirectly, to dispose of or deal with as if it were its own.” The injunction also provided that Perchwell was to be regarded as having such power “if a third-party holds or controls the asset in accordance with its direct or indirect instructions”. But the assets caught by the injunction were Perchwell’s legal ownership of the shares in the three subsidiaries, not the underlying assets of those subsidiaries themselves. There was no evidence before me providing any justification for me to disregard the separate corporate legal personalities of the underlying subsidiaries, namely Cegasa, Promanda and Tunnelson, or to suggest that their assets were held or controlled in accordance with Perchwell’s “direct or indirect instructions”. On the contrary, the evidence showed that the shares in the subsidiaries were held pursuant to the nominee agreement to the account of Shawnee. Moreover there was no evidence to suggest that the three companies were not genuine holding or commercial companies in their own right. For example Tunnelson had been the holding company of the SAHO group companies since March 2009. In my judgment, to have made such an order would not only have extended beyond the legitimate jurisdictional ambit of this court’s powers as articulated in Uden, supra, but would have also disregarded the principle enshrined in Salomon v A Saloman & Co Ltd [1897] AC 22. I should say that, in this context, I do not accept the argument of Miss Elizabeth Weaver, counsel for Pikeville and Perchwell, to the effect that paragraph 17.2 of Hamblen J’s order did not extend to assets “legally” held by the two defendants; in my judgment it is necessary to read paragraph 17.2 consistently with paragraphs 10 and 13 where pure legal ownership is clearly referred to. However, as indicated above, I do accept her other arguments that it is not appropriate to make such orders.
The Dadourian application against Pikeville – Italy
VTB seeks permission to enforce the freezing order granted against Pikeville, in Italy, where the Italian properties are situated. Pikeville, as I have described already, is currently restrained by the order of Hamblen J from disposing or dealing with the Italian Properties. Pikeville opposed the application. Both sides respectively exhibited Italian law memorandum of advice from Italian lawyers: VTB produced two memoranda of advice from Mr. Anglani of NCTM; Pikeville served a memorandum setting out advice on Italian law dated 24 September 2012 from Ughi e Nunziante – Studio Legale.
It was common ground that the guidelines governing the Court’s approach to such an application is to be found in the “Dadourian Guidelines” set out in Dadourian v Simms, Practice Note [2006] 1 WLR 2499, at [25-49].
Miss Weaver on behalf of Pikewell submitted that VTB had not demonstrated that the guidelines were satisfied. She said that VTB had not established that enforcement in Italy was necessary for the purposes of ensuring that Hamblen J’s order was effective; Pikeville was restrained by the order from dealing with the Italian Properties, and had acted openly and co-operatively in relation to the order; its ownership of the Italian Properties was openly registered at the Italian Land Registry; there was no basis for suggesting that Pikeville would not continue to comply fully with the order; accordingly the assets were not at risk of dissipation. Further she submitted that VTB’s evidence was not clear as to the nature and effect of the steps proposed to be taken in Italy. There was disagreement between the lawyers as to what was involved in any application for an exequatur order and whether it could be registered at the Italian Land Registry and if so, what the effect would be. Accordingly the court should not, against such a background of uncertainty, make such an order which would have the effect that Pikeville would be involved in time-consuming and long drawn out proceedings. It would impose an inappropriate burden on Pikeville of litigation in a foreign jurisdiction, where there is no claim against it and where the English court has not yet determined whether to continue the order to trial. Moreover it was unclear whether Pikeville would, in practice, be able to recover any costs from VTB. Thus VTB had not satisfied the court that the proposed following proceedings were necessary, proportionate and not oppressive. For these reasons the order should be refused.
I take the view that, as a matter of urgency, and in accordance with the Dadourian Guidelines, VTB should be given permission to seek to enforce the freezing order in Italy against Pikeville by, in particular, applying for an exequatur order and registering such order at the Italian Land Registry. As to the application of the relevant guidelines:
Guideline 1: The underlying principle applicable to the grant of permission is that it should be just and convenient for the purposes of ensuring the effectiveness of the worldwide freezing order and not oppressive to the parties or to any third party who might be joined to the foreign proceedings. I accept VTB’s submission that this is a case where permission to enforce the worldwide freezing order in Italy against Pikeville is just and convenient. I am not convinced by Miss Weaver’s submissions to the effect that Pikeville has been wholly co-operative or that there is no risk that, without enforcement of the order in Italy, the properties will not be disposed of. As its audited accounts reveal, there is uncertainty as to the ultimate ownership of the Italian Properties and of the loan monies that were used to finance their purchase. Hamblen J clearly found this to be a case where a risk of dissipation had been demonstrated. That remains the position on the evidence before me. It seems to me to be clearly just and convenient that, if considered to be appropriate, as a matter of Italian law, some sort of restriction should be entered in the Italian Lands Registry.
Guideline 2: what precise relief should be granted? This is set out in the draft Order, and includes application for an permission to apply for exequatur order and its registration against the freehold title of each of Italian Properties. If the Properties had been in England and Wales, a restriction could have been registered against the title to the property under Rule 93(h) of the Land Registration Rules 2003.
Guideline 3: the interests of the parties need to be balanced. In accordance with the offer made by Mr. Penny at the hearing, I am going to require VTB to provide security for the costs of any application to enforce the worldwide freezing order in Italy. I will hear argument as to the precise amount and terms of such security after the delivery of this judgment. Subject to the provision of security, the interests of both parties are balanced and respected, if such an order is to be made. It is clear from the evidence that the Italian Properties are Pikeville’s principal and most valuable assets. They are currently not subject to charges in favour of Pikeville’s creditor, Miccros, but the evidence shows that the proposed relief would not give VTB any priority over the interests of Miccros as creditor. Thus no third party interests would appear to be prejudiced. On the other hand, there is no evidence before me to suggest that Pikeville would suffer inappropriate prejudice in the event that such a restriction is placed on the Italian Land Registry. Pikeville does not appear to be a trading company and there is no suggestion in the evidence before me that it requires the equity in the Italian Properties to support any ongoing trading activity, or that any damage will be suffered by Pikeville in the short term other than its exposure to costs.
Guideline 4: VTB will not be asking for relief in Italy which is superior to the relief obtained in this jurisdiction, and it seems plain from the Italian law evidence that, in any event, no superior relief would be granted.
Guideline 5: the evidence is fully before the Court, both as to the existence of Pikeville’s Italian assets and the procedural position under Italian law.
Guideline 6: there is no dispute that VTB can show that Pikeville, whether as legal owner, or otherwise, owns assets within the Italian jurisdiction.
Guideline 7: the Court has already found that there is sufficient risk of dissipation to justify the grant of a without notice injunction, and that injunction is continuing at least until the end of November 2012. Given Mr. Skurikhin’s current reluctance to disclose documents relating to his possible control over the Foundation and the Settlement, the fears as to the risk of dissipation remain.
Guideline 8: the application is made on notice.
Accordingly, subject to the appropriate provision of security, I consider that it is just and convenient to grant permission to VTB to enforce the worldwide freezing orders in Italy. I take the view that, given the opaque nature of the corporate and trust structures relating to the ownership of what might loosely be referred to as Mr. Skurikhin’s assets, and the evidence which at least, on its face, suggests that attempts have been made to render his personal assets judgment proof, it is entirely appropriate that steps are taken in the relevant local jurisdiction to seek to enforce the orders of this court, and to register the appropriate restrictions in the Italian Land Registry, against what in real terms are the only identifiable tangible valuable assets, apart from interests in the SAHO group companies held in Perchwell. I take the view that it is appropriate to do so notwithstanding the forthcoming challenge to the making of those orders. I take the view that there is a real risk that attempts might be made to dispose of the Italian Properties in the interim and that the sooner that the procedures seeking recognition of the English orders by the Italian court, and the entry of restrictions in the Italian Land Registry, are started the better. As suggested by Mr. Penny in argument, I will require VTB to report to the Court at the forthcoming inter partes hearing at the end of November 2012 as to the then current position regarding enforcement steps in Italy.
The Dadourian applications against Perchville – Cyprus
VTB also seeks leave to enforce the worldwide freezing order in Cyprus against Pikeville in relation to its interest as legal owner of shares in the two Cyprus companies Promanda and Tunnelson. Largely for the same reasons as I was not prepared to grant the further disclosure in relation to the assets of these companies, I am not prepared to grant permission for VTB to seek to enforce the worldwide freezing order in Cyprus - at least at this stage, prior to the effective hearing of the application by the defendants to discharge the injunctions, and by VTB to continue the worldwide freezing orders until trial.
It is clear from the advice of the Cypriot lawyers instructed on behalf of VTB, Antis Triantafyllides & Sons LLC, dated 21 September 2012, that, if permission were granted by this court, VTB’s intention would be to notify Promanda and Tunnelson, and the other companies to which loans were made by Perchwell, on the basis that Promanda and Tunnelson’s underlying assets, and those of the debtor companies, should be regarded as the assets of Perchwell, and that Promanda and Tunnelson, and the other debtor companies, should be restrained from dealing with their own assets. As Miss Weaver submitted, that approach is not correct as a matter of law, and does not reflect the terms of the injunction that was granted against Perchwell by Hamblen J, which did not extend to the underlying assets of Perchwell’s subsidiaries, but merely to Perchwell’s interests in their shares, or in the loans made by Perchwell.
In circumstances where this appears to be the intended aim of VTB’s proposed Cyprus proceedings, I do not consider that it would be just and convenient, or proportionate, to make the order sought pending the effective hearing of the application to discharge the injunctions, due to be heard at the end of November 2012. I do not consider that the Dadourian guidelines are satisfied in relation to this application. If the relief sought had been articulated in more specific and limited terms, and had merely sought specific orders from the Cyprus court in relation to Perchwell’s legal interest in the shares in the Cypriot subsidiaries, and the loans made in relation to such companies, the position might have been different. But on the evidence before me there is nothing to demonstrate that, even if such limited and targeted relief had been in contemplation, and had been granted by the Cyprus court, it would provide VTB with greater protection against disposal or dealings with such interests, than the orders already made by the English court, in circumstances where Perchwell is an English LLP, and it and its members are subject to the jurisdiction of the English court. Moreover the relief contemplated in its present form would expose not only Perchwell, but also Promanda and Tunnelson and the other debtor companies, to potentially expensive and far reaching litigation in Cyprus of an uncertain nature. In those circumstances I refuse VTB’s current application in relation to enforcement in Cyprus, but without prejudice to any future application of a more restricted nature that VTB might seek to make at the effective hearing of the injunctions.
Disposition
Accordingly, as set out above, I grant certain of the further disclosure sought by VTB against Mr. Skurikhin; I refuse the further disclosure sought against Perchwell; I give permission to VTB to seek to enforce the freezing orders in Italy as against Pikeville; and I refuse VTB’s application to seek to enforce the freezing orders in Cyprus against Perchwell. I will hear submissions from counsel as to the precise terms of the order.