Kazakhstan Kagazy Plc & Ors v Zhunus & Ors

This is an application to commit the second defendant, Mr. Arip, for contempt of court. It was listed for hearing today, in court 16 in the Royal Courts of Justice, Strand. For various reasons, it has, in fact, been moved to court 15, next door. That, in itself, is no impediment. However, I am informed that Mr. Arip had mistakenly been informed, in various communications, that the hearing was taking place in court 16 in the Rolls Building; and there is a concern (but which, I shall explain is, in my judgment, theoretical only) that Mr. Arip might have gone to that court, rather than to this one and not have been directed here.

These are long-running proceedings, in respect of which judgment has been entered against Mr. Arip for a sum approaching US$300 million. Although represented by solicitors throughout most of the proceedings, he is now unrepresented, and has, of late, disengaged from these proceedings. He did not appear at the hearing at which the order of Jacobs J, in respect of which he is alleged to be in contempt, was made; he has not appeared at various hearings for his oral examination as a judgment debtor; and did not appear or engage with another application for committal for contempt before Moulder J last week. I am entirely satisfied that it is highly unlikely that he will have attended in person at court 16 in the Rolls Building; and, furthermore, in any event, steps have been taken to post somebody who recognises him at that court and now to post a notice at that court directing him here. In my judgment, it is vanishingly unlikely that, by some mischance, he arrived at court 16 at the Rolls Building and has not been directed to this court.

In the circumstances, it is entirely appropriate to continue with the hearing on the basis that Mr. Arip has deliberately not attended, despite being on notice of the hearing.

This is an application brought by the first to fourth claimants (“the claimants”) against the second defendant, Mr. Arip, for committal for contempt of court.

In February 2018, Picken J granted the claimants judgment against Mr. Arip for various sums which totalled US$298,834,593, following extensive Commercial Court proceedings, in which Mr. Arip was represented by solicitors. Thereafter, the claimants have been engaged in enforcement proceedings.

The application arises from an order of Jacobs J, made on 28 June 2019, in which he ordered that Mr Arip do:

That order was endorsed with a penal notice and, pursuant to the order of Jacobs J, was served on Mr. Arip's then solicitors, Charles Fussell & Co LLP both by e-mail and delivery by hand.

The simple and unanswerable ground of contempt is that Mr. Arip has not complied with that order to any extent. He has not delivered any of the watches, whether by 12 July 2019 or at all, notwithstanding ample notice of the express order that he do so, both following the order and in substantial subsequent correspondence directed to him at his known personal e-mail address.

I am entirely satisfied, so that I am sure to the criminal standard and well beyond, that Mr. Arip has breached the order of Jacobs J and is thereby in contempt.

The question arises as to whether or not it is nevertheless appropriate to proceed with this application in the absence of Mr. Arip. I am satisfied that it is, having considered the criteria for so doing, in particular as summarised by Warren J in Taylor v Van Dutch Marine Holdings Limited, [2016] EWHC 2001 Chancery. In paragraph 54 of that judgment Warren J listed a number of factors, all of which, in this case, point to proceeding with the hearing against Mr. Arip. First, he was served with all relevant documents, including the notice of this hearing. I have already dealt, in a short preliminary judgment, with the immateriality of the fact that this hearing has taken place in a different court within the Royal Courts of Justice than he was notified by e-mail. Second, he has had plenty of notice to enable him to prepare for this hearing, had he intended to do so, and certainly more than sufficient time to comply with the order and rectify his failure to do so. Third, he has advanced no reason for non-attendance. Fourth, it is entirely reasonable to conclude that he has waived his right to participate in this hearing. Fifth, an adjournment would not secure his attendance or facilitate him being represented. He has disinstructed his solicitors and completely disengaged from the proceedings. Sixth, there is no disadvantage to Mr. Arip in not being able to present his account of events. His failure to comply with the order of Jacobs J is plain and undisputable. If he had an explanation, such as that he no longer has the watches or cannot deliver them up for some reason, he could have communicated it at any point prior to this hearing. Very simply, he has not done so. Seventh, whilst a short adjournment might not prejudice the claimants very greatly, it would certainly prejudice them in costs, and any such prejudice plainly outweighs the complete absence of any prejudice to Mr. Arip in proceeding. Eighth, there can be no prejudice to the forensic process if the application proceeds. There is nothing, in my judgment, that Mr. Arip would be able to say in defence of this application, other than to comply with the order, which he has plainly failed and refused to do.

Finally, in terms of the overriding objective, it is entirely just, expeditious and fair to proceed in the absence of Mr. Arip.

Mr. Miller, who has appeared for the claimants today, has very fairly attempted to identify any arguments which Mr. Arip might be able to advance in defence of the application. He has identified that the Civil Procedure Rules, at 81.4(5), refer to a requirement that an order for delivery of goods must give the defendant the option either to deliver the goods or to pay their assessed value. However, it is also apparent from

Mr. Miller also has pointed out that the notice of these proceedings and the details concerning this application have been provided to Mr. Arip by e-mail, as permitted by various court order. Given correspondence with his former solicitors, it is entirely apparent that the e-mail address used for those purposes is that of Mr. Arip and is the one which his own solicitors had been using and would continue to use in contacting him -- his former solicitors. There has been no bounce-back or rejection of e-mails sent to that address, and I am entirely satisfied, beyond all reasonable doubt, that Mr. Arip has received such notice by e-mail and is well aware of the order, these proceedings for contempt, and of this hearing.

In the circumstances, I find, and will declare, that Mr. Arip is in contempt of court and liable to committal for breach of the order of Jacobs J of 28 June 2019.

The further question then arises as to whether it is appropriate to proceed immediately to sentence, or whether to adjourn to permit Mr. Arip a further opportunity to comply with the order and/or to obtain representation and/or to appear to make representations as to the question of sentence.

The principles applicable on such an issue arising were, again, considered by Warren J in the Taylor v Van Dutch Marine Holdings Limited case. At paragraph 58, Warren J referred to the judgment of Briggs J in JCS BTA Bank v Solodchenko, [2011] EWHC 1613 Chancery, to the effect that it is appropriate, where a serious contempt has been proved in a respondent's absence for the court to pause before proceeding immediately to sentence and to consider whether the matter should, in the alternative, be adjourned. However, in that case, Warren J did not adjourn, stating that he saw little point in taking this course, since it was unlikely that the respondents in that case would in fact avail themselves of that opportunity.

In my judgment, exactly the same consideration arises in this case. It is plain that Mr. Arip has now entirely disengaged from these proceedings. He has not attended appointments for his cross-examination, for his oral examination as to his assets as a judgment debtor, resulting in an order last week by Moulder J, requiring him to attend or otherwise be imprisoned for 14 days. He did not attend or make representations on that hearing, which took place on 21 August 2019; neither has he engaged in any way with this application or responded to correspondence.

In my judgment, it is entirely unlikely that Mr. Arip would avail himself of any opportunity to make submissions on sentence, either in person or through representatives, and there would be no point whatsoever in adjourning for that purpose. Neither is there any prospect that he would belatedly comply with the order of Jacobs J in order to affect that sentence. I therefore propose to proceed to consider sentence immediately.

The question of sentence is entirely a matter for the court, but Mr. Miller has, helpfully, referred me to a number of authorities on the approach to be taken. In particular, in JSC BTA Bank v Stepanov, [2010] EWHC 794 Chancery, Roth J considered the appropriate sentence for contempt of court in circumstances where there is a continuing contempt, as indeed is the case here. Roth J cited the decision of the Court of Appeal in Lightfoot v Lightfoot [1989] FLR 414, in which Lord Donaldson MR said as follows:

In the Stepanov case, the respondents to the committal application had wholly failed to comply with disclosure obligations imposed in two orders for injunctions. Roth J held that there had been a flagrant disobedience of the court's orders; that there had been no attempt whatever to explain or excuse that disobedience; that there had been judgment for very significant sums of money against the defendant, and the orders in question were in support of the claimant's rights resulting from that judgment; and finally, the defendant was, until very recently, represented by experienced solicitors but now had withdrawn instructions from them after these proceedings for contempt were served and made no attempt to appear or be represented before the court.

Roth J took the view that it was therefore entirely appropriate to impose a two-year sentence of imprisonment, given the seriousness of the circumstances, with an express provision that the defendant can apply to vary or discharge that order.

In my judgment, the very same factors arise in this case. There is a flagrant breach or disobedience of the court's order, with no attempt to explain or excuse the disobedience. There is a judgment for a very significant sum of money, and these orders are an attempt to enforce the claimants' right resulting from that judgment. Again, Mr. Arip has, until recently, been represented by experienced solicitors, but has withdrawn instructions from them, following the order made by Jacobs J in respect of which he is in breach.

I will, therefore, make an order that Mr. Arip be committed to prison for two years for his contempt, but I will include a provision (as did Roth J) that the defendant can apply to vary or discharge that order. The intent of that is, of course, that he can do so if and when he complies in whole or in part with the order or, alternatively, provides an explanation as to why he has been unable to do so.

I will, therefore, make that order, and will hear from Mr Miller as to its precise terms.