[2021] EWHC 403 (Ch)
IN THE HIGH COURT OF JUSTICE
IN THE BUSINESS AND PROPERTY COURTS OF
ENGLAND AND WALES
CHANCERY DIVISION
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Before:
THE HONOURABLE Mr Justice Trower
Case No: BL-2017-000665
Between:
JSC Commercial Bank Privatbank
Claimant
and
(1) Igor Valeryevich Kolomoisky
(2) Gennadiy Borisovich Bogolyubov
(3) Teamtrend Limited
(4) Trade Point Agro Limited
(5) Collyer Limited
(6) Rossyn Investing Corp
(7) Milbert Ventures Inc
(8) Zao Ukrtransitservice Ltd
Andrew Hunter QC, Robert Anderson QC and Christopher Lloyd (instructed by Hogan Lovells International LLP) for the Claimant
Tom Adam QC, Alec Haydon QC and Tom Foxton (instructed by Fieldfisher LLP) for the First Defendant
Hearing date: 12 th February 2021
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE Mr Justice Troewr
Mr Justice Troewr Mr Justice Trower1
In these proceedings JSC Commercial Bank Privatbank (the “Bank”) claims that its former majority shareholders, the first defendant, (“Mr Kolomoisky”) and the second defendant (“Mr Bogolyubov”) misappropriated US$1.9 billion from the Bank pursuant to a series of fraudulent loans and supply agreements. There is a detailed description of the background to the proceedings and the nature of the claim in the decision of the Court of Appeal given on the defendants' jurisdiction challenge ( PJSC Commercial Bank Privatbank v. Kolomoisky [2020] 2 WLR 993). It is not necessary for me to give any of that detail for the purposes of this judgment.
2
On the application of the Bank made on 19 December 2017, Nugee J made a worldwide freezing order against the eight defendants up to a maximum sum of US$2.6 billion. For present purposes, the most relevant aspects of that order are those which affect Mr Kolomoisky.
3
By paragraph 8a of the freezing order, Mr Kolomoisky was required to the best of his ability to inform the Bank's solicitors (Hogan Lovells) in writing of all his assets worldwide exceeding £25,000 in value, giving the value, location and details of all such assets. Paragraph 8b of the freezing order defined what was meant by the value, location and details of a number of classes of asset but was not prescriptive as to the meaning of that phrase when applied to assets in the form of intangibles, apart from bank accounts, shares and interests in a trust. Mr Kolomoisky was also required to swear and serve an affidavit confirming (and if necessary, updating) this information.
4
So far as the merits of the proceedings are concerned, both Nugee J and a number of judges subsequently have accepted that the Bank has a good arguable case against, amongst others, Mr Kolomoisky. It is not said that I should do other than proceed on the same basis. It is also clear that I should approach this application on the footing that there is a real risk of dissipation of Mr Kolomoisky's assets so as to render any judgment that the Bank may obtain nugatory. That was the basis on which the freezing order was continued after the decision of the Court of Appeal.
5
I also accept the submission of Mr Andrew Hunter QC for the Bank that I should approach this application having regard to the seriousness of the allegations that have been made. The way this was put by Fancourt J in passages from his judgment on the jurisdiction challenge that were cited by the Court of Appeal ( [2020] 2 WLR 993 at para [22]) was:
(1) that the evidence “was strongly indicative of an elaborate fraud perpetrated by someone, allied to an attempt to conceal from any auditors or regulator the existence of bad debts on the bank's books, and money laundering on a vast scale”; and
(2) that Mr Kolomoisky and Mr Bogolyubov had admitted “a good arguable case of fraud on an epic scale”.
6
The original freezing order was varied by an order made by Snowden J on 9 January 2018, which increased the figure of £25,000 to £1 million and made provision for the disclosure of Mr Kolomoisky's assets located in Ukraine and/or Russia (the “U/R assets”) to be made in the first instance only to his solicitors (Fieldfisher) to be held to the order of the court. The freezing order was then continued by order made by Roth J on 15 January 2018, making specific provision for Mr Kolomoisky's disclosure affidavit to be served on Hogan Lovells by 18 January 2018.
7
On 19 January 2018 Nugee J made a further order which has come to be known as the confidentiality club or CC order. It made more detailed provision for preserving the confidentiality of the U/R assets and ordered that any document or information disclosed by Mr Kolomoisky relating to an asset located in Ukraine and/or Russia, or to shares in companies or entities which own (or whose subsidiaries own) assets in Ukraine and/or Russia, shall not be disclosed to any person other than identified solicitors and counsel.
8
The asset disclosures made by Mr Kolomoisky relating to his assets outside Ukraine and Russia initially took the form of an asset list provided on 9 January 2018, which described 40 assets. It was then updated by a revised asset list (the “non-U/R asset list”) which Mr Kolomoisky exhibited to his first affidavit sworn on 18 January 2018. Mr Kolomoisky explained that he does not speak English and so his affidavit was sworn in Russian. He confirmed that he was satisfied that this list represented “to the best of my ability, an up-to-date and accurate list of my assets located outside Ukraine and Russia each with an estimated value of approximately £1,000,000 or more.”
9
Mr Kolomoisky went on to confirm that “I am aware of my obligation to update the list if I become aware of any further relevant information which should be disclosed under the order.” On the same day Mr Kolomoisky swore a second affidavit accompanied by an updated U/R asset list.
10
The non-U/R asset list ran to 18 pages. It was prepared in six columns headed respectively: Asset Description, Trading/Non-trading, Location, Detail, Estimated Value (USD) and Encumbrance (if any). A significant number of these assets were Mr Kolomoisky's interests in companies located in a number of different jurisdictions. The reference to Trading/Non-trading was a relevant detail because the freezing order as varied did not prohibit dealings or disposals in the ordinary and proper course of business, nor did it require notification to Hogan Lovells of dealings or disposals in the ordinary and proper course of business by any trading company.
11
Apart from Mr Kolomoisky's interests in the companies identified in the updated asset list, the other main types of asset were claims against third parties described variously as a debt or a chose in action. For present purposes however, the other asset of most relevance is described as a “Bitcoin investment” located in Georgia, the details of which were given as follows: “an investment placed by way of oral agreement with Mr Aleksi Kuchukhidze with a right to receive the lesser value of 50,000 Bitcoin or USD 1bn in January 2021”. Under the column “Estimated Value” the following description was given: “The sum invested is c. USD 50,000,000. The potential value in January 2021 is USD 1bn or 50,000 Bitcoin (whichever is the lesser)”.
12
The column for Trading/Non-Trading included the entry “N/A”. As Mr Hunter pointed out, the way in which the non-U/R asset list was prepared indicated that this designation was used when Mr Kolomoisky wished to identify an asset other than an interest in shares, which he owned personally (rather than through a nominee company).
13
In March 2018 Mr Kolomoisky and the other defendants mounted jurisdiction challenges and applied to set aside the freezing order originally made by Nugee J. They were successful before Fancourt J in December 2018, but his decision was reversed by the Court of Appeal on 15 October 2019, when it delivered the judgment to which I have already referred. The freezing order stayed in place throughout this process.
14
At various points during the course of 2018 (20 February, 31 May, 16 July and 18 September), Mr Kolomoisky produced further updates to the non-U/R asset list. These updates provided further information both about assets that had already been disclosed and about additional assets which had not before been listed. He also provided further updates to the U/R asset list on a number of separate occasions during the course of 2018, again providing further information about listed assets and identifying additional assets which had not before been listed. None of these updates referred to the Bitcoin investment.
15
For many parts of the period for which the freezing order has been in force, Mr Kolomoisky has directed his attention to addressing queries from the Bank regarding his asset disclosures and the use to which he is putting his assets from time to time. Evidence from a partner at Fieldfisher is to the effect that he has made some 89 notifications to Hogan Lovells since the freezing order was originally granted and has sought consent in order to proceed with certain transactions on in excess of 120 occasions.
16
The Bank said that these communications did not of themselves illustrate that Mr Kolomoisky was a cooperative defendant as to his asset disclosure, and that when analysed there was in fact a striking paucity of notification relating to his financial, business or investment transactions. It is difficult to make an assessment as to whether that submission is justified, but Mr Kolomoisky is not a defendant who simply ignores his...
