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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Kazakhstan Kagazy Plc & Ors v Zhunus & Ors [2016] EWHC 1048 (Comm) (06 May 2016) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2016/1048.html Cite as: [2016] EWHC 1048 (Comm), [2016] WLR(D) 238, [2016] 4 WLR 86 |
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QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
Kazakhstan Kagazy PLC (and others) |
Claimants |
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- and - |
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Baglan Abdullayevich Zhunus (Formerly Baglan Abdullayevicj Zhunussov) Maksat Askaruly Arip Shynar Dikhanbayeva |
Defendants |
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Paul McGrath QC and Anna Dilnot (instructed by Cleary Gottlieb Steen & Hamilton LLP) for the Second and Third Defendants
Hearing date: 7 April 2016
Further written submissions filed: 8 and 15 April 2016
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Crown Copyright ©
Mr Justice Leggatt :
A. Introduction
The parties
The claims against the defendants
i) The claimants allege that, between 2005 and 2009, the defendants dishonestly caused C2, C3 and C4 to make payments to a purportedly independent construction company, Arka-Stroy LLP, for the development of a logistics centre and industrial park in Kazakhstan. It is alleged that only a minimal amount of construction work was actually done, that Arka-Stroy LLP was secretly controlled by the defendants and that much of the money was paid out to entities controlled by them. The claimants allege that the group has thereby suffered losses equivalent to around US$102 million.ii) The claimants allege that in 2008 and 2009 the defendants committed a similar fraud involving payments purportedly made for construction work by C6, which resulted in a further loss of some US$14 million.
iii) A third claim, added by amendment in 2015, involves allegations that the defendants used nominee companies to acquire land plots cheaply from farmers in Kazakhstan which were then re-sold to C2, ostensibly for development, at highly inflated prices, resulting in a loss of some US$44 million.
The freezing injunctions
Settlement between the claimants and Mr Zhunus
The present applications
The Contribution Act
"Entitlement to contribution.
(1) Subject to the following provisions of this section, any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with him or otherwise).
(2) A person shall be entitled to recover contribution by virtue of subsection (1) above notwithstanding that he has ceased to be liable in respect of the damage in question since the time when the damage occurred, provided that he was so liable immediately before he made or was ordered or agreed to make the payment in respect of which the contribution is sought.
(3) A person shall be liable to make contribution by virtue of subsection (1) above notwithstanding that he has ceased to be liable in respect of the damage in question since the time when the damage occurred, unless he ceased to be liable by virtue of the expiry of a period of limitation or prescription which extinguished the right on which the claim against him in respect of the damage was based.
(4) A person who has made or agreed to make any payment in bona fide settlement or compromise of any claim made against him in respect of any damage (including a payment into court which has been accepted) shall be entitled to recover contribution in accordance with this section without regard to whether or not he himself is or ever was liable in respect of the damage, provided, however, that he would have been liable assuming that the factual basis of the claim against him could be established.
…
(6) References in this section to a person's liability in respect of any damage are references to any such liability which has been or could be established in an action brought against him in England and Wales by or on behalf of the person who suffered the damage; but it is immaterial whether any issue arising in any such action was or would be determined (in accordance with the rules of private international law) by reference to the law of a country outside England and Wales."
Procedure for claiming contribution
B. The Contribution Application
The lack of particularity argument
The no factual case argument
The draft contribution notice
Is the deficiency remediable?
Timing of the application
Mr Zhunus' contribution claim
C. D2's Application for a Freezing Injunction
The absence of precedent
Clean hands
The no cause of action argument
"A right to obtain an interlocutory injunction is not a cause of action. It cannot stand on its own. It is dependent upon there being a pre-existing cause of action against the defendant arising out of an invasion, actual or threatened by him, of a legal or equitable right of the plaintiff for the enforcement of which the defendant is amenable to the jurisdiction of the court. The right to obtain an interlocutory injunction is merely ancillary and incidental to the pre-existing cause of action. It is granted to preserve the status quo pending the ascertainment by the court of the rights of the parties and the grant to the plaintiff of the relief to which his cause of action entitles him, which may or may not include a final injunction."
When does a cause of action for contribution accrue?
"(1) Where under section 1 of the Civil Liability (Contribution) Act 1978 any person becomes entitled to a right to recover contribution in respect of any damage from any other person, no action to recover contribution by virtue of that right shall be brought after the expiration of two years from the date on which that right accrued.
(2) For the purposes of this section the date on which a right to recover contribution in respect of any damage accrues to any person (referred to below in this section as "the relevant date") shall be ascertained as provided in subsections (3) and (4) below.
(3) If the person in question is held liable in respect of that damage—
(a) by a judgment given in any civil proceedings; or
(b) by an award made on any arbitration;
the relevant date shall be the date on which the judgment is given, or the date of the award (as the case may be).
...
(4) If, in any case not within subsection (3) above, the person in question makes or agrees to make any payment to one or more persons in compensation for that damage (whether he admits any liability in respect of the damage or not), the relevant date shall be the earliest date on which the amount to be paid by him is agreed between him (or his representative) and the person (or each of the persons, as the case may be) to whom the payment is to be made."
Which date is relevant in applying for a freezing injunction?
"The claimant cannot of course guarantee that he will recover judgment, nor what the terms of the judgment will be. But he must at least point to proceedings already brought, or proceedings about to be brought, so as to show where and on what basis he expects to recover judgment against the defendant."
Quia timet relief
"It is settled at common law that, given a contract of indemnity, no action could be maintained until actual loss had been incurred. … In equity that was not the view taken. Equity has always recognized the existence of a larger and wider right in the person entitled to indemnity. He was entitled, in a Court of Equity, if he was a surety whose liability to pay had become absolute, to maintain an action against the principal debtor and to obtain an order that he should pay off the creditor and relieve the surety. Another way in which the indemnity was often worked out in the Court of Chancery was by ordering a fund to be set apart to meet the liability as and when it arose. So that in the view of the Court of Equity it was not necessary for the person entitled to the indemnity to be ruined by having to pay the full amount in the first instance. He had full power to take proceedings under which that fate might be averted, and he might substantially protect himself and secure his position by coming to the Court."
"What is needed is a sufficiently clear right to an indemnity even if the cause of action at law is not yet complete, together with a clear indication that the indemnifier is going to ignore his obligations."
Conclusion
Note 1 See [2013] EWHC 3618 (Comm) and on appeal [2014] EWCA Civ 381. [Back] Note 2 See [2015] EWHC 3059 (Comm). [Back] Note 3 The settlement deed provides that in certain circumstances, if Mr Zhunus is found to have been in material breach of obligations under the deed, the stay may be lifted and the claims against him revived. But that does not affect the position unless and until such an event occurs. [Back] Note 4 See RSC O.11 r.1(1)(i), now CPR PD 6B, para 3.1(2). [Back] Note 5 The Court of Appeal left open whether this meant the time when proceedings are begun for the purpose of claiming contribution or the time when the judge adjudicating upon such a claim decides whether or not to order contribution: see para 47. [Back]