JSC BTA Bank v Mukhtar Ablyazov (July 2013)
The circumstances in which a contemnor should not be heard by the court were not confined to cases in which the contemnor was bringing an application. It could also extend to cases in which the contemnor was a respondent to another party's application. Accordingly, the court refused to hear a contemnor on an application by a judgment creditor to vary a receivership order where he had been guilty of serious contempt aimed at impeding the course of justice.
The applicant bank (B) applied to vary a receivership order made over the assets of the respondent (X).
B was a Kazakh bank which had accused X, its former chairman, of fraud. B had obtained judgment against X for US $3.7 billion. A freezing order was made over X's assets. X did not hold assets in his own name but controlled the shareholdings in a chain of offshore companies through trusted associates. The freezing order had been extended to cover 700 such companies. The court also made a receivership order but X failed to co-operate with the receivers. X was found to be in contempt of court for failing to declare the extent of his assets, dealing with his assets in breach of the freezing order, lying on oath, and relying on false evidence and forged documents. He was sentenced to 22 months' imprisonment for contempt but fled the country. B sought to vary the receivership to allow the receivers to disclose non-privileged documents concerning the companies covered by the receivership.
B submitted that X should not be heard by the court on the application because he was a serial contemnor who had not purged his contempt. X, through his counsel, argued that the court could only refuse to hear a contemnor where he was making an application and seeking relief from the court, not where he was a respondent to an application made by another party.
(1) Refusing to hear a contemnor was a step that the court would only take where the contempt itself impeded the course of justice and made it more difficult for the court to ascertain the truth or to enforce the orders which it might make. There was nothing in the authorities which suggested that the circumstances in which a contemnor should not be heard was confined to cases in which a contemnor was bringing the application, Hadkinson v Hadkinson  P. 285 and X Ltd v Morgan Grampian (Publishers) Ltd  1 A.C. 1 applied. Nor was there any logic or principled reason for so confining it. One of the justifications for the principle was that a contemnor was to be deprived of the opportunity to seek to influence the court's decision-making process if he did not recognise the authority of the court and was not willing to abide by its decisions. X was a persistent and serial contemnor. It was clear from JSC BTA Bank v Ablyazov  EWCA Civ 639 and JSC BTA Bank v Ablyazov  EWCA Civ 1411,  1 W.L.R. 1331 that there was every reason to think that X did not regard himself as bound by the orders of the court and that he would do all he could to avoid B being able to execute its judgments against his assets, not only by direct disobedience to the court's orders, but also by taking any steps that might occur to him to thwart any future orders. He wished to have his submissions addressed to the court in order to safeguard his interests. However, justice required that X should not be heard on the instant application. His deliberate and persistent refusal to comply with court orders had been a sustained contempt of a very grave nature and had seriously impeded the course of justice in the very respect with which the instant application was concerned, namely B's ability to enforce its judgments and recover from X the money which he had stolen from it. The prejudice to X was not very great in any event since he had had notice of the application and an opportunity to make points in writing. He was merely deprived of the opportunity to have those points expounded orally (see paras 12-23, 26 of judgment). (2) The starting point was that as a matter of principle B should have access, for the purposes of enforcement, to the documents and information that the receivers had acquired. It was desirable for the purposes of the receivership itself that B should be as fully informed as possible when making decisions as to which of the many companies, which were the subject matter of the receivership, that it wished to pursue for the purposes of enforcement. Without an ability to make those decisions the receivership would be open-ended because it could only properly come to an end once B had had a reasonable opportunity to enforce against the relevant assets. B's proposed variation was therefore granted. Disclosure of the receivers' documents should be made to B but not to X. The documents should exclude privileged documents, and if a privileged document was disclosed to B by mistake it should not use it without the permission of the court. It was also appropriate to provide that complying with the order for disclosure was a purpose of the receivership (paras 29-30, 35, 40, 46).