Trafalgar Developments Limited & ors -v- Mazepin & ors, [2019] IEHC 7 (2019)

Docket Number:2016 No 9981 P
Party Name:Trafalgar Developments Limited & ors, Mazepin & ors
 
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THE HIGH COURT

COMMERCIAL[2016 No. 9981 P.]

BETWEEN

TRAFALGAR DEVELOPMENTS LIMITED,

INSTANTANIA HOLDINGS LIMITED,

KAMARA LIMITED

and

BAIRIKI INCORPORATEDPLAINTIFFSAND

DIMITRY MAZEPIN, OJSC UNITED CHEMICAL COMPANY URALCHEM, URALCHEM HOLDING PLC, EUROTOAZ LIMITED, ANDREY GENNADYEVICH BABICHEV, YULIA BOLOTNIKOVA, BELPORT INVESTMENTS LIMITED, MILKO EMILOV MINKOVSKI, ANDROULA CHARILAOU, DIMITRY KONYAEV and YEVGENIY YAKOVLEVICH SEDYKINDEFENDANTSJUDGMENT of Mr. Justice David Barniville delivered on the 17th day of January, 2019

Introduction

  1. This is my judgment on the plaintiffs’ application for judgment in default of appearance against the seventh defendant, Belport Investments Limited (“Belport”), a company registered in Tortola in the British Virgin Islands (“BVI”), and the eleventh defendant, Mr. Yevgeniy Yakovlevich Sedykin (“Mr. Sedykin”), a Russian citizen with an address in Togliatti City in the Samara Region of the Russian Federation. The application is made pursuant to O. 13 rr. 6 and 9 RSC, as amended. The plaintiffs also seek injunctive and ancillary reliefs in aid of execution, in the event that the judgment in default of appearance is granted by the court.

  2. The proceedings were commenced pursuant to leave granted by the High Court (McDermott J.) on 7th November, 2016, by a plenary summons which was issued on 9th November, 2016. In short, the plaintiffs claim that the defendants (including Belport and Mr. Sedykin) are co-conspirators in an alleged scheme (the “Scheme”) which is intended wrongfully to divest the plaintiffs of their shares, or the benefit of their shares, in a Russian company called OJSC Togliattiazot (“ToAZ”). It is claimed that the defendants’ participation in this alleged Scheme amounts to unlawful means conspiracy in tort, or alternatively, that the means employed by the defendants in aid of the alleged Scheme, if lawful, are nonetheless actionable as being carried out for an unlawful end.

    Motion for Judgment in Default of Appearance

  3. The immediate background to the present application is that on 6th June, 2018, the plaintiffs issued a motion seeking judgment in default of appearance and injunctive and ancillary relief in aid of execution against Belport and Mr. Sedykin and against the first, second, third, sixth, ninth and tenth defendants.

  4. The motion for judgment default of appearance and for the other reliefs referred to was listed for hearing on 28th July, 2018. On 13th July, 2018, a conditional appearance was filed on behalf of the first, second, third, sixth and tenth defendants. On 25th July, 2018, an unconditional appearance was filed on behalf of the ninth defendant. No appearance was filed on behalf of Belport or Mr. Sedykin. The plaintiffs proceeded with the motion as against those defendants only.

  5. The plaintiffs’ application was grounded on an affirmation of Mr. James Walfenzao, a director of the first named plaintiff, Trafalgar Developments Limited (“Trafalgar”), dated 1st June, 2018. Further affidavit evidence was also adduced in support of the application. This evidence is contained in the affidavit of Ms. Karyn Harty sworn on 6th June, 2018, the affidavit of Mr. Evgeniy Korolev sworn on 3rd, October, 2017, the affidavit of Professor Richard Sakwa sworn on 4th June, 2018, the affidavit of Mr. Vladimir Gladyshev sworn on 1st June, 2018, the affidavit of Mr. Sergei Makhlai sworn on 10th April, 2017 and the affidavit of Mr. Andreas Zivy sworn on 6th April, 2017. In total the papers provided to the court for the purpose of this application for judgment in default of appearance comprised some seventeen lever arch folders (including a book of legal submissions and authorities).

  6. The plaintiffs assert on the basis of the affidavit evidence and legal submissions that there has been a default in entering an appearance by Belport and Mr. Sedykin, that the default procedures under O. 13 RSC have been complied with and that the court can, therefore, be satisfied that it is entitled to grant judgment in default of appearance against Belport and Mr. Sedykin. In addition, although they take the view that they are not required under O. 13 RSC to do so, the plaintiffs have sought to verify their claims by means of this affidavit evidence.

  7. In the event that I am disposed to granting judgment in default of appearance, the plaintiffs seek the following injunctive and ancillary reliefs against Belport and Mr. Sedykin:-

    (a) Mareva type injunctive relief restraining Belport and Mr. Sedykin, their respective servants or agents, from reducing their personal assets, including assets in which these defendants hold any direct or indirect interest, below the sum of US$78,769,219.84 (or such other sum as the court considers appropriate) pending further order of the court.

    (b) An order restraining Belport and Mr. Sedykin, their servants or agents from dealing with any direct or indirect interest of OJSC United Chemical Company Uralchem (“UCCU”), the second defendant, in the shares of ToAZ.

    (c) An order restraining Belport and Mr. Sedykin from dealing with any assets in order to prevent or obstruct the plaintiffs from enforcing or recovering on foot of the judgment of this court or such damages as might be awarded on such judgment.

    (d) An order requiring each of Belport and Mr. Sedykin to disclose on affidavit or equivalent document, all of their assets and liabilities (including any interest therein) to include assets in which the first or second defendant has a direct or indirect interest.

    (e) An order requiring each of Belport and Mr. Sedykin to disclose on affidavit or equivalent document all bank accounts (and/or wallets in respect of any cryptocurrency) worldwide in which these defendants have a direct or indirect legal or beneficial interest.

    (f) An order for disclosure on affidavit or equivalent document of all documents relating to any actions taken by these defendants, or on their behalf, to place their assets beyond the reach of the plaintiffs.

  8. I will first outline in a little greater detail the factual background to this application and the manner in which the proceedings were commenced. I will then consider the requirements which must be satisfied by the plaintiffs in order to obtain judgment in default of appearance against Belport and Mr. Sedykin and the evidence provided by the plaintiffs in that regard. Next I will set out my conclusions on the plaintiffs’ application for judgment in default of appearance against those defendants. I will then consider and set out my conclusions on the plaintiffs’ application for injunctive and other ancillary relief in aid of execution.

  9. I should make clear that in this application I am dealing solely with the claims made by the plaintiffs against Belport and Mr. Sedykin in circumstances where they have not entered an appearance to the proceedings and have not sought in the proceedings to dispute any of the claims made against them by the plaintiffs. I make no findings whatsoever in relation to the plaintiffs’ claims against the other defendants in the proceedings. Those claims remain to be addressed in the proceedings in accordance with the appropriate procedures of the court. Nothing which I say in this judgment is intended in any way to affect the conduct of the plaintiffs’ case against the other defendants or the defences or objections which those other defendants have or may wish to raise in respect of the plaintiffs’ claims.

    Factual Background

  10. As appears from the amended statement of claim dated 10th April, 2018, which was filed in the Central Office of the High Court on 26th April, 2018, and from the affidavit evidence adduced on this application for judgment, the plaintiffs’ claims may be briefly summarised as follows. The plaintiffs claim that together they own in excess of 70% of the shares in ToAZ, a Russian company, which is stated by the plaintiffs to be one of the largest producers of trade ammonia in Russia. The plaintiffs claim that the defendants are co-conspirators in the alleged Scheme, the intention of which it is alleged is to deprive the plaintiffs of their shares in ToAZ for the benefit of Mr. Dimitry Mazepin (“Mr. Mazepin”), the first defendant. The plaintiffs describe Mr. Mazepin as a Belarussian businessman and the ultimate beneficial owner of UCCU, the second defendant. UCCU is said by the plaintiffs to be a minority shareholder in, and a direct competitor of, ToAZ.

  11. The plaintiffs claim that the alleged Scheme displays features that are typical of a phenomenon known as a “raider attack”. A description of these so-called “raider attacks” is set out in an affidavit sworn by Professor Richard Sakwa, an associate fellow of the Russian and Eurasia Programme (REP) at the Royal Institute of International Affairs, Chatham House, on 7th June, 2018. It is stated on behalf of the plaintiffs that such attacks typically involve the so-called “raider” acquiring a minority shareholding in a target company. Thereafter, illegal, dishonest and corrupt means are deployed in order to acquire a controlling shareholding in the target. The means deployed to wrest control of the target often include the repeated issuing of improper civil and criminal lawsuits against the target in order to devalue the company’s stock, the placing of unlawful pressure on judicial authorities to bring regulatory and tax prosecutions against the target company and the seizing of confidential information at the target’s offices. These actions are intended to cause the owners of the target to either give up the target company or sell it at a discounted rate. The plaintiffs assert that in the Russian Federation it is particularly common for “raiders”’ to register themselves as a victim after an improper criminal complaint has been made against the target and then to seek compensation from the target upon conviction for the criminal wrongdoing. The debt or damage owed to the alleged victim can then result in the bankruptcy of the target...

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