Trafalgar Developments Ltd v Mazepin

JudgeMr. Justice David Barniville
Judgment Date01 February 2021
Neutral Citation[2021] IEHC 69
Docket Number[2016 No. 9981 P.]
CourtHigh Court
Date01 February 2021






[2021] IEHC 69

David Barniville

[2016 No. 9981 P.]



JUDGMENT of Mr. Justice David Barniville delivered on the 1 st day of February, 2021

This is my judgment on an application by the fourth and fifth named defendants, Eurotoaz Limited and Andrey Gennadyevich Babichev, (“Eurotoaz defendants”) for an order under O. 40, r. 1, RSC granting them liberty to cross-examine Leonard Ke-Chung Waller-Diemont (“Mr. Waller-Diemont”), a director of the fourth named plaintiff, Bairiki Incorporated (“Bairiki”), on foot of an affidavit which he swore in the proceedings on 12 th October, 2020.


Mr. Waller-Diemont swore that affidavit on behalf of Bairiki in support of an application by the plaintiffs for an order amending the proceedings. That application is listed to be heard by me next week, on 2 nd and 3 rd February, 2021. In the event that the court decides to grant liberty to the Eurotoaz defendants to cross-examine Mr. Waller-Diemont, they ask the court to make consequential orders under s. 11(3) of the Civil Law and Criminal Law (Miscellaneous Provisions) Act, 2020 (the “2020 Act”) that the cross-examination of Mr. Waller-Diemont (who is based in Curacao) should take place remotely using the Trialview remote hearing platform.

Plaintiffs' Amendment Application

The plaintiffs' application to amend the proceedings (the “amendment application”) was brought by a notice of motion issued on 4 th June, 2020. In that motion, the plaintiffs seek an order giving them leave to amend the proceedings in a manner identified in a draft second amended statement of claim and a draft amended plenary summons. The amendments are intended to give effect to an alleged migration or re-domicile of the first named plaintiff (Trafalgar Developments Limited (“Trafalgar”)) from Anguilla to St. Lucia (and a change of name of the company) and of Bairiki from Nevis to the British Virgin Islands (the “BVI”). Between them, Trafalgar and Bairiki are said to be the owners of approximately 32% of the share capital of a Russian company called OJSC Togliattiazot (“ToAZ”) which is at the heart of the proceedings.


It is unnecessary to describe in any detail the claims made in the proceedings, save to note that the plaintiffs claim to be the victims of an alleged raider attack by the defendants (including the Eurotoaz defendants) designed to enable the defendants to acquire the plaintiffs' shares in ToAZ at a gross undervalue and to gain control of ToAZ. The claims are strenuously denied and rejected by those defendants who are represented in the proceedings. A brief description of the claims and allegations in the proceedings can be seen in the judgment I delivered on various discovery issues between the plaintiffs and the Eurotoaz defendants which is reported at [2019] IEHC 610.


The plaintiffs' amendment application is grounded on an affidavit sworn by their solicitor, Michael Cooney of McCann Fitzgerald, on 4 th June, 2020 and on a number of other affidavits, including affidavits of experts in the laws of the relevant Caribbean jurisdictions which exhibited the reports or opinions of those experts. The most relevant of the plaintiffs' legal experts, for present purposes, is Mr. Jonel Powell, a Lawyer in St. Kitts and Nevis (and the current Minister of Education, Youth, Sport and Culture in that jurisdiction).


The Eurotoaz defendants have opposed the application. Of the other defendants in the proceedings, the first, second, third, sixth and tenth named defendants (known as the “UCCU defendants”) have also opposed the application and have put in a replying affidavit in support of their opposition (sworn by Mr. Vladimir Nikolaevich Melnikov on 16 th November, 2020).


A replying affidavit was initially sworn on behalf of the Eurotoaz defendants by Keith Smith of Arthur Cox on 21 st August, 2020. The Eurotoaz defendants have also provided affidavits and reports from experts in the laws of other relevant jurisdictions. The most relevant of these experts, for present purposes, is Ms. Jean Dyer, a lawyer based in Anguilla, who is qualified to practise in Nevis.


Several other lawyers have sworn affidavits and provided reports in connection with the plaintiffs' amendment application which are not relevant to the cross-examination issue which is focussed on the purported migration of Bairiki from Nevis to the BVI and, in particular, on the steps taken in Nevis in connection with that alleged migration.


One of the affidavits relied on by the plaintiffs in support of their amendment application is the affidavit sworn by Mr. Waller-Diemont on behalf of Bairiki on 12 th October, 2020. Mr. Waller-Diemont swore that affidavit in response to Mr. Smith's replying affidavit and in response to Ms. Dyer's first report of 21 st August, 2020. Ms. Dyer's report was in turn a response to Mr. Powell's first report on behalf of Bairiki of 2 nd June, 2020. While it will be necessary to refer in a little more detail later to what is said in those reports and in the further reports provided by Mr. Powell and Ms. Dyer, it is sufficient to note at this point that, in his affidavit of 12 th October, 2020, Mr. Waller-Diemont was responding to what Mr. Smith said in his replying affidavit and to what Ms. Dyer said in her first report. Ms. Dyer expressed the opinion in that report that the applicable statutory requirements in Nevis were not complied with by Bairiki in the migration process for two reasons.


First, she stated that the Certificate of Departure signed by Mr. Waller-Diemont on 12 th November, 2019 was incorrect and did not comply with s. 130(2) of the Nevis Business Corporation's Ordinance, 2017 (the “NBCO”) for various reasons, including that it did not refer to the fact that, on 5 th July, 2019, Judge Kirillov in the Komsomolsky District Court in Russia gave judgment in proceedings brought under Article 159(4) of the Russian Criminal Code (the “Russian judgment”) in which he awarded damages of a sum approximating to $1.38bn against (inter alia) the plaintiffs in these proceedings, including Bairiki. That judgment was essentially confirmed on appeal by the Samara Court of Appeal on 26 th November, 2019. Ms. Dyer stated that under s. 130(2) of the NBCO, Bairiki was required to set out the names and addresses of the judgment creditors under the Russian judgment in the Certificate of Departure and that the failure to do so constituted a material non-disclosure and a breach of the NBCO. She expressed the opinion that it could reasonably be inferred from the withholding of that information that the transfer or migration was not in good faith as stated by Mr. Waller-Diemont in the Certificate of Departure. She expressed the view that this was “one of the rare situations” in which the Registrar of Corporations in Nevis would have refused to allow Bairiki to migrate out of Nevis or would, at least, have required Bairiki to put the creditors on notice.


The second reason provided by Ms. Dyer for her view that the migration of Bairiki from Nevis to the BVI was ineffective was that a Certificate of Continuance providing proof that the company had continued into the foreign jurisdiction was not filed with the Registrar of Companies in Nevis within 30 days of the filing of the Certificate of Departure, as required by s. 131(4) of the NBCO. Ms. Dyer concluded that the migration of Bairiki from Nevis to the BVI was invalid and that it remains domiciled in Nevis.


Mr. Powell and Ms. Dyer exchanged further reports dealing with these and other points relevant to the validity and effectiveness of the migration of Bairiki from Nevis to the BVI. As the issues considered by those experts in their reports will be the subject of extensive consideration at the hearing of the plaintiffs' amendment application, I will attempt to confine my consideration of the relevant issues in those reports to those that are strictly necessary for the resolution of the Eurotoaz defendants' cross-examination application.


As noted above, Mr. Waller-Diemont swore his affidavit on 12 th October, 2020, partly in response to Ms. Dyer's first report as well as in response to Mr. Smith's replying affidavit. At para. 6 of his affidavit, Mr. Waller-Diemont contended that the questioning of the migration of Bairiki to the BVI by the Eurotoaz defendants was part of the raider attack the subject of the proceedings and was an abuse of process. In that context, he referred to and relied on a judgment of the High Court of the Eastern Caribbean (Ellis J.) of 19 th July, 2018 (the “Ellis judgment”) in proceedings brought by two indirect shareholders in ToAZ, Magnum Investment Trading Corporation and Niteroi Limited. Mr. Waller-Diemont's description of the Ellis judgment in that paragraph of his affidavit is disputed by the Eurotoaz defendants. Mr. Waller-Diemont then explained (at para. 7 of his affidavit) why Trafalgar and Bairiki chose to migrate and re-domicile to St. Lucia and the BVI respectively, which he said was due to the unavailability of local corporate agents in their original jurisdictions.


At para. 8 of his affidavit, Mr. Waller-Diemont stated that, having reviewed the Certificate of Departure following consideration of Ms. Dyer's first report, he accepted that “in error” he had overlooked referring to the Russian judgment. He said that the Declaration was prepared on the basis of Bairiki's latest annual accounts at the time,...

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