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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Joint Stock Company (Aeroflot - Russian Airlines) v Berezovsky & Anor [2012] EWHC 3017 (Ch) (30 October 2012) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2012/3017.html Cite as: [2012] EWHC 3017 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Rolls Building London EC4A1NL
		30/10/2012

Mr Justice Floyd :

1. The action in which these applications are made is an action to enforce a money judgment or judgments of the Russian courts holding the two defendants, Boris Berezovsky and Nikolay Glushkov, liable to compensate the claimant, Aeroflot, for fraud perpetrated upon it. The fraud in question is called the Andava fraud. Both defendants have been convicted by Russian criminal courts (in the case of the first defendant, in his absence) of crimes based on the Andava fraud. By the two applications which are now before the court, the defendants apply to strike out the action or for summary judgment. The applications are made on the ground that the Russian courts had no jurisdiction over them, or alternatively that enforcement of the judgments would be contrary to public policy and to principles of natural justice.
2. In order to understand the background to the issues which I have to decide, it is necessary to explain a little about Russian criminal and civil procedure. I must also set out the procedural and other chronology.
3. Procedure in the courts in Russia does not adhere to the sharp division between criminal and civil matters which prevails in this and many other jurisdictions. A civil claim for compensation arising out of the subject matter of a criminal charge may be brought within a criminal prosecution. The court hearing properly constituted criminal and civil proceedings may decide on the criminal liability of the defendant and on the civil liability of the defendant to compensate the civil claimant. The court may also fix the amount of compensation, or send the assessment of the amount of compensation off to be assessed by another court on another occasion.
4. The stages of the Russian criminal process are described in the first witness statement of John Kelleher, the first defendant's solicitor, and are not the subject of challenge. They are derived from the Criminal Procedure Code of the Russian Federation, and are as follows:

i) The process begins when the "investigator" acting with the consent of the public prosecutor issues a resolution to institute a criminal case.

ii) A preliminary investigation is then conducted by the investigator.

iii) If the investigator considers there is sufficient proof, the investigator may, in the course of the preliminary investigation, issue a resolution to charge a person with a criminal offence and bring that person to court.

iv) When the investigator has completed the investigation and he considers there is sufficient proof, the investigator must notify the accused of that fact and present the accused and his lawyer with the criminal case materials.

v) When the accused and his lawyer have become acquainted with the case materials, the accused may file requests in relation to the case or the case materials, which the investigator must consider and may grant or refuse.

vi) When the preliminary investigation has been completed, a formal protocol is compiled by the investigator which is required to be signed by all the parties to the investigation.

vii) If the recommendation of the investigator is to bring a prosecution, the investigator compiles a formal conclusion of guilt, which he must sign and forward to the public prosecutor. This document forms the indictment.

viii) If the prosecutor agrees with the conclusion of guilt, he endorses the indictment and forwards the case files to a court. The prosecutor must inform the accused and his representatives that he is doing this and provide the accused with a copy of the indictment.

ix) When the case files are received by the court, a judge decides whether the case is within the court's jurisdiction. If it is, the judge issues a resolution appointing a preliminary or full hearing.

5. As explained by Professor Maggs, Aeroflot's Russian law expert, the point in Russian procedure when a court may proceed to assume jurisdiction, even if a defendant fails to cooperate, is the point at which the prosecutor has complied with Article 222 of the procedural code by sending the case to court, informing those involved and either handing a copy of the formal accusation to the accused or explaining why he could not do so.
6. A person who suffers loss may bring a civil claim within the criminal proceedings by applying to be recognised as a civil claimant.

Proceedings involving Mr Berezovsky

7. On 18 January 1999, the public prosecutor issued a resolution to open a new criminal case concerning Aeroflot ("the 1999 resolution"). On 5 April 1999, the prosecutor resolved to indict Mr Berezovsky under case number 18/277001-99. On 26 April 1999 a further resolution was issued to the same effect.
8. In November 1999 a decision was taken to drop some of the complaints against Mr Berezovsky but to leave others open.
9. On 30 October 2000, Mr Berezovsky left Russia. He has not returned to Russia since that date. He was granted asylum in the UK on 10 September 2003 and is still living in the UK today.
10. Between 2001 and 2007 Mr Glushkov and others were prosecuted and pursued in criminal and civil proceedings in respect of fraud against Aeroflot in case 18/24401/01 and 2-1778/2006 respectively. This led to Mr Glushkov's conviction, a finding that he was liable with others to compensate Aeroflot and quantification of the liability in the sum of 214,988,879.70 roubles. These findings are embodied in a judgment of the Savelovsky District Court dated 3 July 2006 and a judgment of the Golovinsky District Court dated 14 November 2006 ("the first Savelovsky judgment" and the "first Golovinsky judgment" respectively). I deal with the detailed chronology of the case against Mr Glushkov separately.
11. Returning to the case against Mr Berezovsky, on 11 April 2007, the prosecutor issued a resolution to separate from the 1999 proceedings the accusation against Mr Berezovsky that he aided and abetted former managers of Aeroflot in defrauding that company. This resolution was immediately followed by a resolution to charge Mr Berezovsky and take him to court. The case was given number 18/432799/07 ("the 2007 resolution"). On 16 April 2007, the investigator notified Mr Berezovsky's lawyers of the completion of the preliminary investigation, and notified them of their right to inspect the files, a right which they then exercised. This led to a request by Mr Berezovsky's lawyers for additional materials to be added to the case files and an application to the investigator to discontinue the criminal proceedings. Notwithstanding the application, on 8 June 2007 Mr Berezovsky was charged with the offences.
12. Mr Berezovsky's lawyers acknowledged receipt of the decision to charge him in case 18/432799/07 on 9 June 2007. The case was sent to the Savelovsky District Court of Moscow by letter of 13 June 2007, marked as received by the court on 14 June. Applying Professor Maggs' criterion, the point had then been reached where the Russian court could proceed to assume jurisdiction.
13. On 15 June 2007, the day after the receipt by the Savelovsky Court of case 18/432799/07 against Mr Berezovsky, Mr Berezovsky wrote to his lawyers from London prohibiting those lawyers from participating in the case. On 21 June 2007 this decision, prohibiting involvement in the case, was notified to the court, enclosing the letter from Mr Berezovsky. In the absence of duly appointed representatives, the court appointed a Mr Dudkin to represent Mr Berezovsky without his consent.
14. In the course of the case, on 22 October 2007, Aeroflot applied to be recognised as a civil claimant and served a statement of claim for recovery of damages. The claim was for 214,988,879.70 roubles, the exact sum claimed against Mr Glushkov and others in the now concluded proceedings against them. The claim sought to make Mr Berezovsky jointly liable with Mr Glushkov and others for the same sum. Neither Mr Glushkov, nor any of the other defendants, was a party to these civil proceedings.
15. Aeroflot's statement of claim in these civil proceedings against Mr Berezovsky gave his registered address at Moscow, Leninsky Prospekt ("the Leninsky address"). However it went on to say that he was residing at a specific address in Down Street, London ("the Down Street address"). There can be no dispute, therefore, that Aeroflot knew at this stage not only that Mr Berezovsky had left Russia, but also that he was living in the UK and could be contacted at the Down Street address.
16. By a judgment of 29 November 2007 ("the second Savelovsky judgment") Mr Berezovsky was convicted of the Andava fraud. In addition, Mr Berezovsky was found liable to compensate Aeroflot on the basis that he was jointly and severally liable with Mr Glushkov and others for the exact sum claimed.
17. Mr Berezovsky's state-appointed lawyer launched an appeal against the second Savelovsky judgment to the City of Moscow Court. The appeal was dismissed on 4 February 2008. It is common ground that the judgment entered into force on that date.
18. On 5 February 2010 the Office of the Public Prosecutor of the Russian Federation applied to the Federal Examining Magistrate in Lausanne, Switzerland, for mutual assistance in the recovery of assets associated with the fraud. The requested assistance was granted on 7 July 2010, resulting in the recovery of some 52 million Swiss Francs and 700 thousand US dollars. The recovered sums were said to "correspond to the damage established in Russia, namely to RUB 214,988,879.00". The amount recovered actually amounts to some 1.8 billion roubles, nearly 8 times the damage established in Russia. Accordingly, from August 2010, Aeroflot was in possession of funds well in excess of the judgments it had obtained in Russia.
19. Notwithstanding the successful recovery of these sums, Aeroflot continued to pursue Mr Berezovsky's assets in Russia in purported execution of the second Savelovsky judgment. So, on 9 December 2010, the enforcement bailiff resolved to foreclose cash owned by Mr Berezovsky in the sum of some $US 4 million in a branch of ZAO Raiffeisenbank in Moscow. The resolution gave Mr Berezovsky's Moscow address at the Leninsky address, but said that the defendant "effectively resides at" the Down Street address. Other attachment proceedings were taken against real property in Russia, by a resolution dated 1 April 2011.
20. By a claim form issued in the Chancery Division dated 15 December 2010, Aeroflot commenced further proceedings in respect of a separate fraud (called the Forus fraud) against Messrs Berezovsky, Glushkov and a number of companies in the Forus Group who were outside the jurisdiction of the English court ("the English Forus proceedings"). Attached to the claim form in the English Forus proceedings was a "Schedule of Defendants and their addresses". Mr Berezovsky's address was given as the Down Street address. In his witness statement in support of service out of the jurisdiction (on the Forus companies) dated 6 April 2011, Mr Michael Fenn, Aeroflot's English solicitor, said that Mr Berezovsky was resident in England and Wales. He went on to explain that Aeroflot had chosen to sue in England because:

"37.1 [Mr Berezovsky] is domiciled here. Following his flight from Russia in 2001, he was granted political asylum in 2003. [Mr Berezovsky's] address is believed to be [an address in Egham, "the Egham address"]. The Defendant has an office which is [the Down Street address]."

21. The Particulars of Claim in the English Forus proceedings dated 15 April 2011 recite the events leading to the second Savelovsky judgment for 214,988,879 Roubles, and record that recovery of that sum has been made by Aeroflot.
22. On 13 April 2011 Aeroflot issued a claim in the Golovinsky District Court. These proceedings ("the 2011 Indexation proceedings") were against Mr Berezovsky, Mr Glushkov and another. The claim was for an uplift or indexation of the amount of damages awarded by the Savelovsky district Court on 29 November 2007, that is to say the second Savelovsky judgment against Mr Berezovsky.
23. The uplift or indexation was sought on the basis that the Russian Civil Code allowed account to be taken of inflation in the cost of living. Accordingly the claim sought an increase in the sum of 214,988,879 roubles from 1996, the date when it was alleged the harm was inflicted, to 29 November 2007, the date of the second Savelovsky judgment. The statement of claim attached a schedule which included columns for the level of inflation in each year from the Moscow City Statistics Department, and the necessary adjustment to the judgment sum in each year. The level of inflation for each year was always greater than 100% and on one occasion more than 200%. The effect of inflation up to the date of the second Savelovsky judgment was to increase the original judgment sum to 2,117,875,744 roubles, or in other words by an approximate factor of 10.
24. On 18 April 2011 the Golovinsky court issued a resolution summoning the parties to attend on 25 April 2011 for a pre-trial review. The Court directed that a copy of its resolution should be sent to the claimant and respondents and that a copy of the claim be sent to the respondents with the attached documents.
25. The pre-trial review was heard on 25 April 2011. The court record shows that neither "debtor" attended. On 25 April the court directed that the trial take place on 31 May 2011.
26. On 26 April 2011 English solicitors instructed by both Mr Berezovsky and Mr Glushkov responded to the English Forus proceedings. This shows that by this date Aeroflot knew how they could successfully bring proceedings to the attention of Mr Berezovsky.
27. Pursuant to the direction of the Golovinsky Court, it appears that a telegram was sent to Mr Berezovsky at the Leninsky address on 26 April 2011. However, on 28 April 2011 the court received "failed delivery reports" stating that the telegram had not been delivered, that no one had answered the door and no one had come to the post office to collect the telegram.
28. So far as the documents in the case are concerned, Mr Baturin, Aeroflot's in-house Russian lawyer, says that they were to be sent by the Court to the defendants. There is no direct evidence from the court file that this was done, but Aeroflot rely on the fact that the third defendant, a Ms Kryzhevskaya, recently forwarded a set of documentation she received from the Golovinsky court, which included copies of the telegram notifying her of the hearing on 31 May 2011 and other documents in the 2011 Indexation proceedings, and another set of proceedings. There is, however, no suggestion that any attempt was made to serve the documents other than at the Leninsky address.
29. The Court heard the 2011 Indexation proceedings on 31 May 2011 and handed down its judgment. The judgment records that the defendants, Messrs Berezovsky and Glushkov:

"did not appear for the court hearing, had been notified at their last known place of residence about the time and venue of the court hearing, did not communicate to the court the reasons for their non-appearance and did not submit any objections to the claim. In accordance with article 167 of the RF Civil Procedure Code, the court ruled that the case should be considered in the absence of the defendants".

30. The Golovinsky Court granted the claim for indexation between 1996 and 29 November 2007 in full, without deduction of the sum already awarded by the second Savelovsky judgment, and collected in full by Aeroflot.
31. The present proceedings were commenced by claim form on 2 March 2012 and were served on Mr Berezovsky at his English address, no doubt based on his domicile in this country.

Proceedings involving Mr Glushkov

32. Unlike Mr Berezovsky, Mr Glushkov remained in Russia until 2006. He was arrested and detained in December 2000. In December 2001 he was charged with the Andava fraud offences in case number 18/24401-01.
33. On 17 June 2002 Aeroflot made a civil claim against Mr Glushkov in respect of the Andava fraud in case number 18/24401-01. On 3 July 2006 the Savelovsky District Court convicted Mr Glushkov but referred the quantification of the civil claim for determination in civil proceedings. On the same day Mr Glushkov fled Russia and sought asylum in the UK. He has not returned to Russia since that date.
34. On 14 July 2006 the first Savelovsky judgment came into force and became binding on a civil court in relation to Mr Glushkov's civil liability.
35. On 14 September 2006 the civil claim, number 2-1778/2006 was filed in the Golovinsky District Court. In its statement of claim Aeroflot disavowed any claim to indexation of the damages in the following terms:

"The indexation of the sum stolen has already been carried out during the preliminary investigation in the indictment, as funds were paid into Aeroflot JSC's account in a foreign currency and not in Russian roubles. Therefore Aeroflot JSC requests the recovery of the sum given in the verdict without requiring indexation."

36. The reason given for not requiring indexation seems to relate to the fall in value of the rouble against foreign currency, rather than making an allowance for domestic Russian inflation. Neither side sought to make anything out of this distinction.
37. On 14 November 2006 the Golovinsky Court gave the first Golovinsky judgment in favour of Aeroflot holding Mr Glushkov liable with others to compensate Aeroflot in the sum claimed, namely 214,988,879.70 roubles. That judgment came into force on 21 December 2006.
38. As noted above, Mr Glushkov was a named defendant to the English Forus proceedings commenced on 15 December 2010. The claim form as originally issued gave Mr Glushkov's address as the Down Street address. However, on 5 April 2011 an amended claim form was issued, giving an address for Mr Glushkov in Wokingham, Berkshire "the Wokingham address". It was here that the English Forus proceedings were served on Mr Glushkov by a letter dated 15 April 2011. In his witness statement dealing with service out of the jurisdiction Mr Fenn explained that Aeroflot has chosen to sue in England because:

"37.2 Mr Glushkov is also resident in England having claimed political asylum here in January 2010. [Mr Glushkov] is believed to reside at [the Wokingham address]."

39. Meanwhile the 2011 Indexation proceedings had begun in Russia. These proceedings followed the same course in the case of Mr Glushkov as they had in the case of Mr Berezovsky. The telegram notifying Mr Glushkov of the hearing was sent to his registered address in Russia at Bagrationovsky Proezd ("the Bagrationovsky address"). It was similarly undelivered, and not collected. Equally, there is no direct evidence that the documents in the case were served on Mr Glushkov at that address. No attempt was made to serve or notify him in England.

Aeroflot's knowledge of the addresses of Messrs Berezovsky and Glushkov

40. Mr Baturin does not seek to suggest that Aeroflot did not know that both defendants were living in England at the date of the commencement of the 2011 Indexation proceedings. He says, instead, that neither Aeroflot nor their English solicitors knew the exact address for Mr Berezovsky. He maintains that this is shown by the fact the English Forus proceedings were served on Mr Berezovsky at the Down Street and Egham addresses. He accepts that Aeroflot knew that the Wokingham address was Mr Glushkov's correct address from the receipt of Addleshaw Goddard's letter 26^th April 2011.

The pleaded case

41. The claim form in the present action states that the action is for recognition and enforcement of a judgment of the Savelovsky District Court of the city of Moscow dated 29 November 2007 as varied by a judgment dated 31 May 2011 of the Golovinsky District Court of the city of Moscow for 2,117,875,744 roubles and/or the unsatisfied balance thereof amounting to some 507,422,503.47 denominated roubles [GBP 10,863,252.05] plus interest. These are the judgments I have referred to as the second Savelovsky judgment and the second Golovinsky judgment (in the Indexation proceedings).
42. Paragraphs [5] and [6] of the Particulars of Claim recite the findings of the first Savelovsky judgment and the first Golovinsky judgment in relation to the criminal and civil liability of Mr Glushkov. Paragraph [7] alleges that the Savelovsky and Golovinsky courts were duly constituted in accordance with Russian law and had jurisdiction to determine the criminal and civil proceedings against Mr Glushkov, and that he was present in the jurisdiction of the Savelovsky Court at the time when the proceedings were commenced against him.
43. Paragraphs [8] to [10] refer to the 1999 and 2007 resolutions to charge Mr Berezovsky, and assert that, because Aeroflot was recognised as an injured party in the criminal proceedings on 12 April 2007, it thereby made a civil claim for compensation. The proposition that being recognised as an injured party amounts to the making of a civil claim is, however, refuted by the expert evidence, and no reliance is placed on it in Aeroflot's skeleton argument. Instead, it appears to be common ground that the civil claim by Aeroflot came into existence on 22 October 2007.
44. Paragraph [12] of the particulars of Claim alleges that, at the date of the 1999 resolution, Mr Berezovsky was present within the jurisdiction of the Savelovsky court. Paragraph [13] alleges that in the course of "the said proceedings" Mr Berezovsky submitted to the jurisdiction. The pleading relies on a series of steps, the latest of which was on 9 June 2007, said to amount to such a submission.
45. Paragraphs [14] and [15] set out the findings of the second Savelovsky judgment as to Mr Berezovsky's criminal and civil liability. Paragraph [18] alleges that the second Golovinsky judgment, which it asserts gives rise to "the Indexed Savelovsky Judgment Debt", was a judgment ancillary to the second Savelovsky judgment.

Law

46. No treaty or other legislation relates to the enforcement of these Russian judgments. It is common ground that the common law applies. The basis on which the courts of this country will enforce a foreign judgment is that the foreign court, being a court of competent jurisdiction, has given a judgment that a sum is due. The judgment creates a debt which our courts will both recognise and enforce: Adams v Cape Industries [1990] 1 Ch 433 at 513D-H.
47. In deciding whether the foreign court is a court of competent jurisdiction, the English court applies the rules of English private international law, and not the law of the foreign court: Adams v Cape (supra) at 513H-514C. This notion of jurisdiction is sometimes referred to as the foreign court's "international jurisdiction".
48. Those rules of private international law are directed to the competence of the foreign court "to summon the defendant before it and to decide such matters as it has decided": see Adams v Cape (supra) at 517H to 518A, relying on Pemberton v Hughes [1899] 1 Ch 781, 790 per Lindley MR.
49. In Adams v Cape (supra) the Court of Appeal explained that the competence of the foreign court to summon the defendant depended, in the absence of any form of submission to the jurisdiction, on his physical presence in the country concerned at the time of suit: see 518A-B. There was no dispute before me that physical presence at the time of suit or submission to the jurisdiction are each sufficient to confer international jurisdiction on the foreign court.
50. The Court of Appeal in Adams v Cape (see 518B) expressly left open the question of whether residence without presence was a sufficient basis for international jurisdiction. The court returned to the reserved question in State Bank of India v Murjani [unreported, CA transcript March 27 1991]. In that case the State Bank of India had obtained summary judgment in a New York court against Mr Murjani for a sum claimed on a guarantee. The Bank sought to enforce the judgment against Mr Murjani in England, by seeking summary judgment. The first issue was described as being:

"To found jurisdiction in the New York Court other than by agreement or submission, did Mr Murjani have to be present or to reside in New York, or both, at the time the proceedings were served? If residence was necessary was he, on the facts, resident at the material time?"

51. Taylor LJ (as he was then) citing from Adams and the 11^th Edition of Dicey and Morris on the Conflict of Laws said at page 7 that there was "clearly scope for argument as to the correct test". Although it was agreed that Mr Murjani was not present in New York at the relevant time, whether he was resident in New York raised questions of fact which could not be resolved on a summary judgment application. Sir Christopher Slade devoted his concurring judgment to explaining that the reason he had left open the question of residence without presence in Adams, was that he found the question a very difficult one. This was because the word "residence" had a flexible meaning, and also because in the cases cited to them the courts had treated residence as including physical presence, in other words an a fortiori case. There had been no separate consideration of whether residence without presence could be enough.
52. A judgment given by a foreign court which complies with the rules about international jurisdiction will normally be enforced by the English courts. It is not a defence to enforcement to contend that the foreign court made an error of law or fact; see Dicey, Morris and Collins, The Conflict of Laws 14^th Edition ("Dicey") at Rule 41 page 616. However, there are exceptions to this general rule. The English court will not enforce a judgment if to do so would be contrary to public policy (Dicey's Rule 44) or contrary to the European Convention on Human Rights (see Dicey at paragraph 14-149), or if the judgment was obtained in proceedings which were contrary to natural justice (Dicey's Rule 45).
53. As the ECHR has the force of law in this country, the court naturally has to consider whether the recognition and enforcement of the judgment would be contrary to the ECHR and refuse enforcement if it is: see Pellegrini v Italy [2002] EHRR 44 cited in paragraph 14-149 of Dicey. As pointed out in Dicey, and by David Steel J in Merchant International Co Ltd v Natsionalna Aktsionerna Kompania Naftogaz [2011] EWHC 1820 (Comm); upheld on appeal [2012] EWCA Civ 196, this exception is probably better considered as arising through section 6 of the Human Rights Act, rather than through public policy alone.
54. The principles of natural justice were summarised by Atkin LJ in Jacobson v Frachon (1927) 138 L.T. 386 at 392 in the following terms:

"Those principles seem to me to involve this, first of all the court being a court of competent jurisdiction, has given notice to the litigant that they are about to proceed to determine the rights between him and the other litigant; the other is that, having given him that notice, it does afford him an opportunity of substantially presenting his case before the court"

55. The scope of the exception based on natural justice is now recognised to be wider than that afforded by lack of notice and opportunity to be heard. In Adams v Cape Industries the Court of Appeal held that there was a breach of the principles of natural justice where a foreign court, in breach of its own procedural rules, had given default judgment without judicial assessment on an unliquidated claim. The breach of the principles of natural justice is not, however, to be found in a mere procedural defect in the proceedings of the foreign court, but in the fact that, viewed against the background of the foreign procedural law, a defendant could have a reasonable expectation that the court would obey its own rules: see 567F to 568.
56. The principles which govern an application to strike out or for summary judgment were not in dispute. They were summarised by Lewison J (as he then was) in EasyAir Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15] in a formulation subsequently approved by the Court of Appeal in AC Ward Ltd v Catlin (Five) Ltd [2009] EWCA Civ 1098; [2010] Lloyd's Rep IR 301 at [24], as follows:

"The correct approach on applications by defendants is, in my judgment, as follows:

i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 1 All ER 91 ;

ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]

iii) In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman

iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]

v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;

vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;

vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.

Mr Berezovsky's application to strike out

57. Mr Leggatt QC submits that the Russian courts did not have jurisdiction over Mr Berezovsky according to English rules of private international law, and that the judgments should in any case not be enforced against him because to do so would be contrary to public policy and natural justice.

Jurisdiction in relation to Mr Berezovsky

58. Mr Berezovsky was not present within the jurisdiction of the Golovinsky court when the 2011 Indexation proceedings were commenced there. Moreover, if the Indexation proceedings are to be viewed as legal proceedings independent of the earlier proceedings in the Savelovsky court, Mr Berezovsky cannot be said to have submitted to the jurisdiction of the Golovinsky court. The case put against Mr Berezovsky is that the Savelovsky court had jurisdiction to determine the criminal case against Mr Berezovsky and the civil claim made by Aeroflot in those proceedings, and that the second Golovinsky judgment was ancillary to the second Savelovsky judgment.
59. Mr Leggatt submitted, in outline:

i) That the criminal proceedings against Mr Berezovsky began, at the earliest on 13 June 2007;

ii) On that date Mr Berezovsky was not present in Russia: indeed he had left the country some 7 years earlier;

iii) The fact that Mr Berezovsky was present in Russia at the date of the commencement of the criminal investigation in 1999 is irrelevant to the question of whether the Savelovsky court had jurisdiction;

iv) Nothing done before 13 June 2007 by or on behalf of Mr Berezovsky could amount to a submission to the jurisdiction of the Savelovsky court;

v) There was no submission to the jurisdiction after that date: indeed Mr Berezovsky had expressly forbidden his lawyers to participate;

vi) Even if any of the acts relied upon by Aeroflot before 13 June 2007 could be said to amount to a submission to the jurisdiction of the Savelovsky court, any such submission could not have applied to Aeroflot's civil claim as Aeroflot made no civil claim until 22 October 2007;

vii) Even if Mr Berezovsky had submitted to the jurisdiction of the Savelovsky court, this would not provide any basis for holding that he had submitted to the jurisdiction of the Golovinsky court in the separate Indexation proceedings.

60. Mr Marshall QC, in responding to this case on behalf of Aeroflot, made it clear that the principal argument he wished to advance was based on what Aeroflot alleges is Mr Berezovsky's continued residence in Russia. Much of his written and oral argument was directed to showing that, despite having left Russia more than 10 years ago, Mr Berezovsky retained the intention of returning to Russia when political conditions there allowed him to do so. Mr Marshall submitted that he was free to advance such a case, even though the pleaded case made no reference to residence in Russia whatsoever. He referred me a number of 19^th century cases and text books in which it was submitted that a foreign judgment could be recognised and enforced without a specific plea that the foreign court had jurisdiction. In answer, Mr Leggatt relied on a short passage in Adams v Cape at 549-550 concerned with the burden of proof. Pleading and burden of proof are of course separate matters to which different rules may apply.
61. Nevertheless, it seems to me that on an application such as this I am concerned more with considerations of overall procedural fairness rather than with strict rules of pleading or burden. Once Aeroflot had chosen to plead out their case on jurisdiction by presence and submission to the jurisdiction, it seems to me that it could be unfair to Messrs Berezovsky and Glushkov to have to meet a case on jurisdiction on an entirely different footing. On the other hand, given the fact that residence is, at least arguably, an alternative basis for jurisdiction, it would be wrong in principle at this stage to shut Aeroflot out from pleading and seeking to maintain a case based on residence. Neither Mr Leggatt for Mr Berezovsky, nor Mr Philip Jones QC for Mr Glushkov sought to argue that Aeroflot should not have an opportunity to plead such a case.
62. The course I propose to take is therefore as follows: first to consider whether the pleaded basis of international jurisdiction is sound; then to consider the other points run by the defendants as justifying summary judgment (public policy and natural justice). It is only if the attack on the pleaded basis of jurisdiction is successful and all the other points run by the defendants fail that it will be necessary to consider the residence point at all.

Mr Berezovsky - presence

63. Aeroflot rely on Mr Berezovsky's presence in Russia at the time of his formal accusation in 1999. There is no dispute that he was so present. The question is whether it is realistically arguable that any legal proceedings against him commenced at that time.
64. Mr Marshall correctly reminded me that it is dangerous to draw analogies between the Russian criminal and civil procedure and our own. Moreover he pointed to the fact that the Russian prosecutor has more extensive powers than a corresponding investigatory authority here: for example it appears that the investigator can resolve to recognise a party as a civil claimant within a criminal case.
65. Notwithstanding these points, it seems to me that it is not realistically maintainable that the date of the out of court accusation in 1999 was "the time of suit" for the purposes of determining the jurisdiction of the Savelovsky Court to which the case was ultimately referred. Despite the differing roles of prosecutor and investigator, it is the jurisdiction of the court, and in particular its jurisdiction to summon the defendant before it (or deal with the case in his absence) on which attention must be focussed. The earlier criminal investigation might not result in court proceedings at all. Moreover these investigations do not invest the court with power to summon the defendant. The court only becomes involved at all once the prosecutor is convinced of the defendant's guilt.

Mr Berezovsky - submission to the jurisdiction

66. In the alternative Aeroflot maintain that it is arguable that Mr Berezovsky submitted to the jurisdiction. The point which they most stress is that Mr Berezovsky, through his lawyers, applied for the prosecution to be dismissed. However, I accept Mr Leggatt's submission that there was no submission to the jurisdiction of the court in this way. Whilst of course a defendant may expressly agree, in advance of proceedings, to submit to the jurisdiction of a particular court, the more general position is that acts done by a defendant towards a prosecutor or claimant before legal proceedings are in existence are not likely to amount to a submission to the jurisdiction of any court. It is also true to say that, by invoking the court's jurisdiction, once it is engaged, to dismiss an action on the merits, a defendant may be submitting to the jurisdiction of that court. In the present case, however, by asking the prosecutor to discontinue the case before it was sent to court, Mr Berezovsky was inviting the prosecutor not to invoke the jurisdiction of the court at all. I am unable to see how this can realistically be argued to be a submission to the jurisdiction of the court.
67. It is therefore not necessary for me to consider, in the case of Mr Berezovsky, the fallback arguments concerned with whether there was submission to the jurisdiction of the court in respect of the civil claim and of the 2011 Indexation proceedings. If Aeroflot are to advance a case of jurisdiction in the case of Mr Berezovsky, then they would, in my judgment, have to do so on the alternative, unpleaded basis of residence.

Mr Berezovsky - public policy and natural justice

68. Mr Leggatt raises two exceptions to the rule that an English court must enforce a judgment of a foreign court of competent jurisdiction. The first is that the enforcement of the second Golovinsky judgment in the 2011 Indexation proceedings would breach the principle of finality, which is a rule of English public policy. The second is that enforcement would breach the principles of natural justice, as Mr Berezovsky was not given fair notice of those proceedings.

Mr Berezovsky - finality

69. The principle of English law that parties to litigation are bound by its outcome and cannot re-open the subject matter of that litigation is based on public policy. I will call this the finality principle. The public policy rationale for the finality principle is stated in Spencer Bower Res Judicata (3^rd Edition) paragraph 1.10, in the following terms:

"Two policies support the doctrine of res judicata estoppel: the interest of the community in the termination of disputes and the finality and conclusiveness of judicial decisions; and the right of the individual to be protected from vexatious multiplication of suits and prosecutions".

70. The rationale of the finality principle is explained by Lord Wilberforce in Committee for Privileges: The Ampthill Peerage [1977] AC 547 at 569:

"English law, and it is to safe to say, all legal systems, place high in the category of central principles that which requires that limits be placed on the right of citizens to … reopen disputes… Any determination of disputable fact may, the law recognises, be imperfect: the law aims at providing the best and safest solution compatible with human fallibility and having reached that solution it closes the book. The law knows, and we all know, that sometimes fresh material may be found, which might perhaps lead to a different result, but in the interests of peace, certainty and security it prevents further enquiry. It is said that in doing this, the law is preferring justice to truth. That may be so: these values cannot always coincide. The law does its best to reduce the gap. But there are cases where the certainty of justice prevails over the possibility of truth, … and these are cases where the law insists on finality. For a policy of closure to be compatible with justice, it must be attended with safeguards: so the law allows appeals: so the law, exceptionally, allows appeals out of time: so the law still more exceptionally allows judgments to be attacked on the ground of fraud: so limitation periods may, exceptionally, be extended. But these are exceptions to a general rule of high public importance, and as all the cases show, they are reserved for rare and limited cases, where the facts justifying them can be strictly proved."

71. The principle of finality is also recognised by article 6 of the ECHR. In Brumarescu v Romania [1999] ECHR 105; (2001) 33 EHRR 35 the European Court of Human Rights held at [61]:

"The right to a fair hearing before a tribunal as guaranteed by Article 6§1 of the Convention must be interpreted in the light of the Preamble to the Convention, which declares, among other things, the rule of law to be part of the common heritage of the Contracting States. One of the fundamental aspects of the rule of law is the principle of legal certainty, which requires, inter alia, that where the courts have finally determined an issue, their ruling should not be called into question."

72. In that case the Romanian state had taken possession of Mr Brumarescu's parents' house. Mr Brumarescu brought a successful action in the Bucharest Court of First Instance to recover possession of his parents' estate, and was granted a declaration that the confiscation had been null and void. The court also ordered that the house be returned to Mr Brumarescu. Subsequently the Procurator General of Romania lodged an application to have the Bucharest Court's judgment quashed on the ground that it had exceeded its jurisdiction. The Supreme Court of Justice acceded to the application and quashed the judgment of the Bucharest Court. The ECtHR held at [62] that, by allowing the Procurator general to use the power to quash a judgment of a court:

"the Supreme Court of Justice set at naught an entire judicial process" which had ended in – to use the Supreme Court of Justice's words – a judicial decision that was "irreversible" and thus res judicata – and which had, moreover, been executed.

In applying the provisions of Article 330 in that manner, the Supreme Court of Justice infringed the principle of legal certainty. On the facts of the present case, that action breached the applicant's right to a fair hearing under Article 6§1 of the Convention."

73. In Pravednaya v Russia application No 69529/01 the ECtHR applied the same principles to a case where a final judgment had been quashed. It said at paragraph [27]:

"The procedure for quashing of a final judgement presupposes that there is evidence not previously available through the exercise of due diligence that would lead to a different outcome of the proceedings. The person applying for rescission should show that there was no opportunity to present the item of evidence at the final hearing and that the evidence is decisive. Such a procedure is ... common to the legal systems of many member States."

74. In Merchant International Co Ltd v Natsionalna Aktsionerna Kompania Naftogaz (supra), the claimant had obtained a substantial judgment in the Ukraine in 2006. It commenced proceedings in the Commercial Court in England to enforce the Ukrainian judgment. Judgment in default of defence was obtained. The defendant sought to set aside the judgment and to have the claim struck out on the ground that, in the meantime, the defendant had applied successfully to the Supreme Commercial Court of the Ukraine to have the 2006 judgment set aside, on the ground of newly discovered circumstances.
75. The claimant argued that the English court should not recognise the later judgment of the Supreme Commercial Court which set aside the judgment of 2006 of the Ukrainian Court. David Steel J concluded that the English court should not recognise the later judgment. He rejected a submission based on Government of USA v Montgomery (No 2) [2004] UKHL 37, [2004] 1 WLR 2241, that it was only in cases of "flagrant" breaches of the ECHR that enforcement could be refused. He held, and with respect I agree, that where the foreign court is a Convention country, the need for a flagrant breach does not arise. That conclusion is supported by Dicey at paragraph 14-149.
76. David Steel J supported his conclusion at [36] by reference to two further considerations. The first was that the original 2006 judgment had been in existence for 5 years, and it was only after the failure to set aside service that any challenge was made to it in Russia. He felt justified in that case in approaching the challenge with scepticism. The second consideration was that the observations of the ECtHR in the Pravednaya line of cases called for the requirements of Article 6 to be handled with "particular sensitivity" where, as in Merchant International and here, the outcome of the proceedings favoured a state-owned entity.
77. Based on these authorities, Mr Leggatt submits that the second Golovinsky judgment, and the proceedings which led to it breached the principles of finality and legal certainty. The Savelovsky court had already, in a final judgment given in 2007, determined the amount of compensation due to Aeroflot from Mr Berezovsky for the fraud of which Aeroflot complained. It found that the loss amounted to 214,988,879.70 roubles. The judgment entered into force, was final, and the judgment debt had subsequently been recovered. In the subsequent proceedings in the Golovinsky court, commenced several years after the second Savelovsky judgment had become final, the court was asked, by a state owned entity, to find that the loss suffered was ten times greater. No new facts or circumstances were advanced or considered by the court. He submits that this amounts to a glaring shortfall from the necessary standard under the Convention.
78. Mr Marshall QC for Aeroflot submitted that the existing authorities concerned cases where the original judgment was "set at naught", not a case like the present where there was merely a correction or variation of the amount of damages. He also submitted that Mr Berezovsky could have anticipated that a claim would be made for indexation notwithstanding that no claim had been made in the proceedings. He also submitted that what was in substance being relied on here was an application of the Henderson v Henderson abuse of process principle, which was not the same as res judicata and was not the subject of the principle of finality as recognised in the EctHR cases.
79. In my judgment the decision to reopen the judgment as to the amount of damages payable was a plain breach of the finality principle. Firstly, there is no question of any facts having subsequently come to light. The indexation sought was only up to the date of the second Savelovsky judgment. Secondly, the second Savelovsky judgment assessed the amount of damages due for the cause of action. There is no suggestion that the indexation claim is a separate cause of action. Thus there is no need for Mr Berezovsky to rely on the Henderson v Henderson principle about claims which could have been brought. He says, in my view rightly, that the claim in the Indexation proceedings was a successful attempt to reopen the final, second Savelovsky judgment. Thirdly, I do not think there is a valid distinction to be made as a matter of policy between cases like Brumarescu, where the decision is set at naught, and a case like the present where a final award of damages is multiplied tenfold. The effect in both cases is that the dispute is reopened, and the defendant is twice troubled with the same litigation. Lastly, I cannot accept that Mr Brezovsky can be deemed to have anticipated that the judgment might be uplifted for indexation. No case was produced by either expert where a Russian court had done this in respect of indexation before the date of judgment. It is unrealistic to say that a party should have predicted a legal novelty.
80. I have reached this conclusion without reliance on a "special sensitivity" as regards judgments favouring state-owned entities. I would wish to hear further argument on whether it is right to apply a different standard of scrutiny, as to do so would, as it seems to me, carry an inference that the courts of a foreign state have treated a state owned entity on a different basis to other litigants.

Mr Berezovsky - notice

81. It is not strictly necessary to consider this further ground, given my finding in relation to finality. Nevertheless it was fully argued and I should deal with it, albeit briefly.
82. It is not in dispute that a defendant must be given fair notice of proceedings leading to a judicial decision. It is a principle recognised by the common law and enshrined in Article 6 of the ECHR as part of the right to a fair trial.
83. It is common ground that no attempt was made to notify Mr Berezovsky in England of the 2011 Indexation proceedings or the date of trial. Aeroflot rely on the fact that an attempt was made to notify him at the Leninsky address, which was his registered address as a matter of Russian procedural law. The evidence showed that, in Russian procedural law, service at the registered address would normally be good service if the defendant's exact place of presence was not known to the claimant. In addition to the telegram (returned undelivered) they also maintain that the court documents were served there.
84. I must assume in Aeroflot's favour that they may succeed at trial in establishing that the court documents were delivered to the Leninsky address. I do so with hesitation, as Aeroflot have managed to produce extracts from court files in relation to other matters. However there is evidence both that the court was to serve papers on the defendants and that one of the defendants did receive them. If that is so, there is scope for investigation at trial as to whether the documents reached the attention of Mr Berezovsky. It would be wrong to accept assertions in the written evidence as conclusive on this issue, in the absence of disclosure and cross-examination.
85. The question which I have to decide is whether, in these circumstances, service at a registered address in Moscow can realistically be argued to be fair notice of the proceedings.
86. Mr Marshall relies on the fact that Mr Berezovsky maintained the Leninsky address as his registered address in Russia. He could have taken, but did not take, steps to have it de-registered. He relies on the rationale in Adams that what is a breach of natural justice is to be determined by reference to the reasonable expectations of a defendant against the context of the foreign procedural law. A defendant to proceedings in Russia can expect to have proceedings served at his registered address. There is accordingly no breach of the principles of natural justice if proceedings are served there. Furthermore, he says that the question of whether Mr Berezovsky received actual notice is properly in issue, and cannot be resolved without a trial.
87. Mr Leggatt submits that Aeroflot knew of Mr Berezovsky's presence at the Down Street address, given that it was this address which was used in the Statement of Claim in the civil proceedings before the Savelovsky Court, and that Mr Fenn gives it as the address in his witness statement for service out. He points out that the registered address is not, as a matter of Russian law, a universally acceptable address for service, but one which the court will accept if the exact place of presence of the defendant is unknown.
88. I am unable to conclude in this state of affairs that Aeroflot have no realistic prospect of success on this issue. I conclude that it is arguable that Russian procedure, in allowing service at a registered address where there is no exact place of presence known for the defendant, is not a breach of the rules of natural justice. It is arguable that such a procedure strikes a balance between inability to commence proceedings against a defendant, and unfairness by allowing proceedings without notice. Whether such service in fact took place in the present case, the extent of Aeroflot's knowledge of Mr Berezovsky's place of presence, the precise inferences to be drawn from the fact that he maintained a registered address in Russia and the question of whether there was actual notice, are all matters which would need to be resolved at trial.

Mr Glushkov's application to strike out

89. Mr Jones advanced the application on behalf of Mr Glushkov on four main grounds:

i) The 2011 Indexation proceedings are said to be a variation of the second Savelovsky judgment. Mr Glushkov is not bound by the second Savelovsky judgment and was not party to the proceedings which gave rise to it. I call this "the wrong judgment point";

ii) The second Golovinsky judgment should not be enforced against Mr Glushkov as he was not given adequate notice of it to comply with the rules of natural justice;

iii) The damages due to Aeroflot from Mr Glushkov were finally assessed by the First Golovinsky judgment: to enforce the second Golovinsky judgment would be contrary to public policy by breaching the finality principle;

iv) Mr Glushkov was not susceptible to the jurisdiction at the time of the second Savelovsky judgment or when the 2011 Indexation proceedings commenced.

Mr Glushkov's wrong judgment point

90. Mr Jones' argument on the wrong judgment point is really this. The purpose of the second Savelovsky judgment was to establish Mr Berezovsky's criminal liability and his joint and several civil liability for the sum claimed. Mr Glushkov was not a party to the judgment. His civil liability had been established by the first Savelovsky judgment. The second Golovinsky judgment indexed the amount found due by the second Savelovsky judgment. It did not index the amount (albeit the same amount) found due by the first Golovinsky judgment. Moreover, given the different dates, it is clear that indexation up to the date of the First Golovinsky judgment would have produced a different sum.
91. Aeroflot's answer to the wrong judgment point is that it is an attack on the merits of the second Golovinsky judgment. That judgment expressly purports to bind Mr Glushkov. It is not for this court to enquire into whether the Golovinsky court erred in indexing the second Savelovsky judgment.
92. Whilst Aeroflot's answer is by no means free from difficulty, I am not persuaded that the wrong judgment point justifies striking out or summary judgment. It is true that the claim form seeks enforcement of the second Savelovsky judgment as varied by the second Golovinsky judgment, but reliance on the second Golovinsky judgment alone may be enough for Aeroflot to succeed. It is arguable that his remedy for the use of the wrong judgment to index the debt is simply a matter going to the merits of that judgment.

Mr Glushkov - notice

93. On the question of notice, despite Mr Jones' helpful and refined submissions, I have reached a similar conclusion to that which I reached in respect of Mr Berezovsky. Although Aeroflot accept that they knew of the Wokingham address as the address for Mr Glushkov on receipt of Addleshaw Goddard's letter of 26 April, they do not accept that they had such knowledge before that date. In any event, as with Mr Berezovsky, the question of whether Mr Glushkov received actual notice could not be resolved without a trial.

Mr Glushkov - finality

94. Mr Glushkov's case on this issue tracks that of Mr Berezovsky. The first Golovinsky judgment finally determined the amount of compensation due to Aeroflot. The re-opening of that issue in the 2011 Indexation proceedings was a breach of the finality principle for the same reasons as I have given in respect of Mr Berezovsky. This court should not enforce it for the same reasons.

Mr Glushkov - jurisdiction

95. The pleaded case on jurisdiction against Mr Glushkov is based on the first Savelovsky judgment and the first Golovinsky judgment. Mr Glushkov does not dispute the jurisdiction of those courts to give those judgments. At the relevant times he was present in Russia. Moreover he must be taken to have submitted to the jurisdiction of those courts.
96. The critical question for these purposes is whether, in the light of those circumstances, Mr Glushkov can be taken to have submitted to the jurisdiction of the Golovinsky court for the purposes of the 2011 Indexation proceedings. Two cases were brought to my attention in which the question of the effect of a submission to the jurisdiction on subsequent proceedings has been discussed. These are Murthy v Sivajothi and another [1999] 1 WLR 467 and Whyte v Whyte [2005] EWCA Civ 858.
97. In Murthy a defendant who submitted to the jurisdiction of a Florida court in respect of a mortgage action and settled the claim was held to have submitted to a cross-claim by two of his co-defendants to the original proceedings, the owners of the property. Evans LJ, having reviewed some United States authorities which permit claims fairly related to the original claim to be raised, said at 476E-F:

" ... when a person submits to the jurisdiction of a foreign court in respect of a claim made against him by a plaintiff or claimant in those proceedings, the he can also taken to have submitted to its jurisdiction in respect of, first, claims concerning the same subject matter and, secondly, related claims in the sense described above. This is provided, of course, that such claims may properly be brought against him under the rules of procedure in the foreign court, either by the original plan or by others who are parties to the proceedings there at the time when he makes the submission.

98. In Whyte a wife who had submitted to the jurisdiction of a Texas court for the purposes of proceedings which culminated in an order providing that the daughter of the marriage reside primarily in Texas was held to have submitted to separate proceedings brought for damages for breach of the original order.
99. I am not persuaded, at least not sufficiently persuaded for the purposes of summary judgment, that these principles are not wide enough to confer international jurisdiction on the Golovinsky court in respect of the second Indexation proceedings and the judgment resulting therefrom. Assuming, without deciding, that an indexation claim of this kind is countenanced by Russian law, and not barred by res judicata, I consider it to be realistically arguable that it is a related claim in the sense used in Murthy.

Illegality

100. At various points in the argument Aeroflot sought to suggest that it was relevant to consider whether Messrs Berezovsky and Glushkov were lawfully residing in this country. They make grave allegations that Mr Berezovsky made false statements to the immigration authorities and tribunals in order to obtain asylum here. These allegations were never properly spelled out in any pleading, or coherently made in any evidence. Mr Marshall's written skeleton contained the barest outline. In those circumstances I have not thought it right to have regard to the points. I am satisfied, however, that they can have no conceivable bearing on the pleaded jurisdiction case against Mr Berezovsky or on the finality issue in relation to both defendants, the latter of which is a sufficient basis for granting this summary judgment application.

Conclusion

101. The applications of both defendants succeed. Enforcement of the judgments would breach the finality principle. I will grant summary judgment dismissing the action accordingly.