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England and Wales High Court (Commercial Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Avonwick Holdings Ltd v Azitio Holdings & Ors [2019] EWHC 305 (Comm) (15 February 2019) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2019/305.html Cite as: [2019] EWHC 305 (Comm) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
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Avonwick Holdings Limited |
Claimant |
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- and - |
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(1) Azitio Holdings Limited (2) Dargamo Holdings Limited (3) Oleg Mkrtchan (4) Sergiy Taruta |
Defendants |
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- and - |
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(1) Vitali Gaiduk (2) Roselink Limited (3) Prandicle Limited (4) Olena Gaiduk (5) Gastly Holdings Limited and 15 others |
Third Parties |
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David Wolfson QC and Henry Hoskins (instructed by Covington & Burling LLP) for the First and Third Defendants and Fifth Third Party
Nathan Pillow QC, Louise Hutton and Anton Dudnikov (instructed by Hogan Lovells International LLP) for the Second and Fourth Defendants
Stephen Smith QC and Peter Ratcliffe (instructed by Baker & McKenzie LLP) for the Third Third Party
Hearing dates: 12th, 15th February 2019
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Crown Copyright ©
MR JUSTICE ANDREW BAKER:
Introduction
The Application
The Grounds
Mr Mkrtchan's Detention
"Ultimately, the Gaiduk Parties have been driven to conclude that the third course [i.e. adjourning and re-fixing for October 2019] should be adopted (subject to the court's approval) on the basis that (i) it means that the October 2019 trial date can be secured now before it is lost, (ii) it means any further prolongation of Mr Mkrtchan's detention beyond 5 July 2018 will not entail the loss of the trial date, and (iii) it will spare the expense and distraction of preparing for and attending a specific hearing to debate the details and consequence of Mr Mkrtchan's detention."
a. a certainty of seriously frustrated legitimate expectations;
b. a certainty of extending the prejudice to Prandicle in respect of its interest in the Hyatt Hotel Kiev. In my judgment, having ownership of an important and valuable asset held under a cloud of uncertainty and challenge is itself a significant prejudice independently of whether there are, from time to time, any present or imminent plans to dispose of, deal with or raise finance against that asset. If there were any such present or imminent plans, the prejudice would just be all the greater. Whilst I accept the submission on behalf of Mr Gaiduk and Mr Mkrtchan that the evidence for Prandicle does not disclose any immediate plans in relation to realising or otherwise taking advantage of the value of the asset, there is real prejudice to Prandicle, day by day, that would be extended, therefore, by 15 months if I were to adjourn;
c. a certainty of prejudice to other litigants – those who would have been able to access the court for substantial hearings this autumn, but have had to wait for longer because of this fixture, and those who would be in a position to access the court when this trial would then take place who will be prevented from doing so;
d. a risk of appearing to undermine the authority of the court. Even if, which I have parked, the absence of any material change of circumstance since the decision of this court ten months ago does not in law prevent the application from being advanced at all, it is most unwelcome to find that, encouraged by Mr Gaiduk in particular, who now applies for the adjournment, the court has previously expressed itself of the firm view that the trial must take place in October of this year absent exceptional circumstances, and then for the court to be seen in public ten months later adjourning in the absence thereof;
e. a certainty of all the normal adverse consequences of a lengthy delay. For example, prolonged uncertainty generally for all parties, increased costs, risks of further deteriorations in the quality of evidence, potentially risks of unavailability of important individuals, be they witnesses or be they members of the legal teams, i.e. the normal features of large-scale litigation that lead to the risk that justice delayed can become justice denied;
f. finally, a real risk of achieving no substantial benefit, since, in the event, Mr Mkrtchan may be in a position to participate after all in October/November 2019, although I have to say I am not confident that is a strong prospect; or, on the other hand, he might not be in a position to participate as a witness, in effect, ever. Without descending into detail, on the evidence available to me, I have to say I judge that latter to be the most likely outcome.
a. no relevant prejudice to Mr Taruta or to Prandicle;
b. no material or substantial prejudice to Mr Gaiduk. In my judgment, that is despite his more recent protestations to the contrary. As I have already indicated, I prefer his stance in April 2018, that delaying beyond autumn 2019 would be unfair to him even if that led to a trial without evidence from Mr Mkrtchan, as being a realistic and honest assessment of the matter from Mr Gaiduk's perspective;
c. a real risk, of course, of prejudice to Mr Mkrtchan, if (a) that does mean that there is no evidence from him at trial in October/November this year, but (b) there could and would have been evidence from him at a trial in January/February 2021. As I have already indicated, the chance of (a) eventuating does seem to me high, although I certainly do not rule out the existence as a real prospect, as indeed urged upon me by Mr Gaiduk and Mr Mkrtchan, of his being released because the charge against him in Russia is dropped in time for him to participate. The prospect that (b) will be the position presently seems to me somewhat speculative, albeit I cannot say that it is not a real and substantial possibility even if I have also concluded that the most likely outcome is that Mr Mkrtchan will indeed not be in a position to participate here as a witness effectively ever (that meaning, in context, even if the trial was adjourned until January 2021, no party suggesting that it might be just to contemplate anything even later still).
Unreadiness
"In Khatoun10 [the witness statement served with the application], the Gaiduk Parties relied on a number of other arguments in support of an adjournment. The majority of those have been overtaken by events, but one essential point remains, which is that, on any view, the timetable to an October 2019 trial is too compressed." He then summarised what Mr Gaiduk says are the insuperable difficulties with being ready for trial in October, matters which were developed briefly orally. Forensically consistently, Mr Wolfson QC on behalf of Mr Mkrtchan expressed the same concerns and so supported an adjournment on this alternative case management basis, even if there was none on the basis of Mr Mkrtchan's ongoing detention.
a. Primary witness statements by 1 March, as I have already indicated. I have noted from the papers the existence of permissions already sought and granted for witness statements in respect of the principal individuals of very substantial length. I trust that none of those witness statements will be seeking to recite for the court the story that is told by the documents. I trust that a desire for witness statements to do so, whether consciously or unconsciously, has not been part of the reason for seeking very extensively lengthy statements. I cannot and will not, without notice to the parties, revisit those orders, but I do express the provisional view that notwithstanding the very large amounts at stake, the moderately extensive range of dealings over which the pleadings roam, and the nature and seriousness of the allegations, the parties who have permission to serve very long statements should find, if they examine critically such drafts as have been prepared to date for the identification of material which represents proper, first-hand, factual witness evidence that materially adds to the narrative to be derived from the documents, that they do not need anything like the length of statements for which they have permission.
b. All that said, and even if something of the length for which permission has been granted is served in relation to the witnesses in question, it seems to me that there should not need to be more than three weeks for the primary witness statements as exchanged to be reviewed to identify whether there is any (there may well not be any) need for additional questions to be addressed by way of reply witness statements on the part of any of the witnesses and for such statements to be prepared and ready. Therefore, I propose an order for reply witness statements, if any, to be exchanged by Friday, 22 March.
c. Thereafter, as it seems to me, the key target in the case should be to ensure that there has been an exchange of primary experts' reports, meetings and preparation of joint memoranda before the pre-trial review. It does not seem to me necessary or indeed potentially desirable for there to be, in a case of this kind, an exchange of supplementary experts' reports, if there needs to be any, prior to the pre-trial review, as opposed to a review with the court at the pre-trial review of whether, and if so what, supplemental experts' reports are required. I say that because, by way of reminder to the parties, it is not supposed to be the norm that there are supplementary reports. There is an exchange of experts' reports followed by a meeting of the experts to narrow the issues, followed, critically, by the production by the experts without interference or involvement, by and large, of the legal teams of joint memoranda, which joint memoranda not only identify the areas of common ground and the areas in dispute, but set out, in relation to the areas of dispute, in summary the reason or reasons for the respective experts maintaining their own view. Whether and, if so, to what extent it is necessary or appropriate beyond what can be accommodated within the joint memoranda for there to be a further round of reports is, in every case, a matter to be anxiously scrutinised without any assumption that there will need to be such reply reports. If, as it happens, the deferral to a degree of what would otherwise have been the expert timetable now lends itself more naturally to the pre-trial review coming between completion of joint memoranda and service of any supplementary reports if there really needs to be any, in my judgment that is a beneficial by-product of the slightly more compressed timetable overall with which the parties must now work. Having expressed that reasoning, that should explain why in my judgment the appropriate deadline for exchange of primary reports is a little later than had been proposed by Mr Taruta. I have in mind that experts' reports should be exchanged by 7 June, with the experts to meet by either 21 or 28 June, so that is either within two weeks or within three weeks of their primary reports, with joint memoranda to be completed within a week of the deadline for their meeting. The experience of the court is that the longer that is left between the meeting and the joint memoranda, the more are the legal teams tempted to involve themselves where they should not.
d. In those circumstances and maintaining the progress monitoring date and pre-trial review date, I would have in mind a date relatively shortly after the pre-trial review, but obviously bearing in mind that is mid July, for supplemental reports, if any, the precise scope of which will be a matter for the pre-trial review agenda. It may be that, to this extent, at that stage in the process the parties and their experts will need to work in a sense at risk as to whether the work product will be allowed as supplemental reports (but even if it is not the work product will not go to waste because it will assist the experts in being ready for trial), namely that we should set the timetable on the basis that that which any party has in mind to seek to serve as a supplemental report will be worked on between completion of joint memoranda and pre-trial review, even if permission for any such report is to be a matter for the pre-trial review. In those circumstances, it ought to be workable for the deadline for supplemental reports to be only a week after the pre-trial review, 26 July.