JSC BTA Bank v Ablyazov & Ors

The power to vary or revoke an order under CPR r.3.1(7) may be exercised where the court was materially misled or circumstances have materially changed. The court must be satisfied to the civil standard and must consider whether the issue can fairly be resolved without a trial or cross-examination.

Relief from sanction is distinct from an application to strike out a defence. Where conditional relief was obtained by materially false information, the party cannot be placed in a better position than if it had supplied no information. In deciding whether to grant further relief, the court applies the factors in CPR r.3.9, including promptness, intention, explanation, previous compliance, prejudice and the interests of the administration of justice.

The claimant alleged that the defendant companies were vehicles used in two fraudulent financing schemes and obtained freezing and disclosure orders requiring information about ownership, control and authority to give instructions.

After earlier non-compliance, the defendants obtained conditional relief from sanction. They later relied on affidavits stating that Mr Timichev was the legal and beneficial owner and sole controller of the companies. The claimant subsequently obtained documentary material indicating that Mr Shalabayev, Eastbridge and Euroguard had organised and controlled the companies and that the affidavits were materially misleading.

The claimant applied to revoke the earlier relief and enter judgment. The central issues were whether the court had been misled, whether the alleged intimidation of Mr Timichev made further consideration unfair, and whether further relief from sanction should be granted.

1. The court rejected the contention that the application had to be treated as an ordinary strike-out application. Revocation of relief from sanction and striking out a defence address different procedural situations. The disciplinary purpose of an unless order is to secure compliance with court orders.

2. Under CPR r.3.1(7), the court may revoke an order where it has been materially misled or there has been a material change of circumstances. It must be satisfied to the civil standard, having regard to the nature of the allegation, and must consider whether it can fairly determine the issue without directing a trial of an issue, cross-examination or further disclosure.

3. The documentary evidence established that Eastbridge and Euroguard organised the corporate arrangements of a large group of companies, that Mr Udovenko and Mr Shalabayev controlled relevant ownership and governance arrangements, and that the defendants had failed to give truthful information about persons authorised to instruct their agents. The court considered the failure serious and intentional. The evidence was sufficient to show that the court had been seriously misled, although it was not necessary at this stage to determine conclusively that Mr Ablyazov was the ultimate beneficial owner.

4. The alleged intimidation did not make it unfair to proceed. Mr Timichev had maintained his assertion of beneficial ownership but had not answered the documentary case against him. Other witnesses and documentary evidence were also available. The court therefore declined to defer the application or order a separate trial of that issue.

5. Applying CPR r.3.9, the court placed particular weight on the interests of the administration of justice, the lack of promptness, the intentional and unexplained default, the history of non-compliance, the prejudice caused to the claimant and the absence of any adequate proposal for corrective disclosure. Further relief would allow the defendants to avoid the specified consequences of non-compliance. The earlier order granting relief from sanction was revoked and judgment was ordered against the respondent defendants. The separate position of Maden and the request for further information were academic, although the court recorded that Maden had also failed to comply.