Kagalovsky & Anor v Balmore Invest Ltd & Ors (Rev 1)

Contempt of court must be proved beyond reasonable doubt. A freezing order must be construed according to its ordinary and sufficiently clear meaning, particularly where committal is sought. An order restraining dealings in specified shares does not, without wider wording, restrain dealings in the company’s underlying assets or goodwill. A transfer of shares is complete, for these purposes, when registered in the company’s register of shareholders; later filing at Companies House does not complete the transaction. A person who is the controlling mind and de facto director of a company may be the responsible officer required to provide disclosure, and may be liable for deliberately failing to do so.

The claimants alleged that Alexander Altman controlled seven companies involved in the transfer of interests connected with a Ukrainian television station. They sought his committal for contempt for alleged breaches of freezing and disclosure orders made in support of Ukrainian proceedings.

The issues were whether Mr Altman was the controlling mind or de facto director of the respondent companies, whether the alleged transfers occurred after the relevant orders, whether the orders extended to assets underlying specified shares, and whether Mr Altman deliberately failed to provide the ordered disclosure.

1. Controlling mind. The court found beyond reasonable doubt that Mr Altman was the controlling mind and de facto director of the Invest companies and Credit Investbanque Plc. The conclusion was based on the cumulative evidence, including his conduct in instructing solicitors, directing delivery of court papers, seeking to replace nominee directors, paying legal fees and failing plausibly to investigate or report his alleged fraudulent appointment.
2. Transfer of shares. The transfer of the shares in Media Info to the Invest companies had been completed before the freezing order of 8 May 2013. Registration of the transfer in the company’s register of shareholders completed the transaction; filing an annual return at Companies House did not. The first contempt allegation therefore failed.
3. Construction of the disclosure order. The order required confirmation that the relevant shares had not been transferred or were still held. Since the transfers had already occurred when Mr Altman became aware of the order, no confirmation in the specified terms could be given. In a committal application the order could not properly be interpreted as requiring more than its straightforward wording.
4. Scope of the freezing orders. The transfer of ownership of TRS, a subsidiary holding the broadcasting licence, was contrary to the spirit of the orders but did not breach them. The orders restrained dealings in identified shares, not the assets or goodwill of the companies. Templeton Insurance Ltd v Thomas [2013] EWCA Civ 35, concerning an order expressed to cover property and assets, did not govern the differently worded orders in this case.
5. Disclosure breaches. Mr Altman could and should have provided the disclosure required from the Invest companies and Credit. His deliberate decision not to do so established the relevant contempt allegations. The question of sanction was adjourned for a further hearing.

Not stated in the judgment.