JSC BTA Bank v Ablyazov & 16 Ors

In a Norwich Pharmacal application, the usual order is that the applicant pays the reasonable costs of the innocent third-party respondent. That approach may be departed from where the respondent has supported or is implicated in the underlying wrongdoing, or has failed to engage in good faith with the disclosure process. A final finding of liability at trial is unnecessary. The court may assess the available material at the costs stage and exercise a sliding-scale discretion. A respondent must provide information within his knowledge to the best of his ability and produce documents he can reasonably collate, even where the order imposes no duty to make inquiries of third parties.

The claimant bank sought to vary an order made in the ongoing enforcement litigation against Mukhtar Ablyazov. The order required Sergey Tyschenko, a non-party respondent, to comply with a Norwich Pharmacal disclosure order and provided that, subject to further order, the bank would pay his reasonable costs.

The bank alleged that Tyschenko had given evasive and contradictory evidence concerning assets and companies associated with Ablyazov, and had assisted in moving Ablyazov’s assets. It sought an order requiring Tyschenko to bear his own costs and to pay the bank’s costs of cross-examination. The central issues were whether there had been a material change of circumstances, whether Tyschenko had complied in good faith, and whether he was implicated in Ablyazov’s wrongdoing.

1. Application allowed in substance. The court varied the costs order so that Tyschenko could recover 25% of the costs of preparing his affidavits. He recovered none of the costs or expenses of the two days of cross-examination and was ordered to pay the bank’s costs of that exercise.
2. The usual Norwich Pharmacal costs order is that the applicant pays the reasonable costs of the third party’s compliance. The principle identified in Norwich Pharmacal v Customs & Excise [1974] AC 133 is that a person mixed up in wrongdoing may owe a duty to assist the person wronged by providing full information. That reasoning applies with greater force where the respondent knowingly assisted the wrongdoing.
3. Following the guidance in Totalise plc v The Motley Fool Ltd [2001] EWCA Civ 1897; [2002] 1 WLR 1233, the court may consider all the circumstances and may depart from the normal order. It is unnecessary to await a criminal conviction or civil judgment against the respondent. The court may be satisfied on the interlocutory material that the respondent supported or was implicated in wrongdoing. The discretion is graduated and may require the respondent to bear some or all of his own costs or the applicant’s costs.
4. The absence of an obligation to make inquiries meant only that Tyschenko need not inquire of third parties. It did not excuse him from giving information within his own knowledge to the best of his ability or producing documents he could reasonably collate. His evasive evidence on the logoparks and the use of Eximenergo to transfer substantial funds to Ablyazov companies amounted to a failure to comply properly and to engage in good faith.
5. The consent orders preserved the liberty to apply contained in the original costs order. The bank was therefore entitled to rely on the whole subsequent conduct, without dissecting each order by reference to the material available on its date. The approach in Tibbles v SIG plc [2012] EWCA Civ 518; [2012] 1 WLR 2591 did not require that artificial analysis.
6. The court was satisfied that Tyschenko had actively assisted Ablyazov in moving assets while the freezing injunction and receivership order were in force. A trial finding establishing liability was unnecessary for the costs discretion.