JCA BTA Bank v Ablyazov & Ors

An earlier failure to prove beneficial ownership in committal proceedings did not prevent determination of the issue in later civil proceedings. Different standards of proof meant that the decisions were not inconsistent. In addition, issue estoppel may yield where material evidence, unavailable with reasonable diligence in the earlier proceedings, subsequently becomes available. Any justice-based exception must be principled and supported by identified circumstances. A shareholder’s control of a company does not, without more, establish beneficial ownership of the company’s assets. That question requires a fact-specific analysis, including whether the company holds the asset on trust.

The Bank sought declarations that Mr Ablyazov beneficially owned the shares in Rocklane Properties and a flat registered in that company’s name. In earlier committal proceedings, the Bank had failed to prove beneficial ownership to the criminal standard, relying in part on evidence from Syrym and Salim Shalabeyev.

Later disclosure and admissions indicated that documents placing Ivan Terenov in the apparent beneficial-owner position had been backdated after Rocklane Properties was added to the receivership. The Bank renewed its application, and the court considered whether issue estoppel barred it and whether the evidence established beneficial ownership of the shares and the flat.

1. Issue estoppel. The earlier committal decision did not create an absolute bar. The earlier proceedings required proof to the criminal standard, whereas the present application required proof to the civil standard. The decisions were therefore not inconsistent: Hunter v Chief Constable of the West Midlands Police [1982] AC 529.
2. Issue estoppel is subject to an exception where further material relevant to the issue becomes available and could not, with reasonable diligence, have been adduced earlier: Arnold v NatWest Bank [1991] 2 AC 93. The later disclosure and Mr Terenov’s affidavit satisfied that principle. It would have been unjust to prevent the Bank relying on evidence showing that earlier evidence had been knowingly untrue.
3. The postscript review of Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2014] AC 160 confirmed that the justice of permitting the point to be raised should be considered, but warned against using justice as an unprincipled escape from the rule.
4. The new evidence made the Bank’s case compelling. Mr Terenov was a nominee, and Mr Ablyazov was the beneficial owner of the entirety of the issued share capital in Rocklane Properties.
5. Ownership or control of a company does not itself establish beneficial ownership of its assets. A separate, fact-specific trust analysis was required: Jetvia SA v Bilta [2014] 1 Lloyd’s Reports 113; Prest v Prest [2013] 2 AC 415. The Bank did not pursue the declaration that Mr Ablyazov beneficially owned the flat. The declaration was accordingly confined to the shares.

First-instance decision. The judgment records earlier committal proceedings concerning the same ownership issue but gives no separate appellate history.