Otkritie International Investment Management Ltd & Ors v Urumov (aka George Urumov) & Ors

Where a claimant has made relevant recoveries before judgment, the ordinary course is to give credit in the judgment rather than defer it to execution. The claimant may allocate recoveries between overlapping claims, provided the allocation is not obviously unsustainable. Costs allocation under CPR requires a flexible and proportionate assessment of the issues raised by each defendant. A stay pending appeal is exceptional. The court must balance injustice to both sides, including irremediable prejudice, the risk of a stifled appeal, and the risks arising from enforcement or restitution.

This was a consequential hearing following the court’s merits judgment of 10 February 2014 in a multi-defendant fraud action. The court determined the effect of sums already recovered by the claimants, the allocation of those recoveries between losses, interest, costs, a payment on account of costs, and applications to stay execution.

The principal issues were whether recoveries should reduce the judgments immediately or only at execution, whether the claimants’ proposed appropriations were permissible, and whether enforcement should be stayed pending intended appeals.

1. Recoveries and appropriation. The court rejected the claimants’ primary request for judgment in the full headline sums with credit deferred until execution. Although that course could be justified in some circumstances, relevant recoveries received before judgment ordinarily reduce the claimant’s loss and therefore the judgment sum. The claimants could choose how recoveries were appropriated between overlapping claims, consistently with the approach in Fiona Trust v Privalov [2010] EWHC 3199 (Comm), provided the appropriation was not obviously unsustainable. Their proposed allocation was not obviously unsustainable and was adopted.
2. Further factual and monetary matters. The US$1.475 million received by Fanteks from the Tess account was, on the balance of probabilities, part of the fraud proceeds. It was not, however, proved to be a further share for Mr Jemai. Simple interest at 3.25% was unopposed, save that interest relating to Ms Jemai remained reserved.
3. Costs. Indemnity costs were justified. Under CPR 44.3(1), costs had to be allocated flexibly and proportionately rather than by a single formula. The court fixed joint and several liability at 100% for Mr Urumov and Denning; 90% for Mr Pinaev, Rossmore and Pleator; 40% for Mr Gersamia and Templewood and separately for Mr Jemai; 25% for Jecot and Ms Balk; and 10% for Ms Kovarska and Mr Gersamia Snr. It ordered a £5 million payment on account, apportioned on those bases. Costs concerning Ms Jemai were reserved.
4. Stay. Applying CPR r 52.7, the court refused stays of execution. No solid ground showed irremediable prejudice or that an appeal would be stifled. Further delay would unfairly prevent the claimants from enforcing their judgments.

High Court (Commercial Court): Following its merits judgment of 10 February 2014, the court determined consequential matters on 14 March 2014. No appellate stage was stated.