Otkritie International Investment Management Ltd & Ors v Urumov & Ors

An appellate court considering a late notice of appeal must apply the relief-from-sanctions approach. It must assess the seriousness of the breach, the reason for it, and all the circumstances. Unrepresented status does not itself provide a good reason for non-compliance.

An extension may nevertheless be just where a narrowly defined ground has a real prospect of success and the consequences of refusing review are substantial. Permission may be granted without deciding the merits where there is a genuine arguable issue whether proprietary recoveries should reduce equitable compensation for a dishonest assister or knowing recipient.

Ms Balk applied, about 15 months late, for permission to appeal orders made by Eder J in the Commercial Court. The orders held her liable for procuring breach of contract, dishonest assistance and knowing receipt, and entered judgment for US $36,978,000.

She challenged the findings of dishonesty, alleged that illness had deprived her of a fair trial, and sought to adduce further evidence. She also contended that recoveries obtained from 42 Avenue Road, an asset said to have been acquired with misappropriated funds, should be credited when assessing her liability.

The central issues were whether time should be extended and whether the proposed appeal concerning credit for, and allocation of, proprietary recoveries had a real prospect of success.

Decision

1. The court refused permission on the challenges to the findings of dishonesty and to the fairness of the trial. The trial judge had assessed the evidence against Ms Balk separately and carefully. Her illness did not establish an unfair trial or a breach of her Article 6 rights. The proposed further evidence did not satisfy the requirements for admission and would not assist her challenge to the findings.

2. The court held that the proposed quantum ground had a real prospect of success. It was realistically arguable that, where a claimant had recovered the proceeds of a proprietary claim concerning the very property relevant to an accessory’s liability, the accessory should receive credit when equitable compensation was assessed. This was so even though the judge had accepted the claimants’ ability to appropriate recoveries between defendants. The court did not decide that issue; it permitted it to be argued.

3. Applying the three-stage relief-from-sanctions approach described in Hysaj, the 15-month delay was serious and Ms Balk had not provided an adequate explanation for it. Her illness and unrepresented status did not, by themselves, excuse the delay. However, all the circumstances had to be evaluated. The potentially serious effect of denying review of the proprietary-recoveries issue, together with her medical difficulties, made an extension of time just.

4. Accordingly, the court granted an extension of time and permission to appeal only on whether credit should be given for proprietary recoveries of US $21,425,000, US $1,856,981 and US $439,494, and how they should be allocated. No stay of execution was granted. Revised grounds confined to that issue were required.

• Court of Appeal (Civil Division) [2015] EWCA Civ 1578: granted an extension of time and permission to appeal only on the allocation and crediting of proprietary recoveries; refused permission on the remaining grounds.
• High Court of Justice, Queen’s Bench Division, Commercial Court (Eder J): by orders dated 10 February 2014 and 14 March 2014, found Ms Balk liable for US $36,978,000 and held that recoveries, including the value of 42 Avenue Road, were to be credited in accordance with the claimants’ appropriation.