Kazakhstan Kagazy Plc & Ors v Zhunus & Ors

On an interlocutory application, a court should avoid deciding disputed facts which properly belong to the trial. The assessment of a good arguable case is made at an early stage and may involve judicial evaluation rather than definitive findings. A belief that money was recirculated, without more, does not establish knowledge or suspicion of the essential nature and scope of an alleged fraud, or trigger constructive knowledge for limitation purposes. Where the evidence raises substantial credibility and inference issues, it is inappropriate to conduct a mini-trial on an application for summary judgment, discharge of a freezing injunction or a finding of material non-disclosure.

The claimants alleged substantial frauds against former directors and related parties. A worldwide freezing injunction had previously been granted and later continued in a reduced sum. Earlier applications challenging the injunction and the claimants’ limitation position had failed at first instance, and the Court of Appeal had dismissed the relevant appeal and cross-appeal.

The defendants renewed applications under Part 24 for summary dismissal of the claims, arguing that newly disclosed documents and further evidence showed that the claims were time-barred under Kazakh law. In the alternative, they sought discharge of the injunction for lack of a good arguable case and material non-disclosure. The central issues were whether the new material established earlier actual or constructive knowledge of the alleged frauds and whether the court could properly resolve the disputed evidence at an interlocutory stage.

1. The applications were dismissed. The claimants retained a good arguable case that the claims were not time-barred and a real prospect of success on that issue. The freezing injunction was not discharged.
2. Part 24 requires a real prospect of success. That threshold is lower than a good arguable case, although the difference is incapable of precise definition. A good arguable case is assessed at an early stage, often before the facts are fully known, and the court should avoid resolving disputed factual issues which belong to the trial. This approach was consistent with Derby v Weldon (No 1) [1990] Ch 48, The Niedersachsen [1983] 2 Ll 600 and Alliance Bank JSC v Arip and others [2015] EWHC 714 (Comm).
3. The new documents did not demonstrate that the claimants’ management knew, believed or suspected by late 2009 or early 2010 that the defendants had committed the pleaded frauds. The documents admitted competing interpretations, and the claimant’s explanation was sufficiently plausible to prevent a conclusive interlocutory finding. The relevant evidence raised cross-examination points for trial, not a proper basis for summary disposal.
4. Awareness that some money had been recirculated from a loan did not, without more, amount to knowledge or suspicion of the essential frauds. It did not follow that the contractors were corrupt, that the former shareholders had acted dishonestly, or that the claimants ought to have discovered the frauds earlier. Accordingly, the good arguable case on limitation remained.
5. No material non-disclosure was established at this stage. Even if disclosure of the concern about recirculated money had been required, it would have been non-deliberate and insufficient to justify discharge of the injunction.

Earlier interlocutory applications were determined by HHJ Mackie QC. The Court of Appeal, comprising Longmore, Jackson and Elias LJJ, dismissed the Second Defendant’s appeal and the First Claimant’s cross-appeal on 2 April 2014. The present court held that the newly disclosed material did not alter those conclusions.