VIS Trading Co Ltd v Nazarov & Ors

In committal proceedings for failure to obey a disclosure order, the court must determine before sentencing whether past breach, continuing non-compliance, or both are proved. The claimant bears the burden throughout to the criminal standard. Partial disclosure or an assertion of compliance does not determine the issue, and the claimant need not obtain a separate order for cross-examination. A respondent may remain silent, although the court may draw an adverse inference where fair and appropriate; silence alone cannot prove contempt. A wide order requiring documents recording bank-account details may include money movements. Documents recording an entitlement to property may include a potential contingent interest. A contemnor’s absence abroad does not make committal futile where eventual compliance remains possible.

The Claimant sought the committal of the First Defendant for contempt arising from the First and Second Defendants’ failure to comply with a disclosure order made by Singh J on 21 May 2015. The order required wide-ranging disclosure concerning bank accounts, property, specified companies, addresses and individuals, with compliance due by 31 July 2015.

No disclosure was initially provided. Some evidence and documents were served shortly before the committal hearing, and the Defendants argued that the order had since been satisfied and that the hearing was concerned only with sentence for past breach. The Claimant maintained that disclosure remained incomplete. The central issues were whether continuing non-compliance was proved, how the burden and standard of proof operated, whether an adverse inference could be drawn from the First Defendant’s silence, and how the disclosure order should be construed.

1. Disposition. The past breach was admitted. The Court found continuing non-compliance proved, at least in relation to the categories identified in the judgment. The application therefore succeeded in substance, with sentencing adjourned to a separate hearing.
2. The Court held that, consistently with the JSC BTA Bank v Solodchenko and others (No 2) decision, the court must distinguish punishment for past breach from the element reflecting continuing non-compliance. It must determine whether one or both aspects are proved before fixing sentence and must give reasons for the sentence. The Practice Direction required the general nature of the contempt to be stated in open court.
3. The burden remained on the Claimant throughout, to the criminal standard. The First Defendant’s production of some documents did not establish compliance and did not require the Claimant to make a separate application for cross-examination. Under Civil Procedure Rules 1998, rule 81.28(2) and (3), the respondent could give oral evidence and be cross-examined if doing so, but could not be compelled to give evidence. The Court could draw an adverse inference from silence where appropriate and fair, although silence alone could not prove guilt. The Court applied Comet Products UK Ltd v Hawkex Plastics Ltd [1971] 2 QB 67 and Inplayer Limited v Thorogood [2014] EWCA Civ 1511, and distinguished the different, pre-CPR situation considered in JSC BTA Bank v Solodchenko [2011] 1 WLR 906.
4. The 21 May 2015 Order contained no relevance test. Its reference to documents recording bank-account details included money movements, not merely account names and numbers. Its references to documents recording an entitlement to property extended to potential contingent interests. Assertions that documents were held by third parties did not answer the order without evidence of efforts to obtain them. The Court found outstanding disclosure concerning the Sharipov documents, bank accounts, property interests, Chemical Consult Corp transactions and Synecta.
5. The Sixth Affidavit was admitted because the hearing was part-heard, but it was given little weight where inconsistent with the other evidence because it was untested and the First Defendant had declined the opportunity to give oral evidence and be cross-examined. His absence from the hearing did not make sentence futile: committal could have reputational and business consequences and could still promote eventual compliance.