Kazakhstan Kagazy Plc & Ors v Baglan Abdullayevich Zhunus & Ors

A trial judge should not reopen issues already determined merely because a party later obtains new evidence or develops a new argument. Reconsideration is confined to exceptional circumstances, such as correcting an identified material error, and the ordinary route for challenging the decision is appeal.

Damages are expressed in the currency in which the claimant’s loss was actually felt, assessed by reference to the specific transaction rather than the claimant’s general operating currency. In a fraud case, the court may award compound interest in equity where necessary to achieve full compensation, subject to the applicable foreign-law analysis. The appropriate rate and rests require a broad-brush assessment of the cost of borrowing in the relevant currency.

The judgment determined consequential matters following the court’s substantive judgment of 22 December 2017, [2017] EWHC 3374 (Comm). The claimants had succeeded against the second and third defendants on the PEAK, Astana 2 and Land Plots Claims. The further hearing addressed quantum, currency, interest, security for costs, amendments to a freezing order, disclosure, costs, permission to appeal and a stay of execution.

The defendants sought, among other things, to reopen findings concerning penalties and interest, introduce new arguments concerning liabilities and credits, obtain disclosure, resist enforcement and challenge the currency and interest awards. The central questions were whether the trial findings could be revisited at the consequential hearing, what currency best expressed the losses, and what interest and enforcement orders were appropriate.

1. Finality and reopening. The findings on rates, steel, penalties and interest, the Astana 2 Claim and the PEAK Claim were final, subject only to calculations and expressly deferred issues. The defendants could not reopen them on the basis of information discovered after judgment. Reconsideration is confined to exceptional circumstances and is not a substitute for an appeal. The applications to introduce new arguments concerning Alliance Bank liabilities, IFK’s claim and pro-rating were refused.
2. Currency. Applying the principles in The Despina R [1979] AC 685 and The Texaco Melbourne [1994] 1 Lloyd’s Rep 473, the court examined the particular losses. Although payments were made in KZT, the relevant funds had been raised or borrowed substantially in US dollars and euros. The losses were therefore best expressed in US dollars.
3. Interest. Pre-judgment interest was to be calculated using SVG’s short-term Kazakhstan foreign-currency borrowing rates. Interest was not payable on liabilities incurred but not yet discharged. The court rejected a single universal starting date and adopted the detailed payment-based analysis. Compound interest was available in equity and was appropriate given the prolonged and substantial fraud. It was to be calculated with quarterly rests. The post-judgment rate under Administration of Justice Act 1970, section 44A, was 7.14 per cent.
4. Freezing order and enforcement. Security for costs and fortification were released. The cross-undertaking continued pending determination of permission to appeal. Living-expenses and ordinary-course-of-business exceptions were removed, while the legal-expenses exception remained temporarily. The defendants were ordered to provide updated asset information and disclosure concerning their assets and trust interests. Civil use of disclosed information was permitted without further restriction, but criminal use required permission.
5. Costs and appeal. The claimants were awarded their costs on the indemnity basis, subject to a £75,000 deduction relating to the original freezing-order application, and an interim payment of £8 million. Permission to appeal and a stay of execution were refused.

The judgment followed the court’s substantive first-instance judgment of 22 December 2017, [2017] EWHC 3374 (Comm). It determined consequential matters and refused permission to appeal and a stay of execution.