Kazakhstan Kagazy Plc & Ors v Zhunus & Ors

An order for cross-examination in aid of a worldwide freezing order is exceptional, but the court has a broad discretion to make it whenever it is just and convenient. The applicant must show significant or serious deficiencies in existing asset disclosure and a real prospect that questioning will further the order’s proper purpose, such as identifying assets at risk of dissipation. The exercise must remain proportionate and must not pursue an ulterior purpose. An existing freezing order should ordinarily be enforced and policed even though the substantive liability has not yet been determined. Adequate security may remove the need for cross-examination. Appropriate safeguards include limiting the questioning to identified topics, relevant documents and a confined hearing.

The claimants had obtained a worldwide freezing order against the fourth defendant in support of a potential application under section 51 of the Senior Courts Act. The order required disclosure of assets, trusts and the destination of substantial distributions. They alleged that the defendant’s disclosure was materially deficient and applied for an order requiring her to attend court for cross-examination.

The defendant argued that the application was premature, oppressive and overlapped with other proceedings. She also offered security over various assets. The central issues were whether cross-examination would further the freezing order’s proper purpose and whether it was just, convenient and proportionate to order it before the substantive section 51 application was determined.

1. Application granted. The court ordered the fourth defendant to attend cross-examination, subject to consequential directions and safeguards.
2. The governing principles were those summarised in Jenington International Inc v Assaubayev [2010] EWHC 2351 (Ch). The discretion is broad and unfettered, but cross-examination is ordinarily exceptional. It should generally be ordered only where it is likely to further the proper purpose of the disclosure order, there are significant or serious deficiencies in disclosure, and the process will be just and proportionate.
3. The alleged deficiencies were sufficiently established for this interlocutory application on the balance of probabilities. The court was not determining contempt, so the criminal standard of proof did not apply. The evidence concerning substantial transfers to family members, previously identified investment properties and several trusts justified a reasonable inference that further assets might be revealed.
4. The purpose of questioning had to remain confined to identifying assets belonging to the defendant against which the freezing order should bite. Used for that purpose, and with appropriate safeguards, the process was not oppressive or pursued for an ulterior purpose. The existence of tracing proceedings or other enforcement applications did not prevent enforcement of the existing order.
5. The fact that the potential section 51 liability remained undecided did not justify deferring enforcement of the freezing order. The proposed security was not reasonably acceptable. A sufficiently effective payment into court, bank guarantee or other security could still provide grounds to discharge or vary the order.
6. The questioning should be limited to one day, preceded by a list of topics and relevant documents, with disclosure of the bank material relied upon. The court would hear further submissions on timing and consequential safeguards.

Not an appellate decision. The judgment records prior interlocutory orders made by other High Court judges but does not state an appellate history.