Andrey Rogachev v Mikhail Goryainov

In consequential proceedings following the determination of a joint venture account, the currency of the judgment must reflect the currency in which the joint venture operated and accounted. The court should not reopen the parties’ case by adopting a different conversion date after trial.

When assessing disputed capital expenditure, the court is not confined to mechanically accepting descriptions in source documents. It may assess those descriptions in their evidential and commercial context.

Declarations and consequential orders may be made to fix the basis of ownership and prevent recourse to technical loans. Costs ordinarily follow the successful party, but serious unreasonable conduct may justify indemnity costs.

The judgment determined consequential matters arising from the trial judgment in proceedings concerning the unwinding of a joint venture between the claimant and defendant. The court had to quantify the balancing payment, determine the appropriate currency conversion methodology, assess disputed cash capital expenditure, give effect to the agreed allocation of markets, regulate technical loans and related transactions, and decide costs, interest and payment arrangements.

The claimant argued that investments, drawings and market values should be converted from roubles into US dollars at the date of the consequential order or payment. The defendant relied on the conversion methodology used at trial. The central issues were the proper accounting currency, the evidential treatment of disputed expenditure, and the appropriate consequential and costs orders.

1. Currency conversion. The balancing payment was to be calculated in US dollars. The relevant conversion was from the rouble currency of the underlying Moscow markets into the US-dollar currency of the joint venture. Investments and drawings were therefore converted using the exchange rate for the period in which each investment or drawing was made, and market values were fixed at the agreed valuation date of 30 June 2023. Miliangos v George Frank [1976] AC 443 concerned conversion into sterling for enforcement and did not govern conversion into the joint venture’s accounting currency.
2. Cash capital expenditure. The further accounting exercise was a limitation on sums claimed through the claimant’s fixed-assets register. The court was not required to accept descriptions mechanically. It could consider whether the descriptions were credible and related to the claimant’s markets. The disputed M1 and K25 items were excluded because they were absent or differently described in the register, were unsupported by the evidence, and were inconsistent with the underlying business circumstances. The balancing payment was fixed at US$12,671,497.
3. Declarations and consequential relief. Declarations were appropriate to establish the agreed ownership basis of the account and reduce the risk of later attempts to reopen it. Existing ownership declarations were made for the markets other than K25. K25 was addressed by recital and orders requiring the parties to execute documents and take steps necessary to transfer ownership. Orders were made preventing claims under the identified technical loans, including a debt-forgiveness deed for the major Gerthing-Shannon loan.
4. A blanket order restraining all future claims connected with the joint venture or markets was refused. Such relief was akin to an anti-suit injunction and required careful consideration on full information about foreign proceedings. A narrower order preventing pursuit of the identified UNCITRAL arbitration was made.
5. Costs and interest. The defendant was the clear winner and was awarded the costs of the proceedings on the indemnity basis. The claimant’s serious allegations, concealment of undeclared cash income, wrongful freezing-order conduct and unreasonable consequential conduct took the case outside the norm. Interest on costs was fixed at 8 per cent, and a payment on account of costs of £4 million was ordered. The balancing payment was to be paid into court by 10 January 2025, with interest at US Prime plus 2 per cent if paid late.

First-instance consequential judgment following the main trial judgment, cited as [2024] EWHC (Ch) 2436. No application for permission to appeal was made at the consequential hearing.