QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
||
B e f o r e :
____________________
Manchester Shipping Limited |
Claimant |
|
- and - |
||
Balfour Shipping Limited Nikolay Viktorovich Sochin |
Defendants |
____________________
James Willan (instructed by Byrne & Partners LLP) for the Defendants
Hearing date: 7 April 2020
____________________
Crown Copyright ©
Lionel Persey QC:
Introduction
(1) The wording of the Case Memorandum.(2) The wording of the List of Issues.
(3) A number of issues arising out of both parties' DRDs.
The Case Memorandum
The List of Issues
Issues relating to the DRD
1(d) This is a request for disclosure of correspondence between the Defendants and any representative of KGK (including Mr Kosodybov). The Defendants say that they will already have given sufficient disclosure under Request 1(a)-(c) and that it is unnecessary and disproportionate for there to be disclosure of correspondence in addition. I disagree. I consider that the Claimant is entitled to see the correspondence that it seeks in order to ascertain the whereabouts of the diverted charterhire.3(a)(b) These are requests for disclosure of all documents relating to the Balfour charterparties together with bank statements of the First Defendant. The Claimant seeks Model C disclosure. The Defendants have offered Model A, on the basis that if any such payment was made it would be required to disclose the relevant bank statement as a "known adverse document". In the alternative, the Defendants contend that Model C disclosure limited to "any document evidencing a payment under the Balfour Charterparties" is appropriate. I consider the Defendants' alternative position to be reasonable and order Model C disclosure on this basis.
4. This is a request for disclosure arising out of the KGK insolvency proceedings. The Defendants say that these are all a matter of public record and have identified two websites. I did not understand the Claimant to have accessed these websites. I consider that they should have done so. I do not order disclosure of these matters.
7(a)-(x) These are broad requests which, it is said, go to the issue of what Balfour has done with the money it received from Maris in respect of the hire of the Shevchenko between May 2016 and October 2018. Mr Sochin has identified that payments were made but has not produced any of the underlying documents. The Claimant seeks Model C disclosure and has identified the kind of documents that should be produced. The Defendant resists this disclosure on the basis that it is unnecessary and disproportionate. I consider the requests to be well founded and therefore order Model C disclosure as sought.
8(a)-(b) These are requests for correspondence between the Defendants and L-Caspiy and between the Defendants and the Russian Interior Ministry regarding L-Caspiy. I am unable to identify any pleaded issue to which these requests go and disallow them.
7. 9 This issue is concerned with whether SMC chartered the Shevchenko to the Claimant. The Claimant's case is that the documents proffered in support of the Defendant's case are forged. I consider the Claimant's Model C request for documents "pertaining to on which day and by which natural person the alleged charterparties were signed" and "documents relating to the communication of the fact of those charterparties" to be justified as had in fact been agreed by the Defendant prior to the hearing.
10 It seems that the parties now agree that Model D should apply to this issue.
23 & 24 The Claimant requests Model E disclosure in respect of the dishonest assistance claim. It does so on the basis that it would not be appropriate for disclosure to be confined to matters which Mr Sochin considers to be relevant to honesty. The Defendants say that Model D is sufficient and that this case is not an exceptional case within the meaning of Model E. I have concluded that Model D disclosure is appropriate. In so doing, I have borne in mind the other disclosure that I have ordered, together with the requirement in paragraph 6.4 of PD51U which provides that an order for Extended Disclosure must be "reasonable and proportionate having regard to the overriding objective, including … 7) the need to ensure that the case is dealt with expeditiously, fairly and at a proportionate cost".
3. The only issue between the parties under this issue is whether entries in the Claimant's bank statements to/from L-Caspiy, to/from KGK are not to be redacted. The Claimant has offered not to redact the L-Caspiy entries, but requires the KGK entries to be redacted. I agree with the Defendants that both categories are not to be redacted – it seems to me that the Defendants ought themselves to be able to investigate the payments in order to determine whether they relate to the debts which are the subject of these proceedings.5(a)(b) There is an issue between the parties as to whether the assignment between the Claimant and L-Caspiy was part of an improper or unjustifiable arrangement and whether the assignment was authentic. The Claimant wishes to limit the ambit of the disclosure sought by the Defendants. I do not consider it is appropriate for me to do so. I agree that there needs to be proper disclosure of the dealings between the Claimant and L-Caspiy and order the disclosure as sought by the Defendants.
6(a)(d) These two requests are made in respect of the relationship between Mr Baranov and L-Caspiy. The Claimant wishes to remove the words "Manchester, Mr Townley … [and] Nerida" from (a) part (iii), and to replace the following words in (d) "and any companies associated with him, except Manchester" with "Morwena" only. The Defendants argue that these requests reflect the pleaded case. I agree that they do and order their disclosure. I also agree that the request is not too wide because if L-Caspiy does not have a relationship with other companies associated with Mr Baranov then there will be no disclosure to give.
6(a) bis This issue concerns what has happened to the funds paid by KGK to the Claimant's assignee L-Caspiy and why they have not been paid to the Claimant. The Claimant wishes to limit this request to documents arising out of or relating to the criminal investigations concerning he alleged theft of those funds by Mr Systra. The Defendants say that the Claimant should disclose such documents as it may have in relation to any other suspects. I agree and so order.
ATTACHMENT NO.1
Claim No: CL-2018-000332
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
B E T W E E N:-
Claimant/Applicant
Defendants/Respondents
INTRODUCTION
4.1 admit that they sought (successfully, in the case of MARIS) to divert hire from Manchester to Balfour;
4.2 admit that they are, accordingly, jointly and severally liable for procuring KGK/MARIS' breaches of contract, and that Mr Sochin is also liable for breach of his fiduciary duty to Manchester;
4.3 deny the charge of conspiracy and deny any dishonesty (on the basis that Mr Sochin says he believed the steps to be legitimate self-help). Manchester does not accept that Mr Sochin believed the steps to be legitimate;
4.4 admit that MARIS paid to Balfour US$3.9m which was received by Balfour on trust for Manchester ('the Trust Fund') and that it has been paid away. Balfour denies any breach of trust and Mr Sochin denies dishonestly assisting in any breach of trust.
KGK
12. KGK entered insolvency proceedings in January 2019.
13.1. Would KGK have been able to pay Manchester, and would it have done so, but for the admitted breaches?
13.2. What (if any) effect does Manchester's assignment have on the quantum of damages?
MARIS
18.1. Did Manchester retain valuable rights to bring claims against MARIS and, if so, are the value of those rights to be taken into account in assessing Manchester's loss?
18.2. But for the conduct about which Manchester complains, would SMC have withdrawn the vessel from service prior to October 2016? If so, what (if any) effect does that have on the quantum of Manchester's claim?
19.1. Did Balfour commit a breach of trust?
19.2. If so, did Mr Sochin assist Balfour in the breach of trust? Was such assistance dishonest and (if relevant) part of a dishonest scheme? There is also an issue as to what law governs that claim and whether any such claim exists.
KEY PROCEDURAL STEPS
20.1 17 May 2018: Claim Form issued (in respect of KGK claim only);
20.2 21 May 2018: Freezing Orders granted against the Defendants (in respect of KGK claim only);
20.3 14 August 2018: Claim Form amended to introduce MARIS claim (Mr Justice Popplewell adjourned an application to extend the Freezing Orders to the MARIS claim, with permission to restore);
20.4 6 October 2018: Defence served, admitting creation of backdated KGK charterparties and MARIS addendum, but denying liability on basis of 'justification' defence; Application issued by Defendants to discharge the Freezing Order;
20.5 11-12 November 2018: hearing of Defendants' application to discharge the Freezing Orders;
20.6 8 February 2019: Amended Defence (maintaining denial of liability for both MARIS and KGK claims);
20.7 11 February 2019: Application to discharge Freezing Orders dismissed;
20.8 16 May 2019: Claimant's application issued for summary judgment/strike out of Defendants' denials of liability;
20.9 12 October 2019: Defendants' Re-Amended Defence, admitting liability in part; admitting a constructive trust in respect of the MARIS claim; and introducing further defences on causation/loss for the KGK/MARIS claims;
20.10 21 October 2019: Knowles J grants consent to re-amend Defence (but preserving Claimant's right to apply for summary judgment thereon at CMC); and directs CMC;
20.11 18 November 2019: Re-Amended Reply;
20.12 6 December 2019: Rejoinder;
20.13 16 December 2019: Manchester issues application for interim account and summary judgment in respect of Maris claim;
20.14 17 January 2020: CMC. Contents of Rejoinder to be moved to Defence and Rejoinder to cease to stand as a statement of case;
20.15 14 February 2020: Manchester applies for permission to amend its Re-Amended Particulars of Claim to bring claims for breach of trust and dishonest assistance, and for summary judgment thereon;
20.16 5 March 2020: Defendants consent to amendments; Manchester undertakes not to move summary judgment (or similar) applications prior to trial;
20.17 20 March 2020: Defendants' Re-Re-Re-Amended Defence;
20.18 30 March 2020: Manchester Re-Re-Amended Reply.
Claim No: CL-2018-000332
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
B E T W E E N:-
Claimant/Applicant
Defendants/Respondents
1. Common Ground
(a) The KGK Claim
1.2 Mr Sochin is the beneficial owner of Balfour.
(b) The MARIS Claim
2. ISSUES IN DISPUTE
(a) The KGK Claim
2.4.1 Was Mr Sochin in breach of fiduciary duty by not informing Manchester of the KGK Payment Proposal?
2.4.2 Would Manchester have accepted the KGK Payment Proposal had Mr Sochin informed Manchester of it?
2.4.3 If so, what was the likelihood that KGK would have made payment to Manchester in accordance therewith?
2.6 Did KGK pay Balfour pursuant to the Balfour Charterparties?
2.8.1 Is the assignment an authentic document? If so, what were the terms of the assignment including, in particular, as to the termination of the assignment?
2.8.2 Has Morshelf-Caspiy made payments in respect of the KGK Charterparties to Manchester? If and to the extent it has not, (if relevant) what has happened to those funds?
2.8.3 (If relevant) what payments Morshelf-Caspiy is obliged to and/or will it make to Manchester in the future?
2.8.4 Was it reasonably foreseeable that Manchester would assign its rights to sue KGK to a Russian company?
2.8.5 Was Manchester (as the Defendants allege) the cause of its own loss insofar as it entered into an assignment permitting Morshelf-Caspiy to retain part of the amounts due under the KGK Charterparties?
2.8.6 Was the assignment (both in principle and on the particular terms) reasonable mitigation / in breach of the duty to mitigate?
2.8.7 Has Manchester caused its own loss and/or failed to mitigate its loss by not exercising the termination rights in the assignment?
2.8.8 Are payments made by KGK to Morshelf-Caspiy (as assignee) under the KGK Charterparties to be taken into account in assessing Manchester's loss in circumstances where Morshelf-Caspiy has failed to account to Manchester under the assignment?
2.8.9 Has Mr Baranov and/or companies associated with him derived, or will he/they derive some benefit from the conclusion of the assignment? If so, should Manchester's damages be reduced?
2.8.10 Was the assignment entered into in connection with the (alleged) improper arrangements involving Mr Baranov referred to in paragraph 2.6 above?
(b) The MARIS Claim
2.9.1 What is the correct approach for assessing dishonesty?
2.9.2 To what extent (if any) is the Court to have regard to Mr Sochin's stated purpose in effecting the admitted breaches?
2.9.3 If relevant, what was Mr Sochin's purpose?
2.9.4 Were the SMC Charterparties genuine or, as the Defendants allege, were they forgeries?
2.12.1 Did Manchester retain, following the admitted breaches of duty, valuable rights to bring a claim against MARIS, or would MARIS have had a defence to such claims under Article 182(1) and 189(2) of the Russian Civil Code?
2.12.2 If Manchester did retain valuable rights, what is the value of such rights? And is the value of those rights to be taken into account in assessing Manchester's loss?
2.13.1 Did Manchester charter the Shevchenko from Silverburn or from SMC?
2.13.2 If Manchester chartered the Shevchenko from SMC, what were the terms of charter? Are the charterparties on which the Defendants rely genuine, or, as Manchester alleges, are they forgeries?
2.13.3 Did Manchester pay invoices which referred to the written charterparty with SMC?
2.13.4 Was there, as Manchester contends, an "undocumented arrangement" between Manchester and SMC? If so, what were the terms of this arrangement?
2.14.1 Is the hypothetical counterfactual scenario asserted by the Defendants relevant to the assessment of damages?
2.14.2 Prior to October 2016 had SMC issued invoices to Manchester which Manchester was obliged to but had failed to pay?
2.14.3 Would SMC have been entitled to withdraw the vessel?
2.14.4 Would SMC have withdrawn the vessel? If so, when?
The Breach of Trust Claims
2.15 As regards the claim against Balfour for breach of trust:
2.15.1 When Balfour paid out the trust fund, did it do so in breach of trust?
2.15.2 If so, is Manchester entitled to equitable damages?
2.16.1 What law governs the claim in dishonest assistance? If the applicable law is Latvian or Russian law, do those laws recognise a claim for dishonest assistance in breach of trust?
2.16.2 Did Mr Sochin procure or assist Balfour in the payment out of the trust fund?
2.16.3 If so, was such assistance dishonest?
(c) Interest