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Charles Samek QC & Marc Delehanty in important appeal re: damages for freezing order breaches & jurisdiction for conspiracy claims

Charles Samek QC and Marc Delehanty acted for the Appellant / Cross-Respondent, Ilyas Khrapunov, in an important appeal which breaks new ground in the law on civil liability for freezing order breaches and jurisdiction for conspiracy claims. Charles and Marc were instructed by Peter Black and Matthew Jenkins of Hughmans Solicitors.

JSC BTA Bank v (1) Ablyazov and (2) Khrapunov [2017] EWCA Civ 40

The Court of Appeal (Gloster, Beatson and Sales LJJ) handed down judgment in this appeal on 2 February 2017 and it will be of great interest to commercial and civil fraud law practitioners.  The judgment concerns: (a) the scope to bring claims for damages for breaches of a freezing order (both direct actions and conspiracy claims); and, (b) when an English Court will have jurisdiction for a claim of conspiracy to breach a worldwide freezing order.

Background

The Bank had issued proceedings in the Commercial Court against Mr Ablyazov and Mr Khrapunov (the former’s son-in-law) alleging that the two had conspired together to breach court orders (worldwide freezing and receivership orders) made against Mr Ablyazov in previous English proceedings with the aim of preventing the Bank from executing against assets of Mr Ablyazov.  Its pleaded cause of action was unlawful means conspiracy.

In response, Mr Khrapunov issued a CPR Part 11 application, challenging the Court’s jurisdiction to try the pleaded claim.  As part of that application, he also challenged the viability of the underlying cause of action – on the basis that there can be no civil liability in damages for breach of a court order (where the acts prohibited by the court order are otherwise lawful) and, so, no cause of action in unlawful means conspiracy where the pleaded unlawful means are breaches of court orders.

Following a judgment from Teare J, which variously supported some of Mr Khrapunov’s contentions and some of the Bank’s contentions, both sides appealed. 

Summary

In summary, the Court of Appeal held as follows:

1. Accepting Mr Khrapunov’s argument, that no cause of action arises simply by virtue of a civil contempt of court being committed by a defendant (e.g., breach of a freezing order).
2. Nevertheless, on an application of the general principles from the House of Lords case of Total Network, there can be a cause of action in unlawful means conspiracy where the unlawful means consist only of deliberate breaches of Court orders. Essentially, the Court held that it does not follow from its finding at point 1 above that there is a positive rule of law precluding a cause of action which relies on a breach of a court order as a necessary element of it.
3. Accepting Mr Khrapunov’s contention, that there is a clear distinction between an unlawful means conspiracy (which only requires an intention to injure the claimant) and a lawful/non-unlawful means conspiracy (which requires a predominant intention to injure the claimant). Essentially, although the Court did not revisit the authorities on this point, it expressed obiter that, as a matter of logic, predominant purpose to injure is different to the predominant purpose of serving one’s own interest (even though the necessary and intended consequence of pursuing the latter may, of course, effect injury).  Accordingly, the Bank’s pleaded claim in unlawful means conspiracy could not suffice as a claim in lawful/non-unlawful means conspiracy. 
4. Accepting Mr Khrapunov’s argument, that Article 6(1), Lugano Convention 2007 (cf. Article 8(1) Brussels I Regulation recast) – which provides for jurisdiction if a co-defendant is domiciled in England – was not engaged.  It was not sufficient to show Mr Ablyazov would have been in England if he had not unlawfully left the country in breach of a court order to remain. This is because there is no implied disapplication of section 41 / 41A of the Civil Jurisdiction and Judgments Act 1982 on the basis that a person should not be allowed to take advantage of his own wrong.
5. Accepting Mr Khrapunov’s argument, that the place of the alleged damage arising from the alleged conspiracy to dissipate and conceal assets of Mr Ablyazov would be the places where those assets were allegedly dissipated and concealed and not England, where the Bank alleged its choses-in-action and judgments had suffered a diminution in value.  Accordingly, the Bank could not rely on the ‘damage’ limb of the ‘Bier’ test to found jurisdiction under Article 5(3), Lugano Convention 2007 (cf. Article 7(2), Brussels I Regulation recast).
6. Nevertheless, there is Article 5(3) jurisdiction in England under the ‘event causing the damage’ limb of the ‘Bier’ test on the basis that the alleged conspiratorial agreement was entered into by the defendants in England (or communication of assent to entry into the agreement was received by Mr Ablyazov in England).  The Court considered that the ‘hatching’ of the conspiracy, rather than the putting of the conspiracy into effect (i.e., the alleged acts of asset dissipation) is the harmful event for the purposes of the tort of unlawful means conspiracy.

The full text of the judgment can be found here.

The Chambers UK directory lists Charles as a leading QC in its commercial dispute resolution and fraud (civil) categories, describing him as an “outstanding advocate. He has real presence in court and you can see that the judges really listen to him. He came across really well”; “extremely bright, hard-working and responsive”; “very clear in terms of his thinking, advice and advocacy”; and “a fantastically hands-on, very user-friendly and talented advocate”.

The Legal 500 directory recommends Marc as one of the country’s leading junior barristers for civil fraud law, describing him as “a very clever lawyer with massive knowledge of the law”.