Kazakhstan Kagazy plc and others v Zhunus and others – WLR Daily

Posted October 31st, 2016 in civil procedure rules, contribution, fraud, freezing injunctions, law reports by sally

Kazakhstan Kagazy plc and others v Zhunus and others [2016] EWCA Civ 1036

‘The claimants were a group of companies. The first and second defendants had been, respectively, the chairman of the board and the chief executive officer of the first and second claimants. The third defendant had been the finance director of the second claimant. The claimants issued proceedings alleging, inter alia, that the defendants had dishonestly caused the claimant companies to enter into transactions in which large sums of money were paid to entities owned or controlled by the defendants and which had caused the claimants to incur substantial financial losses. All three defendants served defences denying fraud and dishonesty or that they had personally benefitted from the transactions. Subsequently, the first defendant reached a settlement of the claim against him with the claimants. The second and third defendants applied for permission pursuant to CPR r 20.6(2)(b) to bring a contribution claim against the first defendant, no such claim having been filed and served when they served their defence. The second defendant further sought a worldwide freezing order against the first defendant. The judge refused the applications, holding that (i) the claim for contribution was bound to fail because the draft contribution notice sought to be relied upon by the second and third defendants did not advance a case of actual fraud or wrongdoing by the first defendant and, following the their settlement agreement with the first defendant, no such case was being advanced by the claimants which the second and third defendants could adopt as an alternative to their primary position that they had acted honestly; and (ii) the court could only grant a freezing injunction once the applicant had an accrued cause of action, which, in the context of a claim for contribution, was once the contribution notice had been filed and served under CPR r 20.6(2).’

WLR Daily, 26th October 2016

Source: www.iclr.co.uk