The Office For National Drug et al v Pavlo Lazarenkl aka Pavel Lazarenko et al

ANTIGUA AND BARBUDA IN THE HIGH COURT OF JUSTICE EAST CARIBBEAN SUPREME COURT (IN THE COURT AD 1999 OF APPEAL) CIVIL APPEAL NO. 22 OF 1999 BETWEEN THE OFFICE FOR NATIONAL DRUG AND MONEY LAUNDERING CONTROL POLICY Appellant/Applicant and (1) PAVLO LAZARENKL aka PAVEL LAZARENKO (2) FIRSTAR SECURITIES LTD. (3) NEMURO INDUSTRIAL GROUP LTD . (4) GUARDIAN INVESTMENT GROUP LTD. (5) ORB Y INTERNATIONAL LTD. (6) LADY LAKE INVESTMENT CORPORATION (7) FAIRMONT GROUP LTD . (8) PETRO MYCKOLAYIOVYCH KIRICHENKO aka PETRO KYRYTSCHENKO (9) ALEXANDER LIVERANT Respondent Appearances: Mr . JohnFuller and Curtis Bird for Appellant/Applicant Ms. Joyce Kentish for Respondents 1999: December 22 DECISION

[1]GEORGE S J: Let me say at the very outsetthat this is in a senes 2n exerr.::i ‘=ni futility in that before the Courtis a summons dated 17th December1 9 99 and filed20 th D ecme ber 1999 to stay an Order of Mr. JusticeHenry Moe madethe 1 7 thday of December, 1999 varying a Restraint Order of the Court dated 281h October , 1999 wherelJy theLiquidators of Eurofed Bank Limited (In liquidation) were ordered topay debts and legal fees of the first Respondent totalling US$1,582,361.98 [2 ] FREEZING ORDER ON EUROFED BANK 2& OCTOBER 1999 T he Restraint Order was in effect an order freezing or restraining any dealings in all accounts at Eurofed Bank Limited (“the Bank”) and any other ftnancial institutions ni Antigua and Barbuda in the name of each or any of the Respondents or any co rproa tion, company or trust where each or any of them was a director, trusteeor beneficial owner.

[3]Provision was made for variation or discharge of the said order by any of the resp ondentsby application to the Court at any time on giving two dear days notice to the solicitor for the Appellant.

[4]APPLICATION BY RESPONDENTS ANO INTERIM ORDER On application of the first, second, third, fourth, fifth, sixth and seventh named Resp ondents made by summons dated 9111 December, 1999 Mr. JusticeHenry Moe, on 17rn Decembe,r 1999 made inter alia, an interim order varying t he res rta int/injunctiveorder made (by him) on 28111 October, 1999 and ordered that the App e llantby the Liquidators ( of the Bank) releaseforthwiththe following sums of money from the accounts of the first, second, third, fourth, fifth, sixth and seventh respondnets’ accountsfor the pay,:-:0 ntof the debts and legal expenses of the first­ named Respondent namely: (1) $1 Million United Statas Dollars to Jeffer Mangels, Butler & Marmaco, LLP; (2) $300,000.00 United States Dollars to Ross, Suchoff, Hankin, Maidenbaum: (3) $282,361.98 United States Dollars to the firm of Curtis Mallet-Prevost Colt & Mosle, LLP.

[5]RESPONDENTS’ UNDERTAKING TO REPAY TheRespondents were ordered togive to thecourt an undertaking torepay the funds releasedshould it be satisfactorily proven that the said funds were not their lawful property. Leave to appeal the said order was simultnneously granted to the Appellant.

[6]APPEAL AND APPLICATION TO STAY ORDER Noticeof appeal dated 1rnDecember, 1999was duly lodged by the Appellanton 2oin December, 1999 together with a summons for stay of the said orderpending final determinationof the appeal. The application for stay was most vigorousyl opposed.

[7]Whenit in fact first came on for hearing on Monday 201 December, 1999, Counsel for theRespondents ( Ms . Kentish) claimedthat she had only just been served with the summons and had not been given appropriate nciice. Sh8 needed t;r.-:e. Applicationfor an interim stay until the hearing of the summonto stay was also ., .) opposed and refused by the Court. By com:en,t the hearing we::: adjourned to Wednesday 22ndDecember, 1999 when Ms. Kentish raised apreliminary point to the effect that this Cour., being a court of coordinate jurisdiction with that which had made the interim order, had no jurisdiction to entertain the application for the stay after the hdge ilad himself refused a viva voce application made by Counsel for the Appellant. [SJ Th si was vehemently denied by Mr. Fuller who contended that what he had in fact done was to apply for leave to appeal which was granted. [9 ] There is no note in the Judge’s Chamber Book of any application for stayhav ni g been made at the time that the Order was made. Leave to appeal howveer cons tit u tespart of the Ordermade. I am therefore guided by the Judge’s notes on that aspect of the matter. [1OJ JURISDICTION TO STAY EXECUTION An application for stay of execution of a judgmenot r orderappealed from penndgi the determination of the appeal would ordinarily be made to a Judge of the Court of App e alin accordance with Rule 16 of the Court of Appeal Rules 1968, but wheret h si may cause undue inconvenience or delay a Judge of the Court below may by virtue o f Rule 17(1) exercise the powers of a single Judgeof the Court of th’? Appeal.

[11]ARGUMENTS The grounds for stay of execution in a nutshell are that the interim order for payment o f the first Respondent’s debts andlegal expenses to ‘he tune of over US$1.5Million Un ited States Dollars, wc1s in the circumsta ces precipitate as the hearing of the resp ondents’ summons dated 9111 Decembci”, 1%9 to vary or discharge theRestraint Order had not by then concluded. [ 1 2] According to paragraphs 3, 4 and 5 of the Appellan’st affidavit in support of the summons for stay of the orde,r the hearing of the summons commenced on the 16!11 D ecember, 1999 and was adjourned after argument and testimony until 17th Decerrber, 1999 when further argument and testimony took place. At midday on 17th D ecember, 1999 the Judge agreed to adjourn thematter until the11h’ January, 2000. At that stage the Respondents had not as yet completed their case, nor had their witnesses completed their testimon. yUpon the said adjournment, Counsel for the Respondents applied spontaneously for an order for interim payment and after hearing the application and the objectionsthereto by Counsel for the Appellan,t the order was made as aforesaid. [ 1 3 ] Mr . Fuller further contendedthat in the event that the Learned Judgeshould at the conc ul s ion of the adjourned hearing find against the Respondents there would be no possibility of r ove!’)’ cf the funds which were ordered to be paid out under the ni te rim order as they were on the face of it to be paid to third parties outside of the jurisdictiunand any undertakiriq given by the Respondents would be valueless because the first Respondent had himself declared that he has no assets to access.

[14]Notwithstanding that and without giving any reason,sthe Learned Judge had rnade the order which he did Mr. Fuller complained; contending that an interim ciderfor payment was wholly inappropriate in proceedings of this nature, would be arbitrary and without basis in fact and in law. Further, the order was directed to the Liquidators of the Bank who were not parties to the proceedings and were neither present nor represented and had had no inputwhatsoever. Theywere the persons now under pressure to pay he disclosed and threatened with contempt proceedings.

[15]Inresponse, Ms. f<entish, Learned Counsel fortheRespondents submitted that there was at the time a preponderance of evidence before the Judge to show that the funds were indeed owned by the first Respondent. There was before him, she pointed out, the sworn affidavit of the first Respondent’s lawful attorney which asserted and made out a clear claim of ownershi.p There was also the evidence of Vladimir Ivanov, an employee of the Bank who had testifiedto the setting up of the accountsin the names of the corporate and other indvi idual Respondents and had also testified that the original signature cards to those accounts had been signed by the first named Respondent. There was other compelling evidencebefore the learned JudgeMs. Kentishsubmtited which if beli8vedwoulc havG given irri oorl and sufficient reason to make the order which he did and which in all the

[16]THE LAW It is no par of my function as I see it to sit as it were on appeal on the merits of the interimorder_ti f 17tn December 1999. In determining whether or not to grant a stay of execution I am guided by the principles set out at paragraph 59/13/1 of the 1995 Edition of the White Book at page 1009 under the rubric “When will a stay of executionbe granted.” There, the learned authors stress that an appeal does not operateas a stay on an order appealed against except to the extent that the court below or the Court of Appeal otherwise directs. Thepoint is made that neitherthe court below nor the Courtof Appeal will grant a stay unless satisfied that +hereare goodreasons for doing so and the Court does not “make a practice of depriving a succesfsul litigant of the fruits of his litigationand locking up fundsto which prima faciehe is entitled” pendingan appeal. Thatsaid the learned authors go on to point out that the Court is likely to grant a stay wherethe appeal would otherwise be rendered nugatory and the question whether or not to grant a stay is entirely in thediscretionof the court and the court will grant it where the special circumstancesof the caseso requir.e Further, executoin might be stayed where for example the judgmentis in favourof a person resident out of or about to leave the jurisdictionor if, under a court orde,r money is to be paid out of a fund and distributed amonga largenumberof person,; resraentabroad and an injunction may even be granted restraining dealings with the

[17]CONCLUSION It is my considered view that the liquidators as the persons most likely to be affected by any application for variation or dischar e of the Restraint Order ought at the very el as t to have been served with notice of these proceedings for they are the ni d vi idualswho are at the very heart of the Bank’s liquidation/affairs. An d if for no other reason I would myself have ordered a stay, where as M.r Fuller has (q u i te rightly in my view) pointed out, payment of not inconsiderableand apparently unverified sums is ordered to be paid to third parties who are resident out of the jurisdiction and where the possibility of recovery is most unlikely should such payments later prove to have been wrongfully ordered. I fully agree that the mere undertaking of the Respondents to repay could prove worthless having regard to all thecircumstances. TheAppellant’s appeal would thereby have been rendered completelynugatory. An d that view is reinforced by the fact that the interimpayment ordered could be made in an instant without there being adequate and proper safeguards for full reparation to the Appellantin the event that the Court should later find that the Respondents are not beneficially entitled to the money which is in itself an issue in se roiu s dispute and will require full and mature considerationfor its p rop er determination. For the foregoing reasons tt: re is in my judgment a real likelihood of the appeal succeeding and I would have granted the stay accordingl.y

[18]At the conclusion of the hearing, shortly before noon the decision was resevred for 3 o’clock that very afternoon. Within minutes Mr. Fuller who had eAited my Chambres returned and informed me that the Liquidators had in fact paid the sums ordered on 17 t h December, 1999. The offices of Messrs Lake & Kentish (for the Respondents) also confirmed by telephone shortly thereafter that they had received a facsimile message to that effect late that morning. Anydecision of the Courtwas thereby rendered nugatory as it had been overtaken by events.

[19]Speakingformysel,f I did not inthe first place quite frankly, expect the applicaiot nfor a stay to have been opposed having regard to all the circumstance.sThelearned Judgehad after all immediately granted leave to appeal on making the order which he did and indeed a notice of appeal was promptly lodged by the Appellanttogether with an application for its stay.

[20]Experienceshows that it is very seldomthat applications for stay are opposed in suchcircumstances. Significantly, even a 48 hour stay (pendingthe actual hearing) was resisted (and refusedby the Court) when the ::::ppl(::at:cn fast came 0n for hearingon Monday 20th Decembe,r 1999. In hindsight, this oughtto have been granted from the very outset. The gut feeling is that learned Counsel for the Respondents was determined to thwart this appeal and has in fact succeeded in de;ng so. Unfortuntae ly, as it h&.S turned out, it is the liq uidators who were neither present nor rep rsee n-te1 at the hearing of these proceedings who have been compelled to comp ly with the ensuing court order without the benefit of being heard or malcing an informed judgment of their own in the matter. ….

[21]This to my mind is an entirely undesirable and unsatisfactory st Ephraim F. Georg < p align=”right”>High Court Judge