Norwich Pharmacal orders: when respondent can be ordered to pay applicant’s costs

Anna Caddick

JSC BTA Bank v Ablyazov concerned an application by BTA Bank for the costs of compliance with a Norwich Pharmacal order to be paid by the respondent, Mr Tyschenko.

Mr Tyschenko was a Ukrainian businessman with interests in a range of oil, gas, banking and real estate assets. The bank’s case was that he was an associate of Mr Ablyazov, who had assisted him in putting assets beyond the reach of the bank. Mr Tyschenko’s (former) wife is of particular fame as she unknowingly led the bank’s enquiry agents to Mr Ablyazov’s hide-out in Cannes, France, when she travelled there directly from a hearing in the Commercial Court. Mrs Olena Tyschenko was a former lawyer for Mr Ablyazov and at some stage become romantically involved with him. This event led to Mr Ablyazov’s arrest and current detention in France, where he remains awaiting the outcome of an extradition request from the Ukraine.

Further to the Norwich Pharmacal order, Mr Tyschenko filed two affidavits and attended twice voluntarily for cross-examination. The bank contended that Mr Tyschenko’s evidence was “dissembling and evasive” and that he should therefore bear the bank’s costs. Mr Tyschenko said that he had substantially complied with the order and therefore the ordinary Norwich Pharmacal costs order should follow, i.e. he, as the respondent to the order, should receive his reasonable costs of compliance. He submitted that it was only where the respondent was subsequently convicted of a crime or judgment was entered against him in respect of a tort that the usual rule could be departed from, and that it would be inappropriate for the court to conclude that he was implicated in Mr Ablyazov’s wrongdoing at this interlocutory stage.

Mr Justice Flaux did not agree: the issue was whether at the time the question of costs was before the court, the court was satisfied that the respondent had supported or was implicated in the wrongdoing or had sought to obstruct justice. There was no requirement for a trial; indeed the claimant might have no intention of ever suing the respondent. Neither was the claimant required to show that there had been substantial non-compliance. The assessment was instead qualitative and flexible.

Mr Tyschenko argued that he was a busy businessman with many interests who could not be expected to know the detail of everything that he was involved in. However, the inconsistencies in his evidence could not be explained away on that basis (and indeed he had not made that excuse in the course of his evidence). Although the order had been amended to make it clear that Mr Tyschenko was not obliged to make enquiries of third parties, Flaux J held that he could easily have found out much of the information he purported not to know from documents held by his own companies. In the round, the judge agreed that Mr Tyschenko’s evidence had indeed been dissembling and evasive and that there was material before the court which demonstrated that he was implicated in Mr Ablyazov’s wrongdoing. Therefore Mr Tyschenko could no longer be regarded as an innocent third party unwittingly caught up in someone else’s wrongdoing.

Flaux J allowed the bank’s application in part, holding that Mr Tyschenko was entitled to 25% of his costs of preparing his affidavits and the bank was entitled to its costs of a two-day cross-examination exercise.

JSC BTA Bank v Ablyazov and 16 others [2014] EWHC 2019 (Comm)

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