JSC VTB Bank v Alexander Katunin

• Jurisdiction: British Virgin Islands
• Judge: Jack, J
• Judgment Date: 31 January 2022
• Neutral Citation: VG 2022 HC 5
• Judgment citation (vLex): [2022] ECSC J0131-1
• Docket Number: CLAIM No: BVIHC (COM) 2014/0062
• Court: High Court (British Virgin Islands)

EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

(COMMERCIAL DIVISION)

CLAIM No: BVIHC (COM) 2014/0062

Between:

JSC VTB Bank

Claimant

and

(1) Alexander Katunin

(2) Sergey Taruta

Defendants

Determined on the basis of written submissions:

Mr. Grant Carroll and Mr. Daniel Mitchell of Ogier for the Claimant

Mr. Adrian Francis and Mr. Carl Moran of Maples for the Defendant

1 Jack, J [Ag]: On 29 ^th November 2021, I determined a number of supplemental issues. This followed a judgment delivered orally on 15 ^th June 2021 where I held that the claimant was entitled in principle to a judgment against the defendant (“Mr. Taruta”) for the judgment debt ordered to be paid by the Meshchansky District Court of Moscow in its judgment of 28 ^th February 2014 (as varied by a subsequent decree of the same Court dated 24 ^th March 2014). The precise amount due was stood over for determination on 25 ^th November 2021.

2 On that date, the parties agreed that the sum due under the Meshchansky judgment was US$29,993,498.25. I stood over further an issue as to whether interest under the Judgments Act 1907 1 should run from 15 ^th June 2021 or from 25 ^th November 2021. This is my determination of that issue.

3 There is also an issue as to what sum should be ordered by way of an interim payment as to costs, which I deal with below.

4 Further Mr. Francis on behalf of Mr. Taruta sought to make submissions on the form of the order appointing receivers. However, I have already approved that order. I am not minded to vary the order in the absence of any formal application to that effect. Likewise there is no formal application before me for a stay of execution, which is the last of the matters raised by him.

The date from which interest runs

5 I turn then to the date from which interest should run. The Judgments Act 1907 provides that:

“…every judgment debt shall carry interest at the rate of five per centum per annum from the time of entering up the judgment, or from the time of the commencement of this Act in cases of judgments then entered upon and not carrying interest, until the same shall be satisfied, and such interest may be recovered in the same manner as the amount of such judgment.”

6 Mr. Francis submits that it is only once the judgment debt has been quantified that interest starts running. He relies on the House of Lords decision in Thomas v Bunn for this proposition. Lord Ackner said: 2

“The wording of [the English provision] clearly envisages a single judgment which constitutes the ‘judgment debt’. This ‘judgment debt’ can only arise where the judgment itself quantifies the sum which the judgment debtor owes to his judgment creditor. The language of the section does not envisage an interlocutory judgment, but only a final judgment.”

7 The law in relation to costs orders, Mr. Francis submits, is anomalous. Interest under the Judgment Act runs from the date of the order awarding costs (the incipitur rule) not from the date on which costs are quantified: Stichting Nems v Gitlin, 3 applying Hunt v R M Douglas (Roofing) Ltd. 4 It should not, he submits, be applied generally.

8 Mr. Carroll by contrast says that Thomas v Bunn is a case on damages and indeed specifically damages for personal injury. Their lordships were hearing three appeals together. In each there had been interim judgments on liability with quantum subsequently to be determined at trial. The House of Lords determined that interest under the English Judgments Act 1838 5 only ran from the judgment on the quantum of damages. Different rules, he says, apply to claims for debt.

9 I do not agree with Mr. Carroll. In my judgment his proposed differentiation between claims for damages and for debt overlooks Lord Brightman's observations in Thomas v Bunn, where he referred to: 6

“the decision in Attorney-General v Lord Carrington. 7 This case is of respectable antiquity. It was decided only five years after the Judgments Act 1838 was passed, and therefore at a time when the pre-existing practice against which the Act falls to be construed, must have been well present in the minds of all concerned. In that case an information had been filed seeking to recover two annuities from the estates of the second Lord Carrington. By a decree made in December 1842 the lands were declared chargeable with one of the annuities and the master was directed to take an account of the arrears. It was also ordered in the same decree that the amount so found due should be paid by the defendant into the bank. The master made his report in April 1843. It was contended by the informant that under sections 17 and 18 of the Act the defendant was liable to pay interest on the sum certified calculated from the date of the decree down to the date of the master's report. The defendant, however, argued, at p 461: ‘that there was no decree whereby any sum of money was payable, at least until the amount had been ascertained by the master.’ Lord Langdale MR found for the defendant and held that he was not chargeable with interest during this period. This case has stood for 150 years without, so far as I am aware, exciting any adverse comment, and I see no compelling reason for departing from its principle today.”

10 In England, the law has moved on. As Leggatt J (as he then was) explained in Involnert Management Inc v Aprilgrange Ltd: 8

“There has been a further relevant statutory change since Hunt's case was decided. At the time of that decision section 17 of the Judgments Act provided for judgment debts to carry interest ‘from the time of entering up the judgment’ — which was construed as meaning the date on which the judgment was pronounced. When the [English ] Civil Procedure Rules were introduced in April 1999, section 17 was amended so as to provide for interest to run ‘from such time as shall be prescribed by rules of court’. [English ] CPR 40.8(1) provides that, where interest is payable on a judgment pursuant to section 17 of the Judgments Act 1838, ‘the interest shall begin to run from the date that judgment is given unless … (b) the court orders otherwise’. That rule accordingly gives the court power to order interest under the Judgments Act to run from a later date than the date of the costs order.”

11 The Eastern Caribbean rules were less prescriptive than the English RSC. Order 42 rule 3 of the Eastern Caribbean RSC provided:

• “(1) A judgment or order of the Court or of the Registrar takes effect from the day of its date.

• (2) Such a judgment or order shall be dated as of the day on which it is pronounced, given or made, unless the Court or the Registrar, as the case may be, orders it to be dated as of some other earlier or later day, in which case it shall be dated as of that other day.”

12 This flexibility is reproduced in our CPR where rule 42.8 provides:

“A judgment or order takes effect from the day it is given or made, unless the court specifies that it is to take effect on a different date.”

There is, however, no express power given by primary legislation to direct that an order take effect from a different date to that on which it is pronounced.

13 Mr. Francis submits that the absence of any statutory underpinning to CPR 42.8 means that I do not have the power to order that interest run from 15 ^th June 2021. In an earlier judgment in the Stichting Nems v Gitlin litigation, 9 Adderley J was asked to make a charging order absolute. This was opposed on the basis that there was no statutory basis for making a charging order, so the Court had no power to make such an order, despite the terms of CPR Part 48: see Levy v Ken Sales & Marketing Ltd on a similar point in the Privy Council on appeal from Jamaica. 10 The judge held that in the absence of primary legislation giving the Court the relevant jurisdiction, he had no power to grant a charging order.

14 An appeal was allowed against the decision of Adderley J. 11 This was on the ground that there was statutory underpinning in this Territory for the charging order regime in CPR Part 48. The UK Judgments Act 1838 and Judgments Act 1840 12 were in force in this Territory (a point not brought to Adderley J's attention) and these provided a statutory basis for the making of a charging order absolute. The Court of Appeal did not, however, cast any doubt on the principle that the CPR cannot change the substantive law. I thus agree with Mr. Francis' submission that the CPR on its own cannot justify a backdating of the order quantifying the amount of the judgment.

Judgments nunc pro tunc

15 That, however, is not the end of the matter. Even if there is not a statutory power to backdate a judgment, there may be a common law power. In Re MG Engineering and Consulting Ltd, 13 whilst sitting in Gibraltar, I had to consider whether I could retrospectively change an order which had fixed a liquidator's remuneration at a very low figure. 14 I held:

• “24. A general power, if it exists, must, in my judgment, be sought in some separate and identifiable common law power. There was a common law power to make orders nunc pro tunc (i.e. backdating the order). This was recognized in the first

  civil procedure rules, the Hilary Rules 1834, 15 rule 3, and was repeated (with minor drafting amendments) in rule 56 of the Hilary Rules 1853, 16 which provided that—“…all judgments, whether interlocutory or final, shall be entered of record of the day of the month and year, whether in term or vacation, when signed, and shall not have relation to any other day; but it shall be competent for the court or a judge to order a judgment to be entered nunc pro tunc.”

• 25. Pollock B in Hemming v Batchelor 17 said: ‘I refer to this rule [rule 56] for the purpose of drawing attention to the word “competent.” This word is explained by what was the practice before any such rule of court existed. It was then the practice of the courts, if either party died pending...