Magnum Investment Trading Corporation v The Attorney General of the British Virgin Islands

• Jurisdiction: British Virgin Islands
• Judge: Ellis J.
• Judgment Date: 19 July 2018
• Neutral Citation: VG 2018 HC 8,[2018] ECSC J0719-2
• Court: High Court (British Virgin Islands)
• Docket Number: Claim No. BVIHCV 2016/0035
• Date: 19 July 2018

[2018] ECSC J0719-2

EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

Claim No. BVIHCV 2016/0035

Between:

Magnum Investment Trading Corporation

1 ^st Claimant

Niteroi Limited

2 ^nd Claimant

and

The Attorney General of the British Virgin Islands

1 ^st Respondent

Magistrate Ayanna Baptiste–Dabreo

2 ^nd Respondent

Appearances:

Mrs. Monica Carrs-Frisk, QC, Mr. Paul B. Dennis, QC with Ms. Nadine Whyte, Counsel for the Claimants

Mr. Hefin Reese, QC, Mrs. Jo-Ann Williams-Roberts (Solicitor General), and Mrs. Kaidia Edwards-Alister, Ag. Principal Crown Counsel, Counsel for the Respondents

Ellis J.

1 The Claimants are both BVI registered companies which indirectly own shares in a Russian company, OJSC Togliaytiazot (“ToAZ”), one of the most successful mineral fertilizer production companies in Russia.

2 By letter of request dated 19 ^th June 2015 (received on 1 ^st October 2015), (“the Request”) the Russian Authority, namely the Investigative Committee of the Russian Federation, sought assistance of the First Respondent in obtaining evidence in aid of criminal investigations taking place in the Russian Federation involving the offence of “swindling”. The Request indicated that the Russian Authority is investigating a criminal case against named individuals, Makhlai Vladimir Nikoloayevich, Makhlai Sergei Vladimirovch, Korolev Evgeniy Anataloyveich, Andreas Zivi and Beat Reprecht (the “Persons under Investigation”) for allegedly stealing products from ToAZ valued at approximately USD$3Million by “deception and abuse of confidence” over the period 1 ^st January 2008 – 31 ^st December 2011. The Request further provides that during the period of the alleged swindling, three of the Persons under Investigation managed ToAZ via foreign legal entities which included Thornton Ventures Limited and A.S. Industries Limited.

3 The Request contends that in December 2012, shares in ToAZ which belonged to Thornton and AS Industries were transferred to the Claimants respectively pursuant to agreements for sale. On that purported basis, it is contended that the circumstances under which the Claimants were established, the purchase of the shares in ToAZ and the management of those shares are critical to the investigation and so assistance was sought in obtaining certain confidential documents and information belonging to the Claimants.

4 The Request sought the following:

• i. Certified extracts from the trade registers of the Claimant Companies for the period starting from their date of incorporation to the date of the Request.

• ii. Interrogatories of the directors and other managers of the Claimant Companies soliciting responses to the following questions: (a) when the Companies were incorporated and what are their core activities, (b) the banks where the Companies accounts opened from the date of incorporation to present, (c) who are the beneficial owners of the companies from date of incorporation to present, (d) what role did the Persons under Investigation play in the companies, (e) where, when and under what circumstances did the companies acquire the shares in ToAZ (indicating the seller of the shares, the date of the relevant sale and purchase agreement and the number of shares acquired), (f) to whom and in what amount and to what accounts are the proceeds from the purchase of the shares to ToAZ transferred, (g) who represented the company interest at annual general meetings of the shareholders of ToAZ, (h) where, when and under what circumstances were the shares of ToAZ sold (indicating the buyer of the shares, the date of the relevant sale and purchase agreement, the number of shares acquired), or transferred to another asset management company (indicating the company, the date of the relevant trust agreement and the amount of shares transferred), (i) to whom and in what amount and to what accounts were the dividends received on shares of ToAZ transferred.

• iii. The Respondent was to provide a soft and hard copy of the interrogation signed by the person questioned and person who conducted the inquiry.

5 On 11 ^th November 2015 Corporate Agents (BVI) Limited, the registered agent of the director of the First Claimant received a request from the Financial Investigation Agency (“FIA”) seeking information pursuant to section 4(2)(d) of the Financial Investigation Agency Act 2003 (the “FIAA”). On the 18 ^th November 2015, in response to this request, the registered agent delivered a number of documents to the FIA.

6 On 8 ^th January 2016, the First Respondent in accordance with section 6(7) of the Criminal Justice (International Cooperation) (Amendment) Act 1993 as amended by the Criminal Justice (International Cooperation) (Amendment) Act 2004 (together referred to as the “CJICA”), directed the FIA to apply to a Magistrate for a search warrant to search the premises of Corporate Agents (BVI) Limited for the purpose of investigating criminal offences involving of the Claimants.

7 The warrant was granted on 12 ^th January 2016 further to an ex parte application. That warrant sought production of “ all original files, documents, accounts and all other records, kept in the ordinary business whether those records are in written form or kept in microfilm magnetic tape or mechanical or electrical data retrieval mechanism, paid cheques, inter account transfers, telegraphic transfers and all correspondence and notes including all office notes made concerning the company formation. All details concerning changes of the company name and all changes or registered agent, together with all transactions in relation to the Claimants and any other company, trust or bank accounts concerned with the BC's numbers mentioned which is alleged to be connected to a case of swindling …”

8 The documents retrieved were submitted to the FIA by Corporate Agents (BVI) Limited on 22 ^nd January 2016. There was in fact not actual search conducted. The Claimants contend that these are the same documents which had been requested and provided to the FIA earlier in November 2015.

9 The Claimant also contend that although the warrant demands that the documents retrieved should be brought before the Magistrate's Court to be dealt with as the law directs, this was not done in this case. Instead, they allege that steps were taken to transmit the documents to the Russian Authority. This step was only averted by the interlocutory injunctive relief granted on 3 ^rd February 2016 in which the High Court ordered the First Respondent to abort the transmission pending an inter partes hearing. By order dated 10 ^th February 2016, following an inter partes hearing, the Court prohibited the First Respondent from recommencing transmission pending the hearing of the Claimants' Application for Leave to apply for Judicial Review.

10 This claim seeks to engage the Court's supervisory jurisdiction to review three decisions:

• i. The First Respondent's decision of 8 ^th January 2016 to direct the FIA to apply for a search warrant.

• ii. The Second Respondent's decision on 12 ^th January to grant the search warrant.

• iii. The First Respondent's decision on 28 ^th January 2016 that the documents gathered pursuant to the search warrant could be sent to the requesting foreign authority without regard to representations made by the Claimants.

11 The Claimants seek the following relief:

• i. An order of certiorari quashing these decisions.

• ii. An order of mandamus requiring the return of the documents to the Claimants.

• iii. An order prohibiting the First Respondent (his servants of agents) from transmitting the documents to any third party.

• iv. Costs.

• v. Such further and other relief as the Court deems just.

12 The Claimants contend that the Request was issued for improper purposes and formed part of an unfair and unlawful campaign by Russian entities and authorities against the Claimants and entities connected with them. The relief is claimed on the following grounds:

• i. The Respondents unfairly and unlawfully failed to provide to the Claimants the materials relied upon in support of the decisions and the Second Respondent failed to give reasons for her decision to grant the warrant.

• ii. The First Respondent failed to investigate and make necessary inquires before acceding to the request of the Russian Authority.

• iii. The Respondent acted ultra vires in that the statutory preconditions for the exercise of their powers were not met.

• iv. The Respondents failed to properly exercise their respective discretions.

• v. The failure to make full and frank disclosure /non-compliance with the duty of candour in relation to the information provided to the Second Respondent before she made her decision.

• vi. The First Respondent failed to consider the Claimant's representations before taking the decision to transmit the documents to the Russian Authority.

STANDARD AND BURDEN OF PROOF IN JUDICIAL REVIEW

13 Generally, administrative actions are presumed to be legal and valid. 1 However, this presumption is rebuttable. The classic statement of this legal principle is set out in the judgment of R v Inland Revenue Commissioners ex p Rossminister 2;

“Where Parliament has designated a public officer as decision-maker for a particular class of decisions the High Court …must proceed on the presumption omnia praesumuntur rite esse acta until that presumption can be displaced by the [Claimant] for review — upon whom the onus lies of doing so.”

14 Accordingly, the burden is on the party who seeks to set aside any determination, order or decision to bring sufficiently cogent evidence to show that the decision is invalid, unreasonable or unlawful.

15 In R v Lambeth London Borough Council ex parte Ireneschild 3, the English Court of Appeal made it clear that the onus is on the applicant to show the failure to take into account relevant considerations. The applicant also bears the burden of proving that the irrelevant...