BL-2017-000665 - [2025] EWHC 2909 (Ch)

Mr Kolomoisky’s first Ground of Appeal is that I was wrong to decide that, where the source of what was said to be a repayment was an Intermediary Drawdown made under a Relevant Loan or an Intermediary Loan or the value of a Transferred Asset or one of the New Loans, that repayment will not serve to reduce or extinguish the Bank's claim in tort as it was improperly paid out of the Bank’s own resources.

Mr Haydon accepted Mr Kolomoisky’s prospects of success on Ground 1 depended on his ability to persuade the Court of Appeal to review and then to reverse some of my conclusions on Ukrainian law, which are ultimately questions of fact, albeit fact of what the Court of Appeal has called a peculiar kind (see for a recent example: Byers v Saudi National Bank [2022] EWCA Civ 43 at [103]). He submitted that the extent to which the Court of Appeal will be prepared to embark upon that task may well be affected by the extent to which the principles and legal concepts in issue may be familiar to an English lawyer. As the Court of Appeal said in Macmillan Inc v Bishopsgate Investment Trust Plc (No 4) [1999] CLC 417 at [13]:

“When and to the extent that the issue calls for the exercise of legal judgment, by reference to principles and legal concepts which are familiar to an English lawyer, then the court is as well placed as the trial judge to form its own independent view.”

In contending that the Court of Appeal is likely to be prepared to review the findings I made on Ukrainian law, Mr Haydon relied on the more recent decision of the Court of Appeal in Cassini SAS v Emerald Pasture DAC [2022] EWCA Civ 102 at [46] to [48] in support of the proposition that findings as to foreign law are not subject to the same restrictions on scrutiny by an appellate court as other findings of fact, especially where a novel point of foreign law was an issue. Snowden LJ said the following about the expert evidence of French law in that case:

“Although an appellate court will bear in mind that the trial judge had the advantage of seeing and hearing the expert witnesses, and of clarifying their evidence directly with them, the appellate court is entitled to consider the expert evidence afresh and form its own view of the cogency of the rival contentions in determining whether the trial judge came to the correct conclusion.”

Mr Haydon also submitted that some of the conclusions I reached on Ukrainian law were made at a high level of generality and based on principles which are familiar to English lawyers. It therefore followed that they were more susceptible to review by an appellate court. I do not think that the way this was put in his skeleton argument demonstrated quite the right approach.

I accept the Bank’s submission that the way in which it can be expected that the Court of Appeal will approach the findings of Ukrainian law I made is by reference to the decision of the Privy Council in Perry v Lopag Trus Reg No 2 [2023] 1 WLR 3494, as adopted and explained by the Court of Appeal in Banca Intesa Sanpaolo SPA v Comune di Venezia [2023] EWCA Civ 1482. Factors which are likely to carry considerable weight include the similarity which the foreign system has to English law, including whether or not it is a common law system, whether the foreign law is expressed in a foreign language and the extent to which the judge at first instance had depended on the assistance of extensive expert evidence to explore and explain the many court decisions to which the experts referred in support of their contentions.

It seems to me that the Court of Appeal will also have in mind that I reached my view based on an assessment of each expert having regard to their evidence as a whole, and the way in which they answered the questions posed to justify their opinions. As with the types of factual finding under consideration by Lewison LJ in FAGE UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5, the Court of Appeal will recognise that I had regard to “the whole of the sea of evidence presented to [me] whereas an appellate court will only be island hopping”.

I do not consider that in the present case, these principles are affected to any material extent by what is said in Mr Kolomoisky’s skeleton argument about the significance of delay in the handing down of the Judgment. Unlike Mr Bogolyubov, Mr Kolomoisky does not raise delay as a specific Ground of Appeal. However, it was submitted that delay may well have contributed to the findings sought to be appealed and what are said to be certain relevant inconsistencies in the Judgment and misunderstandings or failures to take into account points made on behalf of Mr Kolomoisky in his closing submissions.

I will come back to what are said to have been the errors, but I should say something about the delay itself. I much regret the length of time which it took to produce the Judgment and it is right that my estimates from time to time of how much longer the task would take were significantly over-optimistic. It took so long to prepare because of the enormity of the task inherent in the nature of the case and the way it was litigated. The case was multifaceted, the submissions were voluminous and almost every issue had to be determined under a foreign law to be decided with the assistance of extensive expert evidence. Paragraph 203 of the Bank’s skeleton argument for the Second Consequentials hearing gives some flavour of the task. I would only add this to what is said there. Quite apart from their length and the level of detail they contained, the cross references in the parties’ closing submissions to earlier submissions, witness statements, expert evidence (including detailed appendices and numerous decisions of the Ukrainian and Cypriot courts) and handouts distributed during the course of the trial were voluminous and many of them had to be tracked down during the course of preparing the Judgment because there had been insufficient time to take the court to them during the course of oral argument. I also found it necessary to re-read all of the transcripts when considering and re-considering the evidence and the submissions (some on more than one occasion). This was a time-consuming exercise which provides a partial explanation for the delay, but it is important to appreciate that in my view this improved rather than undermined my ability to make a proper evaluation of much of the evidence. This may be reflected in the fact that the vast bulk of my findings are not challenged in the Defendants’ Grounds of Appeal.

I say this only because it seems to me that the Court of Appeal will take into account all the many aspects of the case when determining whether there might have been a denial of justice to the losing party by reason of the delay. On this aspect of his application for permission to appeal, Mr Kolomoisky must show that there is a real prospect that it will reach that conclusion, because serious delay is not of itself a sufficient ground to impugn a judgment (Phones 4U Ltd v EE Ltd [2025] EWCA Civ 869 (“Phones 4U”) at [218]), and indeed the contrary is not submitted to be the case. The Individual Defendants must still show that I was wrong or that the Judgment is not safe and that to allow it to stand would be unfair (per Falk LJ at [222]).

Doing the best I can in the circumstances, I do not consider that there is any real prospect of Mr Kolomoisky showing that the delay made any difference to my determination of the points he seeks to challenge. Although it was said in Mr Kolomoisky’s skeleton that I found it difficult to determine the crucial issues on the Repayment Defence because of some confusion and ambiguity in what Mr Beketov had to say ([1078] and [1094] of the Judgment), I have difficulty in seeing how it can be said that those findings were affected in any way by delay and the same can be said about what is also submitted to be inconsistencies in my approach to the Repayment Defence more generally.

Turning then to the detail of Mr Kolomoisky’s Grounds of Appeal, I agree with the Bank’s submissions that much of what is challenged in Ground 1 falls at the first hurdle. He criticises my conclusion that purported repayments (recorded as they were by ledger entries) which were sourced from the further dishonest use of the Bank’s own resources (i.e. Intermediary or New Loans or the excess of Transferred Assets above their true value), did not reduce or extinguish the loss arising from the Relevant Drawdowns. A similar challenge was also made by Mr Bogolyubov as his Ground 5. As Mr Bogolyubov simply adopts Mr Kolomoisky’s case in the alternative to his own Ground 4 with no additional reasoning, what I say in this part of my judgment should be treated as a response to Mr Bogolyubov’s Ground 5 as well. This was an argument which was run in a number of different ways throughout the trial, but I agree with the Bank’s submission that it has no real prospect of success. The core, and in my view unsurprising, answer is that, since the purported repayments were in fact further frauds purporting to make transfers from the Bank’s own resources, they did not provide any genuine value.

As to the further specific Ground 1 points made by Mr Kolomoisky, I do not think it is arguable that the findings I made that each of the drawdowns under Intermediary and New Loans comprised movements of the Bank’s money is in any way inconsistent with the conclusion that these so-called repayments should be disregarded on the grounds that they provided no benefit to the Bank. I also do not think it is arguable that Yurov provides an answer to the Bank’s case because it was different on this point from the present case, being concerned with an outstanding debt owed by a borrower not loss caused by a void transaction by which money was misappropriated. I accepted the Bank’s argument (see [1069] to [1071] of the Judgment) that the clear evidence of Ukrainian law derived from Mr Beketov and the decision of the Grand Chamber in Ukoopspilka was that the loss arising from the making of the Relevant Drawdowns is not co-extensive with what were only the purported contractual debts under the Relevant Loans, which were void.

Like the Bank I had some difficulty in following the contention that I had confused the Bank’s loss caused by a Relevant Drawdown, which was the loss in respect of which the Bank sued, with the Bank’s overall loss. I do not see that there is a real prospect of showing that I was wrong to conclude that the later grant of an Intermediary or New Loan or the later transfer of a fraudulently overvalued Transferred Asset did not extinguish or reduce the Bank’s original loss. There can be no confusion if it is recognised, as Ukrainian law does, that it is open to the Bank, as a victim of the unlawful acts, to make the election I described in [1148] to [1153] of the Judgment. I also agree with the Bank’s submission at the Second Consequentials hearing that the challenge to my finding that the purported repayments under further fraudulent transactions fell to be disregarded is not very clear, but if I understand what is being said, I do not think it has a real prospect of success. Article 216 is only part of the analysis. This is an example of a challenge to the reasoning which takes a single part of the argument out of its proper context. As I made clear in [1086] of the Judgment, the justification for disregarding the payment is that it does not provide the “full compensation” for the harm which the Bank suffered at the time the Relevant Drawdown was made and to which (per [1066] of the Judgment) the Bank is entitled under Article 1166.

Finally on Ground 1, I do not agree that the Individual Defendants have any real prospect of showing that I should have rejected Mr Beketov’s evidence which supported the conclusion I reached. My assessment of his evidence was that it was not incoherent and internally inconsistent for the reasons I gave in [1059] to [1066] of the Judgment, against the background I had set out in paragraphs [1035ff]. I consider it is clear that I was entitled to reach the conclusion I did, that it reflected the law of Ukraine.

The second Ground of Appeal was that I was wrong to decide that the choice by the Bank to treat what is said to be a repayment of a void loan as a discharge of the borrower’s restitutionary liability in relation to the loan does not in and of itself extinguish the Bank’s claim against the third party for the loss sustained in the amount of the loan. It is said that there was no satisfactory evidence of Ukrainian law to support the proposition that the Bank must separately choose to treat the liability in tort as discharged and that my findings in relation to this issue were inconsistent with my findings in relation to Asset Transfers. The third and fourth Grounds of Appeal also challenged my findings on choice, the former in relation to my conclusion that the Defendants sought in closing to advance an unpleaded new case and the latter in relation to the Bank’s choice to credit the Borrowers with the inflated value of the Transferred Assets. These points are all interlinked and I shall adopt the course adopted in the Bank’s skeleton argument of dealing first with the pleading point raised by Mr Kolomoisky in Ground 3(i).

This Ground of Appeal appears to be that I was wrong to hold that Mr Kolomoisky was advancing a new case. I reached that conclusion on the basis that he said in terms that he was no longer contending that liability was automatically extinguished by the ledger entries recording repayment of the Relevant Loans in the Bank’s books ([1087ff] of the Judgment). Rather, as I explained, his case shifted in closing to rely on the factual question of what choice the Bank had made. The shift in case could not have been clearer, and the fact that Mr Kolomoisky now relied on the factual question of whether a choice had been made as opposed to the previous case that the liability was automatically extinguished was reiterated in a number of places in his written closings.

I do not think that Mr Kolomoisky has any real prospect of persuading the Court of Appeal that the conclusion I reached as to why it was not open to him to run the argument on choice that he did ([1083] to [1095] of the Judgment) was wrong. I evaluated the way that the argument was developed, explained why it was new and explained why it would be wrong to permit the case to be run in a manner which was open to me. I consider that the Court of Appeal will not interfere with the conclusions I reached.

Grounds 2, 3(ii) and 4 only arise if the Court of Appeal concludes that I was wrong to find that it was not open to the Defendants to run their new case on free choice. Grounds 2 and 3(ii) challenge the findings I made on Mr Beketov’s evidence as to Ukrainian law (1076] to [1082] of the Judgment) and Mr Oleksiyenko’s evidence as to what actually happened post-nationalisation ([1096] to [1123] of the Judgment). As I explained in [1096] to [1097] of the Judgment, an assessment of the facts was not easy in the light of the way in which the point had come to be argued in closing (see above), but these are all challenges to my evaluation of the evidence (both expert and factual) with which I consider that there is no real prospect that the Court of Appeal will interfere. As to Ground 4, this relates to an unpleaded allegation that the Bank made a free choice to accept the fraudulently inflated values of the Transferred Assets. I analysed the evidence and explained my conclusions on the facts in [1161] to [1174] of the Judgment. In my view there is no real prospect that the Court of Appeal will interfere with that evaluation.

For these reasons I refuse Mr Kolomoisky’s application for permission to appeal.