Our client, Salim Shalabayev, was a witness in contempt proceedings against his brother-in-law, Mr Ablyazov. He was present to give evidence that he beneficially owned a property in North West London (the 'Property') and that it was not the property of Mr Ablyazov, who was the subject of large scale fraud proceedings. Teare J disbelieved Mr Shalabayev, finding him an unreliable witness and ruling that Mr Ablyazov was in contempt in respect of non-disclosure of his assets. The Judge established that, on the criminal standard, the Property belonged to Mr Ablyazov.
JSC BTA Bank then applied for a charging order over the Property. Mr Shalabayev tried to intervene, arguing the court had no jurisdiction to grant a charging order in the bank's favour over a property he beneficially owned but he was refused permission to do so. The same judge (Teare J) considered Mr Shalabayev's position to be an attempt to re-litigate an issue – the findings from the committal proceedings – which had previously been decided by another competent court (a 'collateral attack'), bringing the administration of justice into disrepute and being an abuse of the court's process.
The Court of Appeal ruled that Teare J was mistaken and that Mr Shalabayev should be given a proper opportunity to resist the claims of the bank (who were represented in the appeal by Steven Smith QC and Hogan Lovells International LLP) in relation to the Property. In particular:
- Mr Shalabayev had not had a proper forum to put forward his case in the proceedings – being a witness in someone else's committal proceedings was very different to being a participant as an alleged contemnor. The judge's analysis was significantly and inappropriately influenced by his adverse views of Mr Shalabayev and Mr Ablyazov's credibility overall but this did not mean Mr Shalabayev was not telling the truth on the particular issue of ownership of the Property.
- Mr Shalabayev's attempts to defend the bank's claim to deprive him of his beneficial interest in the Property was not an abuse of process and proceedings properly constituted as between the bank and Mr Shalabayev in respect of the Property ownership would not bring the administration of justice into disrepute.
- A different Commercial Court judge should rule on the issues concerning the ownership of the Property.
This decision highlights the necessity for justice to be done: the Judge had incorrectly applied his overall view of Mr Shalabayev and Mr Ablyazov to a distinct and separate issue (being the ownership of the Property) meaning that Mr Shalabayev was deprived of a fair chance to present his case.
The principle of collateral attack may apply where a party to current proceedings was only a witness (rather than a party) in previous proceedings but the practical reality is that it may be difficult to run this particularly where, as here, the two proceedings were notably different – the bank's application for a committal order and its subsequent application for a charging order – meaning there was no abuse of process. The decision sets an important precedent and guidance as to abuse of process by virtue of a collateral attack.
Case reference: Salim Shalabayev v JSC BTA Bank  EWCA Civ 987
James Sheehan instructed by Withers LLP for the Appellant and Steven Smith QC instructed by Hogan Lovells International LLP for the Respondent.