Deutsche Bank (DB) has succeeded in a three-week committal application in the long-running DB v Sebastian Holdings, Inc (SHI) and Vik litigation.
The context was as follows. Following a 14-week Commercial Court trial in 2013, Mr Justice Cooke ordered the defendant shell company, SHI, to pay US$250m to DB. The debt arose out of heavily loss-making FX and equities trading SHI conducted with and through DB during the 2008 financial crisis. Mr Justice Cooke dismissed SHI’s US$8bn counterclaim against DB in its entirety, holding that it was based on dishonest evidence from Alexander Vik, the Monaco-domiciled billionaire who owned and controlled SHI.
When SHI failed to pay the judgment debt, DB obtained an order under CPR 71 requiring Mr Vik to provide documents and attend for questioning about the whereabouts of SHI’s assets. DB subsequently applied to commit Mr Vik, alleging that he had lied when answering questions and failed to provide key categories of documents required by the CPR 71 order.
After DB defeated Mr Vik’s applications challenging jurisdiction and then seeking to strike out the committal application (the judgments in both applications set new legal precedent), DB’s committal hearing was heard over three weeks in May this year, with Mr Vik being cross-examined by DB for four days over video link.
In her Judgment, Mrs Justice Moulder held that DB had succeeded on substantially all of its allegations of contempt. She held that Mr Vik was not a credible witness, and that parts of his video link evidence were “wholly incredible”, “clearly a lie” and “absurd”, and that he appeared to regard giving evidence as “an intellectual challenge to pit himself against counsel for the bank”. Against that background, she went on to consider the detailed allegations of contempt, holding that she was satisfied to the criminal standard that:
(a) Mr Vik had deliberately given false evidence at the CPR 71 hearing on three separate matters, including in relation to his knowledge of a trust containing around US$730mn of assets transferred by Mr Vik out of SHI; and
(b) Mr Vik had deliberately failed to provide documents required by the CPR 71 order. Amongst other things, he had deliberately failed to disclose electronic documents responsive to the order and relevant emails in the possession of SHI’s litigation consultant, a Mr Per Johansson.
The judgment is notable for its consideration of the role of circumstantial evidence in supporting findings of contempt: see in particular paragraphs [27]-[36].
Issues of sentencing, mitigation and other consequential matters have been adjourned to a subsequent hearing to take place in July.
Sonia Tolaney QC and James MacDonald QC acted for DB, instructed by Freshfields Bruckhaus Deringer LLP.
A link to the judgment can be found here.