Deutsche Bank AG has prevailed in the latest phase of its long-running dispute with Monaco-based billionaire Alexander Vik over a US$250 million judgment obtained against Mr Vik’s shell company Sebastian Holdings, Inc in 2013.
The Court of Appeal today upheld Moulder J’s decision to commit Mr Vik to prison for 20 months for contempt of court, suspended conditional on compliance with wide-ranging disclosure and other obligations. It also awarded Deutsche Bank indemnity costs.
Following a three-week contempt trial in May 2022, Moulder J had found beyond reasonable doubt that Mr Vik committed multiple serious breaches of an order (made under CPR Part 71) requiring him to provide information about the assets of Sebastian Holdings. Mr Vik’s proved contempts included knowingly giving false evidence under oath and deliberately failing to provide documents required to be disclosed under the order. Mrs Justice Moulder concluded that Mr Vik (who gave oral evidence remotely at the contempt trial) was not a credible witness and had told lies under cross-examination during the contempt trial.
The Court of Appeal (Males, Andrews and Nugee LJJ) unanimously endorsed Moulder J’s contempt findings and sentence. It dismissed Mr Vik’s appeal against the suspended committal order, holding that his criticisms of Moulder J’s decisions on liability and sanction were variously “without substance” and “hopeless”, and ordered him to pay Deutsche Bank’s costs of the appeal on the indemnity basis with a substantial interim payment on account.
The Court also refused three separate applications made by Mr Vik to adduce further evidence in support of his appeal (all of which was available to Mr Vik at the contempt trial). It concluded that Mr Vik had offered no real explanation for his failure to adduce the evidence at trial and that the evidence was in any event of minimal probative value. Deutsche Bank was awarded its costs of these applications also on the indemnity basis.
The Court’s decision contains important guidance on the approach appellate courts should take where an appellant seeks to overturn findings of fact and assessments of credibility. It affirms that the restraint with which appellate courts should approach attempts to interfere with factual findings and assessments of credibility is equally applicable to appeals against committal orders. Before an appellate court is entitled to interfere with such findings, the decision must be shown to be “plainly wrong”, “rationally insupportable” or one “that no reasonable judge could have reached”.
The decision also confirms that permission to appeal is not required to challenge findings of contempt where a committal order is made at a separate sanction hearing held after the contempt trial. This resolves longstanding uncertainty about the exercise of a contemnor’s entitlement to appeal as of right against a committal order, magnified recently by the Court of Appeal’s decision in Al-Rawas v Hassan Khan & Co (a firm) [2022] EWCA Civ 671. The point is of particular relevance to heavy commercial litigation where current practice in the Commercial Court and the Chancery Division is generally to deal with issues of mitigation, sanction and costs at a hearing held a week or so after judgment on liability for contempt is handed down.
This is the fifth time the Deutsche Bank/Sebastian Holdings dispute has reached the Court of Appeal. The litigation has produced a string of important decisions to date, both at first instance and on appeal, concerning enforcement proceedings, including:
- Sebastian Holdings Inc v Deutsche Bank AG [2014] EWCA Civ 1100, concerning the circumstances in which conditions should be imposed on an application to the Court of Appeal for permission to appeal.
- Deutsche Bank AG v Sebastian Holdings Inc [2016] EWCA Civ 23, [2016] 4 WLR 17, concerning the availability of non-party costs orders against directors of judgment debtor companies.
- Deutsche Bank AG v Sebastian Holdings Inc [2016] EWHC 3222 (Comm), holding (for the first time) that contempt proceedings for breach of a Part 71 order can be brought against an officer of a judgment debtor who is resident abroad.
- Deutsche Bank AG v Sebastian Holdings Inc (Nos 1 and 2) [2018] EWCA Civ 2011, [2019] 1 WLR 1737, holding that permission is not required to serve a contempt application out of the jurisdiction for breaches of an order made under Part 71.
- Deutsche Bank AG v Sebastian Holdings Inc [2022] EWHC 1555 (Comm), considering the circumstances in which the court should grant permission to an alleged contemnor to attend the hearing of the contempt application remotely by video link.
Sonia Tolaney KC, James MacDonald KC, Andrew McLeod and Matthew Hoyle acted for Deutsche Bank, instructed by Freshfields Bruckhaus Deringer LLP.
The judgment is available here.