Mr Justice Butcher agrees to Kingdom of Sweden’s High Court application for enforcement in Sweden of worldwide freezing order on assets in sophisticated international pension fraud
By John Brace (Editor)
Leonora Brace (Co-Editor)
This is a report on a public hearing held on the 3rd April 2020 which started at 10.30 am in the Commercial Court (Queen’s Bench Division) which is part of the Business and Property Courts of England and Wales (part of the High Court of Justice).
Due to the coronavirus pandemic the hearing was held (see Civil Procedure Rule Practice Direction 51Y) not in person but virtually as a video hearing. It was an injunction hearing in case CL-2020-000117 (Kingdom of Sweden v Serwin and others) before Butcher J.
Aidan Casey QC with Richard Eschwege instructed by Mishcon de Reya LLP for the Claimant (Kingdom of Sweden). Mr Max Serwin used to be called Mr Emil Ingmanson and is referred to by the latter name below.
The Court was sitting as the High Court to hear the case of Kingdom of Sweden versus Serwin and others. A warning was given that the hearing was being recorded, but that no-one else could video record or audio-record the hearing.
Butcher J started first on the “great deal of reverberation”. He asked people to only have their microphones on if they were speaking. He asked Aidan Casey QC if he had that reverberation? Aidan Casey QC answered that he could hear “Your Lordship” clearly and had no problems with echoes or of that nature.
Butcher J commented that it was probably only himself. Aidan Casey QC commented that there was an echo when Butcher J was speaking. Butcher J asked if this was when Butcher J was speaking? Aidan Casey QC apologised to Butcher J. Butcher J stated he was not sure what to do about it, but was it better now? Continuing he referred to Aidan Casey QC’s application to the Court which Butcher J needed to know about.
Aidan Casey QC stated that he and his junior Mr Eschwege appeared on behalf of the Claimant and their instructing solicitors were from Mishcon De Reya LLP. There were possibly others, but he couldn’t see a list of all the participants on his screen. Butcher J suggested that Aidan Casey QC clicked on the little icon of people and then he would get on it.
Aidan Casey QC stated he could see it now and mentioned by name Lily Davies from Mishcon De Reya LLP and one of the respondents a Mr Afram Gergeo. As far as Aidan Casey QC could see, he was the only Respondent logged in today and the only Respondent that was expected.
Butcher J asked if Mr Afram Gergeo could make himself available and use video? Mr Afram Gergeo’s image appeared as part of the hearing in response to this question. Butcher J stated that he would hear from Aidan Casey QC first on the application, then give Mr Afram Gergeo an opportunity to say what he wanted to say. Mr Afram Gergeo agreed with this.
Butcher J asked people to mute their microphone when not speaking, then invited Aidan Casey QC to start. Aidan Casey QC asked if he could first check that the bundle for today’s hearing had been received by Butcher J? Butcher J confirmed this.
Aidan Casey QC asked follow up questions as to whether the skeleton argument, article 53 certificate and small bundle of authorities had also been received? To each of these questions Butcher J confirmed that he had received these documents.
When Aidan Casey QC asked Butcher J had he received the separate transcript of the full judgement, Butcher J stated that he hadn’t read it and may not be able to lay his hands on it. There was a further exchange between Aidan Casey QC and Butcher J about paragraph 56 which Aidan Casey QC was asked to read out, Aidan Casey QC replied that he would if he got to it.
Butcher J was asked by Aidan Casey QC if he had received the further communication with other respondents and lawyers who had corresponded on their behalf? Butcher J replied that he thought he had so Aidan Casey QC would have to take Butcher J to that with some care.
Aidan Casey QC referred to developments that morning and letters corresponding for Mr Mark Bishop which there had been an attempt to file electronically. Butcher J stated that it wasn’t to hand, but that was not to say he didn’t have access to it. Mr Aidan Casey QC pointed out it was brief. Butcher J stated that they could go slowly through that but when Aidan Casey QC got there.
Aidan Casey QC referred to the questions of service and notification. Aidan Casey QC referred to the second witness statement found at page 7 of the bundle, he asked was Butcher J working purely from the electronic bundle? Butcher J confirmed he was. Mr Aidan Casey QC stated he was grateful and referred to a witness statement at page 7, then paragraph 15 on page 10. Butcher J responded with “Yes”.
Continuing, Aidan Casey QC referred to paragraph 15 of the witness statement of Miss Blom-Cooper and that Butcher J may recall that Mr Afram Gergeo had been released on the 19th March, but two other named respondents remained in custody in Sweden. The witness statement described the communication received from lawyers concerning the two in custody. Aidan Casey QC referred to this and the relevance of reading two sub paragraphs (16.1 and 16.2) with regards to Mr Mark Bishop. Butcher J answered, “Yes”.
Aidan Casey QC stated that it may be useful and necessary to look at the correspondence to which it referred. Aidan Casey QC also referred to the exhibit at page 63. Butcher J answered, “Yes”.
Aidan Casey QC referred to a further short chain of emails which needed to be read in reverse order, on page 66 was the email of the 17th March 2020. Butcher J answered, “Yes”. Aidan Casey QC drew attention to Miss Blom-Cooper’s reply on the 18th March which occupied the main part of that page. Again Butcher J answered, “Yes”. Aidan Casey QC referred to the foot of page 65 and the reply on the 19th March, to which Butcher J responded with “Yes”.
Aidan Casey QC again referred to an email and how it finished with the issue about helping to instruct English solicitors, then a reply on the 19th March extending the time deadline for asset disclosure and so forth. Butcher J answered, “Yes”. Aidan Casey QC referred to the reply of the 23rd March to which Butcher J answered, “Yeah”. Aidan Casey QC quoted from a reference which stated, “not able to contact unless approved by Swedish Prosecutors or Probation Service” and a requested extension of 7 days to reply in March. Butcher J answered, “Yes”.
Aidan Casey QC stated that he would come in a moment to updating the position as to communications. Aidan Casey QC referred to a further email sent to himself and another email. Aidan Casey QC stated there had been no direct communication from Mr Emil Ingmanson to which Butcher J answered, “Yes”.
Aidan Casey QC referred to paragraph 16.2 of the witness statement which referred to a telephone call from a Swedish lawyer who worked for a firm of Swedish lawyers. This lawyer acted for Mr Mark Bishop. Aidan Casey QC referred to page 68, where there was an email sent on the 24th March, four days after the conversation by Miss Blom-Cooper. Aidan Casey QC referred to the order made on the return date and the final substantive paragraph, the asset disclosure provisions and the letter to sign. Butcher J replied, “Yes”.
Aidan Casey QC stated that in a moment he would come to the third witness statement, but he just wanted to bring up to date with the most recent correspondence. He stated that yesterday [2nd April 2020] at 12:44 there had been an email to Miss Blom-Cooper which there had been an attempt to file yesterday. The author of the note stated they they had not been formally instructed, referred to signed copies signed in ink, that the Respondent was being detained with restrictions and did not have the funds necessary to instruct English representatives to defend himself.
Attached were PDF scans and a returned attached asset disclosure letter. With regards to the worldwide freezing order, it stated that to the best of Mr Mark Bishop’s knowledge or belief, whether owned by Mr Mark Bishop jointly or solely, Mr Mark Bishop did not have assets worth greater than £10,000 and it was signed by Mr Mark Bishop.
Aidan Casey QC referred to at 15:43 on the 2nd April 2020 Miss Blom-Cooper had sent an email asking for wet ink signature versions of the letters. Attached to this email were the application documents and formal confirmation of service which explained the logistics of the remote hearing. If Mr Mark Bishop could not access Skype for the hearing he was to inform urgently. This also listed the time of the hearing and that it was before Butcher J. Aidan Casey QC made a further comment about what had been put in the mail on the day of the hearing.
After further comments were made by Aidan Casey QC he referred to a witness statement that started on page 121 and a third attempt. He invited Butcher J to look at paragraph 8 which started on page 122 through to paragraph 11 which was on the following page. Butcher J answered, “Yes”.
Aidan Casey QC referred to confirmation received from two named people (one of these two was Mr Afram Gergeo (one of the respondents)) yesterday by Mishcon de Reya. Aidan Casey QC also referred to the covering statement of costs, the skeleton arguments and the authorities bundle to which Butcher J answered, “Yes”.
Aidan Casey QC mentioned an email sent yesterday at 15:41 about the logistics of the hearing to take place by Skype and that there had been no response to it, to which Butcher J answered, “Yes”.
Aidan Casey QC stated that he should say that the Swedish Prosecution Authority had informed that it was unlikely that Mr Mark Bishop and Mr Emil Ingmanson would have access to Skype facilities today [3rd April 2020]. Aidan Casey QC referred to the Head of the Legal Department at the Swedish Prosecution Authority and whether Mr Mark Bishop and Mr Emil Ingmanson were allowed to speak to English lawyers at least once in private to which Butcher J answered, “Yes”.
Continuing, Aidan Casey QC stated that he had no more details that that, but it was at odds with Mr Mark Bishop being unable to contact anyone aside from his Swedish lawyers. That was where things stood in relation to service upon and communications with Mr Emil Ingmanson and Mr Mark Bishop. Aidan Casey QC’s submission was clear that they had been served with the application documents. It was likely they had been told by their Swedish lawyers about the hearing’s arrangements and had they wanted to participate or complain, that they would have received a message to that effect. Aidan Casey QC admitted that the position he accepted was unusual and that Butcher J may have concerns about their ability to participate today. If Butcher J had sufficiently grave concerns, one way of balancing their interests would be to allow the application to proceed, but if Butcher J should so wish there could be be a return date for matters at issue in the application if they were so advised. Butcher J replied that it would be like any order without a hearing as a way of dealing with their position to which Aidan Casey QC answered, “Yes”. Butcher J stated that it seemed likely to be sensible.
Aidan Casey QC went on to the substance of the application itself. The Claimant [Kingdom of Sweden] sought permission to enforce the worldwide freezing order in Sweden. The alleged fraudulent operation had been split into two phases – Optimus and Falcon.
Criminal proceedings in Sweden had been subdivided. Criminal proceedings had been brought against Mr Emil Ingmanson and Mr Mark Bishop in relation to the Optimus phase. This trial was to end on Friday. The trial in Sweden for the Falcon phase had yet to commence (latest estimate was some time in summer 2020).
Aside from shares in companies of questionable value and a flat in London, the only known assets were in Sweden. The value of these assets were overtopped many times by the value of the claim, but the assets were not insubstantial. Each respondent had significant ties to Sweden. For example one was a Swedish citizen living in Sweden and England and another was an American but living in Sweden. Aidan Casey QC didn’t accept that there had been proper asset disclosure and referred to the evidence before The Honourable Mr Justice Foxton. There were substantial business interests. These business interests in America and Canada were in relation to mortgage securities and were of a very substantial amount. Aidan Casey QC referred to the statement that there were no assets over £10,000, but stated there were known assets that had been subject to provisional sequestration and Aidan Casey QC referred to the Stockholm District Court [Stockholms tingsrätt] and the Swedish Enforcement Agency [Kronofogdemyndigheten].
The Swedish Prosecution Authority’s claims which were likely to be made were in the course of the Swedish prosecutions and possible claims of forfeiture or fines. Orders had to be made in two tranches, against Mr Emil Ingmanson and Mr Mark Bishop for the Optimus Phase and against all three for the Falcon Phase of the prosecution. In Sweden once made by the court such orders did not have effect until enforced against specific assets by the Swedish Enforcement Agency [Kronofogdemyndigheten]. Butcher J commented that enforcement [in Sweden] was not what was understood here [UK (United Kingdom)] by enforcement.
Aidan Casey QC continued with an explanation of how the Swedish Enforcement Agency [Kronofogdemyndigheten] searched for assets and if applicable made an entry onto the registers. These moving parts drove the application for a provisional order to protect the claims made by the Swedish Prosecution Authority which would very soon be cancelled because of the commencement of proceedings in England. Butcher J stated that he wanted to understand better. Butcher J asked whether it was definite or merely likely and also a related question he asked was, was applying for the order or enforcement of the worldwide freezing order contingent or not contingent on the provisional sequestration orders?
Aidan Casey QC answered that as far as he understood, as far as lawyers ever talk in certainties, it was a certainty that they would cancel those parts of the provisional sequestration orders. The claims made by the Swedish Prosecution Authority expressed no doubt, but it wasn’t possible to place a precise date on it. Aidan Casey QC stated that he said it would be rapidly once they were aware of the English proceedings. It was not expressed as contingent on cancellation, but if it was possible for Butcher J to couch an order in those terms the Claimant may be entirely happy with it. Butcher J referred to a concern about doubling up.
Aidan Casey QC replied that there was no difficulty if the order provided if and when the provisional sequestration orders currently in place were cancelled so the order could be enforced in Sweden. There had been interesting and illuminating exchanges. On receiving a copy of the relevant application, a copy of the judgement and the article 53 certificate, there would be a special team to consider it and treat it with expedition. He then mentioned a danger of hiatus.
Butcher J stated that if he was prepared to grant an order he would want to avoid this. Butcher J referred to a suggestion of an appropriate form of words? Aidan Casey QC answered that consideration of the logical backdrop was also that as to the provisional sequestration orders it protected the prosecutors from anticipated claims and possible orders for forfeiture and possible fines. Aidan Casey QC wanted to make two points.
The first point was that the judgement in the Optimus Phase was scheduled for the 17th April, if this resulted in acquittals and if in consequence the Falcon Phase was dropped and didn’t proceed the provisional orders would also fall which was always almost automatically as far as Aidan Casey QC understood it. A further point was that in Swedish law, proceedings in England might be used against making forfeiture by the Swedish State and the fines might be of a lower order of magnitude. However, not only did it appear inevitable that the Swedish Prosecution Authority’s provisional sequestration orders would shortly be cancelled, there was a realistic possibility that those made in favour of the prosecutor may fall away.
Aidan Casey QC referred a point by Mr Eschwege that in the circumstances of an acquittal in the Optimus prosecution it would raise questions if the English freezing orders could continue at all, but there were different standards of proof as the position in Sweden was the same, that civil cases had to meet the balance of probabilities whereas criminal matters had to be beyond reasonable doubt.
Butcher J replied to this. In response Aidan Casey QC stated that the position was the same one, but it could be contemplated in a reasoned judgement say with strong arguments that there was a possible acquittal, but the claims would remain in the territory of a good and arguable case. He referred to the Swedish law material on the dynamics of provisional sequestration orders. Butcher J stated he had read the note on this.
Aidan Casey QC answered on the question of effective certainty of the cancellation of the provisional sequestration orders, he suggested starting with the note which was not on the reading list but which started on page 75. Butcher J responded. Aidan Casey QC referred to the earlier note of the 17th February that had some relevant information for today’s hearing and repeated that the note started at page 75. Butcher J confirmed that he had looked through it.
Aidan Casey QC stated that he wouldn’t take Butcher J to all the salient points, but that the provisional sequestration order was enforced by the Swedish Enforcement Agency [Kronofogdemyndigheten] but there was a particular paragraph of the guidelines and room for debate. A freezing order was not to be granted abroad when it would or might lead to superior relief in a foreign jurisdiction. How this arose was in 2.13 on page 79 in the Swedish law material. Butcher J answered yes. Aidan Casey QC stated that as explained in a subsequent note, the position was that if a person claimed to be a creditor there would be be a provisional order to enforce that by the Swedish Enforcement Agency [Kronofogdemyndigheten] which applied to certain assets. There was no firm priority of creditors. In general an English freezing order led to a wrinkle if there was another creditor, that judgement would go to the Swedish Enforcement Agency [Kronofogdemyndigheten]. Attachment rights would be given over the same assets as a provisional sequestration order. The creditor may be promoted to an attachment creditor which was contingent on if the provisional claim succeeded. That creditor would get a form of priority realisation of the assets. If there were only two at that time, the creditors would share in pari passu the proceeds of realisation. It was relevant to the guideline at four, the situation regarding imminent cancellation of the Swedish Prosecution Authority’s provisional sequestration orders was at page 83. Butcher J confirmed he was there now Mr Casey.
Aidan Casey QC invited him to read the paragraphs and referred to pages 81-84 to which Butcher J answered, “Yes”. Aidan Casey QC referred to a more recent note and a document at page 25 of the bundle to which Butcher J answered, “Yes”. Aidan Casey QC referred to the concluding language at 2.4 and admitted he had no doubt that it will happen, at 2.6 it touched upon questions of procedure and mechanics. The timing implications, regardless of how it was raised, the Swedish Court’s view was that in the issue that both parties agreed that there was no longer any reason to maintain the Swedish Prosecution Authority’s provisional sequestration orders that the decision may be rendered without a hearing.
Aidan Casey QC moved to the form of any contingent order made today [3rd April 2020] might take and the first sentence, to which Butcher J answered, “Yes”. Aidan Casey QC referred to 2.11 to which Butcher J answered, “Yes”. Aidan Casey QC stated that they expected to act rapidly once they learned of the issue, rapidly may mean a couple of weeks. If the prosecution and defence agreed then the Swedish Enforcement Agency [Kronofogdemyndigheten] would act very quickly in a day or two regarding enforcement measures on the relevant assets.
Aidan Casey QC also referred to the questions of oppressiveness and so on. 2.9 referred to the consequences if the provisional sequestration orders were cancelled were largely automatic. If the worldwide freezing order was discharged and the Swedish provisional sequestration orders, then the defendants didn’t have to do anything, the unwinding was rapid and automatic as 2.10 explained the circumstances that all the provision sequestration orders might fall away leaving the defendants free to dispose of their assets. Aidan Casey QC returned to the question of contingent superiority of relief and referred to 3.17 on page 72. Butcher J replied, “Yes”.
Aidan Casey QC made further comments about the position of the provisional sequestration orders that prevented transfer or dealing of the assets to the detriment of the Applicant unless the Swedish Enforcement Agency [Kronofogdemyndigheten] allowed this for special reasons. Aidan Casey QC had developed the detail of how an attachment creditor would cause promotion of the original provisional sequestration order creditor to which Butcher J replied, “Yes”.
Aidan Casey QC stated that a further aspect to the case as seen from the material, was that enforcement was a matter for the Swedish Enforcement Agency [Kronofogdemyndigheten]. If proceedings were commenced in a foreign court, the Swedish Enforcement Agency [Kronofogdemyndigheten] would be told about the judgement, then the Swedish Enforcement Agency [Kronofogdemyndigheten] would act as it deemed appropriate. On page 52, there was the possibility that the Swedish Enforcement Agency [Kronofogdemyndigheten] would treat the worldwide freezing order as a provisional sequestration order under Swedish law which was possibility 1. Aidan Casey QC explained what would happen if this potentially happened. The alternative scenario was that the Swedish Enforcement Agency [Kronofogdemyndigheten] would possibly not treat it as a provisional sequestration order and in that case the Swedish Enforcement Agency [Kronofogdemyndigheten] may apply enforcement measures which would order obligations to be fulfilled or prohibitions to be observed. One of the items in the skeleton argument was that while it was possible for the Swedish Prosecution Authority to ask the Swedish Enforcement Agency [Kronofogdemyndigheten] to enforce in the second way, therefore to keep it strictly equivalent to an English freezing order, it was up to the Swedish Enforcement Agency [Kronofogdemyndigheten] how it enforced the worldwide freezing order. A meeting with the Swedish Enforcement Agency [Kronofogdemyndigheten] had explained how their provisional view was that an English freezing order would be treated like a provisional sequestration order. That was the view that the Swedish Enforcement Agency [Kronofogdemyndigheten] may take but they could be requested not to. The judgement in the Optimus Phase had been originally scheduled for February but had been rescheduled. If there was a conviction and an appeal, it would not have legal force until the appeal was disposed of. Aidan Casey QC referred to paragraph 54 and what was likely to happen if there was a conviction in the Optimus trial and suggested paragraphs 5.4 to 5.6 were read or reread to which Butcher J answered, “Yes”.
Aidan Casey QC drew attention to 5.4 and pointed out that an immediate candidate was the prosecutor if one or both trials resulted in a monetary order once any appeal was exhausted. It was inevitable or highly likely that there would be attachment rights on known assets in Sweden but if the prosecutions failed it wouldn’t happen. Other contingent attachment rights arise because of the prosecutor’s natural course of conduct of a fine or forfeiture order. Section 6 dealt with topics that might be grouped under two headings which he might call the justice and convenience of the Swedish Prosecution Authority’s claims protected in Sweden. If the Swedish Prosecution Authority made recoveries it would be distributed to the relevant pensioners’ savings, but payment to the Swedish State wouldn’t be earmarked for pension savers. In such a case it was possible but unclear that but that was over to the Swedish Prosecution Authority to make good to the pension savers.
Turning to the other topic in this section, at 6.6 and 6.7 it was detailed what might happen in various different scenarios to the assets according to Swedish law. Butcher J replied, “Yes”.
Aidan Casey QC referred to section 7 and stated that as a matter of procedure there was no special form, but at 7.2 following an exchange of information with the Swedish Enforcement Agency [Kronofogdemyndigheten] what was likely to happen is that it would set up a special team and treat it as a matter of urgency. The exchange of information was that the Swedish Enforcement Agency’s [Kronofogdemyndigheten]’s provisional view was that it was likely to be treated as a provisional sequestration order. Butcher J replied, “Yeah”.
Aidan Casey QC made a final point about 8.1. Relevant to the guidelines on oppression, Aidan Casey QC made a further point about the worldwide freezing order and the Swedish Enforcement Agency [Kronofogdemyndigheten]. Aidan Casey QC referred to the Swedish law material and the guidelines in the small bundle of authorities which started on page 33. Butcher J replied, “Yes”.
Aidan Casey QC referred to paragraph 25 on page 36 and that granting permission abroad had to be just and convenient. It was not to be oppressive. There was no prospect of third parties being joined to foreign proceedings. He made further points about paragraphs 26 and 28 and his view that it was not oppressive to the defendants who would not be depleting their reserves while fighting criminal proceedings. He made further points about paragraphs 32 and 35. Butcher J responded, “Yeah”.
Aidan Casey QC made further points about guideline 3 in the Dadourian case [ 1 WLR 2499], risk of oppression from the multiplicity of proceedings, costs, superior relief in foreign proceedings, how Butcher J had to be informed in his decision-making by the practice and law in the foreign court and how assets in the jurisdiction of the foreign court were treated, paragraph 21 in a witness statement, proof of the existence of the assets, risk of disposal of the assets, doubling up and paragraph 40. Butcher J stated, “Yes, go on”.
Aidan Casey QC referred a full transcript in the Dadourian case [ 1 WLR 2499] and particularly paragraph 19 involving Swiss law. He continued by explaining that he had no doubt that the Swedish Prosecution Authority could ask the Swedish Enforcement Agency [Kronofogdemyndigheten] to treat the English order in the second category, but that the Swedish Prosecution Authority couldn’t do more than that or attempt to control or intefere with what the Swedish Enforcement Agency [Kronofogdemyndigheten] did once an order was received and analysed. Aidan Casey QC made a series of technical points about the treatment of any order and whether it would lead to superior relief in a foreign jurisdiction. Butcher J replied that at this stage that there was no real issue there as far as he understood it.
Aidan Casey QC made a long point in reply about superior relief, third party conduct that the Claimant had no control over and that may never arise and the authorities on the certainty of superior relief not being an absolute bar to enforce abroad. He gave Mr Eschwege credit for a number of points he made next about cases involving Lebanon and Switzerland as well as the balancing exercise arising from the potential impact on the Applicant, respondents and the potential impact on third parties if granted.
Aidan Casey QC then made brief submissions on the Swedish law and the likely actions of the Swedish prosecutor, the results of these actions, the impact of bankruptcy, the pension savers, how the assets might be distributed, the publicity about the criminal prosecutions and custody, how Mr Mark Bishop was being sued in America and in Canada by OmniArch, which was not dissimilar to Mr Emil Ingmanson being sued in Malta by Falcon itself. Falcon’s status as an independent creditor however could be ignored. However all the relevant interests shouldn’t count against permission. Butcher J responded, “Yes”.
Aidan Casey QC stated that Mr Eschwege would draft the appropriate formulation to cater for the doubling up concern which would be a new sentence at the end of paragraph 1 of the draft order. Butcher J stated that he didn’t have it in front of him at the moment, Aidan Casey QC referred him to page 5 of the bundle to which Butcher J answered, “Yes”.
Aidan Casey QC made a point about paragraph 1 and suggested that to cater for the need about doubling up a new sentence would be added. The new sentence would be about the steps to cancel the existing or any previous provisional sequestration orders if not already cancelled. Butcher J stated that Aidan Casey QC could either send it or read it again.
Aidan Casey QC stated he would do both and that Mr Eschwege would send it to Butcher J and stated that it would be upon granting enforcement and granting by the Swedish Enforcement Agency [Kronofogdemyndigheten], the Claimant will take whatever steps are necessary or seek discharge or cancellation or enforcement of any provisional sequestration order made in favour of the Swedish Prosecution Authority. Butcher J stated that Aidan Casey QC had read quite quickly, was it “or seek”? Aidan Casey QC answered yes in favour of the Swedish Prosecution Authority, if not already cancelled. Butcher J asked a question about the order. Aidan Casey QC answered his question. Butcher J made a further point about the order. Aidan Casey QC made a point about the risk of scintilla temporis and doubling up. Butcher J replied, Aidan Casey QC replied to him, Butcher J replied, “Yes”. Aidan Casey QC stated that he wanted to perform the electronic equivalent of turning around to check. Aidan Casey QC stated that that was the position unless there were any more questions, those were the submissions he intended to make in support of the application.
Butcher J stated that probably the next thing was to ask Mr Afram Gergeo if he had any remarks on the submissions made by Adrian Casey QC? Mr Afram Gergeo replied that he had only been out of custody for 2 days and it was difficult to read all the documents but he was searching for…
At this point those in the hearing were notified that Mr Afram Gergeo had left the hearing. Butcher J stated that unfortunately they seemed to have lost Mr Afram Gergeo altogether. Aidan Casey QC stated that he had also.
Mr Afram Gergeo rejoined the hearing. Butcher J commented on this. Mr Afram Gergeo apologised. Butcher J stated he was not sure what happened. Mr Afram Gergeo stated that he had got a call, he hadn’t sought legal counsel in the UK [United Kingdom] or attempted to get the documents in Swedish, he had been in isolation for 11 months but wanted help with this case. Could he get a 2-3 week delay to assist with seeking on working to find a UK solicitor to help him? He didn’t understand the proceedings nor could he tell what Aidan Casey QC had said. All his assets were frozen by the Swedish Enforcement Agency [Kronofogdemyndigheten] who had even been to his wife’s house and taken the electronic equipment. The Swedish Enforcement Agency [Kronofogdemyndigheten] had everything, so he had nothing to hide or disappear. He wanted time to come back with a solicitor to help which would be much appreciated. Butcher J asked if he needed time to deal with the application as opposed to general questions about the orders?
Mr Afram Gergeo replied that he needed to understand and it was difficult to understand what was here. He referred to the freezing order and stated that on Tuesday there had been a meeting at which it had been decided what date the trial would happen. Part 2 would happen, it had just been decided on the 17th August and continue for 11 weeks. No assets would be unfrozen until that judgement, so there was plenty of time. He asked for a little bit more time for a UK solicitor so he could understand. He would be grateful for this.
Butcher J suggested that he might make the order today that allowed respondents (including Mr Afram Gergeo) to set it aside if Mr Afram Gergeo thought they had grounds to do so without having to show a change in circumstances. Mr Gergeo replied, “Yes” to this.
Butcher J stated that the debate today had been on quite a technical subject, but did not go to the existence of the worldwide freezing order. If there was anything that Mr Afram Gergeo wanted to say about the argument please could he say it now? Mr Afram Gergeo replied that Aidan Casey QC had referred to paragraphs in the bundle that he either hadn’t read or didn’t understand. It was very technical and in English legal language. He needed to understand to help, it was difficult to argue against something he didn’t understand. Mr Afram Gergeo stated that he felt Aidan Casey QC had said a lot of things he felt were not true but he needed to seek legal guidance regarding the case.
Butcher J thanked him and asked Mr Afram Gergeo if he wanted to say anything else? Mr Afram Gergeo replied no and thanked Butcher J. Butcher J asked Aidan Casey QC if he wanted to comment with regards to what Mr Afram Gergeo had just said? Aidan Casey QC replied that the concerns were met with a mechanism to preserve their rights so the order may be set aside if so advised. Butcher J stated that he wasn’t sure if he had been referring to Mr Afram Gergeo or the two in custody?
Aidan Casey QC responded to this point and stated it was fair to say it was highly technical. It might be fair if he could have had an English lawyer to speak but he did not want this to be seen as an objection. Butcher J commented on the matter of setting aside the order may not be the top of their list of priorities to be looking at.
Aidan Casey QC replied that the only other points would be these. It would be very helpful for Mr Afram Gergeo to provide to Mishcon De Reya an address for service of documents and a contact email address so that Mr Afram Gergeo could be provided with everything needed for further conduct of proceedings. Aidan Casey QC reminded that under a previous order there was an obligation to make asset disclosure by 4 pm today [3rd April 2020]. Aidan Casey QC stated that he was in no doubt that Mr Afram Gergeo would be reminded by the hearing, but that it would be helpful to provide an email address to Mishcon De Reya so that they could explain what he needed to do.
Butcher J asked if Aidan Casey QC had anything else to say? Aidan Casey QC answered, “No”.
Butcher J stated he would give judgement “at 2 o’clock”. Aidan Casey QC stated that it gave him no problems and it appeared to be that Mishcon De Reya were confirming they were ready. Butcher J stated at 2 o’clock he would give his ruling.
Mr Afram Gergeo stated that he had to be at a police station at 3 o’clock Swedish time [GMT+1]. Butcher J asked him how much longer had Mr Afram Gergeo got? Mr Afram Gergeo answered that he had a maximum of 40 minutes, then he needed to leave to speak to the police officer but he was sorry about this.
Butcher J stated that a 5 minute break would be taken, then he would give judgement, but it may mean that he had to improve the quality of it once it was seen in writing. Mr Afram Gergeo confirmed 5 minutes.
The hearing was adjourned at 12.33 pm (although video was displayed and recording continued through the adjournment).
The hearing resumed at 12:45 pm.
Butcher J after a short introduction explained his decision.
The application was for enforcement in Sweden. It had been granted at an ex parte hearing on the 28th February, which Butcher J had continued on the 20th March 2020.
Butcher J needed to say very little about the nature of proceedings and the allegations as they were summarised in paragraph 5 of The Honourable Mr Justice Foxton’s judgement. Apart from a letter from Mr Mark Bishop, the respondents had failed to provide asset disclosure. As far as he was aware the assets were in the main in Sweden and the subject of provisional sequestration orders in favour of the Swedish Pensions Agency [Pensionsmyndigheten] and prosecutors regarding ongoing criminal proceedings in Sweden.
The provisional sequestration orders were likely to soon be cancelled now by the Swedish Prosecution Authority as proceedings had commenced in England and the orders of the prosecutors may fall away due to proceedings in Sweden.
Regarding permission to enforce the freezing order in Sweden, the Swedish criminal proceedings were an important part of the background to the present application. Mr Emil Ingmanson and Mr Afram Gergeo had been arrested in England, Mr Mark Bishop in Sweden. An English Court had ordered extradition to Sweden. One of these first two had then absconded to Hungary and had been rearrested in January 2019, then extradited to Sweden later in 2019.
The Optimus Phase of the criminal proceedings involved those charged with fraud, who stood trial which concluded on the 21st February 2020. Judgement had been previously expected at the time to be stated on or about the 7th April, but it now appeared would be given on the 17th April 2020.
The prosecution of the Falcon Phase of the alleged fraud had all been investigated and was expected to commence in the summer. There had been discussion as to the trial date until recently. Mr Emil Ingmanson and Mr Mark Bishop were in custody pending the outcome, Mr Afram Gergeo had been released in March 2020 but subject to having to report to the Swedish Economic Crime Authority regularly.
Contact with Mr Emil Ingmanson’s Swedish lawyers in 2020 suggested that he would be in a position by March 2020 to instruct English solicitors, but he had not been in contact since. Mr Mark Bishop’s solicitors had contacted the Claimant [Kingdom of Sweden] stating an intention to instruct a representative and defend the matter. There had been communication with a named individual. In the communication it was said that he was not able to afford English counsel in relation to the assets claim.
Mr Afram Gergeo had been released from custody and participated in the hearing by Skype but had said he was not in a position to look at the papers and had difficulty following proceedings. On behalf of the Claimant [Kingdom of Sweden] Aidan Casey QC had been told with regards to Mr Emil Ingmanson and Mr Mark Bishop that there would be no possibility that they could access Skype and they they may not have been able to participate even if Mr Emil Ingmanson or Mr Mark Bishop had wanted to. Aidan Casey QC had sought an answer to the problems for participation for the two in custody and for Mr Afram Gergeo.
Butcher J stated that the order he was going to make, the respondents could apply to set aside or vary without the need for a change of circumstances. Other than a letter of Mr Mark Bishop, the respondents had not yet responded to the request for asset disclosure, but some of the respondents may have had difficulties.
Each appeared to have some assets in Sweden, which were the only substantive assets save for a property in London.
The Claimant [Kingdom of Sweden] was currently aware that in Sweden if convicted and fined, this property went to the Swedish State or in damages to victims. The provisional sequestration orders were for the amounts to pay upon conviction and were over the assets of those reasonably suspected of the offences. Butcher J explained how Swedish courts dealt with deadlines (or extended deadlines) regarding the provisional sequestration orders for criminal proceedings in Sweden.
The orders needed to be enforced against particular assets. The evidence was that the Swedish Enforcement Agency [Kronofogdemyndigheten] in enforcing the provisional orders had searched for assets. Once the Swedish Enforcement Agency [Kronofogdemyndigheten] made a determination then there were restrictions placed on transferring or dealing with the assets to the detriment of the party that had applied for the orders. For the purpose of the provisional sequestration orders the assets were preserved pending judgement. If there were fines, damages or forfeitures the evidence was that the Swedish Enforcement Agency [Kronofogdemyndigheten] would enforce that.
If the subject of an attachment order by another creditor, the original creditor gained attachment status and if a claim succeeded then the property would be divided. Regarding the Swedish assets there were two sets of orders. The Optimus provisional sequestration orders were for 350 million Kronor [approximately £27,093,500] each and were enforced on behalf of the Swedish prosecutor. The Falcon provisional sequestration orders were for 65.3 million Euros [approximately £56,374,143] each.
Various companies were owned by Mr Afram Gergeo and all known assets were subject to provisional sequestration orders in favour of the Swedish prosecutor and Swedish Prosecution Authority. Advice from Swedish lawyers had been that because proceedings had commenced in English, when this fact was known to the Swedish Court it would very or fairly rapidly cancel the provisional sequestration orders made in favour of the Swedish Prosecution Authority.
In the circumstances of the Falcon case they would lapse. Evidence submitted was that they would lose the provisional sequestration orders which were still in favour of the prosecutor but may change in the near future as they were scheduled to give the Optimus Decision on the 17th April and if acquitted in respect of the Optimus Phase these provisional sequestration orders would be cancelled.
The provisional sequestration orders regarding the Swedish assets of the respondents in respect of the Falcon phase ran to the 8th April 2020. If no application was made by this date to prolong the provisional sequestration orders then they would be cancelled. The background and the motivation of the Claimant’s [Kingdom of Sweden]’s concerns were that if the provisional sequestration orders were cancelled then the Swedish assets would not be subject to provisional sequestration orders and the respondents would be entitled to dispose of their Swedish assets.
The Claimant’s motivation for the application to apply the worldwide freezing order in Sweden was subject to the relevant principles in Dadourian Group International Inc v Simms [ 1 WLR 2499]. For the purposes of brevity as it was not set out when transcribed, it was necessary to set out that guidelines 1-8 were neither exhaustive or exclusive of any other matter that was relevant to the circumstances. Butcher J referred to paragraph 37 of the Arcadia Petroleum Ltd case ( EWHC 2337 (Comm)) and made comments about how it may be appropriate to grant an order that led to superior relief abroad, that superiority of foreign relief was not an absolute bar but it was rather the nature of the relief and the nature of it.
Considering the Claimant’s [Kingdom of Sweden]’s application in the context of the guidelines, it was clear that a freezing order was capable of a recognition order in Sweden and that the Claimant [Kingdom of Sweden] needed to apply to the [Swedish] Enforcement Agency [Kronofogdemyndigheten] with the freezing order as evidence in order for it to be treated as a provisional sequestration order. There was the possibility that it would not be treated as a provisional sequestration order but by another suitable measure. Butcher J had considered the submissions by Aidan Casey QC in writing and orally and was satisfied by those submissions which permitted there to be liberty to set aside the order which satisfied for those purposes enforcement in Sweden. It satisfied the Dadourian guidelines [ 1 WLR 2499] regarding justice and convenience as it was just and convenient regarding the effectiveness of the freezing order.
In Sweden it would apply in that jurisdiction. The victims of a sophisticated international fraud had lost tens of millions of Euros. The substantive assets appeared to be in Sweden. If the Swedish Prosecution Authority’s orders were cancelled, which they almost certainly would be, the assets would not have protection in the jurisdiction of Sweden. Butcher J did not consider that granting permission for the worldwide freezing order in Sweden would be oppressive as it would just replicate such an order therefore limited steps would have to be taken.
The respondents didn’t have to do anything or incur extra costs. At some stage the status of assets in more than one jurisdiction would have to be addressed to prevent doubling up. Butcher J was concerned of the doubling up of the preventative order if he gave permission for the worldwide freezing order in Sweden, but the way it should be dealt with was by the inclusion in the order of an additional sentence that had been read out by Aidan Casey QC. It was intended to have effect once there was a provisional sequestration order in place. As a result of this order the Swedish Prosecution Authority would seek the discharge of the existing provisional sequestration order, in order for there not to be duplication of the provisional sequestration orders in Sweden.
As to the second guideline, the question was to look at all the relevant circumstances and it would be proportionate for the Claimant to be allowed to apply to the Swedish Enforcement Agency [Kronofogdemyndigheten]. Ultimately it was a matter for the Swedish Enforcement Agency [Kronofogdemyndigheten] as to how it was enforced in Sweden.
The third guideline, the real benefit to the Claimant was to have permission to be able to enforce in Sweden where the only substantive assets known to the Claimant were. The Swedish Pensions Agency [Pensionsmyndigheten] had a provisional sequestration order and it was also subject to a provisional sequestration order in favour of the prosecutor. If the prosecutor succeeded and as a result a monetary order was made, it would be shared with the Swedish Pensions Agency [Pensionsmyndigheten] and prosecutor able to distribute its share. If it succeeded it would be made to the Swedish State in general, rather than specifically to the Swedish Pensions Agency [Pensionsmyndigheten] and on that basis the underlying pension savers may not receive compensation.
Butcher J had been told by the Claimant [Kingdom of Sweden] that it did not intend to join a third party to the Swedish court proceedings. Therefore it was not a consideration that weighed against granting permission.
The fourth guideline was said to be the most contentious regarding the grant of relief and was the question as to whether granting permission would lead to superior relief being obtained to that in the freezing order. It appeared that Swedish law did not create a priority, only a priority right if a third party obtained an attachment order over the same assets.
Butcher J referred to the detailed note on Swedish law regarding rights over assets and how some competing rights were ranked pari passu. This did not provide a form of superior relief, which was only generated if there were other creditors. Currently there appeared to be none save the Swedish prosecutor. If permission was granted to apply to the Swedish Enforcement Agency [Kronofogdemyndigheten] it would not as a direct result lead to the obtaining of superior relief which would only arise if there were other subsequent events. The potential of another creditor and the related provisions of Swedish law were something over which the Claimant [Kingdom of Sweden] had no control. The possibility that the Swedish Pensions Agency [Pensionsmyndigheten] would be promoted to priority creditor in the way it had been described was not in any event a bar to the present application. It was right to say that a possible request to the Swedish Enforcement Agency [Kronofogdemyndigheten] would be on terms as similar as possible. Butcher J was going to without making it contingent, make the order requiring the Swedish Prosecution Authority to undertake to do so.
It was up to the Swedish Enforcement Agency whose stated intention was to enforce it as if it was a provisional sequestration order.
The possibility of a superior form of relief in a foreign court was not a sufficient reason for refusal of permission to enforce abroad.
Not to be forgotten was the Falcon Phase, although it was right to say the Claimant had not received any adequate disclosure about assets from the respondents, any of the respondent’s Swedish assets could be traced.
Butcher J was however going to require the Claimant to report to the Court in the event of a material change of circumstances such as bankruptcy other than on the respondent’s own petition.
The fifth guideline appeared to be a very full explanation of the applicable law and practice in Sweden which was a good position as to what were the relevant laws, principles and options relevant to the Swedish proceedings.
The sixth guideline Butcher J had no doubt that the respondents did have assets in Sweden.
The seventh guideline about the risk of dissipation, The Honourable Mr Justice Foxton had been satisfied of the risk of dissipation. The risk of dissipation cannot be said not to remain and there had not been an attempt to set aside the worldwide freezing order. The conclusion reached was that there was a risk of dissipation. Accordingly there had been a sufficient risk of dissipation as to the 8th guideline that it had been made on notice to the respondents. It appeared to have been served on Mr Emil Ingmanson and Mr Mark Bishop via the prosecutor and Mr Gergeo had been served via a process server in Sweden on the 28th of March. Accordingly Butcher J was satisfied that it was just and convenient to grant but on various terms indicated during the course of the judgement to give permission to enforce the worldwide freezing order in Sweden.
Aidan Casey QC stated that he was grateful, but needed to do work on the formulas of the additional undertaking and authority to offer them, but he couldn’t see a problem, but he would have to take instructions, therefore it may be appropriate to translate into an undertaking the additional sentence.
Butcher J stated that it might be better.
Aidan Casey QC wanted to add in reasonable before necessary just in case there were unforseen circumstances, as the Claimant might not want to be saddled with absolute as opposed to all reasonable. Butcher J said this was fine but he expected him to come back and tell him.
Aidan Casey QC moved onto the article 53 certificate. Butcher J described it as not a user friendly document. Aidan Casey QC asked if Butcher J could get it up on a screen or a hard copy. Butcher J asked for just a second. Aidan Casey QC stated he couldn’t give an electronic reference. Butcher J confirmed that he had it.
Mr Afram Gergeo stated that he really needed to go, he needed to run to the police station. Butcher J stated that he couldn’t keep him, but he would try to make sure that Mr Afram Gergeo’s position was taken into account in the remaining part of the hearing that he couldn’t be there for.
Mr Afram Gergeo stated that he hoped he understood. Butcher J stated that he understood. To Aidan Casey QC Butcher J stated that he was sorry he was looking for it and he’d got it [the EU article 53 certificate].
Aidan Casey QC referred to annex 1 which referred to the judgement but it wasn’t very user friendly, on page 2 an address was supposed to be given for Mr Afram Gergeo and the other respondents. Aidan Casey QC stated that what would have to be used was what was understood to be Mr Afram Gergeo’s most recent address in the UK as before disappearing he had not given his address in Sweden. Aidan Casey QC had found out now that Mishcon de Reya had his email address via the Swedish Prosecuting Authority and a more up to date addreses in Sweden.
Butcher J asked if this was not the email address used for participation in the Skype for Business hearing? Aidan Casey QC stated that it hadn’t been shared with them so he didn’t know. Butcher J stated that he didn’t know. Aidan Casey QC stated that it would have been given to the court only, he didn’t know if it was confidential but it would be helpful if it was received from the Court as it would ensure effective communication. Butcher J stated that he’d feel obliged to ask Mr Afram Gergeo first.
Aidan Casey QC returned back to the certificate and page 2 which dealt with the judgement and a negative response at 4.3 as it was not in default of appearance. Butcher J stated that the judgement here was the worldwide freezing order which wasn’t in default of appearance.
Aidan Casey QC answered no, the certificate went on but it began life as an ex parte order which was not properly described as in default of appearance albeit at stage 1 as there was no opportunity to appear. Butcher J pointed out that no one did appear at the return date.
Aidan Casey QC stated that again it was not a judgement in default despite the non appearance referring to 4.4. Butcher J stated is that what it meant and that he had never had to go through one of these forms before.
Aidan Casey QC stated that he did include in the bundle of authorities at page 23 where the Court may get some rather elliptical guidance from. 4.3.2 which should be struck out, as if one says yes to judgement in default, then the date in which documents that instituted proceedings or served may lend some support to the construction of a judgement in default being served. Failing that to appear as an opposed hearing which the respondents may or may not have had the opportunity to attend in consequence of the default of appearance. Butcher J stated that he was not sure it does. It seemed to Butcher J to be ambivalent, what seemed to Butcher J was that it seemed to indicate that there may have been a judgement given but it required showing that the defendant was notified. Butcher J didn’t think that it really shed much light.
Aidan Casey QC pointed out that Butcher J had to add in to the mix the definition of judgement. Butcher J replied. Aidan Casey QC stated that the date was the 28th of February, as amended to the 22nd of March. It was crucial that the customary undertaking left out by error had been reinserted by the slip rule and reinterpreted in March. Aidan Casey QC felt the need to add in 4.3.1 to ensure it was accurately described as no, although none of the defendants attended court on either the 28th of February or the 20th of March. Butcher J agreed.
Aidan Casey QC continued that the next positive entry at 4.4 was yes or no, it was enforceable in the Member State of origin so the answer was yes. 4.5 dealt with service of the judgement and he referred that Miss Blom-Cooper could do that today [3rd April 2020]. Butcher J agreed.
Aidan Casey QC continued with the long section beginning at 4.6 which was aimed more at final than provisional decisions but included a short description of the subject matter of the case and the measure ordered. Butcher J agreed but stated that it he had already stated a hearing on notice but not attended. Aidan Casey QC agreed, but he didn’t know that if that further complicated it or if Butcher J had added informative words. Butcher J stated that he added a form of words earlier.
Aidan Casey QC referred to 4.6.2 and the positive response of the order of the court. With regard to the substance of the matter and that once Butcher J was happy with the form it would require Butcher J’s signature and the stamp of the court of origin. Aidan Casey QC referred to amending that and at that point the connection with Aidan Casey QC was lost.
Aidan Casey QC returned and stated that he had sort of dropped out and hoped he was back. Butcher J confirmed that he was. Aidan Casey QC stated that he would correspond with the clerk regarding the substantive order and the undertakings required. Butcher J asked him to correspond to the clerk, with a copy to Butcher J and Mr Afram Gergeo. Aidan Casey QC referred to Mishcons de Reya and that only left the question of costs. Butcher J answered, “Yes”.
Aidan Casey QC referred to an application to make an application for costs which had been served which he should have said at an earlier point. It was difficult to persuade as to the arguments for costs without Mr Afram Gergeo there which had been for a very good reason. Butcher J stated that Mr Afram Gergeo had to leave and for the reason he had had to leave.
Aidan Casey QC stated that he didn’t mean to press that. With regards to Mr Emil Ingmanson and Mr Mark Bishop, possible points were that he didn’t know whether they could have attended or couldn’t. Appropriate costs could be made at the return date and costs reserved to the date of the first case management conference? Butcher J said that he was minded of that, but when was the first case management conference likely to be?
Aidan Casey QC said that he didn’t know, but he suspected it was a matter of 2-3 months off by looking at what had to happen. Butcher J agreed that that was the sensible course and that the costs of today’s application would be reserved to the first case management conference.
Aidan Casey QC was grateful, he didn’t have any further points to conclude as far as he was concerned. Butcher J thanked him and asked him to let him have the revised form of order via Butcher J’s clerk. He hoped to finalise it if not today [3rd April 2020] then by early next week.
Aidan Casey QC thanked Butcher J for sitting through the short adjournment. Butcher J confirmed that that was going to be the end of the call.
The video hearing ended.
If you click on any of the buttons below, you’ll be doing me a favour by sharing this article with other people.