Boats on water in docks.

Injunctions: Hearsay evidence and dissipation risk considered

27 January 2015. Published by Geraldine Elliott, Global Head of Commercial Disputes

The case of JSC Bank & anor v Sergei Pugachev[1] serves as a useful reminder of the need to take care with the use of hearsay evidence and the standard and evidence required of the dissipation of assets.

The case concerned an application brought by Mr Pugachev, the subject of the Order, to discharge the Order on the grounds that (i) much of the evidence relied upon in obtaining the Order was hearsay, the source(s) of which had not been identified; and (ii) the existence of a complex offshore corporate structure was insufficient evidence there was a risk of dissipation of assets and the standard of proof that there was a risk was relatively high.

The underlying facts giving rise to the without notice application related to court proceedings brought in Russia against Mr Pugachev following the insolvency of the Bank which he had founded and in which he was alleged to have had an on-going involvement. The claim made in these proceedings was the Mr Pugachev was liable under Russian law for "causing" the Bank's insolvency, and consequently for the Bank's outstanding debts in the insolvency, or alternatively, the shortfall.

The Judge did not agree with Mr Pugachev's submissions in relation to the dissipation of assets – the standard of proof was not high and it was sufficient to demonstrate a risk. The Judge considered that whilst it was correct that the existence of offshore corporate structures alone was likely to be insufficient evidence to establish a risk of dissipation, in some cases the "quality and nature of the arrangements may be a pointer towards a risk of dissipation". In relation to the hearsay evidence, the Judge agreed that there were technical failings in identifying the sources of information contained in the witness statements. However, he found that these technical failings were either immaterial or obvious to any tribunal reading the evidence and the effect of it modified accordingly.

To read the full article, please click here.

This blog was co-authored by Katie Wright. 

[1] JSC Mezhdunarodniy Promyshlenniy Bank (2) State Corporation "Deposit Insurance Agency" v Sergei Pugachev [2014] EWHC 4336