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In Avonwick Holdings Ltd v Azitio Holdings Ltd and others a hearing involved an application to adjourn a trial set for a hearing over seven weeks starting in October 2019. The primary claim is based on fraudulent misrepresentation. At hearings on 12 and 15 February 2019, the claimants sought adjournment of the trial on alternative bases that the continued detention in Russia of one of the parties and the consequent impossibility of serving witness evidence from him, and insufficiency of time properly to complete trial preparations in time for the hearing. The court rejected the application on both bases. In relation to the first, the court weighed up the respective prejudice to the parties and other court users arising from adjournment against the prejudice to the parties should the hearing not be adjourned and concluded the former outweighed the latter. In relation to the second, the court considered that there was sufficient time to complete trial preparations. Written by John Bignall, barrister at 7 King’s Bench Walk.
Avonwick Holdings Ltd v Azitio Holdings Ltd and others  EWHC 305 (Comm)
What are the practical implications of this case?
This case demonstrates the exercise in which the court engages when faced with an opposed application to adjourn a trial, weighing up the risk of prejudice to all parties and to other court users on adjourning the trial against the risk of prejudice to the parties arising should the trial not be adjourned. The court took a realistic view of the likely course of events in the respective scenarios. In relation to the evidence of a key factual witness, their inability to serve a witness statement in accordance with the procedural directions was not an insurmountable problem. The case demonstrates that the court will typically be reluctant to adjourn a trial unless there is a risk of prejudice clearly outweighing the prejudice to other parties and other court-users arising from granting an adjournment.
In addition, a party will have a major hurdle to clear if it applies for adjournment in circumstances where it has previously caused the court to express the view that the trial could not take place later than the date from which it is now sought to adjourn.
The case involved a dispute between Ukrainian parties. The primary claim was for a sum in excess of US$1bn advanced on the basis that the sale of a stake in a Ukrainian company (Industrial Union of Donbass) at a price of US$950m was induced by fraudulent misrepresentations as regards the price to be obtained on an immediate resale of that stake. The misrepresentations were said to have been made at a meeting. Directions were set at successive case management conferences leading to a trial starting in October 2019.
One party, Mr Mkrtchan, who was claimed to have made the representations in question, was at the time of the application held in pre-trial detention in Russia, where he had been for a year.
A different party, Mr Gaiduk, applied for adjournment of the trial until (effectively) June/July 2020, the application being supported by Mr Mkrtchan. The application was made primarily on the basis that there was no prospect of witness evidence from Mr Mkrtchan being exchanged in proper time for trial, although there was a prospect of his being released prior to the trial.
Alternatively, adjournment was applied for on the ground of unreadiness for trial in October.
The court took the view that if Mr Mkrtchan were to be released from detention prior to the trial, then it would be likely that he would be permitted to give evidence at trial, and that unfairness to the other parties in his doing so without having served a witness statement in accordance with the directions could be avoided.
On that basis, adjournment arose only on the hypothesis that Mr Mkrtchan were not to be released, in which case adjournment would have to be until after a criminal trial in Russia, thus until January 2021. In considering that, the court weighed up the prejudice that would arise if there were to be an adjournment against the prejudice that would arise if there were not to be.
The prejudice that would arise if there were to be an adjournment included a certainty of seriously frustrated legitimate expectations, a certainty of prejudice to one of the parties (Prandicle) in relation to an asset the subject of claims in the litigation, a certainty of prejudice to other litigants, a risk of appearing to undermine the authority of the court (because it had, at Mr Gaiduk’s encouragement, previously expressed the firm view that the trial must take place in October 2019), a certainty of the normal adverse consequences of a lengthy delay such as increased costs and impairment of witness’ memories, and a real risk of achieving no substantial benefit, as Mr Mkrtchan might not be able to participate even in the adjourned trial.
The only prejudice that would arise if there were no adjournment was a real risk of prejudice to Mr Mkrtchan if there were no evidence from him at trial in October 2019 but would have been had the trial been adjourned to 2021. However, that was speculative, and while a small chance of major prejudice may weight more heavily than a large chance or certainty of more minor prejudice, the judge reached a clear view that adjourning the trial created the greater risk of injustice overall.
The submission that the parties could not be ready for trial in October 2019 was dismissed on the basis that none of the outstanding matters were out of the ordinary for substantial Commercial Court litigation eight months from trial between very well-resourced and well-supported litigating parties. While the legal teams had not prepared witness statements for exchange by the prescribed date a week later than the judgment, there was no good reason why the parties should not be able to serve witness statements by 1 March 2019. The court also reiterated that the norm was not for exchange of supplemental expert reports.
Court: High Court, Queen's Bench Division, Commercial Court
Judge: Andrew Baker J
Date of judgment: 15/02/2019
0330 161 1234