We have  looked at issues relating to witness credibility several times recently. However further apposite examples arise in the decision of Sales J in Avonwick Holdings Ltd -v- Webinvest & Shlosberg [2014] EWHC 3661 (Ch). In particular the major (and obvious) difficulties that can arise if a witness has made earlier statements which contradict what is said in later statements.


The claimant was seeking moneys due under a loan agreement and associated guarantee.  The defendants were defending on the basis that there was a collateral oral agreement on a “pay if paid” basis.  Being an oral agreement, of course, much depended on the credibility of the witnesses.


The judge found that the Claimant’s witnesses were honest, straightforward and credible.

The witnesses

  1. Mr Gayduk, Mr Kravets, Mr Petrov and Mr Kupchyshyn all gave evidence in person for Avonwick. As already stated, I found them all to be truthful witnesses. They gave their evidence in a straightforward way and it was entirely credible.
  2. Two points deserve mention here in relation to their evidence. First, in his submissions, Mr Marshall sought to make much of the fact that the Loan Agreement, which was drawn up by Allen & Overy (“A&O”), did not include an entire agreement clause. He sought to suggest that this indicated that it was intended to allow scope for operation of the alleged collateral ‘pay if paid’ agreement he said had been made by Mr Shlosberg and Mr Gayduk. On the evidence, however, this point was unsustainable.


  1. Mr Shlosberg and Ms Mutieva gave oral evidence for the Defendants. In order to understand the significance of their evidence at trial it is necessary to explain that they had also made witness statements in the course of arbitration proceedings brought by Webinvest against Globoid for repayment of the Globoid loan: witness statement of Ms Mutieva dated 4 October 2013; witness statement of Mr Shlosberg dated 19 March 2014; witness statement of Ms Mutieva dated 27 April 2014 in response to a witness statement of Mr Machitski dated 14 April 2014; and witness statement of Mr Shlosberg dated 28 April 2014 in response to Mr Machitski. They had also made witness statements for the purposes of seeking injunctive relief against Avonwick in relation to the insolvency proceedings against Mr Shlosberg and Webinvest in England: witness statements of Ms Mutieva dated 10 July 2014 and 14 July 2014; witness statements of Mr Shlosberg dated 29 May 2014 and 11 July 2014. It was in Mr Shlosberg’s witness statement of 29 May 2014 that he first suggested that there had been an oral collateral ‘pay if paid’ agreement.
  2. In the case of both Mr Shlosberg and Ms Mutieva, there were significant differences as between their evidence in the arbitration proceedings and the insolvency proceedings, and as between their evidence in both those proceedings and their evidence at trial.
  3. Before trial, there was interlocutory sparring between the parties on the question whether the witness statements and other documents in the arbitration proceedings should be disclosed. Orders were made for their disclosure, and the relevant part of these orders were confirmed by order of the Court of Appeal made on 17 October 2014, on the last sitting day before the trial began on 20 October.
  4. In Webinvest’s arbitration proceedings against Globoid, Webinvest sought to rely straightforwardly on the terms of a written loan agreement dated 22 April 2010 (“the Globoid Loan Agreement”). In Globoid’s defence, Mr Machitski asserted that there had been an oral collateral agreement made between him and Mr Shlosberg to qualify the terms of the Globoid Loan Agreement. This was denied by Mr Shlosberg, and as part of their answer to Mr Machitski’s assertion both Mr Shlosberg and Mr Mutieva said that their experience of Russian business is that negotiations often take place orally, but arrangements are documented in accordance with the agreements reached between the parties (i.e. without leaving out important parts of the agreements made) and that the documented agreements are legally binding (i.e. are not qualified by collateral oral agreements). That was important evidence for them to maintain in the arbitration proceedings, to meet the case being presented by Globoid and Mr Machitski. But it was distinctly unhelpful to the case Mr Shlosberg and Webinvest sought to maintain in the present action, in which it was Avonwick which sought to rely upon the relevant written legal agreements and Mr Shlosberg who was saying that he had made a separate oral collateral agreement with Mr Gayduk which was radically inconsistent with what the written agreements stated.
  5. Unsurprisingly, Mr Shlosberg and Ms Mutieva were cross-examined about this tension between their evidence for the arbitration proceedings and their evidence at trial. They were also cross-examined about the position which Webinvest had maintained vis-à-vis Globoid, in which Webinvest had emphasised that it was being pressed for repayment by its own creditors in a manner which was inconsistent with Mr Shlosberg’s later case that there was a ‘pay if paid’ agreement with Avonwick, which meant that Webinvest owed Avonwick nothing until it was paid by Globoid. Neither Mr Shlosberg nor Ms Mutieva had good answers to these lines of questioning. Mr Shlosberg, for instance, suggested that even though he had signed declarations of truth he did not regard his witness statements in the arbitration as having the status of evidence, since the arbitration had been settled before he gave oral evidence, and also suggested that he had said things in his witness statements to fortify Webinvest’s case against Globoid which were not true. In my view, however, what Mr Shlosberg and Ms Mutieva said in their evidence in the arbitration was much closer to the truth than what they said at trial.
  6. Ms Mutieva was a very unsatisfactory witness. She repeatedly lied or became evasive when challenged with inconvenient documents inconsistent with the story she was trying to put forward. She was visibly uncomfortable in giving many of her answers, and one might have felt sorry for her had she not been so dishonest.
  7. Her evidence even began with a lie. In inter-solicitor correspondence before trial, Dechert LLP (“Dechert”, the solicitors for Avonwick) wrote to the Defendants’ solicitors, Fladgate LLP (“Fladgate”), for the purposes of working out the timetable for trial, to check that Mr Shlosberg and Ms Mutieva would be giving evidence in English, since they had signed witness statements in English. Dechert specifically asked to be informed if they intended to give evidence in Russian, since that would mean that the timetable would have to be amended. Fladgate responded to say that Mr Shlosberg would be giving his evidence in Russian with an interpreter, but stated “Julia Mutieva is confident in English but wishes to have an interpreter present when she gives evidence” (i.e. she was proposing to give evidence in English, but with support from an interpreter should any difficulties arise). However, when she came to give her evidence she said she would give it in Russian, which she proceeded to do, with every question being mediated through a translator, so buying herself extra time to think up answers. It was in fact clear at many points in her evidence and from her demeanour that she understood very well the questions that were being put to her in English by Mr Berry QC for Avonwick.
  8. Mr Berry asked her about Fladgate’s letter, and she denied that she had ever told them that she would give her evidence in English. In his closing submissions, Mr Berry submitted that this was a lie. Having reviewed the matter with the benefit of submissions from Mr Berry and Mr Marshall, and having regard to the whole way in which Ms Mutieva gave her evidence, I consider that Mr Berry is right. Fladgate gave no indication of having behaved other than as highly competent solicitors in relation to these proceedings, and I find it inconceivable that they would not have checked directly with Ms Mutieva before responding to Dechert’s inquiry about how she would be giving her evidence. To have done otherwise, in a matter affecting the trial timetable, would have been to act in reckless disregard of their duty to the court.
  9. Mr Marshall sought to defuse this by pointing out that in her first witness statement in the arbitration Ms Mutieva had said that although it had been prepared in English, she anticipated giving testimony at the evidentiary hearing in Russian. He suggested that, although privilege had not been waived, I should infer that a mistake had been made by Fladgate. In my view, however, this is a feature of the case which, if anything, strengthens the inference that Fladgate must have taken instructions directly from Ms Mutieva before indicating to Dechert that (unlike as proposed for the arbitration) she would give her evidence in English. If they had not done so, and were simply going by what she had said previously, they would have indicated that she, like Mr Shlosberg, would be giving her evidence in Russian.
  10. Although I have explained why this particular part of Ms Mutieva’s evidence was unsatisfactory, this should not be taken to be the main foundation (or even a particularly significant part of the foundation) for my conclusion that Ms Mutieva was not a witness of truth. There were many other reasons for forming that view, arising both from the way she gave her evidence and from the substance of what she said.


The other witness fared no better in the judge’s assessment.

  1. Mr Shlosberg gave his evidence after Ms Mutieva. I found him also to be a thoroughly dishonest witness. His answers were frequently evasive. He veered between affecting detailed recollection of some things and affecting almost complete lack of memory for others, depending on what suited his case. In neither respect was his evidence persuasive. He had no good explanation for the shifts and changes in his evidence between the arbitration proceedings, the insolvency proceedings and for trial, when each time the story changed to serve different purposes or to take account of new and inconvenient matters. He was a witness willing to say anything, however untrue, to suit his purposes and to try to escape liability for himself and Webinvest.
  2. Mr Shlosberg maintained that he had not read the Guarantee with any care before signing it. I did not believe him. It is very likely that he examined with care an instrument which purported to make him personally liable for a loan of US$100 million and that he arranged for Ms Mutieva to make inquiries about its meaning. Similarly, he said that he had not read the Loan Agreement with any care. Again, I did not believe him. Webinvest was his company, and it was assuming a liability of US$100 million. He did not instruct lawyers to advise him. Both instruments were drawn up at Webinvest’s request in both English and Russian, and the inference is that this was to enable Mr Shlosberg (whose English was not fluent, unlike Ms Mutieva’s) to study and understand them for himself. Upon reading these documents, he could not have failed to realise (and in my view he very clearly did realise) that they set out his personal obligations and those of his company in a way that allowed for no doubt, and which certainly contained no hint of any inconsistent collateral agreement with Mr Gayduk. Had there been any such agreement, it would have represented an extraordinary risk for Mr Shlosberg to proceed without it being recorded or adverted to in any way in the Guarantee and Loan Agreement. In fact, the reason it was not recorded was that no such collateral agreement had been made.
  3. It was also a remarkable feature of the evidence of both Mr Shlosberg and Ms Mutieva under cross-examination that, when it came to the crunch, they failed at critical points in their oral evidence to “come up to proof” (as Mr Berry put it) regarding what exactly was said regarding any supposed ‘pay if paid’ agreement. Ms Mutieva’s oral evidence was merely to the effect that it was understood that the source of the funds to repay Avonwick would be the funds received from Globoid. She did not identify clear words used by Mr Shlosberg to inform her that he had made a specific collateral ‘pay if paid’ agreement with Mr Gayduk to limit the contractual obligations of Webinvest. Still more remarkably, at key points in his oral evidence Mr Shlosberg accepted that no words to limit Webinvest’s obligations were spoken between him and Mr Gayduk, and that it was all left as a matter of understandings rather than specific agreement.



  1. This is a clear and straightforward case. Avonwick lent Webinvest US$100 million on the terms of the Loan Agreement and Mr Shlosberg gave a personal guarantee in respect of that loan on the terms of the Guarantee. There was no collateral oral ‘pay if paid’ agreement to qualify the effect of the Loan Agreement and the Guarantee. The evidence by Mr Shlosberg and Ms Mutieva that there was such a collateral agreement was dishonest. All the defences to Avonwick’s claim fail. The Loan Agreement and the Guarantee fall to be enforced according to their terms.


One key point of the judgment was the inconsistent statements given in previous proceedings.  The inconsistencies were never explained.  This was clearly not the only factor in the case in relation to credibility, however it was an important one.


We have looked at the Avonwick decision before in the context of without prejudice letters being adduced at trial.

In relation to witness credibility generally.

1. Litigators must know about credibility.

2. Witness Statements and Witness Evidence: More about Credibility.

3. Which Witness will be believed?Is it all a lottery?

4. The witnesses say the other side is lying: What does the judge do?

5. Assessing the reliability of witnesses: How does the judge decide?

6. Witness credibility, documents and playing away from home