Brigita Morina v Catherine Mairead McAleavey
| Jurisdiction | England & Wales |
| Judge | Mr Justice Edwin Johnson |
| Judgment Date | 23 May 2023 |
| Neutral Citation | [2023] EWHC 1234 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No. PT-2019-000932 |
[2023] EWHC 1234 (Ch)
Mr Justice Edwin Johnson
Claim No. PT-2019-000932
Appeal No. CH-2022-000200
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY, TRUSTS AND PROBATE LIST (ChD)
AND CHANCERY APPEALS (ChD)
Rolls Building
7 Rolls Buildings
Fetter Lane
London, EC4A 1NL
Hodge Malek KC and James Potts (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP) for the Claimant
Emma Hargreaves (instructed by Fieldfisher LLP) for the Fourth and Fifth Defendants
Hearing dates: 26 th and 27 th April 2023
Remote hand-down: This judgment was handed down remotely at 10.30am on 23 rd May 2023 by circulation to the parties and their representatives by email and by release to the National Archives.
Introduction
This is my reserved judgment on (i) an application to strike out, (ii) an application for permission to amend, (iii) an application, so far as the same may be required, for permission to appeal against an order of Deputy Master Teverson made on 13 th October 2022, and, subject to the grant of permission to appeal, (iv) the substantive appeal against that order.
All of these various matters were directed to come before the court at a single two day hearing. The hearing was listed before me. This is my judgment consequential on the hearing.
Not all the parties involved in the case appeared at this hearing. The parties who appeared were the Claimant, represented by Hodge Malek KC and James Potts, and the Fourth and Fifth Defendants, represented by Emma Hargreaves. I am most grateful to all counsel for their helpful written and oral submissions in relation to what is something of a tangle of issues on the statements of case.
In order properly to identify the matters which I have to decide in this judgment, it is necessary, as briefly as possible (i) to identify the parties to this dispute, (ii) to explain, as briefly as possible, what the dispute is about, (iii) to identify the particular claim in the dispute with which I am concerned and (iv) to set out the procedural history which has resulted in the applications and appeal which are before me.
For reasons which will become apparent later in this judgment, it is important to spell out that I am not, in this judgment, making any findings of fact in relation to factual matters which are not agreed between the parties. Nor, save to the extent that I may decide that it is appropriate to do so in this judgment, am I making any decisions on the substantive (as opposed to procedural) issues between the parties in this case.
The parties
Where I need to refer to the principal individuals in this case on an individual basis, I will use first names. It will be understood that I intend no discourtesy by this form of description.
The dispute in this case concerns the estate of the late Vladimir Alekseyevich Scherbakov ( “Vladimir”), a Russian born businessman, who died in Belgium on 10 th June 2017. It appears that Vladimir was a wealthy man, and left a substantial estate ( “the Estate”), with assets in various jurisdictions.
Elena Nikolayevna Scherbakova ( “Elena”) is the former wife of Vladimir. They were married in Russia on 19 th July 1989. There is a dispute as to whether their marriage was dissolved in Russia in 1991 or, as Elena claims, in Belgium in 2015–2016. Vladimir and Elena had two children, Olga Vladimirovna Scherbakova and Alexander Scherbakov, who are both now adults ( “the Adult Children”). Elena is currently in prison in Russia, having been convicted, in Russia, on what I understand to have been charges of attempted fraud and sentenced to six years of imprisonment.
Prior to his death Vladimir was also in a relationship with Brigita Morina ( “Brigita”). Brigita's case is that the relationship commenced in November 2010, and continued until Vladimir's death. There is a dispute over the duration of the relationship. For present purposes it is sufficient to record that Vladimir and Brigita had two children together, a son born in 2014 and a daughter born in 2016 ( “the Minor Children”). Brigita also has a son from a previous relationship, born in 2009. Brigita's case is that Vladimir treated her son from her previous relationship as his own son, and had wished formally to adopt him.
The actions
The dispute over the Estate has generated two actions. In the first action ( “the Probate Action”) Brigita, in her own capacity and as litigation friend to her two sons, seeks an order for the grant of probate in solemn form of a will dated 28 th October 2015 ( “the English Will”) or a copy thereof. The English Will states that it affects all of the Estate, with the exception of property situated in Russia. The Defendants to the Probate Action are Elena, the Adult Children, Brigita's daughter with Vladimir (who was born after the date of the English Will), Chan Shee Chow ( “Mr Chan”), a business associate of Vladimir and a co-executor with Brigita of the English Will, and William Gordon and Catherine McAleavey ( “the Joint Administrators”), who have been appointed as administrators pending suit of the Estate in England, and also as interim administrators of the Estate in the British Virgin Islands ( “the BVI”) and Singapore. The case number of the Probate Action is PT-2018-000247.
The second action ( “the KPHL Action”) concerns a dispute over the ownership of shares in a company known as Key Platinum Holdings Limited ( “KPHL”). KPHL is a BVI company incorporated in the BVI on 23 rd October 2013. Brigita is the sole Claimant in the KPHL Action. By her Re-Amended Particulars of Claim, Brigita seeks a declaration that she is the absolute beneficial owner of the shares in KPHL ( “the KPHL Shares”), either solely or, in the alternative, jointly with the Minor Children. The case number of the KPHL Action is PT-2019-000932.
The Defendants to the KPHL Action are the Joint Administrators, Elena, the Adult Children and the Minor Children. The active Defendants in the KPHL Action are the Adult Children, who deny that Brigita or the Minor Children had any interest in the KPHL Shares. The Adult Children are supported in this denial by Elena, but Elena has not recently taken an active part in the KPHL Action. As noted above, she continues to be imprisoned in Russia.
The Probate Action and the KPHL Action (together “the Actions”) are being case managed together and are listed for trial together in October 2023. In this judgment I am only concerned with the KPHL Action.
The essential issues in the KPHL Action
The statements of case in the KPHL Action are lengthy, and have been much amended. For the purposes of this judgment it is only necessary to give a very short summary of the essential issues between the active parties in the KPHL Action; that is to say Brigita on the one side, and the Adult Children on the other side.
Brigita's claim to a beneficial interest in the KPHL Shares essentially rests on the following transactions ( “the Transactions”), by reason of which it is said that the beneficial interest in the KPHL Shares came to be vested in Brigita:
(1) A declaration of trust dated 8 th January 2015 ( “the 2015 Declaration”) by which the legal owner of the KPHL Shares, Mr Chan (the business associate of Vladimir mentioned above) declared that he held the KPHL Shares on trust for Brigita.
(2) A declaration of trust dated 14 th May 2015 (“the May 2015 Declaration”) by which a Ms Afendyk, to whom Mr Chan had transferred the legal title to the KPHL Shares on or about 16 th February 2015, declared that she held the KPHL Shares on trust for Brigita. Ms Afendyk is described, on Brigita's case, as a trusted family housekeeper.
(3) A transfer by Ms Afendyk, made on or about 17 th September 2015, of legal title to the KPHL Shares to Brigita.
(4) A deed of gift bearing the date 20 th September 2015 ( “the Deed of Gift”), but which is said to have been drafted in 2016 and signed by Vladimir on a date after 23 rd January 2017.
The grounds on which the Adult Children deny this claim can be summarised as follows:
(1) For various reasons of BVI and Swiss law, Vladimir's beneficial interest in the KPHL Shares was never the subject of a valid assignment or transfer to Brigita.
(2) Alternatively, any such assignment or transfer which would otherwise have been effective should be inferred either to have been part of an arrangement pursuant to which Brigita was to hold the KPHL Shares as a nominee for Vladimir or to have been a sham.
(3) Alternatively, and if Vladimir did transfer the beneficial interest in the KPHL Shares to Brigita in his lifetime, the transfer is susceptible to a claim under Section 423 of the Insolvency Act 1986 ( “Section 423”), and should be set aside.
In the present case I am concerned with the case of the Adult Children based upon Section 423 ( “the Section 423 Claim”).
The Section 423 Claim
The Section 423 Claim is pleaded in what is now the Re-Re-Amended Defence and Counterclaim of the Adult Children, at paragraphs 69–69D. The Section 423 Claim was introduced by re-re-amendments dated 8 th July 2022. Permission to re-re-amend the Defence and Counterclaim, in order to introduce the Section 423 Claim and to make a couple of other amendments, was granted to the Adult Children by Deputy Master Teverson ( “the Deputy Master”) by order made on 30 th June 2022 ( “the June Order”), for the reasons set out in a reserved judgment handed down on...
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