Earl Richmond Kitover v Galmarley Ltd (trading as Bullionvault.com)
| Jurisdiction | England & Wales |
| Judge | Treacy |
| Judgment Date | 01 April 2021 |
| Neutral Citation | [2021] EWHC 809 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No: PT-2020-000494 |
| Date | 01 April 2021 |
[2021] EWHC 809 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES
PROPERTY, TRUSTS AND PROBATE LIST (ChD)
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Ms. Pat Treacy
(SITTING AS A JUDGE OF THE CHANCERY DIVISION)
Claim No: PT-2020-000494
Maurice Rifat (instructed by Patron Law) appeared for the Claimant.
Oliver Hyams (instructed by Keystone Law) appeared for the First Defendant.
Hearing date: 16 March 2021
APPROVED JUDGMENT
DEPUTY JUDGE
Overview
Earl Richmond Kitover (“Mr Kitover”) says that he is the true owner of 3.961kg of gold bullion (the “Bullion”) stored in vaults in Zurich and Singapore. The Bullion is under the effective control of Galmarley Limited (“Bullionvault”) in an account in the name of Mr Paul Haller.
Mr Kitover explains that he originally transacted with Bullionvault using false identity documents in the name of Mr Paul Haller (“Mr Haller”). Mr Kitover says that he can show that he and Mr Haller are the same person and asks that the gold bullion should be ordered to be released to him.
Bullionvault does not know whether Mr Kitover and Mr Haller are the same person. It has been unable to trace Mr Haller.
Procedural history
Bullionvault issued a stakeholder claim on 1 July 2020, under CPR Part 86.
The proceedings were listed before Master Teverson on 24 September 2020. The Master decided that the claim was unsuitable for summary determination and ordered that the proceedings should be listed for trial, with Mr Kitover as Claimant, and Bullionvault as a Defendant, and gave case management directions.
Evidence considered
The written evidence consists of: two witness statements of Robert Paul Glynne, a director and CEO of Bullionvault, together with various exhibits; and one witness Statement by Mr Kitover, also accompanied by exhibits. Both Mr Glynne and Mr Kitover gave evidence in person.
Background
Bullionvault is a gold investment service, which operates an online trading platform. An account can be opened online by uploading identification documents. Once funds are deposited to that account, they can be used to purchase bullion, which Bullionvault will store with a vault operator. These vault operators are third parties.
Bullionvault's terms and conditions provide that once funds are applied to purchase bullion the depositor is the bailor. Bullionvault is its agent. The vault operator with which the bullion is stored is the bailee.
It is undisputed that the Bullion is stored in vaults in Zurich and Singapore, under the effective control of Bullionvault. It was purchased following the opening of an online account in the name of Mr Haller. The identity of the account holder was validated by the provision of a US passport in that name along with bank documents also in that name, including an account statement from SwissQuote Bank. The purchases were made in tranches over several years.
Mr Kitover states that in 2007 he opened a gold account with Bullionvault using Mr Haller's name as the account holding name. To do so he also opened an account with SwissQuote Bank in the same false name and made an initial deposit in March 2007 using a passport as proof of identity. The passport used was, he said, a version of his own passport which had been altered to show the holder as Mr Haller.
On 21 May 2018 Bullionvault attempted to contact Mr Haller by email seeking updated proof of identity and proof of address as the passport originally provided to open the Account had expired. On 19 June Mr Kitover visited Bullionvault in London. He met Mr Glynne and one of his colleagues, Ms Vengut. Mr Kitover explained to them what he said had been the use of a false name and forged documents to open the account with Bullionvault. Mr Kitover claimed to be Mr Haller.
Bullionvault has subsequently made various attempts to contact or to locate Mr Haller, without success.
The issues
The issues identified by Master Teverson for determination are: (i) whether Mr Kitover and Mr Haller are the same person; and (ii) what order, if any, the Court should make in relation to the Bullion and/or the account held with Bullionvault in the name of Mr Haller. The Master decided not to deal with the case by way of summary determination because of concerns about potentially complex issues of illegality.
Preliminary points
(i) Part 86 CPR
The parties have agreed that Part 86 is the most appropriate procedural route for this dispute and the BPCs the most appropriate venue. Master Teverson agreed with that view, while giving the direction mentioned above that for the purposes of the trial Mr Kitover should stand as Claimant and Bullionvault as Defendant.
The purpose of Part 86 is to allow the Court to deal with applications by persons who are subject to a liability in respect of property to which they do not have a claim.
As far as relevant, Part 86 provides:
“86.1
(1) This Part contains rules which apply where—
(a) a person is under a liability in respect of a debt or in respect of any money, goods or chattels; and
(b) competing claims are made or expected to be made against that person in respect of that debt or money or for those goods or chattels by two or more persons.
[…]
86.2
(1) A stakeholder may make an application to the court for a direction as to whom the stakeholder should—
(a) pay a debt or money; or
(b) give any goods or chattels.
(2) Such application must be made to the court in which an existing claim is pending against the stakeholder, or, if no claim is pending, to the court in which the stakeholder might be sued.
[…]”
There are two requirements of a Part 86 claim. First, the person making the claim must be a stakeholder; and secondly, competing claims by two or more people must be made, or be expected to be made, against the stakeholder. Bullionvault is a stakeholder within the meaning of Part 86 and when proceedings were commenced, a claim from Mr Kitover was clearly in contemplation. No competing claim has yet been made.
Mr Hyams drew my attention to Global Currency Exchange Network Ltd v Osage 1 Ltd [2019] EWHC 1375 (Comm). Henshaw J considered whether the application of Part 86 might be precluded if no competing claim had yet been made. He held that it would be unsatisfactory to deny the parties access to the Court under Part 86 purely because no competing claim had crystallised. In the circumstances of that case, other potential procedures would not:
“… resolve the question of where GCEN should pay the Funds. GCEN does not claim to be entitled to the Funds itself, but does not consider that it can safely pay them over to Osage. For the reasons set out earlier in this judgment, I consider GCEN to have coherent reasons for its concerns, and that there are reasonable grounds to believe that once appraised of the facts investors would make claims in respect of the Funds (while emphasising, again, that I make no finding as to whether or not any such claim would necessarily succeed). In these circumstances, I consider that (a) the case does fall within CPR 86, and (b) in any event, apart from CPR 86, GCEN would be entitled to seek the court's assistance, for example by suing for a declaration that it is obliged to return the funds to the 11 investors who paid the Funds originally.” [94]
Here, Bullionvault does not consider it can safely make a distribution to Mr Kitover without the Court's intervention. If Mr Haller exists, there are reasonable grounds to consider that a claim on his behalf should be expected. There would be inconsistent claims as between the two parties and compliance with the claim of Mr Kitover would expose Bullionvault to the risk of liability to Mr Haller.
It is an unusual feature of this case that if Mr Kitover's evidence is accepted Mr Haller does not exist and no claim from him could then be expected. I do not consider that this means that CPR 86 cannot apply. Bullionvault has explained its concern that a claim may be made. While that view may be thought to be cautious in the light of the fact that its efforts to locate Mr Haller and to serve him have been unsuccessful, there are coherent reasons for it and it appears to be genuinely held. It is my view that the requirement of CPR Part 86 that “competing claims are … expected to be made” is satisfied. To find otherwise would be to assume the outcome of the proceedings.
(ii) Illegality
A second preliminary point is the potential illegality of Mr Kitover' s actions and how, if at all, that affects Mr Kitover's claim.
The leading authority on illegality is the Supreme Court's judgment in Patel v Mirza 2 [2016] UKSC 42. The position is summarised as follows:
“The essential rationale of the illegality doctrine is that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system (or, possibly, certain aspects of public morality, the boundaries of which have never been made entirely clear and which do not arise for consideration in this case). In assessing whether the public interest would be harmed in that way, it is necessary a) to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim, b) to consider any other relevant public policy on which the denial of the claim may have an impact and c) to consider whether denial of the claim would be a proportionate response to the...
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Going For Gold: High Court Looks At An Unusual Stakeholder Claim Under CPR Part 86
...v Galmarley Limited (trading as Bullionvault.com) [2021] EWHC 809 (Ch), the High Court was asked to determine a stakeholder claim under CPR Part 86 in unusual Bullionvault, a broker, held approx. 4kg of gold on behalf of a client, Mr Haller. But in June 2018, a Mr Kitover flew to London fro......
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Going For Gold: High Court Looks At An Unusual Stakeholder Claim Under CPR Part 86
...v Galmarley Limited (trading as Bullionvault.com) [2021] EWHC 809 (Ch), the High Court was asked to determine a stakeholder claim under CPR Part 86 in unusual Bullionvault, a broker, held approx. 4kg of gold on behalf of a client, Mr Haller. But in June 2018, a Mr Kitover flew to London fro......