Janna Kremen (formerly Agrest) v Boris Agrest Everclear Ltd (BVI) (Intervener)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Mostyn |
| Judgment Date | 03 December 2010 |
| Neutral Citation | [2010] EWHC 3091 (Fam) |
| Docket Number | Case No: FD09P02744 FD08F01208 |
| Court | Family Division |
| Date | 03 December 2010 |
[2010] EWHC 3091 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Mostyn
Case No: FD09P02744
FD08P00693
FD08F01208
and
Mr Christopher Stirling (instructed by Richardson Smith) for the Applicant
Mr Frank Feehan QC (instructed by Horne, Engall & Freeman) for the Intervener
Hearing dates: 15–17 & 22–24 November 2010
The court is concerned with two applications:
i) An application by Janna Kremen (W) to set aside the transfer by Boris Agrest (H) to Eduard Kinigopoulo (EK) on 27 September 2007 of the single share in Everclear Ltd, a BVI Company, the sole asset of which is a property South Lodge, Burhill Road, Walton-on-Thames, Surrey ("the first transaction").
ii) An application by W to set aside the transfer of that same share in Everclear by EK to Georgy Chesnokov (GC) on 27 August 2008 ("the second transaction"). It is W's contention that the operative date for the second transaction was in fact 3 March 2009. This chronological difference is, as will be seen, of critical importance.
These applications are the latest instalment in the protracted and complex litigation between H, W and various third parties. The history was summarised in my most recent judgment in the proceedings between H, W and Mr Fishman [2010] EWHC 2571 (Fam) given on 15 October 2010. In those proceedings there was a comparable application by W to set aside a transaction on alternative grounds, namely under section 23 Matrimonial and Family Proceedings Act 1984 and/or that the transaction was a sham.
In that judgment I endeavoured to set out and summarise the law obtaining under Section 23 and the law concerning sham transactions. I do not repeat that exposition in this judgment, as I understand that both Mr Stirling and Mr Feehan QC accept my analysis.
In my previous judgment I explained that the marriage between H and W disintegrated in the early part of 2007. I found that two agreements entered into on 6 March 2007 between H and Mr Fishman were avoidable under Section 23 but did not meet the stiff test needed to demonstrate a sham, notwithstanding that there were many suspicions and oddities surrounding them. Those transactions were effected in the context of the disintegrating marriage and H's stated intention in May 2007 to render W and the children utterly destitute. I stated in paragraph 5 of my judgment:
…any transaction undertaken by H from the beginning of 2007 onwards must be judged, at least presumptively, to have been affected with the intention, if not the dominant intention, of achieving that stated end.
In relation to the first transaction in hand before me today neither H nor EK have appeared to resist W's claim that it is a complete sham and that at all material times the share in question remained in the ownership of H. On the first day of the hearing I did receive an unsworn written statement from EK and there are Affidavits from H deposing to the bona fides of the transaction. However, it is clear from a number of documents that have been obtained that the transaction was at all times completely fake.
The story about South Lodge begins on 3 May 2007 more or less contemporaneously with the foul monologue of abuse by H of W to which I referred in my previous judgment. A letter was written by conveyancers instructed by H to the sellers of the property stating that they acted for W in connection with the proposed purchase of the property in the sum of £1.95m. On 14 May 2007 there is a file note which records:
Boris Agrest telephoned he said that because of some problems with his wife he would be buying the company through a friend's off shore company.
On 4 June 2007 there is a note that records that:
H said that he was happy to exchange contracts in his name and then assign the benefit of the contract to Kosta.
Kosta appears to be the candidate nominee at that time. On 6 June 2007 contracts were exchanged in relation to South Lodge with H named as purchaser. The purchase money derived from off-shore entities called Garry Trading Inc, Gratex Finance Ltd and Tricommerce SA. On 1 August 2007 South Lodge was transferred into the name of Everclear Ltd as H had earlier assigned the benefit of his contract to buy South Lodge to Everclear upon completion. Thus Everclear was the nominee H decided to use at the time of purchase.
On 27 September 2007 a Stock Purchase Agreement was entered into between H and EK. This agreement was stipulated to be governed by English Law and provided that H would sell the sole share in Everclear to EK for £2.1m. There are a number of documents in the bundles purporting to evidence payments by EK to H's off shore entities in satisfaction of the contractual consideration; however, there are inconsistencies between these instructions and the list of payments referred to by EK in his statement of 15 November 2010. I accept the submission of Mr Stirling that whilst it is possible, in fact probable, that money did flow between EK and H this was in all likelihood in respect of other transactions between H and his close associate EK. That the purported transfer of South Lodge (by means of the transfer of the share in Everclear Ltd) is fake is demonstrated beyond any doubt by the EFG memorandum of May 2008 referred to in paragraph 3 of my previous judgment. This memorandum concerned EFG's mortgage over the former matrimonial home, Whitecliff. It records:
[H] (47 with a 19 year old girlfriend) has moved out of the home and moved into another £3m home in Burhill Park which is another exclusive golf estate in Weybridge. Prior to all the turbulence in the marriage [H] had asked AFL to assist with a loan for this home but obviously this never materialised… [H] informed AFL that he and his ex-wife were attending court in the working week starting 29 April 2008 in order to try and settle the on going dispute between the parties. [H] (in his stubborn way) made it clear that he was not prepared to compromise. He has ensured that his newly acquired UK assets are all held in off shore structures and nominees so his ex will not be able to prove his solvency.
The reference to 'newly acquired assets' can only be to South Lodge.
Therefore, I have no hesitation at all in declaring that the first transaction is a complete sham and that for the purposes of the second transaction it should be treated as if it never happened and that the second transaction was in truth between H and GC, even if H was acting in it in a disguised way.
GC is not a longstanding crony of H. He has however known EK for a long time having met him in 1998 and he has done a deal of business with him in the import and export of jewellery, watches and cars to and from Kazakhstan and Russia. GC was born and lived in Russia until about 1995 when he moved to Florida and it was in Florida that he met EK. GC and his wife Nelly have four children and they became concerned that education at primary and secondary level in Florida was not good enough. His wife had lived in London as a child, her father being a Soviet Diplomat. They formed the view of moving to this country where they believed that the education for their children would be better.
In this context EK stated that he knew someone who could show him the schools and introduce him to life in England, and this was H. GC and H met as a result of this introduction in early 2006.
W has stated that the two couples became very close but I believe she overstates the position and has embroidered her evidence. They were friendly in the way that the expatriate Russian community here is friendly; there were a few occasions when they were on holiday together; and their child Alexi became friendly with the Agrest's child Maxim —they were in the same class at school.
On his arrival here GC was plainly a man of considerable means. A mortgage application form, to which I will refer later, dated 26 August 2008, records him as having a little over £4m of net assets in the UK and £12.5m outside the UK. That fortune had been accumulated a long time before he had ever met H. His relationship with H is to be clearly distinguished from the relationship which H had with Mr Fishman as clearly described in my earlier judgment. That relationship went back many years and involved much mutual business activity. Unfortunately I consider that W has elaborated her evidence in order to play up the nature of the relationship between H and GC. Although it is not mentioned anywhere in her written evidence, she stated for the first time in the witness box that she had voice recordings of the two men which show the closeness of their business relationship. This is an example of exaggeration on the part of W in order to transform what was a casual and not particularly close relationship into something far more substantial.
That said the traffic is not all one way and there are certainly oddities, inconsistencies and suspicious features in the case advanced by GC. For example on 27 March 2008 at a time when South Lodge was purportedly owned by EK, a Tenancy Agreement was entered into between Everclear and Jolima. Jolima is a company referred to in paragraphs 21, 30, 31, and 33 of my judgment in the committal proceedings dated 16 April 2010. It is a company based in Cyprus which purports to be H's employer, but which is obviously H's alter ego.
The Tenancy Agreement is in standard form but it is tolerably clear to me that the manuscript details, specifying the date of the agreement, the names of the parties, the term and the rent, were all written by GC who then witnessed the signature of H. I did not receive any satisfactory reason as to why GC should be acting in a role far beyond that of a...
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