JSC VTB Bank (a company incorporated in Russia) v Pavel Valerjevich Skurikhin
| Jurisdiction | England & Wales |
| Judge | Patricia Robertson |
| Judgment Date | 12 June 2019 |
| Neutral Citation | [2019] EWHC 1407 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2012-000478 |
| Date | 12 June 2019 |
and
Patricia Robertson QC
(sitting as a Deputy High Court Judge)
Case No: CL-2012-000478
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERT COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
7 Rolls Buildings
Fetter Lane, London, EC4A 1NL
Tim Penny QC and Tim Matthewson (instructed by PCB Litigation LLP) for the Claimant
David Lord QC and Sebastian Kokelaar (instructed by Withers LLP) for the Fourth Respondent
The Defendants and the First to Third Respondents did not appear and were not represented
Hearing Dates: 23–25 January 2019, 12 March 2019
Patricia Robertson QC (sitting as a Deputy High Court Judge):
(A) Introduction
The Fourth Respondent (“ Berenger”) applies by Application Notice dated 12 July 2018 to discharge the order of Mr Christopher Butcher QC (sitting as a deputy Judge of the High Court) dated 21 July 2015 (“the Receivership Order”) whereby receivers by way of equitable execution were appointed over the membership shares and interests in the Second Defendant (“Pikeville”), an English limited liability partnership which owns three properties in Italy that were originally acquired for some 18 million Euro. The Claimant (“ VTB”) hopes, through that mechanism, to effect sales of those Italian properties, against the proceeds of which it can then seek to enforce the judgments it has obtained against the First Defendant, Mr Skurikhin, which remain unsatisfied.
The Discharge Application was heard for three days in January 2019, extended from the original estimate of two days to allow time for cross examination of two witnesses, but it did not prove possible to complete the hearing in that time, given the number of issues raised on either side, and it was necessary to sit for a fourth day in March 2019 to allow time for oral argument on the remaining issue (relating to s.53(1)(c) of the Law of Property Act 1925). The application bundle now comprises some 14 files and 5 files of authorities. Extensive expert evidence has been filed on issues of Liechtenstein law and Nevis law and submissions have also been made on issues of New Brunswick law (albeit without any expert evidence). No point has been left unexplored. I do not propose to deal expressly with every single matter that has been debated before me, and which I have considered, but rather to focus on the principal factors which have contributed to my decision.
In broad summary, what I have to decide is whether it is now open to Berenger to seek to discharge the Receivership Order on grounds that were available to it at the time of the application in 2015 (issue 1); if so, whether those grounds are well-founded (issue 2); if not, whether the Receivership Order should nevertheless be set aside on the basis there has been a relevant change of circumstance since the Receivership Order was made (issue 3); and finally, whether all of Berenger's arguments for setting aside the Receivership Order (which depend on the proposition that the relevant assets were, at the material times, held in trust for Berenger) can be side-stepped because the beneficial interest was never validly transferred away from Mr Skurikhin to Berenger in the first place (issue 4). Each of those broad issues involves numerous sub-issues.
(B) Background facts
The protagonists to this application have been VTB and Berenger. Mr Skurikhin (who, since VTB obtained its judgments against him, has declined to come to this jurisdiction after being sentenced to prison for contempt of Court) has not appeared or been represented. However, as will appear, one of the central issues between the parties is whether the underlying reality here is that Mr Skurikhin always was, and still is, pulling the strings behind the scenes, such that Berenger's application represents just the most recent twist in the lengthy tale of his attempts to avoid meeting his liabilities to VTB (well-documented in previous judgments), or whether Berenger was, and is, acting independently of Mr Skurikhin, in a perfectly proper endeavour to protect the other beneficiaries of the trust from the consequences of Mr Skurikhin's bankruptcy in Russia.
That being so, it is relevant briefly to summarise the wider background of the litigation between VTB and Mr Skurikhin, before turning to the facts that are specific to Berenger's application. I gratefully borrow from, and where necessary expand upon, the account of the factual background that was set out by Mr Andrew Henshaw QC, sitting as a Deputy High Court judge, in disposing of VTB's application against Berenger for security for costs: JSC VTB Bank v Skurikhin and others [2018] EWHC 3072 (Comm).
(1) The parties and VTB's claims against Mr Skurikhin
VTB is the second largest bank in Russia, and its majority shareholder is the Russian state. The First Defendant (“ Mr Skurikhin”) is a Russian individual resident and domiciled in Russia, who was the Chairman of the SAHO group of companies, which carried on business in the agricultural sector in Russia.
In December 2008, VTB re-financed loans in roubles to the SAHO group of companies in an amount equivalent to around £42 million, and Mr Skurikhin provided personal guarantees for the loans. The SAHO group companies defaulted on the loans, and demands were served on Mr Skurikhin in respect of his personal guarantees. The demands were not complied with and proceedings were issued against Mr Skurikhin in the Russian courts, leading to VTB obtaining a number of Russian judgments against him.
The Second Defendant (“ Pikeville”) is an English registered limited liability partnership, and is the registered owner of three Italian properties. One has until recently been used as a holiday home by Mr Skurikhin and his family, rent free, another is used by Mrs Skurikhin's business and the third is an empty plot that was intended to be redeveloped as a villa for the family's use. Pikeville purchased those properties for, in total, some 18 million euros using monies loaned to it by Miccros Group Ltd (“ Miccros”) a BVI company owned as to 55% by Berenger and as to 45% by the Eastbridge Settlement (through a company called Taurus Limited of which Mr Meier and Mr Lerch are the shareholders). As a result, in Pikeville's books the value of the properties is counter-balanced by the debt owed to Miccros. I note that Miccros paid Pikeville and Perchwell's costs of the hearing before Burton J, referred to below. VTB's position is that that loan is a sham, Miccros being controlled and ultimately owned by Mr Skurikhin. I do not have to decide that point, which is in issue in proceedings between VTB and Miccros in the BVI, but the fact that there is a live issue about it means I treat with caution the assertions that each of Mr Meier and Dr Schurti made in oral evidence that the membership interests in Pikeville have no real value.
Pikeville's registered members are currently the First Respondent (“ Mr Meier”), the Second Respondent (“ Mr Lerch”), and the Third Respondent (“ Crown”). Crown is a company incorporated in Hong Kong owned and controlled by Mr Meier and Mr Lerch. It is common ground that until 10 June 2005 the beneficial owner of the membership interests in Pikeville was Mr Skurikhin. I shall have to deal in more detail below with the sequence of events in between these two dates, but for the present it is sufficient to note that by the most recent of a number of declarations of trust, on 19 January 2010, Crown, Mr Meier and Mr Lerch each executed a declaration of trust pursuant to which they declared that they held the membership shares and interests in Pikeville on trust for the Fourth Respondent, Berenger. Berenger is a foundation incorporated under the laws of the Principality of Liechtenstein.
Whether Berenger ever in fact became the ultimate beneficial owner of Pikeville is in dispute, in the context of issue 4, which I shall come to later on in this judgment. However, issues 1–3 proceeded on the footing that the membership interests in Pikeville were, indeed, held on trust for Berenger at the material times and that Berenger, in turn, then held that, and certain other assets, on the trusts that were defined in its Statutes and Regulations, described below.
VTB sued Mr Skurikhin in England and Wales on the basis of the Russian judgments after having obtained a domestic freezing order in England against Mr Skurikhin and worldwide freezing orders against both Pikeville and Perchwell (the latter being another English LLP, of which Mr Meier and Mr Lerch are again the members, through which interests in a number of companies in the SAHO group are ultimately held). VTB's contention was from the outset (and still is) that Mr Skurikhin either has a right to call for the assets of Berenger (including the membership interests in Pikeville and Perchwell) to be transferred to him, or has de facto control of those assets, and that, on that basis, he is to be treated the owner in equity of those assets such that the judgments VTB has obtained against Mr Skurikhin are enforceable against them.
It is worth emphasising that Mr Skurikhin appeared and was represented at the hearing before Burton J on the return date for those freezing orders, in late November and December 2012, and that Pikeville and Perchwell had their own representation at that hearing. Prior to that hearing, Gloster J had ordered Mr Skurikhin to give disclosure, describing Pikeville and Perchwell as having been ‘extremely coy’ about disclosure of the identity of their ultimate controlling party or parties: JSC VTB Bank v Skurikhin ...
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