Kireeva v Bedzhamov
| Jurisdiction | England & Wales |
| Judge | Lady Justice Falk |
| Judgment Date | 14 February 2023 |
| Neutral Citation | [2023] EWHC 348 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No: BR-2021-000044 |
[2023] EWHC 348 (Ch)
Lady Justice Falk
-and-
Master Kaye
Claim No: BR-2021-000044
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
The Rolls Building
7 Rolls Buildings
Fetter Lane
London, EC4A 1NL
Mr William Willson (instructed by DCQ Legal) appeared for the Applicant.
Mr Justin Fenwick KC and Mr Mark Cullen (instructed by Greenberg Traurig LLP) appeared for the Respondent.
Approved Judgment
Introduction
This is my decision on cross-applications to vary paragraphs 6 and 8 of my order dated 9 November 2022. That order granted common law recognition to Mr Bedzhamov's Russian trustee in bankruptcy Ms Kireeva (the “Trustee”), following a remittal of certain issues by the Court of Appeal, and made costs orders in respect of both the remittal and the recognition application more generally.
The paragraphs to which the applications relate provided for interim payments by Mr Bedzhamov totalling £325,000, to be paid within 14 days of the sale of 17 Belgrave Square (the “Property”), with the proviso that if there was no such sale by 4 January 2023 the matter should be restored for further directions.
The first of the two applications was made by the Trustee on 8 December and sought a variation which would require the interim payments to be made within seven days. The second application was an application by Mr Bedzhamov on 20 December which sought to restore the matter for directions and an order which would continue to provide that the interim payments should be made within 14 days of the sale of the Property, but also provide that the matter should be restored for further directions if there was no sale by 30 April 2023.
I am not going to go through the background, which is familiar to the court and the parties and has been described in detail in earlier judgments.
My earlier order was made on the papers as far as costs were concerned. The reasons I gave in respect of the timing of interim payment were as follows:
“It is appropriate to make the order sought by Mr Bedzhamov in respect of the timing of any interim payment. This is based on Mr Shobbrook's evidence not only about Mr Bedzhamov's inability to pay (which would not be an adequate reason) but the existence of a significant risk that an order to make payment now would result in the loss of legal representation, with the consequence that what I have previously found to be A1's objective of funding the Trustee with a view to denying access to assets Mr Bedzhamov could otherwise have used to meet legal expenses would be achieved ( Vneshprombank v Bedzhamov [2022] EWHC 1166 (Ch) at [70]). I bear in mind that the delay will not be open-ended, particularly given the imminent expiry of planning permission and Mr Shobbrook's assessment that Mr Bedzhamov will in any event be without legal representation if the matter is not resolved by the New Year.”
Mr Shobbrook is a partner at Greenberg Traurig, Mr Bedzhamov's solicitors. The reference to the expiry of planning permission was to the fact that planning permission for redevelopment of the Property was due to expire on 13 December 2022. The evidence I relied on was the twelfth witness statement of Mr Shobbrook dated 27 October 2022, which among other things said that if Mr Bedzhamov was required to pay a costs order at that time there would be a significant risk that he would lose his legal representation and be unable to fund his defence of the VPB claim, that if a sale was not achieved before 13 December 2022 Mr Bedzhamov risked foreclosure and that Mr Shobbrook believed that if the matter was not resolved by the New Year Mr Bedzhamov would not have legal representation. Mr Bedzhamov's legal team had essentially been running without funding for two years and the ability to continue without payment had, in Mr Shobbrook's words, “exceeded breaking point”.
Mr Willson, for the Trustee, points out that significant progress towards a sale of the Property appears not to have been made since then, several potential funders having dropped out, most recently in mid-December. The Trustee's perception is that the process has gone backwards and not forwards. We are also told that Mr Bedzhamov is now relying on the planning permission remaining valid on the basis of practical implementation, so that the deadline of 13 December has apparently disappeared. Further, Mr Bedzhamov's legal team remains in place. Mr Willson submits that Mr Bedzhamov is seeking what amounts to a stay and that the new points relied upon by Mr Bedzhamov in support of his application are made late and have been addressed by the Trustee.
The evidence in support of Mr Bedzhamov's application comprises Mr Shobbrook's thirteenth witness statement, which is now supplemented by two further witness statements, and a witness statement provided by James Van Den Heule of the property developer Fenton Whelan. Shobbrook 13 states that if Mr Bedzhamov was not given further time to pay the costs order it is “likely” that he would be unable to continue to be represented. Mr Van Den Heule's statement contains a detailed description of the position as regards the Property as it stood on 20 December 2022, the date of the statement.
It is fair to say that Mr Van Den Heule's evidence demonstrates that achieving a successful transaction presents material challenges: he describes it as “beset with difficulties”. The factors include complexity over the title to the Property, the difficulties with which have only been increased by the effect of the invasion of Ukraine (given Mr Bedzhamov's status as a Russian national), the issue over planning permission and the more general downturn in the economy, and in addition the existence of the worldwide freezing order (“WFO”) to which Mr Bedzhamov is subject and the involvement of Clement Glory Limited (“CGL”).
The proposal now being worked on differs from that referred to in my judgment of 20 May 2022 (“the May judgment”), in that the 80:20 sharing is to be between CGL and the developer, rather than Mr Bedzhamov and the developer. Mr Van Den Heule did state in his witness statement that, despite the problems, he was very confident that a sale could be achieved and that he believed 30 April 2023 to be an appropriate longstop date.
As Mr Willson pointed out, Mr Van Den Heule's evidence has not been formally updated, and also various milestones referred to in his witness statement appear not to have been achieved.
Further developments to mention at this point are, first, that the Trustee has obtained permission to appeal to the Supreme Court in relation to the Court of Appeal's decision refusing her assistance in respect of the Property, an appeal due to be heard in November 2023. Secondly, the Trustee has, with VPB as a co-claimant, reissued a claim against CGL, claiming that the charge over the Property in its favour is a sham and also that Mr Bedzhamov is the real beneficial owner of CGL. Thirdly, the Trustee has also applied to join CGL to the recognition proceedings.
In his fourteenth witness statement dated 2 February 2023 Mr Shobbrook again said that Mr Bedzhamov would likely lose his legal representation if an order was obtained for an interim payment on account of costs now. By way of update on the Property, that statement explains that there is confidence that a certificate will be obtained confirming that the planning permission has been implemented and that discussions are ongoing with a proposed new lender, but also states that progress is subject to the impact of the new CGL claim, which Mr Shobbrook says would frustrate a sale on the terms approved by the court. The latest update from Mr Fenwick this morning, on instruction, is that non-binding heads of agreement have been now reached with a new bridging lender.
Discussion
As previously explained, inability to pay is not a good reason to refrain from making an order for interim payment. Making such an order is the norm in circumstances where costs are to be the subject of detailed assessment. CPR 44.2(8) requires an order for interim payment unless there is a good reason not to do so. I agree with Mr Willson that what I am being asked effectively amounts to a stay of the interim payment order, at least until April.
The basic principles in relation to interim payments on account are not in dispute, and I do not need to refer to the case law authority on which the Trustee relies, although I have considered it. In my view, Mr Bedzhamov must satisfy me that it would be in accordance with the overriding objective to take what would be an exceptional course in the interests of justice. The starting point, and in most cases the finishing point, is that a litigant in whose favour a costs order has been made should not be kept out of the money to which he or she is entitled by the actions of the court, whatever the financial position of the other party. However, ultimately, the matter is within the discretion of the court.
It is also the case that the hoped-for progress on the sale of the Property has not been made, at least in the manner previously anticipated. My earlier decision relied heavily on the risk of loss of representation, but also took into account the imminent expiry of planning permission and the apparent deadline that set. Although the planning permission issue may have been addressed, other difficulties relating to the sale – which are by no means all related to the various legal proceedings against Mr Bedzhamov – have not gone away.
The...
To continue reading
Request your trial
-
Lyubov Andreevna Kireeva (as Trustee and Bankruptcy Manager of Georgy Ivanovich Bedzhamov) v Alina Zolotova
...judgment given, because: 42.1. as a matter of law, the correct position regarding “ the general rule” was outlined by Snowden J in Kireeva v Bedzhamov [2021] EWHC 2281 at [186]–[194], as set out above at paragraph 25: essentially, upon recognition of a foreign bankruptcy, the bankrupt's mov......