Kireeva v Bedzhamov
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Falk |
| Judgment Date | 27 October 2022 |
| Neutral Citation | [2022] EWHC 2676 (Ch) |
| Docket Number | Case No: BR-2021-000044 |
| Court | Chancery Division |
[2022] EWHC 2676 (Ch)
Mrs Justice Falk DBE
Case No: BR-2021-000044
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
Rolls Building, Royal Courts of Justice
Fetter Lane, London, EC4A 1NL
Stephen Davies KC & William Willson (instructed by DCQ Legal) for the Applicant
Justin Fenwick KC & Mark Cullen (instructed by Greenberg Traurig LLP) for the Respondent
Hearing dates: 5 & 6 October 2022
APPROVED JUDGMENT
This judgment was handed down remotely at 10.30am on 27 October 2022 by circulation to the parties or their representatives by email and by release to The National Archives.
Introduction
This decision relates to the application by Mr Bedzhamov's Russian trustee in bankruptcy, Ms Lyubov Kireeva (the “Trustee”), for common law recognition in this jurisdiction (the “Recognition Application”). It follows a trial of issues remitted by the Court of Appeal pursuant to an order dated 21 January 2022.
Ms Kireeva is a Russian insolvency practitioner who was appointed on 2 July 2018 for the purpose of realising and liquidating Mr Bedzhamov's assets (the “Bankruptcy Order”). The Trustee's position is that the effect of the Bankruptcy Order is that all of Mr Bedzhamov's assets worldwide vest in her automatically under Russian law.
The basis on which the Bankruptcy Order was made was as follows:
a) Mr Bedzhamov granted a guarantee in favour of a Russian bank, VTB 24 (“VTB”), on 23 October 2015 (the “Guarantee”) to support a loan facility given on the same date to his sister, Larisa Markus, in the sum of 320.441m Russian roubles (equivalent to around US $5m).
b) Mr Bedzhamov did not pay under the Guarantee when it was called, and on 22 December 2016 the Meshanskiy District Court gave judgment against Mr Bedzhamov in favour of VTB (the “VTB Judgment”).
c) On 13 April 2017 VTB applied for a bankruptcy order based on the VTB Judgment.
d) On 20 September 2017 the Moscow Arbitrazh Court accepted VTB's petition (the “VTB Bankruptcy Judgment”). The effect of the VTB Bankruptcy Judgment was to require a debt restructuring process to be undergone. An appeal against that decision failed. As already indicated, the final Bankruptcy Order, which appointed Ms Kireeva, was made on 2 July 2018.
Notwithstanding the Bankruptcy Order, separate proceedings (the “Bank Proceedings”) were subsequently brought against Mr Bedzhamov in this jurisdiction by another Russian bank, Vneshprombank LLC (“VPB”). VPB is also the majority creditor in the Russian bankruptcy, but its own petition, originally founded on a claim of around £40m for unjust enrichment, was not the basis on which Mr Bedzhamov was declared bankrupt.
The claim brought by VPB in the Bank Proceedings is much larger, at around £1.34bn. It relates to what it alleges is a massive fraud carried out by Mr Bedzhamov along with Ms Markus, who was President of VPB. VPB was declared bankrupt on 14 March 2016, and a Russian state corporation, the Deposit Insurance Agency (“DIA”), was appointed to act as its liquidator. Mr Bedzhamov resists the claim, and denies his participation in any fraud.
VPB's claim in the Bank Proceedings was originally issued in December 2018, although the court file was sealed pending an application for interim relief. A worldwide freezing order was made against Mr Bedzhamov in March 2019 (the “WFO”), and a search order was also granted. The evidence in support of the application for the WFO stated that the prospects of the Trustee seeking recognition in England and Wales appeared “very low indeed”.
The Trustee took no steps in this jurisdiction until 19 February 2021, when the Recognition Application was made. That was very shortly after VPB had been notified of Mr Bedzhamov's intention to seek approval to sell or raise funds against property at 17 Belgrave Square and 17 Belgrave Mews West, London (“the Property”) to pay legal costs and living expenses permitted to be incurred under the terms of the WFO. I granted Mr Bedzhamov's application to vary the WFO to that effect on 5 March 2021, but on terms that contemplated an application by the Trustee to set aside the order. I also expedited the Recognition Application.
The Recognition Application was first heard by Snowden J in April 2021. Judgment was handed down on 13 August 2021 ( [2021] EWHC 2281 (Ch)). By his consequential order dated 25 August 2021, Snowden J determined that the Trustee should be recognised, but that she was not entitled to the assistance that she sought in respect of the Property, or the set-aside of the order I had made on 5 March 2021.
Both the Trustee and Mr Bedzhamov appealed against Snowden J's decision to the Court of Appeal. The Trustee's appeal in respect of the Property failed (although she has since sought leave to appeal to the Supreme Court). Mr Bedzhamov's appeal against recognition was allowed on one ground, namely that Snowden J had been wrong to reject, without prior cross-examination, a claim by Mr Bedzhamov that the Guarantee had been forged.
By its order dated 21 January 2022 the Court of Appeal remitted the following issues (the “Remittal Issues”):
a) whether the Guarantee was a forgery;
b) whether the VTB Bankruptcy Judgment was procured by the fraud of VTB; and
c) whether recognition of Mr Bedzhamov's Russian bankruptcy should be denied on the basis that the VTB Bankruptcy Judgment was procured by the fraud of VTB.
For completeness, I should mention that I have since provided consent in principle to a further variation of the WFO with a view to permitting a realisation of the Property (reported at [2022] EWHC 1166 (Ch)), the original permission given by my order dated 5 March 2021 having expired.
The remittal directions
Following a directions hearing, I made an order on 10 March 2022 which included the following:
a) Each party was required to set out their case in respect of the Remittal Issues in a position statement.
b) Instead of conventional orders for disclosure, Mr Bedzhamov was required to provide disclosure of documents on which he intended to rely. The Trustee was required to use her best endeavours to procure the original signed Guarantee and certain other original documents, and to give disclosure of those and certain other documents within her control.
c) Provision was made for factual evidence, and for expert evidence in the field of forensic handwriting.
The position statements
Mr Bedzhamov's position statement
Mr Bedzhamov's case, as set out in his position statement, can be summarised as follows. In or around 2007 he was asked by Ms Markus to provide security for a US dollar loan to her from VTB. He agreed to pledge a plot of land that he owned in the Odintsovsky region, and also agreed to the pledge of two further plots in the same region that he was expecting to inherit from his mother (and did inherit in around 2011).
The position statement goes on to explain that Ms Markus subsequently informed Mr Bedzhamov that her loan had not been repaid in full and that she wished to refinance the loan in roubles with the three plots of land as security, to which he agreed. The position statement states that this occurred in or around 2015, but at trial this was said to be in error, and it should have said 2013.
The position statement then asserts that, to the best of his knowledge and belief, Mr Bedzhamov did not sign any documents in respect of the refinancing, had no recollection of being asked to do so, did not attend VTB's offices for any purpose and “definitely did not sign” any guarantee in respect of VTB's loan to Ms Markus. While it describes the loan agreement that Ms Markus “appears” to have entered into on the same date as the Guarantee, 23 October 2015 (the “2015 Loan Agreement”), it emphasises that Mr Bedzhamov was not asked to provide a guarantee, whether at that time or at all, and maintains that the signature on the copy of the Guarantee that was at that time available was not his. It points out that Mr Bedzhamov flew from Moscow to Nice on the date the Guarantee was allegedly signed.
The position statement also states that VTB stood to benefit from the Guarantee and relies on the fact that VTB is part owned by the DIA and part owned by the Russian Federation. It refers to the fact that VPB was added as a creditor in the bankruptcy once VTB's petition was accepted, and that an earlier bankruptcy petition brought by VPB had been under appeal for reasons that included forged signatures on fictitious VPB loans.
The Trustee's position statement
The Trustee's position statement relies on the question of forgery not having been raised before Snowden J until part way through the hearing, and to there having been no challenge at that time to the existence of the 2015 Loan Agreement, a mortgage also said to have been executed by Mr Bedzhamov on 23 October 2015 (the “2015 Mortgage”), or a guarantee said to have been provided on the same date by Ms Markus's husband Lazar Markus. The statement refers to the reasons given by Snowden J for rejecting the forgery allegation, which included that it would not have been unusual for a guarantee to be provided in addition to a mortgage, that no real explanation had been provided as to how or why a forgery might have occurred (apart from a general campaign by the DIA), and that Mr Bedzhamov's assertion of a lack of funds to produce expert handwriting evidence was difficult to accept given his level of spending, including on other evidence in the Bank Proceedings (see Snowden J's judgment at [168]–[172]).
The Trustee's primary case, as set out in her position statement, is that the Guarantee is regular on its face, was provided pursuant to clause 8.3 of the 2015 Loan...
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