Lyubov Andreevna Kireeva (as Trustee and Bankruptcy Manager of Georgy Ivanovich Bedzhamov) v Alina Zolotova
| Jurisdiction | England & Wales |
| Judge | Greenwood |
| Judgment Date | 13 March 2024 |
| Neutral Citation | [2024] EWHC 552 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: BR-2022-000465 |
[2024] EWHC 552 (Ch)
INSOLVENCY AND COMPANIES COURT JUDGE Greenwood
Case No: BR-2022-000465
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
7 Rolls Buildings
London EC4A 1NL
William Willson and Roseanna Darcy (instructed by DCQ Legal) for the Claimant/Applicant
Thomas Munby KC and James Mitchell (instructed by Gresham Legal) for the First Defendant/Respondent
Hearing date: 24 January 2024
This judgment was handed down remotely at 10.00am on 13 March 2024 by circulation to the parties or their representatives by e-mail.
ICC JUDGE
Introduction
This is an application made by the Claimant, Ms Lyubov Kireeva, by Application Notice issued on 3 October 2023, to strike out certain paragraphs of the Defence of the First Defendant, Ms Alina Zolotova, to a claim commenced by Part 7 Claim Form issued on 11 November 2022 (“ the Share Proceedings”) and/or for summary judgment in respect of the same paragraphs (“ the Application”).
Ms Kireeva (“ the Trustee”) acts in her capacity as the Russian Trustee and Bankruptcy Manager of Mr Georgy Bedzhamov, her appointment having been recognised at common law by order of Falk J (as she then was) made on 9 November 2022 (“ the Recognition Order”) for the reasons set out in her judgment at [2022] EWHC 2676. Before me, the Trustee was represented by Mr William Willson and Ms Roseanna Darcy of Counsel; Ms Zolotova was represented by Mr Thomas Munby KC and Mr James Mitchell of Counsel.
The Second Defendant to the Share Proceedings is an English company called Basel Properties Ltd (“ Basel”). It did not appear and was not represented before me; neither has it served a Defence in the Share Proceedings. Basel is the owner of a valuable Italian property called “ Villa Nicolini” (at via Cappuccini 4, 6 and 10, San' Agnello) and its single issued share (“ the Share”) is registered in the name of Ms Zolotova, who is Mr Bedzhamov's long term partner; the Share was transferred to her, or in any event into her name, on 1 April 2016.
In the Share Proceedings, the Trustee claims that at all material times before Mr Bedzhamov's movable property (situated in England) vested in her automatically by virtue of the Recognition Order, Mr Bedzhamov was the ultimate beneficial owner of the Share, which was held for him by a series of nominees culminating in Ms Zolotova, who thus held the Share on bare trust for Mr Bedzhamov as at the moment of the bankruptcy order. Alternatively, but to the same end, Ms Kireeva claims that the transfer of the Share to Ms Zolotova in 2016 was a “ sham and of no legal effect”, and again alternatively, that it was a transaction at an undervalue for the purposes of s. 423 of the Insolvency Act 1986 (“ the IA 1986”) in respect of which the court should give appropriate relief.
The Trustee thus seeks, in summary: (1) a declaration that the Share is held on bare trust for her by Ms Zolotova; (2) an order that the Share be transferred to her by Ms Zolotova; and (3) albeit only “ in so far as necessary”, a declaration that the transfer of the Share to Ms Zolotova in April 2016 was of no effect or should be set aside and/or that relief should be granted under s. 423 of the IA 1986 and/or rectification of Basel's register of members.
The Share Proceedings are defended by Ms Zolotova; her Defence is dated 3 March 2023. Centrally, Ms Zolotova denies that she holds or has ever held the Share on trust for Mr Bedzhamov; her case is that, albeit through the medium of Basel, Villa Nicolini belongs to her, and has at all times belonged to her; her case in that regard and the issues that it raises, are not the subject of the Application.
However, in addition, in short summary, Ms Zolotova pleads the following points of defence, said to deprive the Trustee of standing and/or to be relevant to the court's power to grant declaratory and other discretionary relief.
First, albeit without particulars, she denies (at paragraphs 2.1, 4.3, 4.5, 4.6 and 19.1) that Mr Bedzhamov's movable property vested automatically in the Trustee, without further order, as a result of the Recognition Order (“ the Movables Defence”); she therefore asserts that Ms Kireeva has “ no interest” in Mr Bedzhamov's assets.
Second, notwithstanding the Recognition Order, she avers (at paragraphs 2.2, 4.4 and 19.2) that the Trustee “ should not continue to be recognised” as Mr Bedzhamov's appointed trustee (and/or that she ought not to be afforded assistance by the English courts) because the petition debt (in other words, the debt by reference to which the Russian bankruptcy order was made) “ has been or is being discharged”, and was “ expected to be fully discharged by 9 February 2023 and may now have been discharged” (“ the Recognition Defence”).
Third, she avers (at paragraphs 2.3 and 19.3–19.5) (“ the Discretionary Bars”) that the “ discretionary remedy of declaratory relief should not be granted” in this case both by reason of the Movables Defence and the Recognition Defence, but also because, in addition:
10.1. the claim is being funded by and under arrangements with A1 LLC (“ A1”) which are contrary to English public policy because they are champertous and/or comprise unlawful maintenance (“ the Maintenance and Champerty Plea”);
10.2. A1 is (or “ appears to be” or there is “ reasonable cause to suspect” that it is) controlled by individuals designated (or “ sanctioned”) under the Russia (Sanctions) (EU Exit) Regulations 2019 (“ the Sanctions Plea”); and,
10.3. the Share Proceedings are abusive, because their true objective is to deny Mr Bedzhamov “ access to assets” (the Villa Nicolini) which he could otherwise have used to meet legal expenses in other related matters in which A1 is also involved as funder (“ the Collateral Purpose Plea”). In his submissions, Mr Munby associated this part of the Defence with the Maintenance and Champerty Plea.
Those additional pleas and defences were the subject of the Application.
As a preliminary point, there was some dispute between the parties regarding the meaning and effect of the pleaded Defence and therefore as to the issues between the parties. At least potentially, the dispute was of some importance, because in her Reply dated 24 March 2023, amongst other things, Ms Kireeva pleaded at paragraph 11 that although declaratory relief would be “ desirable”, it was “ not necessary”, and that the “ operative relief” was that sought at paragraphs 2 and 3 of the Prayer; in other words, it was pleaded that the Discretionary Bars were not relevant to the claims (the “ operative” claims) for an order that the Share be transferred to her by Ms Zolotova, or for relief under s. 423 of the IA 1986, or for the rectification of Basel's register of members, and that in consequence, I assume, there should be no (or perhaps less) objection to striking them out.
As to this, Mr Munby argued that contrary to the Reply, even as presently constituted, the Defence not only pleads the five matters as relevant to the court's discretionary power to award declaratory relief, but also as matters relevant to its powers to award the other relief sought, all of which was also said to be discretionary. Insofar as necessary, by an Application issued on 22 January 2024, Ms Zolotova seeks permission to amend her Defence to add words at paragraphs 2.3 and 20 to “ make clear” that she relies on each matter in respect of the whole of the claim (such that paragraph 2.3 would read “ The discretionary remedy of declaratory relief and the other discretionary consequential relief should not be granted ….”, and paragraph 20 would read: “ In the circumstances it is likewise denied that the Claimant is entitled to the consequential discretionary orders sought, or any relief”).
I do not agree that these amendments would not effect any alteration in the substance of Ms Zolotova's case, for two reasons:
14.1. first, it is not possible, without unduly straining the language of the unamended Defence, to read paragraphs 2.3 and 19 as meaning anything other than that the court should refuse to award the declarations sought for the reasons stated; had it been intended to state that each variety of relief sought was discretionary, and that in respect of each, all of the matters raised in respect of declaratory relief would be relevant to the exercise of the court's discretion, then it could and ought to have been stated explicitly;
14.2. second, the point is not insignificant, both for the reason given at paragraph 11 of the Reply, and also for the reason that even if the various claims all require the exercise of a discretion, it is not necessarily the case that each discretion would be of the same nature or breadth or would necessarily entail a consideration of the same matters or to the same extent; it would or could therefore be important to spell out which matters were said to be relevant to which discretions, and how.
Furthermore, in his submissions, Mr Willson treated separately each of: (i) the Movables Defence, (ii) the Recognition Defence, (iii) the Sanctions Defence, (iv) the Maintenance and Champerty Defence, and (v) the Collateral Purpose Defence. Mr Munby treated the first two as both self-standing defences and as matters relevant to the exercise of the court's discretion, and the other three as relevant only to the exercise of the court's discretionary power to award declaratory (and other discretionary) relief. As a matter of pleading, as to this point, I agree with Mr Munby — the Defence explicitly raises both the Movables and the Recognition Defences as...
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