Lyubov Andreevna Kireeva (as bankruptcy trustee of Georgy Ivanovich Bedzhamov) v Clement Glory Ltd

Hearing dates: 19, 20, 21 February 2025

Approved Judgment

This judgment was handed down remotely at 10.30am on 11 April 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Introduction

This is a judgment to which Master Kaye has contributed. At the hearing we announced our decision that there was no serious issue to be tried in respect of the claimants' only remaining claims. The existing order permitting service of the claim form out of the jurisdiction was therefore to be set aside and the proceedings were to be dismissed. These are our reasons for that decision.

The claimants accepted that if we concluded that there was no serious issue to be tried in respect of the trust claim the entire claim would fall away in light of the events that had occurred since it was issued.

The hearing had been listed for three days but it became clear after the first day that if the parties were to advance all of their arguments on all of the issues and applications advanced by them that the hearing would take substantially longer than that.

The identification of a narrow potentially determinative issue that could be addressed within the time allocated for the hearing was consistent with the overriding objective and good case management. We directed the parties should focus their submissions to the core question of whether there was a serious issue to be tried in relation to the trust claim, it being accepted that in light of the events that had occurred since the claim was issued the other parts of the claim could no longer be pursued.

We made this case management direction to give effect to the overriding objective to deal with cases justly efficiently and proportionately including as to costs and in particular under our powers under CPR 3.1(2)(p).

There are certain documents which the defendants say were wrongly obtained in a search order to which they were not parties. These have been referred to in the papers as the embargoed documents. We heard incomplete submissions about them. Having determined the central issue against the claimants such that the claim would fall away we decided that it would be inconsistent with the overriding objective to hear the rest of the embargoed documents arguments.

Factual background

This claim is part of a wider dispute between the claimants in these proceedings and Mr Georgy Bedzhamov (“GB”) both in this jurisdiction and others. A summary of the background to those wider disputes and some of the factual issues for the purposes of this judgment are set out below. A fuller explanation of the background and history of the disputes can be found in the judgments of Falk J (as she then was) at [2022] EWHC 1166 (Ch) and [2022] EWHC 2676 (Ch), Snowden J (as he then was) at [2021] EWHC 2281 (Ch), the Court of Appeal at [2022] EWCA Civ 35 and the Supreme Court at [2024] UKSC 39, and at [2023] EWHC 348 (Ch).

The second claimant is a Russian bank (“VPB” or “the Bank”). Following the appointment of provisional administrators on 18 December 2015 the Bank was declared bankrupt by the Moscow Arbitrazh Court on 14 March 2016. The Deposit Insurance Agency (“the DIA”), a Russian State corporation, was appointed to act as its receiver and liquidator under Russian law.

VPB alleges that GB together with his sister, Larisa Markus, who had been the President of VPB, perpetrated a massive fraud against it. The Bank says that GB was the de facto controller of VPB and used that position to perpetrate the alleged fraud. It seeks substantial damages, US$1.34bn, for the losses it says resulted from the fraud and further damages for causing VPB's bankruptcy. GB resists that claim and denies his participation in the alleged fraud. That dispute is the subject of proceedings issued by the Bank against GB in this jurisdiction in December 2018, BL-2018-002691 (“the Bank proceedings”). VPB obtained a worldwide freezing order (“the WFO”) and search orders on 27 March 2019.

The third defendant, Maxim Golodnitksy (“MG”), and his company Berkeley Square Investment Partners Limited (“BSIP”) are third parties/intervenors to the Bank proceedings for the purposes of the search order but are not defendants to them.

GB has been living in England since about 2015 and has been domiciled in this jurisdiction since 2017. In 2014 he had purchased a short lease of 17 Belgrave Square and Belgrave Square Mews, London, SW1X 8PG (“17BS”). He was registered as leasehold proprietor on 28 January 2015. His acquisition of 17BS included a personal agreement with the Grosvenor Estate, as freeholder, for a lease extension subject to conditions relating to the development of 17BS.

GB was and remains the subject of criminal and civil proceedings in Russia in connection with the alleged fraud. He (and others said to be connected to him) are also the subject of proceedings in various jurisdictions arising out of the alleged fraud and/or as a consequence of those criminal and civil proceedings in Russia.

The Khamovniki District Court entered judgment against GB in the amount of RUB 3.368 billion on 16 August 2016, being approximately £40m (“the unjust enrichment judgment”). GB appears to have exhausted all avenues of appeal but maintains that the unjust enrichment judgment was obtained improperly and by fraud.

Separately, another Russian bank, VTB 24, pursued GB in respect of a personal guarantee he had given on 23 October 2015 to support a loan facility given to his sister on the same date in the sum of RUB 320,441 million (approx. £5m.) VTB 24 obtained a judgment against GB on the personal guarantee on 22 December 2016 from the Meshanskiy District Court (“the VTB judgment”). GB had maintained that the personal guarantee was a forgery. However, following a trial in the Recognition proceedings (see below) in Kireeva v Bedzhamov [2022] EWHC 2676 (Ch), Falk J concluded that the personal guarantee was not a forgery and that the VTB judgment was not procured by fraud on the part of VTB 24.

Based on the unjust enrichment judgment and the VTB judgment, VPB and VTB 24 separately initiated bankruptcy proceedings against GB in Russia in 2017. Bankruptcy proceedings in Russia have two stages with the second stage resulting in the appointment of the equivalent of a trustee in bankruptcy.

VPB filed its petition based on the unjust enrichment judgment on 17 January 2017. The petition was accepted and there was an initial hearing on 22 March 2017 which was then adjourned to 7 June 2017. VTB 24 filed its petition in reliance on the VTB judgment on 13 April 2017 which was also accepted.

On 25 April 2017 the first defendant to these proceedings, Clement Glory Limited (“CGL”), was incorporated in the British Virgin Islands. The second defendant, Edward Golodnitsky (“EG”), who lives in Israel, is the sole director and registered shareholder of CGL.

On 7 June 2017 the Arbitrazh Court determined that since the unjust enrichment judgment was under appeal it was “unreasonable” and did not have the necessary legal effect to found a bankruptcy order. VPB and VTB 24 appealed the 7 June 2017 decision. On 17 July 2017 that appeal and consideration of VTB 24's petition were adjourned to 20 September 2017.

The claimants allege in these proceedings that despite the decision of the Arbitrazh Court to adjourn the determination to 20 September 2017, the pending appeal was not a substantial ground for opposing the VPB bankruptcy petition. Instead they allege that it was designed to provide time for GB to take steps to deal with his assets prior to any bankruptcy order being made in a way that attempted to put those assets beyond the reach of his creditors including VPB.

GB's appeal against the unjust enrichment judgment was dismissed on 30 July 2017.

Between July 2017 and September 2017 GB entered into various arrangements which the claimants seek to challenge by this claim. There are unresolved issues about whether reference to some of those arrangements wrongly refers to documents which are said to still fall within the confidentiality orders made in the Bank proceedings (i.e. the embargoed documents). They are therefore referred to compendiously in this judgment as “the Arrangements” where appropriate. It is not necessary for the purposes of resolving the issues we have outlined above to spell out the details of the Arrangements in greater detail.

The claimants allege in broad terms that under the Arrangements EG constituted himself a bare trustee of the shares in CGL for GB.

As part of the Arrangements, on 31 August 2017 GB granted an “all monies” legal charge over 17BS to CGL (“the CGL charge”). The CGL charge included an exclusive English jurisdiction clause. The CGL charge was witnessed by MG who gave his address as 49 Berkeley Square, London W1, the office of BSIP.

GB contends that the CGL charge derives from a Settlement Agreement between GB and CGL entered into on 31 August 2017 and a loan Facility Agreement also entered into between GB and CGL on 31 August 2017.

GB contends that the charge secured a sum of in excess of US$35m at the time. In 2022 GB confirmed that the sum secured by...