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

JurisdictionEngland & Wales
JudgeLord Justice Arnold,Lord Justice Newey,Lord Justice Stuart-Smith
Judgment Date21 January 2022
Neutral Citation[2022] EWCA Civ 35
Docket NumberCase Nos: A2/2021/1509
Year2022
CourtCourt of Appeal (Civil Division)
Between:
Lyubov Andreevna Kireeva (as bankruptcy trustee of Georgy Ivanovich Bedzhamov)
Applicant/Respondent
and
Georgy Ivanovich Bedzhamov
Respondent/Appellant
And between:
Vneshprombank LLC
Claimant
and
(1) Georgy Ivanovich Bedzhamov
Defendant/Respondent

and

(2) Unifleet Technology Limited
(3) Basel Properties Limited
Defendants

and

Basel Properties Limited
Non-Cause of Action Defendant

and

Lyubov Andreevna Kireeva (as bankruptcy trustee of Georgy Ivanovich Bedzhamov)
Applicant/Appellant

[2022] EWCA Civ 35

Before:

Lord Justice Newey

Lord Justice Arnold

and

Lord Justice Stuart-Smith

Case Nos: A2/2021/1509

A2/2021/1531

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

BUSINESS LIST (ChD) & INSOLVENCY AND COMPANIES LIST (ChD)

Mr Justice Snowden

[2021] EWHC 2281 (Ch)

Royal Courts of Justice

Strand, London, WC2A 2LL

Mr Stephen Davies QC and Mr William Willson (instructed by DCQ Legal) for Ms Kireeva

Mr Justin Fenwick QC and Mr Stephen Robins (instructed by Mishcon de Reya LLP) for Mr Bedzhamov

Hearing dates: 24 & 25 November 2021

Approved Judgment

Lord Justice Newey
1

This case involves appeals by both Mr Georgy Bedzhamov and Ms Lyubov Kireeva against a judgment given by Snowden J (as he then was) (“the Judge”) on 13 August 2021. The key issues are whether the Judge was right, first, to recognise a Russian bankruptcy order made in respect of Mr Bedzhamov and, secondly, to decline to grant assistance to Ms Kireeva, as Mr Bedzhamov's receiver under the Russian order, in relation to property in London.

Basic facts

2

On 23 October 2015, VTB 24 Bank (“VTB 24”) made a loan to Mr Bedzhamov's sister, Ms Larissa Markus. Ms Markus having failed to meet her obligations in respect of the loan, VTB 24 brought a claim against Mr Bedzhamov on the footing that he had given a limited personal guarantee for his sister. Mr Bedzhamov denied signing the document, but the Meshanskiy District Court of Moscow rejected that contention and, on 22 December 2016, gave judgment in VTB 24's favour (“the VTB 24 Judgment”).

3

By then, Vneshprombank LLC (“VPB”), of which Ms Markus had previously been president, had also obtained a judgment against Mr Bedzhamov. On 20 June 2016, VPB, which had been declared bankrupt earlier in the year, instituted a claim against Mr Bedzhamov in the Khamovniki District Court of Moscow seeking the rouble equivalent of upwards of £30 million for unjust enrichment, and on 16 August 2016 judgment was entered against him (“the VPB Judgment”). Mr Bedzhamov has since made numerous attempts to overturn the VPB Judgment, without success. It is nonetheless his position that the VPB Judgment was obtained improperly and is being maintained by fraud, namely, the wrongful suppression by VPB, at the instigation of its receiver and liquidator, the Deposit Insurance Agency (“the DIA”), of matters contained in a report prepared by the DIA (“the DIA Report”).

4

VTB 24 and VPB each filed a bankruptcy petition against Mr Bedzhamov, and the two petitions were the subject of consideration by the Moscow Arbitrazh Court on 20 September 2017. The Court accepted VTB 24's petition and, as a result, ordered a debt restructuring procedure to be introduced in respect of Mr Bedzhamov's debts. In January 2018, the Court accepted both VPB's claim and one advanced by the Federal Tax Service as claims in the bankruptcy, and on 17 June 2018 a meeting of creditors resolved to petition for the bankruptcy to move to a second stage, in which the debtor is declared bankrupt and a receiver (the Russian equivalent of a trustee in bankruptcy) is appointed to realise the debtor's assets. The petition was heard by the Arbitrazh Court on 2 July 2018. The Court declared Mr Bedzhamov bankrupt and approved Ms Kireeva as his receiver.

5

At the time of the hearings before the Judge and us, three creditors had been recorded in relation to Mr Bedzhamov's bankruptcy: VPB in respect of the VPB Judgment for the sum of RUB 3,106,832,768.29 plus interest and surcharges, VTB 24 in respect of the VTB 24 Judgment for the sum of RUB 225,260,028.42 plus interest and surcharges, and the Federal Tax Service of Russia for the sum of RUB 174,750 plus interest and surcharges.

6

By the time he was declared bankrupt, however, Mr Bedzhamov was no longer in Russia. He appears to have left the country at the end of 2015 and to have been living in England, where he is now domiciled, since at least 2017. In that same year, his sister was sentenced to a term of imprisonment in Russia having pleaded “no contest” to fraud charges, and he has himself been the subject of Russian criminal proceedings since early 2016.

7

At the end of 2018, VPB issued proceedings against Mr Bedzhamov in this country (“the UK Proceedings”). On 27 March 2019, VPB applied for, and was granted, a worldwide freezing order against Mr Bedzhamov restraining him from disposing of assets up to the value of £1.34 billion. The freezing order was continued on 10 April 2019 and, subject to certain variations, remains in force.

8

It is VPB's case in that litigation that it is the victim of a substantial fraud perpetrated by Mr Bedzhamov and his sister. As Males LJ explained when giving a judgment relating to the freezing order:

“In outline, VPB says that there were four categories of wrongdoing, in each of which Mr Bedzhamov was complicit. These were (1) causing VPB to enter into purported loan agreements with actual customers of the bank of which those customers were ignorant, enabling the funds thus advanced to be misappropriated, (2) diverting funds from accounts held by genuine customers of the bank, (3) causing VPB to enter into loan agreements with shell companies which never had any prospect of repaying the funds advanced, and (4) making fictitious credits to accounts of companies controlled by the conspirators which were then used to discharge genuine debts owed by them to VPB or third parties.”

(See [2019] EWCA Civ 1992, at paragraph 11.)

9

VPB has not sought recognition in this jurisdiction of the VPB Judgment. Mr Steven Philippsohn referred in an affidavit he swore in support of the application for the freezing order to an inconsistency between what had been said in the DIA Report and the case which VPB had put forward in the Russian proceedings. Mr Philippsohn provided an explanation, but noted that Mr Bedzhamov might claim that VPB had been prepared to advance a case which it knew to be false.

10

Mr Philippsohn also dealt in his affidavit with the relationship between the UK Proceedings and the Russian bankruptcy. He observed that, “as matters presently stand, the prospect of Ms Kireeva seeking the recognition of [Mr Bedzhamov's] bankruptcy in this jurisdiction appears to be very low indeed”, noting that Ms Kireeva had confirmed to VPB in a letter dated 18 March 2019 that, by reason of lack of funds, she was not able to initiate any legal proceedings abroad, including in the United Kingdom. Mr Philippsohn further said this:

“476. However, even if [Mr Bedzhamov's] bankruptcy were recognised in this jurisdiction, that would not affect his liability to VPB. On the contrary, upon completion of the Russian bankruptcy proceedings, … [Mr Bedzhamov] would remain liable to VPB under articles 53.1(3) and 1064 of the RCC [i.e. the Russian Civil Code], and would not be discharged from that liability …:

(1) The starting point is that by reason of Article 213.28(3) of the Insolvency Law, after completion of the payment of creditors and the sale of property stage of bankruptcy …, a bankrupt is discharged from further satisfying his creditors' claims in the bankruptcy.

(2) However, even after completion of that stage of the bankruptcy, certain liabilities will remain undischarged. Pursuant to Art. 213.28(5) and (6) of the Insolvency Law, this includes liabilities under articles 51.3(3) (i.e., controlling person liability) and 1064 (i.e., tort liability) of the RCC.

477. Accordingly, as a matter of Russian law, [Mr Bedzhamov] will not – upon the completion of the relevant stage of his Russian bankruptcy – be released from his liabilities to the Bank under Articles 51.3(3) and/or 1064 of the RCC; and this bankruptcy would not prevent [Mr Bedzhamov] from pursuing such claims against him in these proceedings.

478. Further, the Bank is content to undertake to the Court to inform Ms Kireeva of any relief granted pursuant to this Application, so that she might make any representations she considers appropriate … at the return date.”

11

On 19 February 2021, Ms Kireeva issued an application by which she sought the recognition at common law of the Russian bankruptcy order against Mr Bedzhamov and of herself as Mr Bedzhamov's bankruptcy trustee and, further, “orders for the entrustment of the Belgrave Square Property (and any other property of [Mr Bedzhamov] in England) and that the Applicant will be able to question [Mr Bedzhamov] in relation to the Belgrave Square Property”. The “Belgrave Square Property” comprises 17 Belgrave Square and 17 Belgrave Mews in London. Ms Kireeva said in an affidavit she swore in support of her application that the Belgrave Square Property could be the largest asset in Mr Bedzhamov's bankruptcy.

12

As to the background to her application, Ms Kireeva said this in her affidavit:

“Around 27–28 January 2021, it was reported in the news that on 21 January 2021 the Tverskoy District Court of Moscow ordered the seizure of the Belgrave Square Property. I have seen the Russian news and have also been informed by my English lawyers that it has been reported in the English-language press …. I have been provided … with...

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