Mohammed Saleem Khawaja v Stela Stefanova
| Jurisdiction | England & Wales |
| Judge | Baumgartner |
| Judgment Date | 13 October 2023 |
| Neutral Citation | [2023] EWHC 2557 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No.: CR-2022-004674 |
[2023] EWHC 2557 (Ch)
HIS HONOUR JUDGE Baumgartner
SITTING AS A JUDGE OF THE HIGH COURT
Case No.: CR-2022-004674
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
IN THE MATTER OF DERMAMED SOLUTIONS LIMITED (COMPANY NO. 11192254)
AND IN THE MATTER OF THE COMPANIES ACT 2006
Royal Courts of Justice
7 Rolls Buildings
Fetter Lane, London, EC4A 1NL
Gideon Roseman (instructed by Mills Chody LLP) for the Petitioner
David Berkley KC (instructed by direct access) for the First Respondent
The Second and Third Respondents did not appear and were not represented
Hearing date: 11 October 2023
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down (subject to editorial corrections) may be treated as authentic.
This judgment will be handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand down is deemed to be 2.00pm on 13 October 2023.
THE APPLICATIONS
There are four applications (together, the “Applications”) before the court:
(1) Mr Khawaja's application, by notice dated 13 April 2023, for information about the Respondents' assets;
(2) Ms Stefanova's application, by notice dated 17 July 2023, to discharge or vary the freezing injunction made on 7 February 2023 (the “Freezing Order”);
(3) Ms Stefanova's application, by notice dated 25 September 2023, to stay enforcement of Roth J's costs order made on 8 September 2023; and
(4) Mr Khawaja's application, by notice dated 2 October 2023, to prevent Ms Stefanova from opening any further bank accounts, to pay the turnover of the business carried out by Biotechnologiesuk Limited ( “Biotech”) into its Barclays Bank account, and for further information about the Respondents' assets.
The Applications are made in these unfair prejudice proceedings which have, as their genesis, a County Court action brought by Mohammed Saleem Khawaja, the Petitioner in these proceedings, against his business partner Stela Stefanova, the First Respondent, over a dispute between them arising out of a contract pursuant to which they were to operate a joint venture through a corporate vehicle called Dermamed Solutions Limited ( “Dermamed”), the nominal Third Respondent in these proceedings. Biotech is the Second Respondent; its relevance will become apparent in due course.
It is fair to observe that to date these proceedings have been and remain bitterly contested (as are the underlying proceedings in the County Court), the result of which has been a number of interim applications and judgments (including findings of contempt against Ms Stefanova, and a suspended sentence of imprisonment in the result), even before the first case management conference. When the Applications were called on before me, at my encouragement the parties sought some short time to explore whether any of the issues arising could be resolved through discussion and mutual agreement: some were, but the bulk of the Applications remain contested.
A short chronology of the dispute relevant to the Applications follows.
CHRONOLOGY
The Agreement
In April 2018, Mr Khawaja and Ms Stefanova entered into an oral agreement (the “Agreement”) pursuant to which Ms Stefanova was to make Mr Khawaja a 50% shareholder and director of Dermamed. Dermamed was to buy and sell medicinal beauty products, such as dermal fillers.
County Court proceedings
In August 2020, Mr Khawaja brought proceedings in the Central London County Court, seeking specific performance and damages in lieu of or in addition to specific performance. On 6 October 2021, following the trial of a number of preliminary issues, His Honour Judge Gerald gave judgment for Mr Khawaja, which, in summary, found as follows:
(1) Ms Stefanova was not a credible witness, in that her oral evidence contradicted her pleaded case, the contemporaneous documents and the key surrounding circumstances;
(2) Ms Stefanova had abandoned her pleaded case, and contradicted her witness statements;
(3) her tactic was to deny what she had previously admitted, and to rely on a strategy of “dissing” Mr Khawaja and denying the undeniable;
(4) her counterclaim for damages was “pure invention”; and
(5) she had attempted to deceive Mr Khawaja into believing Dermamed's business was failing.
The judge made a number of consequential orders, including an order requiring Ms Stefanova to provide a witness statement and specific inspection with respect to her personal financial position and Dermamed's financial position, and an order for her to provide copies of all bank statements for which she had been or was a signatory.
Thereafter, Ms Stefanova failed to comply with His Honour Judge Gerald's orders. On 16 September 2022, His Honour Judge Parfitt made an unless order, which included a penal notice, requiring her to do so.
Unfair prejudice proceedings
Following a non-party disclosure application against Barclays Bank, it emerged that Ms Stefanova had used significant amounts of Dermamed's monies for her own purposes and had diverted the entirety of Dermamed's business to the Second Respondent Biotech. Accordingly, on 12 December 2022, Mr Khawaja presented his unfair prejudice petition to the court and applied on an ex parte basis for a freezing injunction with respect to all of the Respondents' assets. On 13 December 2022, Zacaroli J granted the freezing injunction, which included an order for Ms Stefanova to provide information, including an affidavit, about the Respondents' assets and bank statements.
On 20 December 2022, Meade J continued the freezing injunction, re-ordered Ms Stefanova to comply with Zacaroli J's order, and made a further order requiring her to provide copies of all bank accounts to which she was a signatory on a weekly basis going forward. Meade J's findings included the following (see [2022] EWHC 3449 (Ch), at [6]):
“Ms Stefanova has known of [Zacaroli J's order] for some days … quite clearly she has put considerable effort into assembling documents to put herself in the position to resist the continuation of the order today … she has conspicuously, and I very strong suspect deliberately, not complied with the disclosure order of Zacaroli J … she has been in breach, very plain breach of the disclosure order of Zacaroli J … .”
On 7 February 2023, Dame Sarah Worthington KC, again, continued the freezing injunction. It is this freezing injunction — the Freezing Order — which Ms Stefanova now seeks to vary or discharge.
Contempt proceedings
On 29 March 2023, Richard Smith J found Ms Stefanova guilty of 30 separate grounds of contempt by reason of her failure to comply with His Honour Judge Parfitt's unless order, including lying in her responses and her breaches of Zacaroli and Meade JJ's freezing orders. The judge sentenced Ms Stefanova to prison for 8 months in total, but suspended the sentence on condition that she provided copies of “outstanding bank statements”, she having, in breach of Meade J and Dame Sarah Worthington KC's orders, failed to provide any bank statements whatsoever since 28 January 2023.
Proven dishonesty
Gideon Roseman, who appears for Mr Khawaja, drew to my attention the following evidence and findings of Ms Stefanova's proven dishonesty, which, he submits, is relevant to Mr Khawaja's extant applications:
(1) In her further information served in purported compliance with His Honour Judge Parfitt' s unless order, Ms Stefanova stated that she had not received any salary from Dermamed in 2019 and 2020, and had only taken £30,000 in pension contributions. In her affidavit dated 27 March 2023, Ms Stefanova admitted this was a lie; she had, in fact, taken double the amount for a “pension” and many tens of thousands of pounds for an alleged “salary”. In opposing His Honour Judge Parfitt's order, Ms Stefanova said that she had lied about having provided Mr Khawaja with copies of all her bank statements.
(2) Meade J found Ms Stefanova to have plainly breached Zacaroli J's order for the provision of information, which he suspected was deliberate.
(3) Richard Smith J found her guilty of 30 separate grounds of contempt and that she had entirely failed, in breach of Meade J and Dame Sarah Worthington KC's orders, to provide copies of any bank statements since 28 January 2023 onwards.
(4) Subsequent to the freezing injunctions, she secretly opened the following bank accounts and in breach of the freezing injunctions failed to provide copies of bank statements, thereby keeping the accounts hidden from Mr Khawaja:
(a) Metro Bank, in Biotech's name;
(b) Santander Bank, on 6 January 2023; and
(c) Revolut, on 2 March 2023, in Biotech's name.
(5) In response to Mr Khawaja's solicitors' email dated 16 March 2023 seeking information about Ms Stefanova's Santander account, she instructed her solicitors not to provide any information but to ask Mr Khawaja for information about what he knew about the account.
(6) At paragraph 24 of her affidavit dated 27 March 2023, Ms Stefanova stated that the only bank accounts she held in addition to those at Barclays Bank were accounts with Santander Bank and Metro Bank. She reiterated this in an email dated 14 April 2023 but, plainly, it was a lie. On 2 March 2023, Ms Stefanova had opened a bank account in Biotech's name with Revolut, which she proceeded to receive £17,931 and to spend the same, including at Argos, Ikea and Amazon.
(7) Ms Stefanova has repeatedly refused to provide information about Biotech's business activities, including (a) information relating to the profits it has...
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