Nicola Bushby v Maria Galazi
| Jurisdiction | England & Wales |
| Judge | Klein |
| Judgment Date | 02 February 2022 |
| Neutral Citation | [2022] EWHC 136 (Ch) |
| Docket Number | Appeal Ref. No. CH-2021-000022 |
| Year | 2022 |
| Court | Chancery Division |
[2022] EWHC 136 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
APPEALS (ChD)
ON APPEAL FROM DEPUTY MASTER DOVAR
Royal Courts of Justice,
Rolls Building,
Fetter Lane, London, EC4A 1NL.
HH JUDGE Klein SITTING AS A HIGH COURT JUDGE
Appeal Ref. No. CH-2021-000022
Claim No. HC-2016-001224
Vikram Sachdeva QC (instructed by Irwin Mitchell LLP) for the Appellant
Shane Sibbel and Barnaby Lowe (instructed by Fletcher Day Ltd.) for the First, Second, Sixth and Seventh Respondents
Hearing dates: 7–8 December 2021
Further written submissions: 22 December 2021
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HH JUDGE Klein
This is the judgment on an appeal, by Ms Nicola Bushby, from the decision of Deputy Master Dovar (“the Master”), made on 22 January 2021, that she “will pay the Claimants' and the Christo Defendants' costs of and occasioned by [the application, by notice dated 21 October 2020, for the sealing of a Tomlin order] and [her application, by notice dated 6 January 2021], pursuant to s.51 of the Senior Courts Act 1981…” (“the Costs Order”). The reference to “the Claimants” is a reference to Maria Galazi and Iphegenia Galazis (together “the Galazis”) and a reference to Wellsford Securities Ltd. (“Wellsford”) and Abbee Ltd. (“Abbee”). The reference to “the Christo Defendants” is a reference to Christopher Christoforou, C. Christo & Co. Ltd., Anglo Properties Ltd. and Northwest Enterprises Ltd. (“the Christo Defendants”). 1
This is also the judgment on the cross appeal of the Galazis, Wellsford and Abbee (together “the Respondents”), 2 from the Master's decision, on the same occasion, (1) that, if the costs liable to be paid to them under the Costs Order could not be agreed, they were to be assessed on the standard, rather than the indemnity, basis and (2) that Ms Busby had to pay £25,000 (and not a larger proportion of their claimed costs) on account of costs.
Bacon J gave Ms Bushby permission to appeal on 16 April 2021 and she gave the Respondents permission to cross-appeal on 30 June 2021.
Mr Vikram Sachdeva QC (who did not appear below) represented Ms Bushby before me. Mr Shane Sibbel, together with Mr Barnaby Lowe (who did not appear below), represented the Respondents before me. The other respondents to the appeal (that is, most of the Christo Defendants) did not appear and were not represented. In their solicitors' letter, handed to me by Mr Sibbel on the second day of the hearing at their request, they indicated that they had elected not to participate in the appeal; although, when I invited Mr Sachdeva and Mr Sibbel to make further written submissions about how, in the event that the Costs Order is set aside, I might re-determine the costs applications against Ms Bushby, they too volunteered written submissions, including that a costs order should be made against Christodoulos Galazis. 3
I must thank Mr Sachdeva, Mr Sibbel and Mr Lowe for all their assistance. How the parties found themselves at the hearing before the Master would have been unfathomable in the time available to me without counsels' careful explanation of the procedural history, for which I am very grateful. I am also grateful to them for their clear, and helpful, submissions on what have been difficult issues to resolve.
Background
Wellsford and Abbee are two British Virgin Islands-registered companies. At the time the Claim was begun, the Galazis were the registered holders of the shares in Wellsford, and Northwest Enterprises Ltd. (“Northwest”) was the registered holder of the shares in Abbee. Wellsford and Abbee are the proprietors of properties in London which were bought with funds provided by Mrs Maria Galazi to Mr Christoforou, Mrs Galazi's brother, for investment. He used Wellsford and Abbee as corporate vehicles to invest in the properties.
The Galazis and Mr Galazis began a Claim on 18 April 2016 against the Christo Defendants and a firm of solicitors connected with them. By the Claim:
i) in relation to Wellsford, the Galazis and Mr Galazis sought “a declaration for the avoidance of doubt that Wellsford…has throughout held its assets, income and entitlements on trust for” them;
ii) in relation to Abbee, the Galazis and Mr Galazis sought a declaration that Northwest “holds Abbee…on constructive trust for [the Galazis and Mr Galazis], or alternatively for [Mrs Galazi]”.
It is important to note that, at all times, there has been no dispute between the Galazis, on the one hand, and Mr Galazis, on the other hand, that:
iii) until January 2021, the Galazis were Wellsford's registered shareholders;
iv) since January 2021, Mr Galazis is the registered holder of 25% of the shares in Wellsford;
v) the beneficial owners of the shares in Wellsford have been Mrs Galazi (as to 50%), Ms Galazis (as to 25%) and Mr Galazis (as to 25%);
vi) the beneficial owners of the shares in Abbee have been Mrs Galazi (as to 50%), Ms Galazis (as to 25%) and Mr Galazis (as to 25%).
Quite what was the thinking behind the relief sought in relation to Wellsford is not clear but, as it has turned out, that does not matter.
Mr Christoforou, C. Christo & Co. Ltd. and Northwest filed a Defence and Counterclaim on 16 September 2016. They contended that Mr Christoforou was the beneficial owner of 50% of the shares in Wellsford, and that the remaining shares were beneficially owned by Mrs Galazi (as to 25% of the total shareholding), Ms Galazis (as to 12 1/2% of the total shareholding) and Mr Galazis (as to 12 1/2% of the total shareholding). They disputed that Northwest held the shares in Abbee on trust for the Galazis and Mr Galazis.
It follows therefore that, so far as is relevant, by the close of pleadings the issues between the Galazis and Mr Galazis, on the one hand, and (some or all of) the Christo Defendants, on the other hand, were (principally):
i) whether Mr Christoforou had a beneficial interest in the shares in Wellsford;
ii) whether Northwest held the shares in Abbee on trust for the Galazis and Mr Galazis.
A freezing injunction was made by consent on 14 November 2016. By the freezing injunction, which the Galazis and Mr Galazis had applied for on 18 April 2016, Mr Christoforou, Anglo Properties Ltd. and Northwest were restrained, until further order, from dealing with the shares in, and assets of, Wellsford and Abbee. The Galazis and Mr Galazis, and Mr Christoforou, Anglo Properties Ltd. and Northwest also agreed (and incorporated into the order (“the Freezing Injunction”)) that they would not:
“give instructions to any company formation or administration agent, or person or entity offering similar services, anywhere in the world concerning the shareholding of Wellsford…or Abbee…, except pursuant to further order of the court…” (“the Non-Dealing order”).
It is important to bear in mind the following in relation to the Freezing Injunction:
i) It was obtained at a time when the Galazis and Mr Galazi were all claimants, and defendants to the Counterclaim;
ii) It was obtained at a time when they were all represented by the same solicitors;
iii) It was sought by them together, against the respondents;
iv) Its principal provision restrained the respondents from dealing with the shares in, and assets of, Wellsford and Abbee;
v) It was expressed to continue until further order, and this limitation extended to the Non-Dealing order;
vi) On the material to which I was taken, there is nothing to suggest that, at the time, there was any dispute, between the Galazis, on the one hand, and Mr Galazis, on the other hand, about whether Mr Galazis should be registered as the holder of shares in Wellsford. If this dispute did arise, as Ms Bushby believes it did, it only arose much later on.
Although I was not taken to any contemporaneous material which might shed light on the purpose of the application for the Freezing Injunction, or how come the Non-Dealing order was agreed in the terms it was, I infer that:
vii) the principal purpose of the Freezing Injunction generally was to restrain the respondents from dealing with the shares, and assets of, Wellsford and Abbee, because Mr Christoforou claimed to be a beneficial owner of shares in Wellsford, and Northwest claimed to hold the shares in Abbee otherwise than for the Galazis and Mr Galazis, so that they might have tried to act on that basis, and the Galazis and Mr Galazis disputed that;
viii) the principal purpose of the Non-Dealing order in particular was to hold the ring as between the Galazis and Mr Galazis, on the one hand, and the respondents, on the other hand, because they disputed the ownership of the shares in Wellsford and Abbee and, until the pleaded disputes were resolved, all those parties wanted the status quo maintained, as between the Galazis and Mr Galazi, on the one hand, and the respondents, on the other hand;
ix) it was not in the minds of the parties to the Freezing Injunction that the Non- Dealing order might later prevent the Galazis transferring to Mr Galazis the shares in Wellsford to which he has always been entitled, on the case of the Galazis and of Mr Galazis, and that was not a purpose of the Non-Dealing order (although, as it turned out, that was its effect), because there is no evidence to which I was taken to suggest that anyone had the transfer of shares to Mr Galazis in mind at the time.
On 5 April 2017, Richard Spearman QC, sitting as a Deputy High Court Judge, following a summary judgment application by the Galazis and Mr Galazis, declared that Northwest held...
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