Olena Tyshchenko v Adrian Hyde, Mark Fry and Gary Shankland (Joint Trustees in Bankruptcy of Olena Tyshchenko)
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Bacon |
| Judgment Date | 17 April 2024 |
| Neutral Citation | [2024] EWHC 838 (Ch) |
| Court | Chancery Division |
| Docket Number | Appeal ref: CH-2023-000050 |
[2024] EWHC 838 (Ch)
Mrs Justice Bacon
Appeal ref: CH-2023-000050
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEALS (ChD)
ON APPEAL FROM ICC JUDGE PRENTIS
IN THE MATTER OF OLENA TYSHCHENKO (IN BANKRUPTCY)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Rolls Building
Fetter Lane
London, EC4A 1NL
The Appellant appeared in person on 24 January 2024 and was represented by Ella Vacani (instructed by Keystone Law) on 25 March 2024
Peter Shaw KC and Paul Wright (instructed by Charles Russell Speechlys LLP) for the Respondents
Hearing dates: 24 January and 25 March 2024
APPROVED JUDGMENT
This judgment was handed down remotely at 10 am on 17 April 2024 by circulation to the parties or their representatives by email and by release to the National Archives.
Introduction
This is an application for permission to appeal two orders of ICC Judge Prentis dated 11 January 2023. In the first, the judge dismissed an application by the Appellant ( Mrs Tyshchenko) seeking a stay of her bankruptcy proceedings and related orders. The hearing of that application had proceeded without the attendance of Mrs Tyshchenko, because she had applied for the adjournment of the hearing on medical grounds. Her application to adjourn was considered at the hearing itself, and was also dismissed by the judge in the second of the orders under appeal.
The first hearing before me on 24 January 2024 proceeded as a rolled-up hearing of the application for permission to appeal and the appeal itself. Mrs Tyshchenko attended the hearing remotely at her request, again on medical grounds. Mr Shaw KC and Mr Wright, for the Respondent trustees in bankruptcy (the Trustees), appeared in court in person.
Mrs Tyshchenko made her reply submissions in writing following the hearing. Thereafter I received (at my request) further written submissions from both parties on various specific issues which had not been addressed, or fully addressed, during the hearing.
On 4 March 2024 I circulated my draft judgment, embargoed in the usual way. Three days later, alongside the Respondents' corrections to typographical and similar errors in the judgment, I received a request to reconsider the part of the judgment entitled “Remaking the decision” on the basis that the Respondents wished to adduce further evidence. The Respondents asked that I delay handing down the judgment until their further submissions and evidence had been considered at a hearing. In light of that request I did not hand down judgment but gave directions for a further hearing (to take place entirely remotely) to consider the Respondents' further evidence, and reply evidence from Mrs Tyshchenko. At that hearing on 25 March 2024 the Respondents were again represented by Mr Shaw and Mr Wright. Mrs Tyshchenko had however by that time secured legal representation, and was represented by Ms Vacani.
At the end of the hearing both Ms Vacani and Mrs Tyshchenko asked for permission to file further evidence on certain specific points addressed at the hearing. In light of that request, I gave directions for one further (final) round of evidence and submissions to be filed by both parties, and I have taken account of both that evidence and further submissions in this judgment.
For the reasons set out further below I have reached the conclusion that, in the unusual circumstances of this case, and having considered the further evidence on both sides now before the court, it is appropriate to revise the substantive conclusions that I reached in my initial draft judgment.
Procedural background
The background to the applications before ICC Judge Prentis and the present appeal is rather convoluted and requires some explanation.
The WWRT proceedings
On 4 September 2020 WWRT Limited ( WWRT) brought proceedings against Mrs Tyshchenko and her ex-husband Mr Serhiy Tyshchenko in the Chancery Division of the High Court under claim number BL-2020-001416 (the WWRT proceedings), following the grant of a worldwide freezing order against Mr and Mrs Tyshchenko. The basis of WWRT's claim is set out in earlier judgments in those proceedings, in particular WWRT v Tyshchenko [2020] EWHC 2409 (Ch) and [2021] EWHC 939 (Ch). In short summary, WWRT's claim alleges fraudulent activities by the Tyshchenkos in relation to a series of loans granted by the Ukrainian Bank JSC Fortuna Bank which were not repaid. The bank was subsequently declared insolvent and liquidated by the Ukrainian Deposit Guarantee Fund ( DGF). In the course of that liquidation a package of the bank's assets, including the disputed loans, were sold to a Ukrainian company which in turn sold those assets to WWRT. WWRT's claim is brought on the basis of those loans.
The DGF has now been joined as a defendant to the WWRT proceedings, by order of Master Kaye dated 20 June 2023. Its interest is essentially adverse to that of WWRT: the DGF claims that the right to bring a fraud claim against the Tyshchenkos arising from the disputed loans was not assigned to WWRT but remained with the DGF.
The trial of the WWRT proceedings is currently listed to take place in January and February 2025.
Mrs Tyshchenko's bankruptcy
Following a hearing in March 2021 leading to the continuation of the freezing orders, costs orders were made against the Tyshchenkos, with an order for an interim payment on account in the sum of £150,000. That sum was not paid; instead Mrs Tyshchenko petitioned for her own bankruptcy on 31 May 2021 (apparently on the basis of advice from a branch of the Citizens' Advice Bureau). She was declared bankrupt on 1 June 2021 and the Trustees were then appointed by the Secretary of State on 6 July 2021. The largest creditor in the estate is WWRT, with a claim of over £65m representing its claim against the Tyshchenkos in the WWRT proceedings. Prior to making its application for joinder to the WWRT proceedings, the DGF also filed a proof of debt in the bankruptcy proceedings, with a claim of over £32m. Other than those two creditors, the only remaining confirmed debt is a sum of a little over £5000 which Mrs Tyshchenko has already said that she can pay.
Since both the WWRT and DGF claims are contingent on the outcome of the WWRT proceedings, the Trustees' position is that they will not and indeed cannot adjudicate on the claims and make any distribution in the bankruptcy until the WWRT proceedings have been determined. The Trustees have, however, continued to investigate Mrs Tyshchenko's assets. So far the only significant asset that has been identified is the family home in Surrey, Tanglewood Villa, which is a substantial property whose value I will discuss further below. Mrs Tyshchenko was the beneficial owner of the house, with her interest in the house held via an Isle of Man company, Copper Homes Limited.
The Trustees have obtained full control of the title to the property after their appointment, by obtaining an order of the High Court of Justice of the Isle of Man recognising the English bankruptcy and declaring that the beneficial interest in the shares of Copper Homes Limited vested in the Trustees. In February 2022 the Trustees asked Mrs Tyshchenko to agree a timetable for vacating the property. Mrs Tyshchenko refused to do so on the grounds that she and her children had no other place to live. On 25 August 2022, therefore, the Trustees applied in the Kingston-upon-Thames County Court for an order for possession and sale of the property.
The Trustees' actions have led Mrs Tyshchenko to file applications in various County Courts and the Companies Court seeking to stay the bankruptcy proceedings, remove the Trustees from office or suspend their powers, and to stay or prohibit the possession and sale of Tanglewood Villa. Those applications included the applications which gave rise to the orders which Mrs Tyshchenko now seeks to appeal. There have, however, also been a number of related applications which it is necessary to describe.
Mrs Tyshchenko says that the reason why she has filed so many applications in different courts is that, as a litigant in person, she was unsure of the correct procedures under the relevant insolvency rules. The Trustees note that Mrs Tyshchenko was in fact represented for the purposes of her application to the Kingston-upon-Thames County Court. It is, however, fair to say that apart from that hearing Mrs Tyshchenko was acting as a litigant in person in the various applications described above. She also represented herself in this appeal, up to and including the first hearing on 24 January 2024 (though she was then, as explained above, represented at the second hearing on 25 March 2024). That does not justify applying a lower standard of compliance with rules of the court, but Mrs Tyshchenko's lack of representation may (for example) justify some allowances being made in case management decisions and in the conduct of the hearing: Barton v Wright Hassall [2018] UKSC 12, §18.
The applications before ICC Judge Prentis
The application before ICC Judge Prentis was issued on 2 February 2022 and amended on 4 April 2022. As amended, the application sought a stay of the bankruptcy proceedings, the suspension of the powers of the Trustees, and a prohibition on the sale of Tanglewood Villa, pending the determination of the WWRT proceedings. On 18 May 2022 the application was listed for a hearing on 11 January 2023.
On 5 January 2023, i.e. less than a week before the hearing, Mrs Tyshchenko applied to adjourn the hearing until 13 March 2023, the date of another hearing listed in the bankruptcy proceedings. The main reasons given were that she was having ophthalmic surgery in Poland and would be unable...
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