Satfinance Investment Ltd v Athena Art Finance Corporation
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 21 December 2020 |
| Neutral Citation | [2020] EWHC 3527 (Ch) |
| Docket Number | Case No: CH-2020-000148 |
| Court | Chancery Division |
[2020] EWHC 3527 (Ch)
Mr Justice Morgan
Case No: CH-2020-000148
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
APPEALS (Ch D)
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Charles Dougherty QC and Richard Edwards QC (instructed by Seladore Legal Ltd) for the Appellant
Philip Shepherd QC (instructed by Trowers & Hamlins LLP) for the Respondent
Hearing date: 16 November 2020
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 may be treated as authentic.
Introduction
This is an appeal against the order of Chief Master Marsh, made on 2 June 2020, to give effect to the judgment which he handed down on 26 May 2020. The application which was before the Chief Master was an application by the Fourth Defendant in these proceedings, Athena Art Finance Corp (“Athena”), to set aside an order made, ex parte, by Roth J on 1 November 2019, whereby the Claimant, Satfinance Investment Ltd (“SIL”), was granted permission to serve these proceedings on Athena, out of the jurisdiction. By his order of 2 June 2020, the Chief Master set aside the permission to serve out of the jurisdiction and, as a consequence, he also set aside other orders which had been made against Athena by Roth J on 1 November 2019 and which had been continued thereafter. The Chief Master refused to grant to SIL permission to appeal his order but permission to appeal was granted by Mann J on 22 August 2020.
The following is a brief summary of what is involved in these proceedings and in the present appeal. By its claim in these proceedings, SIL asserts legal and beneficial ownership of a valuable painting entitled ‘Humidity’ (“the painting”) by the New York artist, Jean-Michel Basquiat. SIL says that it acquired its rights to the painting pursuant to an agreement made by it with the First and Second Defendants, Mr Philbrick and Inigo Philbrick Ltd (“IPL”) respectively. SIL wishes to assert its rights to the painting against Athena who claims to be entitled to the painting under arrangements it made with the Third Defendant, Boxwood Green Ltd (“Boxwood”), a company registered in Jersey. Athena's claim is based on a transfer (or a purported transfer) of title in the painting by IPL to Boxwood and then the grant by Boxwood to Athena of a security interest in the painting.
On 30 October 2019, SIL issued the present proceedings against (1) Mr Philbrick, (2) IPL, (3) Boxwood and (4) Athena. SIL served Mr Philbrick and IPL within the jurisdiction on the basis that Mr Philbrick is resident in England and Wales and IPL is incorporated in England and Wales.
Upon issue of the proceedings, SIL applied for permission to serve the proceedings out of the jurisdiction on Athena and for interim relief to restrain dealings with the painting. SIL's applications were considered by Roth J on 1 November 2019 at an ex parte hearing. SIL had attempted to give informal notice of the hearing to Mr Philbrick and IPL but those parties did not participate in the hearing. The applications in relation to Athena were heard ex parte.
On 1 November 2019, Roth J granted permission to SIL to serve the proceedings out of the jurisdiction on Athena. He also granted interim relief restraining the Defendants from dealing with the painting. That interim relief was continued by me on 13 November 2019.
Roth J granted permission to SIL to serve Athena out of the jurisdiction on the ground, set out in CPR PD6B paragraph 3.1(3), to which I will refer as “the necessary or proper party gateway” or “gateway 3”. The order was made on the basis that Mr Philbrick and IPL were anchor defendants, that as between SIL and the anchor defendants there was a real issue which it was reasonable for the English court to try and that Athena was a necessary or proper party to SIL's claim against the anchor defendants. Further, the order was made on the basis that England was the proper forum for the claim.
On 10 December 2019, Athena applied for an order setting aside the order of 1 November 2019 permitting service on it out of the jurisdiction and for orders dismissing the claim against it and setting aside the interim relief as against it.
Athena's application was heard by the Chief Master on 17 March 2020. He handed down his reserved judgment on 26 May 2020 and, in consequence, he made the order, now under appeal, on 2 June 2020. The Chief Master held that, as at 1 November 2019, Mr Philbrick and IPL were not going to defend the claims against them and, in consequence, there was no real issue between SIL and Mr Philbrick and IPL which it was reasonable for the court to try, with the result that SIL had not established that the claim came within gateway 3. In those circumstances, the Chief Master did not have to consider whether England was the proper forum for the claim but he went on to hold that if gateway 3 had been established, he would not have concluded that England was the proper forum.
On this appeal, SIL submitted that the Chief Master was wrong about gateway 3 and about the proper forum for the claim. In addition, SIL relied on the fact that, on or about 19 May 2020, SIL joined, as a Fifth Defendant, Delahunty Ltd (“Delahunty”), a company incorporated in England and Wales. SIL said that Delahunty can now be regarded as an anchor defendant, that is, a defendant in relation to whom there is a real issue which it is reasonable for the court to try. SIL also said that Athena is a necessary or proper party in relation to SIL's claim against Delahunty and England is the proper forum for the claim. The Chief Master did not deal with the possibility of upholding the grant of permission to serve out of the jurisdiction by reference to the joinder of Delahunty but, on the appeal, I was asked by SIL to deal with the case on that basis, if that were necessary to uphold the grant of permission to serve Athena out of the jurisdiction.
The parties
I can take a more detailed description of the parties from the judgment of the Chief Master, to which I will add a reference to Delahunty.
SIL is incorporated in the BVI and managed from Montreux in Switzerland. Mr Boris Pesko is SIL's ultimate owner. His son, Aleksandar Pesko, is a UK citizen and lives in London. SIL owns real estate holdings in London and various art works and financial instruments. From now on, references to Mr Pesko are to Mr Aleksandar Pesko.
Mr Inigo Philbrick is a US citizen who had been resident in Florida and London. He is the sole director and sole shareholder of IPL. IPL was set up in April 2014 as a company incorporated in England and Wales with a registered office in London. It carried on business from an art gallery in Davies Street, London W1.
Boxwood is a company incorporated in Jersey. It is owned and controlled by Mr Philbrick and/or IPL. Until recently, Boxwood had nominee directors from a service provider in Jersey named Valla Limited. However, Valla has terminated its arrangement with Mr Philbrick and IPL and Mr Philbrick is now the sole director of Boxwood.
Athena is a company incorporated in the state of Delaware in the United States and carries on business in New York, specialising in providing credit secured on works of art. Athena has no presence in England and Wales.
Delahunty is a company incorporated in England and Wales and carries on business as an art dealer under the name Delahunty Fine Art from premises in Bruton Street, London W1.
The facts
The Chief Master set out what he took to be the facts on which he should base his decision. As will appear later in this judgment, Athena applied to adduce further evidence on the appeal and that evidence included material as to the whereabouts of Mr Philbrick in the period leading up to 1 November 2019. At this stage in the judgment, I will refer to the facts as described by the Chief Master and I will refer to the further evidence separately later.
Mr Philbrick and Mr Pesko met in 2013 moving in the same social circle in London. Mr Pesko said he had developed an interest in modern art and had recognised that it could be a suitable alternative investment class for SIL. Over a period of time, Mr Philbrick, through IPL, introduced to Mr Pesko seven works of art that were purchased by them as ‘partners’ and sold at a profit.
In August 2016, Mr Pesko and Mr Philbrick agreed to purchase the painting jointly for $18.4 million and on 11 August 2016 they signed a document described as a ‘Partnership Agreement’. (It is referred to in an invoice of the same date as a “Side Letter”). Under the Partnership Agreement:
(1) SIL agreed to contribute US$12.2 million to the purchase of the Painting and IPL agreed to contribute US$6.2 million;
(2) of SIL's US$12.2 million contribution, US$3 million was treated as a senior loan by SIL to IPL; the senior loan was secured against the painting and would be senior to IPL's US$6.2 million contribution;
(3) SIL would hold “full title” to the painting;
(4) subject to SIL's full title, SIL and IPL would hold jointly the painting and would share equally in any profit or loss;
(5) IPL would retain possession of the painting and it would be kept at IPL's storage facilities in London or Zurich.
The Partnership Agreement does not specify a governing law. It was made in London and both Mr Philbrick and Mr Pesko were resident in London. The principal pointer to a legal system other than England...
To continue reading
Request your trial
-
Transworld Payment Solutions U.K. Ltd ((in Liquidation)) v First Curaçao International Bank N.v
...evidence must be directed at the situation at the date when permission was originally granted” (emphasis added): see Satfinance Investment Limited v Athena Art Finance Corp [2020] EWHC 3527 (Ch) at [43] per Morgan J. 59 The Claimants retain the burden of persuading the Court that there is ......
-
Mr Flavio De Carvalho Pinto Viegas and 1, 516 others v Mr José Luis Cutrale
...e.g., Traxys Europe SA v Sodexmines Nigeria Ltd [2020] EWHC 2195 (Comm) §11; Satfinance Investment Ltd v Athena Art Finance Corp [2020] EWHC 3527 (Ch) § 95); and ii) if the applicant satisfies that burden, the respondent must satisfy the court that there is nevertheless some reason why it......
-
Lakatamia Shipping Company Ltd v Nobu SU (aka Hsin Chi Su Aka Nobu Morimoto
...the time the Claimant seeks permission to serve out, the anchor defendant did not intend to defend the claim: see e.g. Satfinance Investment Limited v Athena Art Finance [2020] EWHC 3527 (Ch) at [40], [46], [60], [86]–[89]. (2) A claim that is duplicative of another claim which is already ......
-
Dr Markus Boettcher v XIO (UK) LLP ((in Liquidation))
...v JSC (VMZ Red October) [2015] EWCA Civ 379; [2015] 1 CLC 706, para. 44; Satfinance Investment Ltd v Athena Art Finance Group [2020] EWHC 3527 (Ch), para. 134 The matter in contention between the parties was the second of the above requirements, namely whether there is a real issue betwe......
-
Can Fraudsters Close The Gateway To England And Wales By Dissipating To Persons And Places Unknown? Osbourne v Persons Unknown
...time permission was granted, not at the time of the set-aside application (e.g. Satfinance Investment Ltd v Athena Art Finance Corp [2020] EWHC 3527 (Ch) at paragraph As to the ambiguity with gateway 15(a), this is a point about which there are fewer indications in the authorities, and ther......
-
THE FINE ART OF FRAUD.
...trustee, whereas the passive investor would hold the beneficial interest. (16) Satfinance Investment Ltd v. Athena Art Finance Corp. [2020] EWHC 3527 (Ch), para. (17) Counsel for Athena in Athena Art Finance Corp. v. Certain Artwork by Jean- Michel Basquiat Entitled Humidity, 1982, in Rem, ......