Dmitry Tsvetkov v Elsina Khayrova

In these financial remedy proceedings the assets are, as I find, about £48 million. The Wife (“W”) seeks 50% thereof, c£24m each. The Husband (“H”) seeks a 60/40 split in his favour, such that he would receive about £29m and W about £19m. The difference between their respective positions is about £5m. The parties’ combined costs are just over £3 million (W £1,327,081 and H £1,761,488) which is 60% of the disputed sum. How, then, is it that they have been unable to reach settlement? The main answer is the extraordinary facts of the case which have thrown up innumerable computational and conduct issues. There have been no fewer than 11 court hearings, and the parties have produced a total of 21 sworn statements. No stone was left unturned; the detail placed before me was at times mind boggling. Accordingly it is, regrettably, necessary for me to narrate the background in much more detail than would normally be required.

Counsel for W pointed out that H was found to be untruthful in other proceedings in 2022 between himself and a former business associate, Ernest Magdeev (“EM”). That is indeed the case. On the other hand, he was found to be generally truthful (if not faultless) in commercial court proceedings before Cockerill J between himself and the father of EM, Rustem Magdeev (“RM”) in 2020. In the end, I consider that I should judge H as I find him, untainted by what was said both for and against him by other tribunals. On the whole, I thought he was, generally, truthful to me.

W started her evidence from an unpromising position as it has long been obvious that during these proceedings she has repeatedly lied to H and to the court. Her Form E, that critical foundation of any case, contained numerous material omissions. Thereafter she uttered repeated falsehoods about the whereabouts of valuable jewellery which required a variety of freezing orders, and a search order, before the truth emerged. To be fair, in oral evidence she frankly acknowledged to me that she had lied, and apologised. Despite that admission, overall I did not find her persuasive on the major factual issues which I have to determine, and on balance I preferred H’s evidence.

H is 42 years old, W 36. They have two children who divide their time between the parties’ homes pursuant to a Child Arrangements Order.

Both parties were born in Russia and each now holds UK, Russian and Cypriot passports. H moved to the UK in 2005 and acquired UK citizenship in 2010. W moved to the UK in 2007 and acquired UK citizenship in 2013.

They married in 2009. At their wedding, H was introduced through W’s well connected family to RM, who he came to regard as akin to an older brother. They became close friends and business partners, in particular in connection with a business in Cyprus trading Graff diamonds.

H’s career started in the development of software systems, but he soon developed a skill in acting as a consultant and advisor on behalf of wealthy individuals in respect of a variety of projects. One of the businesses invested in tech enterprises in Russia and Europe. In 2010, H and his fellow investors had a falling out. An injunction freezing $3.7m of his assets was made against him in 2011, although they eventually compromised on payment by H of $300,000. I am satisfied that the experience of being subject to this action led H to develop an attuned sense of the need to protect his assets from creditors and unsympathetic business associates. As a result, thereafter most family assets were placed in W's name.

As a result, H and W moved to Cyprus. There, H set up a number of companies to continue provision of advisory services. Setting a pattern for the future, the shareholdings of these businesses were placed in W’s name. By 2012, H’s success had enabled them to buy a villa in Cyprus and an apartment in Dubai, each legally owned by W (one via a corporate entity).

H’s career progressed, and wealth was generated principally from (1) his advisory work for high net worth individuals, (2) trading in Graff jewellery, watches and Pluczenik diamonds, (3) sales of art to private clients and (4) involvement in a Russian coal mine from 2016 onwards.

At the beginning of 2018, the family returned to England, living mainly in a London flat, and using their Surrey property as a weekend home. These properties, as well as others in London, were bought between 2017 and 2019, and, again, placed in W’s name.

There is no real dispute that the parties enjoyed what most people would describe as a fabulous standard of living; they deployed their wealth to acquire properties in multiple jurisdictions, they acquired high end cars and expensive jewellery and art, they flew regularly in private jets, and enjoyed luxurious holidays.

By 2016, the relationship between H and RM was in difficulty. A feud developed, and the consequences are being felt to this day. A dispute developed about a $10m loan which had been made by RM to H in 2014, and which H asserted, but RM disputed, had been repaid. The issue was in due course litigated, and resolved in H’s favour in the Commercial Court before Cockerill J in 2020; the detailed judgment from those proceedings is publicly reported at [2020] EWHC 887 (Comm).

A further dispute arose between H and EM in respect of a loan made by RM to H in 2015. The benefit of the loan was assigned by RM to EM and, although the dispute was interlinked with the claim before Cockerill J, it had to be resolved by other legal proceedings because of a clause to that effect in the loan agreement. Those proceedings resulted in an award in favour of EM dated 26 May 2022 in the sums of €2,894,118 and USD 3,335,406, plus costs. That award is enforceable through the English courts pursuant to an order of Cockerill J dated 11 July 2022. As a result of various interim orders agreed between the parties and/or made by me, H has received sufficient monies from the sale of various assets such that he has now satisfied the award in full.

In November 2019, a criminal complaint in Russia was issued against H in relation to various business transactions between 2011 and 2014; H says they are trumped up charges engineered by RM. In July 2020, a Russian court issued an arrest warrant against him. Interpol received from the Russian authorities a Diffusion Notice. As a consequence H feels unable to leave this country. He cannot open or maintain bank accounts anywhere in the world. He told me that he is in fear for his life, received an Osman warning in October 2020, has been the subject of three failed assassination attempts in this country, and is required to take expensive security precautions. He is hopeful that before long the Diffusion Notice will be cancelled, thereby enabling him to travel and open bank accounts. Of particular importance to him is that he would then have the opportunity to resume his trading career which requires him to travel to meet wealthy potential clients.

H provided advisory services from 2016 onwards to the owner of a highly lucrative coalmine in Russia (“Stirakia”). H had a very close personal and business relationship with this person who I suspect was something of a mentor to him; he told me they used to meet almost every day for several years. Between 2016 and 2020, H estimates that he received in excess of £100m, before expenses and tax, as a result of his involvement in this business, from which the bulk of the UK assets, art and cars were bought. This is where the family fortune was essentially made. Quite how these sums were quantified was not entirely clear. My impression is that although H no doubt provided valuable business and management advice, there may have been an element of largesse on the part of the owner due to their close personal relationship.

In June 2020, 25% of the shares in Stirakia were allotted to H. The shares were placed in W’s legal name to shield them from the criminal proceedings underway in Russia, and other ongoing litigation, as part of the protective structure for family assets. W granted H a Power of Attorney on 10 June 2020. In practice, W had no involvement; she was a cipher for H.

In September 2020, an offer was made for the business which it was anticipated would realise $10m for the shares in W’s name. The offer did not complete. The shares were eventually sold in 2022 for $7.5m.

The marriage came to an end in early September 2020 when W told H that she wanted a divorce. W’s petition was issued in November 2020, and H’s cross petition in December 2020. Decree Nisi was pronounced on the first attended day of this trial. H’s Form A was issued on 24 August 2021.

On separation, W almost immediately prevented H’s access to the family bank accounts and credit cards. Unbeknown to H, in August 2020 she had transferred Cypriot properties into her mother’s name which I regard as an obvious attempt to place assets beyond the reach of H (I do not accept, as W claimed, that H told her to do this). She blocked H’s operational involvement in Stirakia. She secured sole access to the safety deposit box at Harrods so as to take control of the valuable jewellery therein, intended to be used by H for trading purposes. She retained the rental income, from which the mortgages had to be met. The consequence of all this was that H was shut out of the family assets, with almost nothing in his sole name. He no longer had access to family bank accounts for his personal or business use. In 2021 he accordingly set up a Dubai company, the shares of which were held for him by a trusted associate, Mr D, pursuant to a formal nominee agreement, and banking arrangements were established. The facility was abruptly withdrawn by the bank in June 2022 for reasons to which I will return. Since then, H has had no means of accessing bank accounts or facilities provided by other financial institutions. The Russia/Ukraine conflict has exacerbated the situation and prevented him from doing any meaningful business anywhere in the world. Since late 2022, he has only been able to meet his financial requirements by (i) sale of assets pursuant to agreement and/or court order in these proceedings and (ii) borrowing from Mr D. Probably as a result of these steps carried out by W, H made no contribution to the mortgages from his income, nor did he pay school fees, or any child maintenance for a lengthy period of time, or pay debts referable to the Surrey property.

Since separation, H has lived at the family home in Surrey, and W at the London family flat.

The assets comprise:

The many computational issues fall into the following categories:

H in his Form E said that the UK property assets were “put in [W’s] name to protect [them] from any possible claims made against me in the course of my business dealings by third parties”. He says that notwithstanding this arrangement, he is an equal beneficial owner under what he described to me as something of a fluid arrangement whereby they are W’s for protective purposes but joint for other purposes. In his first witness statement in support of injunctive relief, H said: “In or around 2011 my assets were subjected to an injunction in respect of a claim against me…... Following those proceedings and in order to protect all my wealth as far as possible from similar problems and other corporate conflicts, especially those emanating out of Russia, I have put my assets in [W’s] name”.

W in her Form E expressly asserted that she was the 100% legal and beneficial owner of the parties’ UK properties. In a letter from her solicitors dated 10 May 2022, she said that assets were placed in her sole name “to protect the assets from [H’s] creditors”. In her s25 statement, W changed tack and purported to accept that H has a 50% beneficial interest in each property.

Ordinarily, in financial remedy proceedings, it matters little as between a husband and wife in whose name an asset is beneficially held. The court has wide dispositive powers to adjust ownership as part of its overall determination of the fair outcome. An exception to this general proposition is where a third party asserts a beneficial interest, which may require determination; I say “may”, because it will depend on the overall scale of assets, proportionality and relevance. But in the ordinary course of events the court will not need to embark on a detailed analysis of beneficial ownership.

In this case, there are potential tax ramifications within the context of a query being raised by and H’s response to that, relating principally to periods of UK residence and the receipt of monies from Stirakia. The purchase of properties in that period may have an impact on tax liabilities.

I was not invited to determine the question of beneficial ownership. I did not case manage the proceedings in order to do so, although the implications of this were touched upon at direction hearings. But I believe I can express the view that, on the face of it, there is good reason to consider that the beneficial ownership of the UK properties vests, and has at all material times vested in W:

These comments are directed only to the UK properties. The position with other assets (art, jewellery, chattels, cars and the contents of the safety deposit box) seem to me to be rather more nuanced, not least because some of these categories of assets were utilised by H as trade stock.

There are two potential liabilities which cannot be safely calculated in numerical terms, but both of which could, in theory, run into several millions of pounds. I must decide the apportionment of the risk between the parties.

In his Form E, H said this:

My order of 13 June 2022 includes the following recital:

H has instructed specialist solicitors, leading counsel and accountants to advise him on his tax position. I am told that he has instructed his advisers to open discussions with HMRC. He has not waived privilege on any advice received thus far, for what seem to me to be well founded concerns that W might make mischief with any such information. What has been disclosed openly in correspondence dated 20 April 2023 by H is as follows:

H told me that a large proportion of the £100m plus from Stirakia was received in the tax year April 2017 and 2018, during which he acquired UK residence in January 2018. The extent of any potential liability depends largely on whether a split year tax basis will apply.

H himself seemed to me to be confident, or at any rate optimistic, that he has a reasonable case and, sees the £20m figure as a worst case scenario.

I have already referred to the commercial court proceedings in 2020, and the other proceedings in 2022.

There are three further sets of legal proceedings between the parties and the Magdeevs, all being played out in the Cyprus courts:

I am in no position to make any comment about the merits of the litigation. On the face of it, however, there is both the possibility of recovering monies from the Magdeevs, and the risk of judgment against H and W.

Since June 2022, as a result of the block on H’s ability to access financial institutions, H says that he has not been in a position to earn meaningful sums of money. However, he is optimistic that before long he will be able to start trading again, probably in art. He is clever, resourceful and well connected with extremely wealthy friends and associates. In the past he has earned vast sums. He told me that he expects to be successful again reasonably quickly. He fairly agreed with my suggestion that the sums in dispute in this case are relatively minor when compared with his future prospects.

W did not work during the marriage. She has achieved no success with a coffee business set up during these proceedings. There is no real indication that her next business proposition, a private members’ beauty club, is likely to be financially fruitful. More promisingly, she told me that she has a job offer earning commission for a high end travel agency owned by a friend of hers. But any earnings will pale in insignificance compared to H’s.

Conduct under s25(2)(g) of the Matrimonial Causes Act 1973 is to be taken into account if it is:

In OG v AG [2020] EWFC 52 Mostyn J identified 4 situations where conduct is relevant, saying as follows:

Although Goddard-Watts v Goddard-Watts [2023] EWCA Civ 115 and TT v CDS [2020] EWCA Civ 1215 were cited to me, I do not think these decisions add greatly to the analysis of Mostyn J in OG v AG.

A party asserting conduct must, in my judgment, prove:

If stage one is established, the court will go on to consider how the misconduct, and its financial consequences, should impact upon the outcome of the financial remedies proceedings, undertaking the familiar s25 exercise which requires balancing all the relevant factors.

I have noted an increasing tendency for parties to fill in Box 4.4 (the conduct box) of their Form E by either (i) reserving their position on conduct or (ii) recounting a litany of prejudicial comments which do not remotely approach the requisite threshold. These practices are to be strongly deprecated and should be abandoned. The former leaves an issue hanging in the air. The latter muddies the waters and raises the temperature unjustifiably.

In my view, the following procedure should normally be followed when there are, or may be, conduct issues:

Finally, and for the avoidance of doubt, this suggested procedural route will not be necessary or appropriate where a party relies only on litigation misconduct. The court will ordinarily be able to deal swiftly with costs at the hearing in time honoured fashion.

In this case, H in his Form E stated that he reserved his position. However, a number of matters came to light after the date of his Form E. Accordingly, at a hearing before me on 3 February 2023, I required H to identify conduct allegations which he relied upon. In the event, six specific heads of alleged misconduct were advanced and recorded on the face of my order and the parties then produced narrative statements directed to the six allegations to which I now turn.

Although there is some agreement as to how to approach this issue, I need to set it out in detail, not least because it affects my assessment of the parties and their veracity, and accordingly has an impact on other areas of the case.

A number of investment grade diamonds, and a Patek Philippe watch, have been referred to during these proceedings as items A to H (confusingly, items F and G are sometimes referred to together as Item F only). The diamonds are difficult to sell at full value without their GIA certificates, which are in H’s possession.

All the items were held in a Harrods Safety Deposit Box registered in W’s name, but to which H historically held the keys. On 21 October 2020, unbeknown to H, W persuaded Harrods that the keys had been lost and obtained a set of keys for herself.

In her Form E in January 2022, W made no mention of these items. She has since said that was an oversight which I do not accept.

Because of the omission in her Form E, H immediately raised the jewellery in correspondence. W replied on 20 January 2022: “This is my jewellery and it was removed to my Cyprus safe because [H] came into my Knightsbridge house and emptied everything from my safe”. There was no explanation as to how she had effected removal given that H (as far as he was aware) held the only access keys.

On 28 January 2022, H obtained from Arbuthnot J a short notice preservation and inspection order against W in respect of the items. In a written statement for that hearing (and a further statement provided shortly thereafter pursuant to court order), and again through counsel, W said that she had removed the items to a safe at the villa in Cyprus. She gave an undertaking not to remove the items held there. We now know that she had not taken the items to Cyprus, and none of them were in fact there.

On 14 February 2022, at the First Appointment, I made an order by consent providing a detailed mechanism for recovery of the preserved items from Cyprus. The parties’ solicitors were authorised to travel to Cyprus on 21 March 2022, attend at the villa the next day, open the safe, remove the items, transport the items to the airport, fly them by private jet to the UK, and re-deposit them in the Harrods Safety Deposit Box.

On 18 March 2022, at a hearing before Moor J, those arrangements were varied to provide that the items, when confirmed to be in the Cyprus safe, should be retained there pro tem. The judge twice asked W directly where the items were, and each time she said they were in Cyprus. That assertion was recorded as a formal confirmation on the face of the order. It was false.

On 22 March 2022, H’s solicitors attended at the Cyprus villa to inspect the safe. When it was opened, the preserved items were not there. She had not taken them to Cyprus and they had always been in England. W had uttered barefaced lies to H and the court.

On 1 April 2022, at a without notice hearing before Sir Jonathan Cohen, H obtained a search order entitling the Tipstaff, in the presence of H’s lawyers and a supervising solicitor, to enter W’s London flat and locate and seize the items. During the search, which was carried out later that day:

On 4 April 2022, W filed a statement in which she said:

On 5 April 2022, Holman J joined Mr R to the proceedings and ordered him to deliver up any of the items in his possession or control.

Mr R has produced a number of statements in which he has stated:

On 30 May 2022, W informed H that she had recovered item B (having previously claimed H had been responsible for its removal). She returned it, albeit it showed signs of damage to the culet. As part of his case, H suggested he should be recompensed for the damage, but the SJE was not asked to give an opinion on the impact on value of the damage, and I decline to guess what the figure might be.

On 9 June 2022, W recovered what was said to be item E from Mr R and returned it.

To muddy the already murky waters of this sorry tale, SJE valuers confirmed that items C (recovered in the London flat search) and E (later produced by W) were fakes.

The upshot of this tangled web is that:

H’s original estimate of the values to be ascribed to these items (nearly £18m) was overblown. They have since been valued. The value of all items except B (since sold) and H (the watch sold by Mr R) is £6,690,000.

It is accepted by W that in principle these items (other than item C which she says, but I do not accept, is in the possession of H) should be added back on her side by way of reattribution. That concession was first recorded on the face of the order of 26 April 2022 and has been repeated thereafter. In my judgment, the concession was properly made, but the fact is that she has spun a web of egregious falsehoods to H and the court.

I am quite satisfied that W is in possession of item C, despite her denials. I am also satisfied that W’s case that she cannot recover the other items from Mr R is false. I see no reason why I should believe what she told me on this subject given the numerous lies which she has told the court. Mr R denies he holds them, and has not been required to attend court. It is notable that as part of her open proposal, W seeks a hand over of the GIA certificates to her, which would be unnecessary if she did not have possession or control of the diamonds. She has not brought legal action against Mr R. I agree that it is proper to add back the value of these items on W’s side, but I do so on the basis that she either has possession of the items somewhere or that she can obtain them, not on the basis that she must bear responsibility for items which she can no longer recover.

The importance of the distinction is that I am confident W can access additional resources (the missing items which are available to her), to which can be added items A and D (which have been recovered) so that the total sum on her side of the balance sheet will be £6,690,000. In other words, I have reached a conclusion which is not based on a Vaughan v Vaughan [2008] 1 FLR 1108 addback, but rather is a finding that W continues to hold the items in her possession or control. The former is a technique of adding back monies which have been dissipated through the reckless behaviour of one party, but no longer exist. The latter is a finding of fact about ownership of items which are in existence. The Vaughan addback does not create money as such; it penalises the delinquent party by notionally adding back the dissipated funds so as not to prejudice the innocent party. Here, the assets have not been dissipated in the sense, for example, that they have been extravagantly spent. They have been spirited away, but remain an available resource for distribution.

I will also add back in the value of the watch (item H). It was sold for £358,000 by Mr R to a watch dealer in July 2021 without the box and documents which remain in H’s possession. It was almost immediately sold it on for $570,000 (about £440,000). H tells me it was bought for £579,020 in 2018 (£514,000 on today’s exchange rates). I accept that it could have sold at a higher figure than £358,000 had the box and documents been included; it is well known that these are a necessary part of achieving the optimum value for watches. In my judgment, this was wanton and reckless on W’s part, who stole the watch, handed it over to Mr R without H’s knowledge, and allowed it to be sold without its box and documents. I asked during the hearing for the SJE to do a valuation of the watch, with its box and certificate; they replied in cautious terms, not having been able to view it, and said that a similar watch sold in 2020 for £415,000, but since then values of such watches have gone up by 60% (which might suggest a current value of £664,000). This was not a formal valuation, and I treat it with some circumspection; as the valuer says, there are a number of unknown variables. Moreover, there is some evidence that from Mr R that he paid some monies to or on behalf of M. Doing the best I can, I propose to add back the value of the watch at £550,000. This is not entirely a Vaughan addback, for W tells me that Mr R owes her £400,000; thus, she should be able to recover the bulk of the monies.

In his statement in support of the conduct claim, H advanced what seems to me to have been a somewhat ambitious claim, namely that the addback values should not be those ascribed by the SJE valuation, but by reference to his own estimate of what the items were worth when removed in 2021, a sum nearing £13m (almost double the SJE valuations) reflecting, he suggested, the lost opportunity for him, as a trader, to sell them at a higher value. Sensibly, in my view, he did not pursue that argument; in his evidence, H accepted that this was an “extreme” suggestion. There is no SJE evidence of the value in 2021, no evidence of formal offers to purchase, nor indeed any cogent evidence that he was contemplating a sale of these items at that time.

On 14 February 2022, both parties gave an undertaking to me at the First Appointment as follows:

The background to this was H’s concern that W might approach the Magdeevs and make mischief. He was, as it turns out, right to have been worried. It is now known that W initiated an approach to them via Mr R in September 2021 and maintained regular contact with them, or their agent, up to June 2022, including at least one videocall. Their discussions were about the Cyprus litigation, and the English financial remedy proceedings.

Extraordinarily, W entered into two separate, but linked, agreements with EM in January 2022, neither of which she informed H or the court about until June 2022.

On 18 January 2022, they entered into an agreement in respect of the Cypriot litigation, the terms of which were:

The consequence of this was to assist the Magdeevs against H in the ongoing Cyprus litigation. Whether her involvement has had any detrimental impact on H’s position in that litigation, and therefore a direct financial impact upon H, is impossible to say. There is no evidence either way. It is, however, obvious that W colluded with the Magdeevs to try and cause H damage.

The next day, 19 January 2022, W entered into a formal Litigation Funding Arrangement (“LFA”) with EM. Pursuant to the arrangement:

The terms of the agreement are, on one viewing, highly disadvantageous to W (even punitive). W claims that she had to resort to “self help” because she was under intense financial pressure. I do not accept that presentation for one moment. She had been in in receipt of regular legal advice and representation, the bulk of the assets were in her sole legal name, it was open to her to apply to court for release of funds and she had illicitly removed millions of pounds of jewellery. Her plea of “desperation” is far fetched.

It is hard to conceive that on any view she thought it sensible, or wise, to breach the confidentiality of these financial remedy proceedings. I regret to say that the steps she took were deplorable. Her undertaking given to me on 14 February 2022 was specious and dishonest, for she did not disclose the two agreements or her ongoing communications with the Magdeevs. Nor can I begin to see how giving away 30% of her award was a sensible bargain for receiving up to £400,000 of legal costs.

Despite the solemn promise given to me by W, she subsequently sent a copy of H’s Replies to Questionnaire to the Magdeevs on 21 June 2022, containing, as it does, a wealth of H’s financial information. She accepted to me that she knew that document was confidential. She says she has not sent any other information although, frankly, there is no way of knowing whether she is telling the truth on that. The most that can be said is her history of duplicity does not fill me with confidence about her veracity.

In June 2022, W repented and came clean to H and his lawyers who had been wholly unaware of the communications between W and the Magdeevs. She says that she has now terminated the agreements with the Magdeevs.

Given that the bulk of the assets are in her name, it is likely that the final order made by me will involve her relinquishing assets to H. The wording of the LFA is to pay 30% of “the gross amount received by her”. It may be argued that she will not in fact receive anything from H; she will be the payer, not the payee. That, however, is speculation on my part. Sensibly, it is acknowledged on her behalf that any sums which she has to pay to EM by reason of this agreement must fall at her door.

At about the time when W sent H’s Questionnaire Replies to the Magdeevs, H had access to only one bank, via the trading company in Dubai in the name of Mr D. Almost immediately after W disclosed the Replies, the bank told Mr D that it had received anonymous messages about activities involving third parties on Interpol’s list (presumably a reference to H) and that use of the accounts would be stopped. As a result, H lost access to his last remaining bank accounts.

So, submits H, W’s actions caused the closure of H’s facilities. H was unable to meet expenses out of his Dubai bank account. On his case, he had to engage in a fire sale of assets, specifically two paintings sold in July 2022 for £1.2m when they were worth, according to his Form E, £1.35m. Thus, he says, the financial impact upon him was a loss of £150,000. I regard this all as somewhat speculative. Even if W’s conduct led to the closure of the accounts, I am not persuaded of a causative link with the sale of paintings. H accepted that many of his Form E figures for other items of jewellery and art were too high, in the light of subsequent valuations, so it seems possible to me that his estimate for the value of the two paintings was on the high side. There is no SJE evidence to assist me. H relies in part on hearsay evidence, in that he was told by the purchaser (a friend of his) that he intended to sell one of the paintings for £150,000 more than he had paid H. I conclude that H has not satisfied me of any demonstrable loss caused by W’s appalling actions, although, as with many aspects of W’s behaviour, it may sound in costs.

In September 2020, an oral offer was made to purchase Stirakia at a valuation which would have netted $10m for the shares in W’s name. W through her counsels’ opening note submitted that there was no evidence of an offer at that level, but a small clip of documents, including draft terms of sale prepared by Herbert Smith Freehills, satisfy me that the offer was indeed made. I am also satisfied these documents were sent to W at the parties’ linked email accounts, which W (contrary to her evidence to me) used. I am quite sure that W was aware of the offer.

H says that W blocked the sale, which fell through in about October 2020. Curiously, there is not a shred of documentation to evidence the collapsed sale and, particularly, that W was the instigator of thereof. There is nothing by way of legal documents, correspondence, emails, messages etc. from lawyers, or shareholders, or H complaining about W’s actions and asking her to reconsider. There is nothing to satisfy me (i) that W did indeed block the sale and (ii) that her actions were causative of the failed sale; for example, I cannot discount the possibility that the sale did not go through for other, unrelated reasons such as the purchaser or other shareholders getting cold feet, or legal difficulties. At no point did H’s solicitors, instructed on the divorce, say in correspondence that W had blocked the sale, or cost the family a large sum of money, and that her conduct would fall to be taken into account. For example, a letter from his solicitors dated 22 January 2021 simply says that “the sale did not go through” with no criticism of W’s actions. H’s reaction to all this seems to have been curiously muted. In his Form E, in the conduct box he simply said his position was reserved, which strikes me as surprising if in fact he considered W had prevented a sale at a substantial cost to the family a matter of only three months previously.

True, in December 2020, W notified the other shareholders of her intention to sell the shares for $1.5m to a new purchaser which, on any view, would have been a considerable undervalue, although there is no evidence that a sale agreement was in fact signed. It is also clear that she terminated the Power of Attorney in H’s favour and blocked company dividends. She subsequently relented from this implacably obdurate stance, and reissued the Power of Attorney to H in July 2022, enabling him to manage the shareholding and negotiate a sale. But none of this demonstrates that (i) W actively sought to block the sale between June and October 2020 and (ii) her actions were in fact the sole or primary cause of to the sale falling through in October 2020.

Eventually, in December 2022 a sale of the shares was agreed at $7.5m, $2.5m below the $10m offer made in 2020. H seeks reattribution of that sum to W’s side of the balance sheet, arguing that W’s conduct amounted to reckless or wanton actions which led directly to financial loss of $2.5m, and therefore falling within the Vaughan v Vaughan criteria. As I have indicated above, this head of claim fails for want of proof of the asserted allegation.

The parties are jointly liable for a £23m mortgage in favour of EFG secured by way of cross collateral on (i) the FMH in Surrey, (ii) the flat in London and (iii) an EFG investment portfolio which until the end of last year funded the regular instalments from its income return. The portfolio originally stood at about £10m. H says, and I accept (contrary to W’s denials), that it was agreed by the parties with EFG in late 2022 that £2m from the original portfolio value of £10m be liquidated to reduce the borrowing from £25m to £23m, followed by liquidation of the balance of £8m to reduce the overall indebtedness to £15m. The £2m was duly applied in this way. The remaining £8m was liquidated into cash, but in December 2022 W refused to allow it to be applied towards the mortgage. The monies no longer produce an income, the capital has not reduced the mortgage, and accordingly H says that about £130,000 of unnecessary mortgage interest has been/is being incurred. His case is that W should have followed through with the agreement.

I am not satisfied that this reaches the high threshold of conduct. It is frequently the case during divorce and financial remedy proceedings that interim arrangements are disputatious, with issues about financial support, interim sale of assets, cashflow and the like. In this case, I was met with repeated allegations and counter allegations at almost every direction hearing in respect of interim matters. To try and unpick them all now would be problematic, and not proportionate. The breakdown of marriage regularly leads to the dismantling of the financial edifice underpinning it. The court will not usually at trial embark upon an audit of the interim arrangements from the date of issue to the date of final hearing. Sometimes, a particular aspect of the arrangements, or one or other party’s acts or omissions, will leap off the page as being relevant to the overall disposition. That might (albeit rarely) lead to a Vaughan addback or, perhaps more commonly, might impact upon costs. The court will acknowledge the realities of life, that marital breakdown is painful and expensive. In this case, I take the view that the amount is relatively trivial in the context of £50m of assets, and W’s behaviour does not reach the requisite threshold, although it may impact upon costs.

This is no longer pursued and I need say nothing about it.

It is H’s case that, quite apart from the preserved jewellery referred to above, W has removed other items of jewellery referred to as items 29-53. W by contrast, claims that in September and October 2020 it was H who removed most of the items from the safe at the London flat. Thus, the battle lines are drawn: H says they are in W’s possession, W says they are in H’s possession.

Some of the items have been located. Insofar as the parties disagree about the whereabouts of other items, I prefer H’s evidence. W’s case somewhat collapses on this, given that in Instagram photos she is shown as wearing 6 of the items which she says were taken by H; her claim in evidence that H had removed them, but then gave some back to her to wear was one I cannot accept (it was only mentioned fleetingly in one of her many statements, and was not put to H in cross examination). It is of note that W clandestinely gained access to the Harrods Safety Deposit Box on 21 October 2020 (about the time of H allegedly removing the items from the London safe) without informing H. And of course, she has been shown to have lied to H and the court on multiple times about the Preserved Jewellery, including making the identical (but false) assertion that it was H who stole the Preserved Items. Curiously, although W alleged in correspondence that H had removed items, she initiated no steps at court and did not even provide a list of what had allegedly been removed by H. It was only when H sued her in 2021 in the Queen’s Bench Division (as it then was) for delivery up of his passport that W counterclaimed for conversion, alleging wrongful interference by H with chattels and jewellery. There was some confusion in the evidence about the combination number of the safe, but overall I am amply satisfied that H is to be preferred on this issue.

I find as follows about items 29-53:

In closing I was surprised to hear H through counsel advance a conduct claim which ranged far beyond the six pleaded grounds. Most glaringly, he asserted that by reason of not having access to financial institutions from June 2022 onwards, he has lost income of £2.5m, which he attributes to W’s conduct. That figure was, I was told, calculated by reference to an analysis of his income in the previous year and a half. This submission, along with the others raised for the first time, was untenable:

I do not accede to H’s contention that W’s conduct should be reflected holistically in a 60/40 split in his favour for the following reasons:

I must now resolve the remaining computation issues.

Debt to Mr D:

Handbags:

Finally, I will deal with some smaller issues:

I attach an asset schedule which shall not be include in any published judgment as it identifies specific financial instruments. I find that the total assets are £48,518,478, almost all of which is realisable.

There is a bank account with about £2.195m in it, set up in 2011 for one of the children. It is agreed that the account should be used to pay school fees, but there is a dispute as to whether it should also be used for general child maintenance which would otherwise be payable by H.

There was almost no focus on needs during the case; it seems to have been tacitly acknowledged (rightly in my view) that each party’s needs will be met. W wishes to remain in the London flat. H wishes to stay in the Surrey property.

W’s budget, stripping away mortgage instalments, is £1.344m. H’s comparable budget is £1.645m of which some £656,000pa is for his personal security, put in place in accordance with police advice.

In principle, I have concluded that (i) the overall assets, including the assets denied by W as being in her possession, but which I am satisfied are available to her, should be divided as to 50/50 between the parties, (ii) they should each bear 50% of the potential tax liabilities and (iii) they should each benefit from 50% of the monetary fruits of the Cyprus litigation or bear 50% of any judgment against them.

I do not agree that a 60/40 split in H’s favour would be a fair outcome. I have made findings about W’s conduct and the financial consequences thereof. As part of the computation stage I have added back funds on W’s side to reflect those assets which, in my judgment, W holds but has not disclosed. In that way, I have accounted for W’s conduct by a process of financial reattribution although, as I have already explained, my findings are more by reference to establishing W’s ownership than conduct or addback in the pure sense. I have decided against H on parts of his conduct argument because of; (i) my factual findings, and (ii) some of them are minor in the grand scheme of this case. I am not persuaded that I should go on to penalise W by a 60/40 split which in any event, on the facts of this case, seems somewhat arbitrary to me, particularly as some of the conduct arguments raised in closing were not part of the formally pleaded claim. It seems to me, however, that it may be appropriate to penalise W in costs for her litigation conduct.

I propose to make the following orders, conscious as I am that the specifics will need to be ironed out:

I will deal with costs separately.

In reaching these conclusions, I have taken into account all the s25 criteria and balanced them individually and together. In my judgment, the outcome I have arrived at is fair. The net effect is that each party exits the marriage with £24,259,239.

No member of the media, or accredited legal representative, attended these proceedings as is their right under FPR 27.11. However, the question of whether the judgment should be published, and, if so, whether a process of anonymisation should take place, falls to be considered. I gave counsel notice of this before closing submissions so that they could consider it. Both sought anonymisation on behalf of their respective clients.

I am conscious that in making some comments on this topic, I am treading on ground which is not entirely solid, as a result of a number of judgments of Mostyn J which have cast doubt upon the long established practice pursuant to which the starting point (and usually the end point) has been that financial remedy proceedings are not reportable, save with permission of the court, and judgments are anonymised, again subject to alternative direction of the court.

Those judgments of Mostyn J are magisterial in their breadth and legal acuity. They deserve the utmost respect. I am sure that I do Mostyn J an injustice by attempting to summarise his main conclusions as follows, conscious as I am that my comments cannot begin to give even the merest sense of the intellectual rigour, learning and analysis which he has displayed:

Thus far, it does not appear that his approach, whereby he has published judgments unanonymised, has been routinely followed by other judges of the Division, myself included. That is not to say that he is wrong. He may well be right.

However, I tentatively take the view that:

The Farquhar Group published a report on this very issue in April 2023. It is, if I may say so, extremely well researched and comprehensive. It makes suggestions as to how (whatever the default staring point) the interests of transparency can be served in financial remedy proceedings while at the same time preserving the confidentiality of the parties and their sensitive financial information; essentially striking what the group considers to be a fair balance between Article 8 and 10. The group did not opine on whether Mostyn J’s analysis is correct, nor do its recommendations carry the weight of law. It may be that in due course Presidential guidance will be issued. But at the risk of repetition, my view is that a higher court will at some point probably need to cast a fresh eye on this issue.

All that said, whether the starting point is as per the long established practice (i.e non reportability unless the judge orders otherwise) or as per the thesis of Mostyn J (ability to report unless prohibited by the court), if the court is considering whether to permit or prohibit (as the case may be) reporting, it will need to carry out the Re S balancing exercise.

Even if (contrary to the thesis of Mostyn J) the starting point of non-reportability is as set out in Clibbery v Allen and Lykiardopulo, there are certain categories of case where publication is more likely to take place:

In the case before me, in my judgment all of these categories apply to a lesser or greater extent. The litigation misconduct of W is of the utmost gravity. It is in the public interest to be aware that one party has abused the system, and repeatedly lied, eating up valuable court time and resources in the process. Much is already known about the circumstances of this family from the detailed judgment of Cockerill J in 2020. Proceedings about the parties’ chattels found their way to the Queen’s Bench Division in 2021 and attracted some publicity. Similarly, a court dispute with a garden installation company was reported in the national press in 2022, including some of the more lurid features of this case (for example, H was described as “on the Kremlin’s most-wanted hit list”, and the reporting included the details and photographs of the Surrey house). The fact that there have been three attempts on H’s life in this country is, in my view, a matter of public interest. H gave revealing interviews to the Daily Telegraph in 2020 and the Daily Mail in March 2022 about his business dealings, Russian litigation and general wealth. I also take the view that the public is entitled to know that H has not paid a penny of UK tax, nor even filed UK tax returns since his return to this country in January 2018; this is despite the parties being citizens of this country and resident here, having children who are educated here and owning multiple properties here. Finally, it is, in my view, hard to see how any attempt at anonymisation can realistically work.

I therefore intend that this judgment will name the parties. I will entertain submissions as to whether any particularly sensitive aspect of this judgment should be redacted or amended for public consumption.