Kremen v Agrest (No.11) (Financial Remedy: Non-Disclosure: Post-Nuptial Agreement)

This should, but probably will not, be the final chapter of this chronic and complex piece of matrimonial litigation. It is the hearing of the application by Janna Kremen (“W”) for financial orders under Part III of the Matrimonial and Family Proceedings Act 1984 against her former husband Boris Agrest (“H”). W was granted leave to make this claim by Mr J. Cohen QC on 12 February 2009. There is also before me an application by Georgi Chesnokov (“GC”) for a charging order absolute and a wide-ranging application by Leonid Fishman (“LF”) which includes, among other extravagant claims, a request that he be paid $10m in satisfaction of a debt owed to him by H.

On 14 February 2011 the final hearing of W’s application came before Holman J. He adjourned it and made a number of orders which included the discharge of an outstanding warrant of committal issued against H. He also, clearly and unambiguously, ordered that both H and W personally attend this hearing. Although on 19 October 2011 the Court of Appeal allowed an appeal by W against the discharge of the warrant by Holman J, I imposed at W’s request a stay on its execution, thereby removing any impediment to H’s attendance. H has nonetheless not attended, claiming that he cannot afford the air fare and hotel costs, which, as will be seen, is a false excuse. On all previous occasions he has sent his McKenzie friend Mr Beck to Court to protect his interest. Strictly speaking it is not proper to allow a McKenzie friend into Court if the party whose friend he is, is absent; after all the whole point of the “McKenzie friend” procedure is the provision of quiet assistance to a litigant in person who is actually there arguing his own case. The same situation presented itself to Holman J in February 2011 and he sent Mr Beck away stating in para 36 of his judgment of 15 February 2011:

A McKenzie Friend is a person who is permitted to sit beside a litigant-in-person in court in order quietly to assist that person in a range of ways fully described in various authorities, and indeed now very fully in the President's Guidance of 14 October 2008, now reproduced at page 2882 of the 2010 edition of the Family Court Practice (the Red Book). All those authorities and everything in that President's Guidance clearly contemplate that a McKenzie Friend is somebody who has a very important role in relation to a litigant-in-person who is himself personally present in the courtroom. There is absolutely nothing in any authority of which I am aware, and certainly nothing in that President's Guidance, to suggest that a McKenzie Friend is somebody who in some way can come to court without the presence at all of the litigant-in-person, but in some way to appear as a representative or advocate on his behalf. Before that can happen, an application has to be made for a case specific grant of a right of audience under the relevant statutory provisions, and no such application has been made to me, or so far as I am aware, to the court.

However, I have allowed Mr Beck to be in court and to lodge written submissions from H, which were highly abusive both of W and of the Court. I have been prepared to read these submissions, albeit with some misgivings, as there is a strongly arguable case that H, being in such blatant disregard and contempt of the extremely clear order of Holman J requiring his personal attendance has forfeited the right to have any document put in and read on his behalf.

W has complied with Holman J’s order and is represented by Mr John Hamilton and Mr Christopher Stirling of counsel. GC is represented by Mr Frank Feehan QC. LF has not attended and is not represented and has lodged an application for the adjournment of his application.

I myself have given three previous judgments in this matter on 16 April 2010, 15 October 2010 and 3 December 2010. The latter two are reported at [2011] 2 FLR 478 and [2011] 2 FLR 490. I explained that the background could be collected from the earlier judgments of HHJ Hughes QC dated 16 May 2008, of Mr J Cohen QC of 12 February 2009 and of Thorpe LJ of 16 July 2009. Since my last judgment of 3 December 2010 the following further judgments (in addition to the judgment of Holman J to which I have referred) have been given and can be read on Bailii:

A central factual question for me to decide is whether H is guilty of material non-disclosure, and, if so, what conclusions as to the scale of his resources should be arrived at. In my recent decision of NG v SG [2011] EWHC 3270 (Fam) I attempted to summarise the case-law on this topic and stated at para 16:

Pulling the threads together it seems to me that where the court is satisfied that the disclosure given by one party has been materially deficient then:

i)

The Court is duty bound to consider by the process of drawing adverse inferences whether funds have been hidden.

ii)

But such inferences must be properly drawn and reasonable. It would be wrong to draw inferences that a party has assets which, on an assessment of the evidence, the Court is satisfied he has not got.

iii)

If the Court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms.

iv)

In making its judgment as to quantification the Court will first look to direct evidence such as documentation and observations made by the other party.

v)

The Court will then look to the scale of business activities and at lifestyle.

vi)

Vague evidence of reputation or the opinions or beliefs of third parties is inadmissible in the exercise.

vii)

The Al-Khatib v Masry technique of concluding that the non-discloser must have assets of at least twice what the Claimant is seeking should not be used as the sole metric of quantification.

viii)

The Court must be astute to ensure that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told. If the result is an order that is unfair to the non-discloser it is better that than that the Court should be drawn into making an order that is unfair to the Claimant.

A further key question, which is a mixture of fact and exercise of discretion, concerns the treatment to be given by me to a post-nuptial agreement signed by the parties in Israel on 15 May 2001, which was approved by an Israeli Court on 3 July 2001 and which was re-confirmed when an Israeli Court pronounced a divorce on 13 August 2003. This will require me to consider the judgments of the Supreme Court in Granatino v Radmacher [2011] AC 534 but viewed through the lens of s16(2)(d) Matrimonial and Family Proceedings Act 1984. An added complication is that H now argues that the Israeli Court had no jurisdiction to approve a separation agreement or to pronounce a divorce because he and W were never validly married as he was at the time of the ceremony of marriage in fact already validly married to a Russian lady, and indeed has in 2010 obtained an annulment from a court in Moscow of his marriage to W. As Black LJ stated in her judgment of 24 January 2011 at para 29 “…Mr Agrest's case now seeks to say that the Israeli orders were invalid because he was already married and therefore there was no marriage to provoke a divorce in Israel or a separation agreement…”. Of course, this aspect makes no difference to W’s claims under Part III, as the jurisdiction is equally exercisable after a foreign annulment. As Holman J stated in his judgment of 14 February 2011 “at the very most the husband’s very late assertion that the marriage between these parties was a nullity might require only the relatively technical formality of amendment to the wife’s underlying application under Part III and amendment to the language of the grant of leave to apply”

My task is to make a fair financial award having regard to my findings in relation to the above mentioned matters as well as all the other circumstances of the case as specifically mentioned in s25 Matrimonial Causes Act 1973, which is applied by s18 Matrimonial and Family Proceedings Act 1984. In so doing I will apply the familiar distributive principles of needs and sharing, giving first consideration to the welfare of the minor children of the family. The principle of compensation, as an independent ground for distribution, is not applicable to this case, and indeed in the vast generality of cases will not be applicable, it likely being confined only to the exceptional kind of case exemplified by McFarlane v McFarlane [2006] 2 AC 618.

I adopt the same starting point as Holman J who stated in paras 8 – 9 of his judgment of 14 February 2011

“...my starting point (albeit I stress that I base it entirely on the judgments of others) is one of enormous sympathy for the plight and position of the wife in her titanic struggle to obtain any justice and any significant funding from her former husband and the father of her children. … At paragraph 29 of his judgment of 16 April 2010 Mr Mostyn described the husband as “a very rich man”. Yet this wife and mother has struggled remorselessly to obtain even small sums from him.”

The background has been set out in the previous judgments at some length. H is 51; W is 44. They are both Russian and were married in Moscow in 1991. As stated above H now asserts that the marriage was invalid as he was not at that time divorced from his first wife. On 1 June 1991 their son Gennadis was born. He is married, has a baby boy and is a student at University in New York. W believes that his expenses are met by H and by his father-in-law. On 30 March 1997 their son Victor was born. He is 14 and is at Charterhouse. His fees are about £34,000 per annum and are presently paid by W from the ever-diminishing sums held by the court. On 22 March 2004 their son Maxim was born in Canada. It can be seen that W was pregnant with him at the time of the Israeli divorce. Maxim is at a prep school and his fees are £14,000 per annum. W intends that he should follow Victor to Charterhouse. H does not contribute to the school fees or to the maintenance of the younger boys even though he has been ordered to do so. I do not believe he has much in the way of contact with them.

Although Russian H obtained Israeli citizenship by virtue of the law of return in 1995, and W likewise as his spouse. In 1994 the parties had also acquired Greek citizenship in circumstances of which I am not aware. I believe that W also has Canadian citizenship. At no time during their marriage did the parties live in Israel or Greece for any appreciable period.

In July 1992 the family moved to Vienna and a family home was purchased in W’s name. In 1999 the former matrimonial home, Whitecliff, St George’s Hill, Weybridge was purchased for about £2,500,000, mortgage free, in the sole name of W. H and W moved permanently to the UK, and Whitecliff was their main home. It was in relation to a charge dated 25 January 2008 over Whitecliff in favour of LF that my judgment of 15 October 2010 was concerned.

In January 2004 W went to Canada where Maxim was born. In May 2004 she returned here and resumed cohabitation with H.

In May 2007 the marriage was in desperate straits. H commenced proceedings in Israel against W to enforce the post-nuptial agreement. As Thorpe LJ put it in his judgment of 16 July 2009 “in the face of that application the wife capitulated and transferred the matrimonial home into the husband’s name”. On 8 May 2007 H subjected W to the appalling tirade referred to in para 4 of my judgment of 15 October 2010 and in para 6 of my judgment of 3 December 2010, in which he threatened to leave her destitute. In that latter judgment I explained how it was at about this time that H set about buying for £2.1m the property South Lodge in the name of his close friend Mr Kinigopoulo.

On 14 September 2007 the litigation in this jurisdiction commenced when District Judge Bowman granted W a Non-Molestation and an Occupation Order excluding H from Whitecliff. On that day W also applied for financial relief for the children under Schedule 1 Children Act 1989. The litigation has ground on unremittingly since then. In my judgment of 16 April 2010 I stated:

“This matter first came before the court in, I believe, late 2007. Since then there have been approximately 50 court orders made. The demands that this dispute has made of the family justice system has been prodigious and disproportionate”

Since then the rate of applications to the Court has continued, if anything more furiously.

On 28 April 2008 a 5 day hearing took place before HHJ Hughes QC where W sought a) residence and contact; b) a set-aside of the transfer by her to H of Whitecliff; c) the sale of Whitecliff; d) non molestation/occupation orders; e) orders under Schedule 1 CA 1989. The set-aside application failed, and in the course of her comprehensive judgment of 16 May 2008 Judge Hughes QC made some important findings to which I will later refer.

On 21 February 2009 Mr J. Cohen QC rendered a comprehensive judgment in which, among other things, he ordered that:

On 23 February 2009 at Kingston County Court EFG Bank was granted a possession order in respect of Whitecliff. The property was repossessed on 15 May 2009 when W and the children moved into a two bedroom rented flat in Hersham. Whitecliff was sold on 21 September 2009 to Kendastar Ltd for £3,910,000; after redemption of the EFG mortgage the proceeds amounted to £1,053,720 which were paid into Court. W has received various sums pursuant to orders of me and of Holman J; there is as at 16 December 2011 £653,979.60 held by the Court Funds Office.

H failed to pay the maintenance order and a judgment summons came before me on 16 April 2010. I refer to my judgment on that occasion, where I sentenced H to 35 days imprisonment suspended on terms that he paid the sums due. In my judgment at para 35 I found that:

“I have come to the clear conclusion that, as regards his obligations to maintain his wife and his children, the husband is actuated by extreme malice towards the wife. He has the means to pay but he refuses to do so.”

Rather than pay H decided to flee the jurisdiction. It would appear that since that time he been either in Russia or in Israel. The warrant for his committal was duly issued but as I have explained above it has been stayed and so there was no impediment to him participating in the final hearing before me. An appeal by H against the committal order made by me was dismissed by the Court of Appeal on 17 September 2010.

Meanwhile there was much activity concerning the validity of the parties’ marriage. On 23 July 2009 H’s application to the Moscow District Court for the annulment of his marriage to W on the ground that he was already married was granted. W appealed. H also applied to the Israeli Court to set aside his divorce to W on the basis of the annulment of his Russian marriage. The Russian Appeal Court set aside the District Court order annulling the marriage and remitted H’s application to the District Court. On 15 January 2010 Russian District Court annulled the marriage between the parties once again. On 6 May 2010 the Russian Appeal court dismissed W’s appeal against the (re)-annulment of the marriage. On 16 January 2011 the Israeli Court refused H’s application that his divorce from W be set aside on the basis his marriage to her had been annulled by the Russian Court.

On 15 October 2010 I gave my judgment granting W’s application to set aside LF’s legal charge over Whitecliff. H’s application made in his absence to stay all proceedings pending his application to set aside the parties’ Israeli divorce was dismissed. On 24 January 2011 Black LJ refused LF and H permission to appeal.

On 3 December 2010 I gave my judgment granting W’s application to set aside the purchase by GC of the shares in Everclear Ltd which owned South Lodge from Mr Kinigopolou (in reality H). GC’s appeal was dismissed by the Court of Appeal on 9 March 2011 and his application for permission to appeal to the Supreme Court was dismissed on 27 June 2011. Undaunted, GC then sued H in the Queen’s Bench Division on 5 July 2011 for £1,197,774 and interest of £262,526. Judgment in default of defence was awarded on 26 August 2011 and an interim charging order over South Lodge was granted on 19 September 2011. The application for a final charging order has been transferred by the Master to me for adjudication.

On 15 February 2011 Holman J discharged the warrant for committal and made the orders, including adjournment of the final hearing, to which I have referred. W’s appeal against the discharge of the warrant was allowed by the Court of Appeal on 19 October 2011, but at W’s request its execution was stayed by me on 25 October 2011 when I expressed the view that the whole exercise of appealing Holman J’s order seemed totally pointless and futile.

Meanwhile W had formed the view that the purchaser of Whitecliff was a front for H. I granted her an ex parte freezing order and the joinder of Kendastar Ltd on 6 May 2011. She produced some evidence that satisfied me, at least prima facie, that it was arguable that Kendastar was a front for H. Kendastar produced copious affidavit and other documentary evidence which conclusively proved that this was not the case. In so doing it incurred significant costs in excess of £70,000. Faced with this body of evidence W inevitably had to concede that the order of 6 May 2011 should be set aside and she should pay costs. On 5 July 2011 I ruled that those costs should be assessed on the indemnity basis and further ordered that the sums in court should not be paid out to W pending satisfaction of the costs award or further order. Kendastar’s solicitors have apparently produced a costs bill of £107,000; W has employed a costs lawyer who estimates that the sums due will tax out at £38,000.

On 15 October 2011 LF filed an application which sought:

On 28 October 2011 I gave final directions for trial. These provided, among other things, the following:

It can be seen that H had made a number of untenable applications, all of which were refused.

Within this jurisdiction there is £653,979.60 with the Court Funds Office. South Lodge has subsided in value since my judgment of 3 December 2010. It may be worth £1.9m. The mortgage is £1.46m. After sale costs it is improbable that there is more than £500,000 to hand. Mr Feehan QC says that there is no more than £400,000, at best. So there is only a little over £1m here in total.

To set against that are the sums owed to Kendastar Ltd, somewhere between £38,000 and £107,000. W has additional debts of £163,464. Although H asserts that W has undisclosed assets comprising land and chattels I am satisfied that she has no other assets of any consequence.

H states that he now has no assets whatsoever, and that he works for a Russian business earning in roubles the monthly equivalent of £150. By contrast W maintains that he is a very rich man indeed. In para 22 of Mr Hamilton’s skeleton argument he writes:

“It is submitted there is ample evidence upon which the Court may properly conclude that the respondent has is a very wealthy man indeed. It is impossible to assess his wealth accurately because he has chosen to hide the truth. The logical inference to be drawn is that chooses to do this because he is, as the applicant claims, a very wealthy man. In all the circumstances it is submitted an estimate of his worth as at least £100,000,000, would not be unreasonable on the evidence available.”

On 1 February 2011 W made an open proposal to settle this case for a lump sum of £10m in respect of herself and the children.

Although W will face formidable difficulties in enforcing any sum in excess of £1m there is ample authority to support the obvious proposition that the spectre of these difficulties should not affect my assessment of what is a fair award.

There have been already a number of judicial findings that H is a serious and serial non-discloser who is determined to do down his wife by “foul means”, as Thorpe LJ has put it. Obviously, I must make my assessment anew but the litigation history and judicial findings along the way are plainly relevant to my appraisal.

I am completely satisfied that H has not made a true disclosure to this Court. Rather, he has set out from the start actively to mislead both W and this Court. His motivation is a mixture of a wish selfishly to protect his fortune for himself, even at the expense of his children, and a desire to inflict the maximum economic harm to W. The view I formed of H in April 2010 has been well fortified in this trial.

Inevitably where a Court is conducting the inferential exercise that it is constrained to undertake in a non-disclosure case, the evidence is far from perfect. It is likely to amount to a series of scraps or straws in the wind. This is hardly surprising given that the motive of the non-discloser is to conceal as much as possible from the Court and the claimant. In this case it is H’s positive case that he was at the time that the family came to England a rich man, but that he has lost everything since. In an affidavit dated 5 February 2009 H stated:

“I have not worked since 1998. Having earned approximately US$10m by that time I stopped working as I wanted to devote all my time to my children.”

In an affidavit dated 6 May 2009 he stated:

“As previously stated in this affidavit, my financial situation deteriorated rapidly in 2007. I do not dispute that when I came to England I was a man of significant means.”

In an affidavit dated 8 October 2009 he stated:

“As earlier in my life I was a successful businessman, I retired in 1998. Since 1998 I have no office and was a passive investor in a few companies. But in 2007 my investments became practically zero due to the actions of Russian Government and wrong business decisions.”

Certainly H advanced himself as of great means in a letter dated 18 June 2004 sent to the authorities here by solicitors, Gherson and Co (who have confirmed they were instructed by him), in which investors’ visas were sought for the whole family. This letter stated:

“Mrs Kremen-Agrest is able to demonstrate that she owns personal net assets of a value exceeding the sum of £2 million in the form of Whitecliff, Horseshoe Ridge, St George's Hill, Weybridge, Surrey a property, which was purchased in September 1999 for £2,100,000 which has been recently valued at £3,250,000 and which is held in her sole name. We are instructed that there are no outstanding charges or liabilities in respect of the property.

The funds used to purchase this property were derived from her husband’s varied entrepreneurial activities which is confirmed in the letter enclosed from Banque Safdie, Mr Agrest’s Swiss bankers since 1994. In particular, Mr Agrest began his career in 1982as an engineer at the Rosgiprovodhoz Institute. In 1984 he commenced work for the Moscow Management Office of “Circus on the Stage” as head of the staging section. He was very successful in this post and by 1986 was promoted to the position of Director of Special Events of the Roskontsert Festival Department. In 1987, when private concerts were permitted in the USSR, he became the Director of the Nautilus Pompilius Group - the most popular group in the USSR at that time.

In approximately 1988, we are instructed that Mr Agrest established a Co-operative in Kazakhstan which was to concentrate on the production of promotional merchandise for the stars on the Soviet stage at that time, having previously obtained exclusive rights to trade such merchandise at their performances.

In 1989, in partnership with others, Mr Agrest established a company called “Red Line Moscow”. This company entered into a number of diverse ventures. For example, it opened one of the first independent publishing houses in Moscow, established factories producing and manufacturing permanent magnets using rare metals, headlights and steel-wedded girders for theatrical/concert lighting. The company also engaged in concert based activities and opened an advertising agency. In addition, the company had departments dealing with trade in textiles from China and footwear and furniture from Italy.

We are instructed that a considerable amount of income was generated by the company and its owners by exploiting the difference between credit interest rates and inflation and trading in clearing currencies of countries of the former COMECON (Council for Mutual Economic Assistance).

From approximately 1994, we are instructed that Mr Agrest began to engage in projects connected with oil, for example, settlement of accounts of oil companiesand NGDU with energy specialists.

Contemporaneously Mr Agrest was a co-owner of a company called “Slavtek” in Nizltnevartovsk. From 1996 to 1998 he was also a co-owner of the Business-Paritet Bank in Moscow and actively participated in the placing of promissory notes belonging to thecompany “Interural” for the total sum of US$l50million.

We are instructed that Mr Agrest, also undertook projects connected with property and was and continues to date to be a co-owner of the company “BioMix” which was concerned with wholesale trade in yoghurts and has investments in the woodworking industry.

From 1998 onwards, we are instructed that Mr Agrest began to limit his involvement in business activities to enable him to devote more time to his family. Since this time, he and Mrs Kremen-Agrest have supported their family with the dividends received from monies invested in the companies above, property as well as incomes generated from activities on the bonds markets.”

Further insight into the nature and scale of H’s business activities at this time can be derived from the agreements summarised in para 15(i) – (iv) of my judgment of 15 October 2010 which I repeat for convenience:

Mr Hamilton’s chronology also establishes in this period the following events:

The picture that emerges of H’s means and entrepreneurial activities as at 1999 when the family moved to England, and as at 2004 when the Gherson and Co letter was written, is one of a rich man indeed, albeit perhaps not of the “mega” variety (as Munby J (as he then was) put it in Ben Hashem v Al Shayif [2009] 1 FLR 115 at para 68). There is no evidence of aeroplanes, or yachts moored at Cannes, or of stables of race-horses, or a grand country estate. But there is evidence of considerable wealth, likely to be measured in tens rather than hundreds of millions of pounds.

The core question is whether all this turned to dust in 2007, as H claims. I have noted above that H asserts that since 1998 he has been only a “passive investor” in businesses. This is certainly untrue.

I turn to consider Jolima Ltd. This company’s notepaper gives its address as an office block in Nicosia, Cyprus, but its bank as the St Petersburg bank in Moscow. It is registered in Cyprus but its shareholder is a BVI company called Harpendene Ltd. It was incorporated on 26 April 2007.

Mr J Cohen QC referred to Jolima at para 31 of his judgment and described H as the beneficial owner. I myself referred to Jolima as H’s alter ego in para 14 of my judgment of 3 December 2010. These findings were well justified. Although we have only the merest glimpses it is plain that Jolima has been used by H to transact very substantial business deals way beyond those of passive investment. I refer to the following:

H has asserted that Jolima was in fact owned as to 25% by Harpendene and as to 75% by an Austrian company Petrocommerce Invest Consulting. He claims to have no interest in the latter and that he had a one half-share in the former, but that he sold share for $150,000 to Mr Dubinin on 5 May 2008. As will be seen later it was in this period that H was doing all he could to divest himself of ownership of assets of which W was aware. Jolima’s involvement in the purchase of South Lodge and with Ayklinvest Bank show that H’s divesting actions were not genuine.

H has produced a letter from Mr Dubinin written on Jolima notepaper dated 27 May 2010 which describes himself as “Senior Partner” and which states:

“Hereby I confirm that Mr Boris Agrest since 15^th May 2010 no longer works as a Representative of Jolima Holdings Ltd. Jolima Holdings Ltd wishes great success in Mr Agrest career and personal life”

I do not remotely accept that H was ever in fact a mere employee of Jolima or that he has authentically severed his links with it.

Jolima is not the only off-shore company used by H in this period. In my judgment of 3 December 20101 I explained at para 7 that:

“On 6 June 2007 contracts were exchanged in relation to South Lodge with H named as purchaser. The purchase money derived from off-shore entities called Garry Trading Inc, Gratex Finance Ltd and Tricommerce SA. On 1 August 2007 South Lodge was transferred into the name of Everclear Ltd as H had earlier assigned the benefit of his contract to buy South Lodge to Everclear upon completion. Thus Everclear was the nominee H decided to use at the time of purchase.”

Although little is known about these entities it is clear that they were used as repositories of H’s funds. Gratex Finance Ltd is (or was) a Belizean company; Tricommerce SA is sited in Panama. The EFG memo of 13 May 2008 to which I have referred states “he has ensured that his newly acquired UK assets are all held in offshore structures and nominees so his ex will not be able to prove his solvency”.

There can be little doubt that these entities are owned by H and contain considerable sums.

In his judgment Mr J Cohen QC referred to two booming business venture of H’s whereby he had a near monopoly on the provision of snack machines in thousands of Russian schools and the provision of some 250 gaming machines at separate sites. He held at para 31:

“He says that although he has been very rich his business activities have suffered greatly. He told me that his first fortune was made by operating some 250 gaming machines which 10 years ago were bringing him in the enormous sum of £40,000 a month. The second fortune was by the provision of snack machines in over 2000 Moscow schools. But he says changes in legislation have brought both those businesses to an end. I have seen no documents about the businesses, their profitability or their demise and I cannot form a view about it. He says that he is now worth nothing and that all his money has gone.”

Within his position statement produced by Mr Beck H stated that a company called Makensa was set up for participation in the snack machine project. He stated that:

“Only three payments were made from the bank account of this company since 16 December 2005 till 7 June 2006 to the total amount of US$45,502.86, as a payment of office rent. This company wasn’t used anymore. I have no information about it further destiny”.

In contrast W has unearthed some information about Makensa by virtue of the industry of her private investigator. In his report he wrote:

“Our research identified that Makensa Holdings limited was found to be part of the Starpoint Group of Companies. This is a specific network of associated companies involved in the Financial Services sector. Starpoint Trading is a commercial vehicle created to introduce and allow Cypriot and Russian registered businesses to do work with each other. The following information has been obtained on Starpoint Trading:

Starpoint Trading - Part of the Starpoint Group and Starpoint International Network.

This company has three main offices located in North America (New York) Contact details being E-mail: nyWistarpoinLhk, Europe (Moscow) The International Center for Logistics BFG-Trans Grant, 25212 Moscow, Russia and China (Hong Kong) Starpoint Trading Limited, Dina House, Ruttonjee Central, 11 Duddell Street, Hong Kong - CEO gp@starpoint.hk. There were over 40 separate businesses making up the Starpoint Group from Russia alone, anyone of which could have further connections to the subject of enquiry.”

In October 2005 Dimitry Dubinin was granted power of attorney by Makensa Holdings Ltd.

A further indicator of the utter falsity of H’s claim that he was a mere passive investor in a few businesses after 1998 is his admitted participation in a Russian Open Joint Stock Company called Acrylate. According to information publicly available H was a director of this company in September 2009. It was founded in 1999 and is based in Dzerzhinsk, Russian Federation. It produces acrylic acid and monomers. Its products include acrylic acid of E and P grade, and butyl, ethyl, methyl, 2-ethylhexyl acrylates. The company serves Russia and CIS countries. For the first quarter of 2009 the company reported a net loss of 255 million roubles. Sales amounted to 123 million roubles. At that point the company had announced plans to upgrade the existing acrylic acid facility to 60,000 tonnes per year and to build a new $160 million terephthalic acid facility by 2014.

In his position statement H admits that he was a member of the board of this company from May 2004 to November 2006 but claims to have received no payments for his activity. He produced a letter purportedly from the company dated 2 September 2010 written in Russian which apparently confirms this. By contrast a recent printout of company information from Bloomberg Business week states that H remains a director. W maintains that by virtue of statements made to her by H that he is, or was, a 20% owner of the company.

At this time very large sums were available to H. On 31 March 2005 H’s UBS Fixed Income non-discretionary portfolio showed a total value of £850,614.95. On 12 September 2005 a statement from the Russian International Bank for H’s dollar account showed a balance of US$3m. On 12 October 2005 shares in EFG Bank to the value of £2,599,998 were purchased in the name of H and W. On 12 December 2005H’s Credit Suisse Statement of Investments showed a total value of CHF1,679,777. On 22 December 2006 H received an email from David Hall of EFG Fund Administration Ltd concerning the distribution of £7,095,120 between unit holders in the Access Feeder Unit Trust. In May 2007 H received $38,500 half yearly interest on a $700,000 investment into his Credit Suisse current account.

And so it goes. Mr Hamilton’s chronology describes many other business ventures and transactions. It would be, as Munby J stated in Al-Khatib v Masry [2002] 1 FLR 1053 at para 49, “both tedious and a work of supererogation to subject the whole of it to detailed analysis”. In her evidence W told me how H used to boast of his fortune and of how he was in competition to be as rich as his friend Alexander Shishkin who was worth $1bn. She described to me the numerous business trips made by H to Moscow, Zurich, Geneva and Vaduz.

H’s case as to the loss of his considerable fortune coincides, unsurprisingly, with the collapse of his marriage to W. Following the abusive tirade of 8 May 2007 H set about divesting himself of assets as detailed in the chronology of Mr Hamilton while at the same time taking steps to buy through nominees the property at South Lodge, as described in my judgment of 3 December 2010.

In a submission put in by Mr Beck dated 11 December 2011 (which was copied to the European Court of Human Rights, the Office for Judicial Complaints, the Financial Ombudsman, the House of Lords and the Daily Mail) H wrote:

“Ms Kremen in her court bundle made a claim without any proof that I have control of assets worth 100 min GBP. Relying on support of Mr Mostyn, she made such claims now not only without any proof but clearly contradicts her own signed documents which she submitted to the Home Office, UBS, EFG Banks and where she claimed my total wealth was 10 min. GBP. I categorically deny any ownership over the companies mentioned by Ms Kremen. As she makes such claims without any proof and to stop wasting the Court time I am ready to sign documents re transfer of ownership of LUKOIL, Petrocommerce Bank, Deutsche Bank Ukraine, Makensa, Kendastar, Hallmark etc to Ms Kremen as well as BP, Sheil, GAZPROM, Dresdner Bank etc ”

In Al-Khatib v Masry [2002] 1 FLR 1053, Munby J (as he then was) was faced with a similar situation to that with which I am confronted. At para 96 he found:

“ I do not accept Mr Mostyn’s submission that the materials I have seen justify the inference that the husband’s wealth amounts to the $200 million which the wife believes it to be. I am not saying that it does not. All I am saying is that the materials I have seen do not properly justify an inferential finding that it does. But Mr Mostyn does not have to go that far. The inference which in my judgment I can properly draw, and which I do draw, is that the full extent of the husband’s present wealth is such as will very comfortably justify on a White v White basis the kind of award which the wife is seeking. If a figure needs to be put to it I would draw the inference, and do, that the full extent of the family assets (that is the assets of both the wife and the husband) is very comfortably in excess of £50 million and probably significantly more than that figure. Reference to White v White and the size of the wife’s claim apart there is, I accept, no process of purely mathematical calculation that can be prayed in aid to arrive at or justify such a figure. But there is one valuable cross-check which can be deployed. I ask myself this question: bearing in mind (i) my findings as to the continuing scale of the husband’s business activities and (ii) the evidence, summarised in paras [63]–[67] above, as to the size of the commissions the husband can be shown to have been capable of earning, is it reasonable or unreasonable to conclude that the husband over a period of some 20 years was able to amass a fortune of this size? Far from being unreasonable, such a conclusion is in my judgment entirely reasonable. ”

Similarly in Ben Hashem v Al Shayif [2009] 1 FLR 115 he found at para 68:

“ It is quite clear from the wife’s evidence, which I accept, that she and the husband enjoyed a very high standard of living, just as it is quite obvious that the husband, whatever his origins, is now a man of significant wealth. But the picture must be kept within the bounds of reality. Whatever the wife’s belief – and I neither dispute the honesty of her belief nor dispute that it may be correct – the evidence before me does nothing to support her case that the husband’s wealth is to be measured in hundreds of millions. Their lifestyle was undoubtedly grand, but it was not marked with the opulence or extravagance one might have expected if the husband was really worth what she says, nor is she able to point to tangible assets remotely approaching in value what she says he is worth. It may be that there are hundreds of millions invested in intangibles – I am certainly not finding that there are not – but the picture I have does not suggest it. Theirs was not, for example, a lifestyle characterised by yachts and private jets, nor is there anything to suggest that the husband ever engaged in the kind of expensive hobbies and pastimes one often associates with the mega – or even the very – rich”

Having worked through the discipline I set myself in para 6 above I stand back and similarly attempt an assessment of H’s present fortune. I take notice of the fact that the world economy is in crisis; this must have impacted on the scale and value of H’s assets. Having regard to the hard evidence, the scope of H’s business activities, and lifestyle I conclude that H’s fortune lies in the bracket of £20m - £30m.

I have given an outline to this piece of the history in para 7 above. H has produced an unsigned statement from a Mrs Damsky dated 16 March 2008 who states that W approached her in February 2001 to draw up an “Agreement of Marital Separation”; and that the parties attended before an Israeli judge on 3 July 2001 who approved it. Further, in 2003 W approached Mrs Damsky again to represent her in a divorce; and that on 13 August 2003 the parties were divorced in Israel where the court again approved the agreement. Mrs Damsky states that she is not a cousin of H’s but W has stated to me that she is a distant relative. Mrs Damsky did not attend to give oral testimony to me.

The agreement is dated 15 May 2001 and provides, in summary, the following:

In her statement Mrs Damsky stated:

“In February 2001, Mrs Janna Agrest turned to me with a request to draw up an agreement of Marital Separation (hereinafter: "the Agreement") and children education, to the case if she will decide to separate from her husband and live apart. Mrs Janna Agrest asked me to represent her, and draw such an agreement, that in a case of their separation, it will guarantee her material situation, and she herself stated me her demands about dividing the mutual property. Mr Boris Agrest agreed to all her demands, mentioned that he does not planning a separation or divorce, and signed the Agreement.”

In her oral testimony W firmly denied this account and stated that the entire arrangement was instigated by H. That evidence was not challenged and I accept it. What is striking about Mrs Damsky’s evidence is what she does not say. She does not say that she gave any legal advice to W as to the content of the agreement and as to what rights under English, Israeli or any other law she was giving up.

At the time that the agreement was entered into the only land in W’s name outside England was in Austria and worth about €500,000. W states that in 2005 H used emotional duress to influence her to give a power of attorney to a friend of his who sold the property and kept the proceeds. W in fact lodged a criminal complaint about this in Austria which appears to have got nowhere. H denies this and says that on the sale of the property W received €530,000. I have no doubt that W’s evidence is true, and that she received nothing on the sale of the Austrian property.

Following this agreement nothing was done at all to implement it until May 2007. As explained in the judgment of Mr J Cohen QC and in my judgment of 15 October 2010 at para 25 H did pay to W the $1m but prevailed on her to give it back to him almost immediately, since when the money has disappeared. In his judgment at para 23 Mr J Cohen QC described H’s stance thus:

“The husband was due to pay the money back by 31st December 2007 with interest. He has not paid any of it back, save for £10,000. He says he cannot pay it back. It has all gone. So the wife finds herself having handed over the property, which is very valuable, and lost virtually every penny of the million dollars that she was due to receive. The husband shrugs his shoulders and says: well, I have lost much more than that over the last year or so. She is bound, he says, by the 2001 Israeli agreement. She made a bad investment when she lent it to me. Too bad. She is stuck with it. That, to me, is at least at first sight a deeply unappealing argument.”

I should mention two prior findings concerning the agreement and later divorce. In her judgment HHJ Judge Hughes QC found at para 21 that:

“Although the wife seeks to say that it was the husband's idea to seek the 2001 agreement following a violent attack by him upon her (see B4) that is not supported by Mrs Damsky's account to which I have already referred. Mrs Damsky says it was the wife who approached her and the husband went along with the terms and, of course, the 2001 agreement was approved by the Israeli Court and incorporated into the 2003 divorce. I am not in the least persuaded that the documents were in Hebrew or that the wife did not understand them or the divorce proceedings at the time. I do not believe for one minute that the wife did not know until the spring of 2007 that the parties had been divorced in Israel in 2003.”

In contrast Mr J Cohen QC found:

“14.

On 13th August 2003 in the presence of both parties the marriage was dissolved in Israel. There are several bizarre aspects about this. The wife says that she did not know that the marriage had been dissolved and Judge Hughes did not believe her on this. But before the judge there was not the document which appears in my bundle at 2:53, a document which the husband might have claimed privilege about but was happy for me to see, which shows that he consulted solicitors in 2007 about proposed divorce proceedings, and they had trouble finding out where the marriage certificate was, but the note says that he confirmed there is one in the safe. The solicitors were asking subsequently whether he had found out whether there had been proceedings in Israel and he said that he had not yet found out. So it appears that he was uncertain as to whether or not there had been a divorce.

15.

Even stranger than that, the parties have lived together as man and wife at all times, both before the agreement and its registration in 2001, and the divorce in 2003. Indeed, in August 2003 the mother was pregnant with Maxim, although it is not clear that she knew that she was at that time. The purpose of the divorce is completely lost on me. Indeed the husband said to me he did not really know what the purpose of it was either. He thought it was some sort of parlour game that she was playing, while she said that she was unaware of it happening at all. They went together from their jointly occupied home to court and back again and continued as if nothing had ever happened. No steps whatsoever were taken to implement the agreement of May 2001.”

I adopt and endorse the general finding of Judge Hughes QC at para 15:

“… it is an inescapable conclusion that the husband has the capacity to be very aggressive indeed and to dominate the wife. On that point I accept the evidence of the wife that he was on his best behaviour in Court and I accept the evidence of the housekeeper and driver that he was very aggressive towards the wife at home and frequently denigrated her, that he was the boss and what he said happened irrespective of the wishes of the wife or others in the household.”

My factual findings about the agreement and divorce are as follows:

By s16(2)(d) Matrimonial and Family Proceedings Act 1984 I must have particular regard to “any financial benefit which the applicant or a child of the family has received, or is likely to receive, in consequence of the divorce, annulment or legal separation, by virtue of any agreement or the operation of the law of a country outside England and Wales”.

In Granatino v Radmacher [2011] AC 534 the Supreme Court gave definitive guidance as to the treatment of a nuptial contract in proceedings for ancillary relief following a domestic divorce. The guidance contained in the judgment of the majority delivered by Lord Phillips of Worth Matravers PSC can be summarised as follows:

It seems to me that it will only be in an unusual case where it can be said that absent independent legal advice and full disclosure, a party can be taken to have freely entered into a marital agreement with a full appreciation of its implications. After all, almost every common law country that has legislated in this field has as a key pre-condition these requirements as well as a safety-net where the agreement is judged to be “unfair” (e.g. British Columbia) or “unjust” (e.g. New Zealand) or “unconscionable” (e.g. Australia). It would surely have to be shown that the spouse, like Mr Granatino, had a high degree of financial and legal sophistication in order to have a full appreciation of what legal rights he or she is signing away. Equally, it seems to me that there would have to be clear evidence of significant economic capacity on the part of the claimant spouse before the assessment of needs was suppressed to that minimal level imposed on Mr Granatino. There would surely have to be an equivalent finding to that in para 119 viz “on the evidence he is extremely able, and has added to his qualifications by pursuing a D Phil in biotechnology”. I have noted that in the recent decision of Z v Z(No. 2) [2011] EWHC 2878 (Fam), which concerned a French pre-nuptial agreement, Moor J generously assessed the wife’s needs to include the outright ownership of valuable property and a Duxbury fund to provide a high level of income for the remainder of her life. There was no question of imposing on her an arrangement akin to an award under Schedule 1 Children Act 1989.

On my factual findings I have no hesitation in concluding that:

Accordingly, I accord the agreement no weight whatsoever and discard it from my assessment of the fair award to be made in W’s favour.

I apply first the distributive principle of need. W needs a reasonable home. Having regard to the scale and value of Whitecliff I assess that she needs a housing fund of £2m. In relation to her revenue needs, having regard to the marital standard of living and the scale of assets available to H, I judge that she needs an annual income of £200,000. This capitalises using the Duxbury formula at £5.481m. W needs to have her debts of £163,000 paid. I do not allow as a reasonable need her costs debt to Kendastar Ltd.

W is entitled to receive the maintenance needs of Victor and Maxim on a capitalised basis as I judge there being no prospect of H paying these sums periodically. I judge their general maintenance needs to be £20,000 per annum each. In addition school, fees must be provided for.

My application of the needs principle is therefore as follows:

It follows that W needs every last penny of, and a great deal more than, the £1m within this jurisdiction (see para 30 above).

I turn now to the sharing principle. In my judgment W is entitled to an equal sharing of the fortune to the formation of which she equally contributed, in her own way. This leads, in my judgment, to an award of £12.5m, which is, of course, inclusive of the maintenance or need component of £8.3m referred to at para 78 above.

My direction clearly stated that this application would be adjudicated. s49(2) Senior Courts Act 1981 specifically enjoins me to take steps to avoid a multiplicity of proceedings. I have been given no reason why Mr Fishman has not appeared to pursue his application or why he seeks an adjournment. It is in any event wholly meritless and appears to seek a reversal of my judgment of 15 October 20101 in circumstances where he was denied permission to appeal. His application is therefore dismissed.

I have set out an outline to this application at para 24 above. In effect GC seeks entirely to undo my judgment of 3 December 2010 in circumstances where his appeal was dismissed and his application to appeal further to the Supreme Court was denied.

By s1 Charging Orders Act 1979 I am given a general discretion to grant a charging orders in relation to a judgment debt and by section 1(5) I am required to consider all the circumstances of the case in exercising my discretion as to whether to do so, or not.

My Feehan QC relies on the decision of the Court of Appeal in Harman v Glencross [1986] Fam 81. He submits by reference to that, and other, decisions:

In considering the decision of Harman v Glencross it is interesting to observe that two members of that Court (Balcombe and Fox LJJ) were also members of an earlier constitution which heard the case of Mullard v Mullard [1982] 3 FLR 330 where it was held:

“While it is perfectly true that this court has to take into account any liabilities that a party to the marriage may have, it does not seem to me right that the court, exercising this particular jurisdiction, should necessarily prefer the claims of the creditors to those of the wife and children, and the order, which the registrar made and the judge affirmed, which requires a sale of the house and therefore the forced move of the home and the family, seems to me to result in a preference being given to the creditors over the claims of the wife and the children”

See also Paulin v Paulin [2009] 2 FLR 354, CA where Wilson LJ (as he then was) stated at para 54:

“…although I accept that in proceedings for ancillary relief a court will strive to quantify its award to a wife upon a basis which will enable the husband to meet all his liabilities as well, of course, as to maintain himself, it by no means follows, particularly where money is in short supply, that, whether in the context of capital or in that of income provision, the interests of the husband’s other creditors always take precedence over those of the wife...”

It is also interesting to observe that one factor which may have influenced the view of the Court of Appeal in Harman v Glencross was the submission that a refusal of a charging order might well be futile as the creditor could make the debtor bankrupt and the transfer of property order would then likely be void against the trustee in bankruptcy. But that argument is now impossible given the decision of the Court of Appeal in Hill v Haines [2008] 1 FLR 1192 .

I also consider it implausible that when formulating its decision the Court of Appeal intended that the claims of the wife and children that overreached those of the creditor were solely those for short-term housing but not the means to pay for their daily bread.

In my judgment where a transaction has been avoided under s37 Matrimonial Causes Act 1973 or s23 Matrimonial and Family Proceedings Act 1984 and the disponee then comes along seeking to reverse that very order by these means then the court is clearly in an exceptional situation quite outwith the situation where a bona fide creditor is seeking to recover his judgment debt.

Mr Feehan QC argues that no stain has been cast on GC’s integrity by my judgment of 3 December 2010. I do not agree with that. I found that GC had not given me truthful evidence and that he was complicit in H’s machinations (see paras 17, 23 – 26, 28 – 32, and 36). Moreover I found that GC would have no difficulty in recovering the Kyrgyzstani bonds from H (see para 39). That finding was challenged in the Court of Appeal and was dismissed by Wall P (see paras 24 – 26 of his judgment). Indeed, there is no evidence that GC has even asked H for the bonds back or otherwise to indemnify him for his losses. Mr Feehan QC stated that this was because GC did not know where H was but this is obvious nonsense as in August 2011 his solicitors were in detailed email correspondence with H concerning the negotiation of a consent order which provided for the sale of South Lodge.

In my judgment Mr Stirling is right to characterise this application as an abuse of the process. In his judgment Wall P quotes Sedley LJ as having said of GC’s purchase of South Lodge “he bought a pig in a poke”. His attempts to prevent a reversal of the transaction all failed, and this latest attempt must be dealt with in the same way. In any event I am satisfied that the equity of South Lodge is urgently needed to meet the needs of W and the children. Just as the considerable means of GC were relevant to the exercise of my discretion last time round, so they are this time. In para 13 of my judgment of 3 December 2010 I recorded him as having means of £16.5m. It would be a travesty if in the exercise of my discretion I were to make the charging order final immediately or even on a deferred Mesher basis.

My disposition is therefore as follows: