Kremen v Agrest  EWCA Civ 1266
Applications for permission to appeal the judgment in Kremen v Agrest (No.11) (Financial Remedy: Non-Disclosure: Post-Nuptial Agreement)
This judgment was given at the conclusion of the hearing as to whether permission to appeal should be granted arising from the judgment in Kremen v Agrest (No.11) (Financial Remedy: Non-Disclosure: Post-Nuptial Agreement)  EWHC 45 (Fam).
Mr. Agrest and Mr. Fishman did not attend court but sought to pursue their appeals by their respective McKenzie friend's. Lloyd LJ did not allow their applications for permission to appeal (not only by refusing to hear the McKenzie friends) but also on the basis that there remained no merits in their respective appeals.
However, Mr. Chesnokov sought permission to appeal the refusal of Mostyn J to make the interim charging order final because Mostyn J had gone beyond Harman v Glencross  in applying the balancing exercise as to a property that had never been the matrimonial home.
Permission to appeal was granted.
Summary by Richard Tambling, barrister, 1 Garden Court
Case Nos: B6/2012/0342
Neutral Citation Number:  EWCA Civ 1266
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE PRINCIPAL REGISTRY
(MR JUSTICE MOSTYN)
Royal Courts of Justice
Strand, London, WC2A 2LL
Tuesday, 18th September 2012
LORD JUSTICE LLOYD
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AGREST & ANR
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(DAR Transcript of
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Frank Feehan QC (instructed by Horne Engall & Freeman LLP) appeared on behalf of the Applicant in 0342
John Beck appeared on behalf of the Applicant in 0503 as a McKenzie friend but was not granted a right of audience
Pavel Nikitin appeared on behalf of the Applicant in 0539 as a McKenzie friend but was not granted a right of audience.
The Respondent did not appear and was not represented.
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As Approved by the Court
Lord Justice Lloyd:
1. This is the day appointed for the hearing of three applications for permission to appeal against an order of Mostyn J made on 15 February 2012 in matrimonial proceedings between Mr Boris Agrest, who I may from time to time refer to as "the husband", although the parties are divorced (if they were ever validly married), on the one hand, and Ms Janna Kremen, who I may refer to as "the wife". The matrimonial proceedings between them have been proceeding for a considerable amount of time and have given rise to a large number of judgments. The judgment from which, in effect, these permission to appeal applications arise was permitted by the judge to be reported as Kremen v Agrest (No.11) (Financial Remedy: Non-Disclosure: Post-Nuptial Agreement)  EWHC 45 (Fam).
2. As I say, the judge made his order on 15 February, though it was amended under the slip rule on 27 February. The order was made in consequence of a judgment delivered on 19 January 2012 following a five-day hearing from 12-16 December 2011. At that hearing, Ms Kremen was represented by counsel, Mr Hamilton and Mr Stirling. Mr Agrest was not represented and did not appear, but he was assisted by Mr John Beck as a McKenzie friend. The judge made some reference to that, and I should say that Mr Agrest was absent from the hearing despite the fact that, to Mr Agrest's knowledge, Holman J in February 2011 had made an order that both Mr Agrest and Ms Kremen personally should attend the hearing.
3. Mostyn J, having referred to the fact that he was only represented, in any sense, by Mr Beck, and having referred to what Holman J had said about the very limited role of a McKenzie friend, said:
"However, I have allowed Mr Beck to be in court and to lodge written submissions from [Mr Agrest], which were highly abusive both of [Ms Kremen] and of the Court. I have been prepared to read these submissions, albeit with some misgivings, as there is a strongly arguable case that [Mr Agrest], 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."
But, as I say, the judge allowed Mr Beck to be present in court and to put in written submissions.
4. Mr Beck has attended court today, seeking to represent Mr Agrest on this application for permission to appeal. I have declined to allow Mr Agrest to be represented by Mr Beck in those circumstances. It seems to me altogether out of order that Mr Agrest should proceed in this way. Either he should attend personally, in which case he could address the court and he could have assistance from Mr Beck or any other McKenzie friend, or he should be represented in the proper way by someone with a right of audience before the court.
5. The judge, as I say, conducted the hearing, which was the final hearing of Ms Kremen's application for financial orders under Part III of the Matrimonial and Family Proceedings Act 1985 against her former husband, Mr Agrest. The judge also had before him an application by Mr Chesnokov for a charging order absolute and a further application by Mr Leonid Fishman which included, among other claims that the judge described as extravagant, a request that he be paid $10 million in satisfaction of a debt owed to him by Mr Agrest.
6. I start with Mr Agrest's appeal. This was put on the basis that the judge was wrong to hold, or at least to imply, that the husband and wife had moved to England in 1999 and on that basis wrong to hold that an agreement between them, which was referred to by the judge at "the post-nuptial agreement entered into in Israel", should be governed by English law. Secondly, he complained in his grounds of appeal that the judge ignored relevant factual evidence by way of documents submitted by Mr Agrest and relied on unsupported statements from Ms Kremen. Thirdly, he said that the judge showed bias in favour of Ms Kremen and against Mr Agrest. In his skeleton argument he introduced a further point, namely that husband and wife were never validly married because, at the time of the purported marriage between them, Mr Agrest was still married to a Ms Bozkho in Russia.
7. So far as those points are concerned, it is futile to argue that the order was wrongly made because the parties were never validly married, their marriage having been bigamous. As the judge pointed out in paragraph 7, this point having been mentioned before him, this would make no difference to Ms Kremen's claims under Part III. If the marriage was bigamous it needed to be annulled, and if it had been annulled (as is said to be the case) in Russia, the jurisdiction under Part III would equally well be exercisable in those circumstances.
8. Mr Agrest had taken this point already by the time of Holman J's judgment in February 2011, and that judge pointed out that if there was any substance to that point, all that it would have required was some technical amendment to the wife's underlying application and the order giving leave to her to apply, so there is nothing in that point. There is also no substance in the point about the date of the parties' move to England, because the judge looked at the agreement that was said to have been signed by the parties in Israel in May 2001 and he did not consider it as a matter that was in itself governed by English law. He simply looked at it under English law because the proceedings before him were necessarily governed by English law, being an application under the 1984 Act.
9. So far as the judge's failure to have regard to evidence put in by Mr Agrest is concerned, that is a bit rich in circumstances in which the husband did not attend to give evidence or to challenge the evidence. So there is nothing in that point either. So far as bias is concerned, all that is said really is that the judge had taken a strong view against Mr Agrest and he had not believed his evidence, and that is a matter that was for the judge to decide. Mr Agrest, of course, did not like the judge's conclusions and clearly has no intention of doing anything that he can avoid doing to comply with them. Since he is plainly outside the jurisdiction, and so far as I know no-one really knows where he is, apart from having an email address for him, it is really only a debate about such assets as there are within this jurisdiction, for the time being at any rate. In those circumstances there would in any event be no substance to Mr Agrest's application for permission to appeal even if it were opened before me by someone with a right of audience, and I therefore, on those grounds, propose simply to refuse that application.
10. I take next the application of Mr Fishman, who is essentially a creditor, or claims to be a creditor, of Mr Agrest, and it may be that he is in the same difficulty that he does not know where Mr Agrest is, he does not know where Mr Agrest's assets are, and what he does know is that there are some assets in this country in relation to which Mr Agrest has, or subject to the judge's order may have, some entitlement and he is looking to those as a way of enforcing his claims.
11. Just to put that in context, and also for the purposes of dealing with the application on the part of Mr Chesnokov, I should say this. There are two assets within this jurisdiction which are of relevance. One is a fund in court, which represents the net proceeds of sale of the property called Whitecliff, which was the former matrimonial home. It was subject to a mortgage and was sold by the mortgagee. As a result of orders in these proceedings the net proceeds of sale were paid into court, originally a sum in the order of £1 million. Some parts of that have been paid out to the wife, to Ms Kremen, and at the time of the hearing before the judge there was some £600,000 or so representing that fund still in court. The other asset arises in this way. Following the acrimonious parting of the parties, the husband, Mr Agrest, in effect bought another property in England which it is enough for present purposes to refer to as South Lodge. It was bought in the name of a company called Everclear, and the shares in Everclear were beneficially owned by Mr Agrest, although I think it is right that they may, initially at any rate, at some stage have been legally owned by a person whose name I forget at the moment but who was a nominee for Mr Agrest. Later the shares in Everclear were sold to Mr Chesnokov. So by then the position, if it had not been affected by subsequent orders, was that South Lodge was owned by Everclear and Everclear was owned by Mr Chesnokov; Mr Chesnokov gave value in money or money's worth for that purchase.
12. However, Ms Kremen applied under the matrimonial legislation for an order setting aside that sale of the shares, and in an earlier judgment Mostyn J made the order sought on the basis that, although no imputation was made against Mr Chesnokov along the lines, for example, that he was in cahoots with Mr Agrest or that he was a conspirator or that he did not really give value, the case was successful against him on the footing that, by the time his purchase contract became unconditional, he knew enough about the matrimonial proceedings and about Mr Agrest's position for him not to be a purchaser who was immune from the jurisdiction under section 23. Mr Chesnokov resisted that application. He lost before Mostyn J, and he lost in the Court of Appeal, and he failed in his application for permission to appeal to the Supreme Court. So that was the end of that saga, and I shall come on in a moment to Mr Chesnokov's position before me today.
13. But that is why there are these two assets: there is South Lodge, which I think I am right in saying has not yet been sold but may have to be sold, and there is the fund in court representing the proceeds of sale at Whitecliff. These are assets in relation to which Mr Agrest has or has had some interest, and that is what (a) Ms Kremen, (b) Mr Chesnokov, and (c) Mr Fishman are interested in pursuing. The judge's order against which the appeals are sought to be brought required Mr Agrest to transfer his beneficial interest in South Lodge to Ms Kremen and also required Mr Chesnokov to transfer his legal interest in South Lodge to Ms Kremen, and there were some consequential orders about that including that, in certain circumstances, South Lodge was to be sold.
14. Mr Fishman's application was to intervene in the proceedings. An application was made on 15 October 2011 and he sought in effect an order against Mr Agrest for payment of a debt which he said was owed to him by Mr Agrest of some $10 million. He sought freezing injunctions against Mr Agrest and Everclear in relation to the proceeds of sale of South Lodge and also in relation to the fund in court, security over those assets and the payment of the net proceeds to him in satisfaction of his alleged debt. These proceedings should have been started in the Queen's Bench Division, but if they had been they might very well have been transferred to the Family Division. Mostyn J ordered in October 2011 that this application be heard at the trial in December. Mr Fishman did not attend the trial and he sought an adjournment of his application, which the judge rejected.
15. Mr Fishman seeks permission to appeal against that refusal. Mr Fishman had previously applied to the judge for the funds in court to be paid out to him pursuant to a charge over Whitecliff in his favour which was created in January 2008. But Mostyn J had held in October 2010 that that charge should be set aside under section 23 of the 1984 Act both as against Mr Agrest and as against Mr Fishman. Mr Fishman applied unsuccessfully to the Court of Appeal for permission to appeal against that in January 2011. In those circumstances Mostyn J's comment in his judgment at paragraph 81 that Mr Fishman's application is "in any event wholly meritless and appears to seek a reversal of his judgment of 15 October 2010 in circumstances where he was denied permission to appeal" seems entirely justified.
16. There is, therefore, no substance and no merit in Mr Fishman's application, quite apart from the fact that he, too, has chosen not to attend the hearing, nor to be represented at the hearing and he only has as his representative a Mr Nikitin, who has no right of audience and is therefore here, just as Mr Beck is, as a McKenzie friend who seeks to do much more than a McKenzie friend is allowed to do. Neither in the case of Mr Beck nor in the case of Mr Nikitin has it been suggested that there is the slightest reason why I should grant a special right of audience to either of them and accordingly, as with Mr Agrest's application, I refuse Mr Fishman's application.
17. That leaves Mr Chesnokov's application, Mr Chesnokov being represented as he was below by Mr Frank Feehan QC. The issue as regards Mr Chesnokov arose in this way. I mentioned that the sale of the shares in Everclear to Mr Chesnokov was ordered to be set aside by Mostyn J in his earlier judgment, and Mostyn J on that occasion considered it in a judgment of 3 December 2010, which is reported as Kremen v Agrest (No. 2)  EWHC 3091 (Fam),  2 FLR 490. In the order pursuant to that judgment, which I am not sure that I have seen although it may well be somewhere in the bundles, the judge considered that it was right to allow Mr Chesnokov an indemnity from Mr Agrest against the loss that he would have suffered because he had paid for the shares, and that he had as a result of the proceedings lost the shares.
18. So Mr Chesnokov, finding himself in that position, then took advice as to what he should do and he started proceedings in the Queen's Bench Division against Mr Agrest, seeking the enforcement of the indemnities and claiming a sum just short of £1.2 million pursuant to the indemnities. Just looking at the Particulars of Claim, I see the quotation from Mostyn J's order, which says:
"The Respondent [that is, Mr Agrest] shall indemnify Mr George Chesnokov in respect of all costs arising from and incidental to his attempted purchase of [Everclear]."
And there were some consequential provisions.
19. So Mr Chesnokov started the opposed Queen's Bench proceedings. As I understand it, the position is that he did not have a normal address for Mr Agrest because Mr Agrest was clearly no longer living at South Lodge, and he obtained an order to serve these proceedings in two manners: one was care of Mr Beck; and the other was by email at the email address that was known to be one that Mr Agrest used from time to time. No steps were taken by Mr Agrest, so Mr Chesnokov then obtained a default judgment for the sum claimed and some costs. He then sought to enforce that judgment, and the obvious way of doing so was to obtain a charging order over South Lodge. He obtained an interim charging order on a without notice basis as is the normal form, and his application to have that made final was one of the matters that came before Mostyn J. Mostyn J dealt with it at the end of his judgment at paragraphs 82 onwards and he made the comment at paragraph 82:
"In effect [Mr Chesnokov] 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."
The judge referred to his general discretion under the Charging Orders Act 1979 section 1, and he referred to the critical leading case of Harman v Glencross  Fam 81, in which the main judgments were given by Balcombe and Fox LJJ. He also referred to other cases, Mullard v Mullard  3 FLR 330 and Paulin v Paulin  2 FLR 354, though neither of those has anything to do with a charging order.
20. What Mr Feehan submits is that the judge has gone way beyond Harman v Glencross in applying the balancing exercise that he did conduct to a property that was never the matrimonial home, namely South Lodge, and that he has in any event erred in principle in the balancing exercise that he had set out to conduct.
21. I have of course the benefit of Mr Feehan's grounds of appeal and his skeleton argument, which is commendably succinct. I need say no more than that it seems to me, from reading Harman v Glencross, that there is substance in the grounds of appeal, and I therefore propose to grant permission to appeal to Mr Chesnokov, while refusing the applications on the part of Mr Agrest and Mr Fishman.
22. I will grant permission to appeal, therefore. I will direct that the time estimate for the appeal be half a day, and that the court should, unless otherwise directed, include Lords or Lady Justices both with Family and with Chancery experience.
Order: Application granted in 2012/0342, refused in 2012/0503 & 2012/0539.