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Akhmedova v Akhmedov & Others [2019] EWHC 2561 (Fam) and [2019] EWHC 2732 (Fam)

Two further hearings in long-running ancillary relief proceedings.

The matter came before Mrs Justice Knowles and was a further instalment in the long-running litigation consequent upon the breakdown of the marriage of Mrs Akhmedova and Mr Akhmedov. The final hearing in the substantive ancillary relief proceedings had taken place in December 2016, during which Haddon-Cave J (as he then was) ordered the Husband to pay the Wife the sum on £453,576,152 in settlement of her financial claims in respect of the marriage. In spite of the court order, the Husband had not voluntarily paid any money to the Wife, and thus far the Wife had only been able to utilise enforcement proceedings in respect of around £5 million.

In April 2018, Haddon-Cove J found the Husband to be "engaging in an elaborate and contumacious campaign to evade and frustrate the enforcement of the judgment debt against him." The Husband had thus far used six different offshore companies and entities to evade payment. As a result, the English court had already granted orders against all six entities who were joint respondents within the proceedings. After the 2016 trial had concluded, it came to light that during the course of the trial, the Husband had caused assets to be moved to Liechtenstein to prevent the Wife from being able to enforce a judgment against them. The Wife had been unable to ascertain what had happened to the monetary assets after they had reached Liechtenstein – until now. Despite deliberate obfuscation by the Husband, the Wife had recently obtained information which suggested that some or all of the monetary assets had been transferred into a number of trusts in Liechtenstein, of which trust companies by the name of "Counselor" and "Sobaldo" were trustees. The Wife had therefore brought this application before the court seeking relief orders against these two further entities.  

The Wife's application was three-fold:

1. Application without notice to join Counselor and Sobaldo in their capacity as trustees to the proceedings pursuant to FPR 9.26B

2. Without notice freezing injunction and ancillary orders against Counselor and Sobaldo

3. Application for orders under Section 423 of the Insolvency Act ('IA') and/or section 37 of the Matrimonial Causes Act 1973 ('MCA'), setting aside all transfers of the monetary assets to trusts of which Counselor and Solbaldo are trustees, and ordering Counselor and Sobaldo to pay the value of the sums received by each of them to the Wife. (As this is an application which can only be determined on notice, only initial directions were sought at this stage).

The court articulated that it's decision would consider firstly, the basis of the claims against Counselor and Sobaldo, secondly, whether the Wife has discharged her duty of full and frank disclosure given the application was being made without notice, and finally, whether the court should grant the orders sought.

Basis of claims against Counselor and Sobaldo
As the Wife was making a without notice application for joinder and freezing orders, the burden rested on her to satisfy the court that she had a good and arguable case for substantive relief against Counselor and Sobaldo.

The Judge noted that the court in previous hearings had already made a number of orders under s.423 IA and s37 MCA setting aside and/or making payment orders in respect of the Husband's transfers into various trusts. The Wife argued that this current application sought to travel once more down the same well-trodden path in respect of new transfers which had come to light – in essence, more of the same.

The court noticed that s. 423 provides the court with broad powers to grant remedies where a person has entered into a transaction at an undervalue for the purposes of putting assets beyond the reach of person who is make a claim against him.

The Judge was satisfied that an adverse inference could be drawn against the Husband, in that his transfer of the monetary assets had been for the sole purpose of putting the assets beyond the reach of the Wife and her financial claims. The court was particularly persuaded by: 

1. the timing of the Husband's transfers,

2. the previous findings of Haddon-Cove J, wherein he concluded that the transfer of assets before him on that occasion, had been part of a larger scheme by the Husband to evade enforcement of financial remedies

3. the fact that there was no other sensible explanation for the transfer of the trusts and securities made at those relevant times

Despite the fact that Counselor and Sobaldo were both located outside of England (as were the assets), the court noted that s423 IA has territorial effect, and the court will exercise this power if there is a sufficient connection to this jurisdiction. The court considered this connection to be present by the fact that:

1. the transfer of the assets was undertaken in order to frustrate an imminent and then actual judgment of the English court,

2. The order of the court had arisen following divorce proceedings which had taken place in England

3. During the divorce proceedings, the Husband had submitted to the jurisdiction

4. The intended and only victim of these acts is an English resident – the Wife

Relief sought – joinder of Counselor and Sobaldo
In order to join Counselor and Sobaldo as parties, the conditions under FPR 9.26B had to be satisfied. The court held that the conditions were satisfied, for not only was it desirable to add those parties to the proceedings so that the court can resolve all matters in dispute, but also because there was an issue specifically involving the new parties and the husband, which was connected to the matters in dispute.

Relief sought – freezing injunction and ancillary relief
The court reminded itself of the principles applicable to the grant of freezing injunctions under S.37 MCA, as set out by Mostyn J in L v K (Freezing Orders: Principles and Safeguards) [2013] EWHC 1735 (Fam). The wife must show:

i. That she has an appropriately strong case,

ii. Solid evidence of a real risk of dissipation, and

iii. That it is just and convenient for a freezing injunction to be granted
The Judge was satisfied on the facts that the requirements had been met by the Wife. The court held that this was clearly a case where assets has been moved into trusts – whether directly or indirectly, as part of the Husband's wider strategy of evading enforcement. Further, the risk of dissipation was clearly made out in a case where there was a proven history of actual dissipation. Finally, unless restrained by an injunction, Counselor and Sobaldo would seek to further protect the assets from being susceptible to the enforcement of an English judgment, thus it was just and convenient for a freezing injunction to be granted.

There were 2 further ancillary reliefs sought. The first was asset disclosure. The court held that asset disclosure runs hand in hand with a freezing injunction so as to render the injunction effective and capable of being policed. As the court had the power to make an asset disclosure order pursuant to FPR 20.2(1)(g), the Judge granted this order. The second ancillary order related to the naming of individual directors within the penal notice made by the court. The Judge noted that FPR 37.4(3) provides that a committal order against a company or other corporation may be made against any director or other officer of the company or corporation. The court held that in these circumstances, it would be appropriate to name the de jure directors of Counselor and Sobaldo in the penal notice in order to make it plain to them that they are personally at risk of committal proceedings in the event of a breach of the order.

The Judge therefore granted all the applications sought by the Wife, and listed the matter for an inter partes return date hearing.

Akhmedova v Akhmedov & Others [2019] EWHC 2732 (Fam)
The return date hearing took place 7 weeks after the without notice hearing on the wife's applications. Counselor and Sobaldo, who had now been joined to the proceedings, did not attend and were not represented. However, the Wife was able to demonstrate that the parties had been properly served with the court's freezing orders, alongside notice of the return date hearing, thus the court was content to proceed in the absence of the parties.

The Wife sought a continuation of the freezing order. In support of her application, the Wife provided information to the court regarding the development of matters since the ex parte hearing. The court found that the developments had not adversely changed matters as far as the Wife's applications were concerned, but rather supported the inferences made by the court at the ex parte hearing. As the reasons for granting the without notice relief remained valid, the court held that the freezing orders should continue.

Case summary by Mavis Amonoo-Acquah, barrister, Harcourt Chambers

Read Akhmedova v Akhmedov & Others [2019] EWHC 2561 (Fam) via BAILII

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