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Court of Appeal sets aside property disposal in Russian financier's divorce proceedings

President finds ‘manifest attempt to defeat wife’s claims’

The Court of Appeal, comprising Sir Nicholas Wall, Lord Justice Sedley and Lady Justice Arden, has set aside the disposal of a £2m mansion by the husband in ancillary relief proceedings. The Court concluded that the disposition was made by him with the intention of defeating his wife's claims.

In Everclear Limited (BVI) v Agrest and Kremen [2011] EWCA Civ 232, the Court heard that a property, described as a Surrey mansion, which was the sole asset of Everclear Limited, a BVI company, had been owned by the husband but he had subsequently sold it – first to a Mr Kinigopolou (though this sale was found to be a sham and Mr Kinigopolou a mere nominee for the husband) and then to the current owner, Mr Chesnokov.

Christopher Stirling of Field Court Chambers, acting for Miss Kremen, argued that the property should be considered a matrimonial asset. Mr Chesnokov, represented by Frank Feehan QC of 42 Bedford Row, said that he had bought the company in good faith without any knowledge of the husband's machinations and therefore had a defence to any set aside. The Court, in deciding that the transaction should be set aside, made no implication's about Mr Chesnokov's integrity.

The sale had been funded by a mortgage that postdated the legal transfer of the company but the evidence of the new owner was that such sale was always conditional on the mortgage being advanced to him.  Mostyn J found as a fact that the new owner knew of the husband's motives at the time of the mortgage but not at the time of the earlier legal transfer. This was because the new owner had by the stage of the mortgage been made aware of a court order prohibiting the husband or the company dealing with the property in any way.

The Court of Appeal upheld the Mostyn J's decision that since the sale was conditional on the mortgage, the relevant date of disposition was the date of the mortgage advance (when the sale ceased to be conditional) and thus the sale could be set aside.

Once the Court had determined that the transfer could be set aside, it had to decide whether, as an exercise of discretion, it should do so. Sir Nicholas Wall, giving the lead judgment, said:

"There was manifestly an attempt by Mr. Agrest to defeat Mrs. Kremen's claims, and the addition, as the judge found, of between £600,000 and £800,000 to the matrimonial "pot" was plainly a material factor when considering the support of Mrs. Kremen and her children."

Accordingly, the Court concluded that it was correct to exercise its discretion to set aside the transaction.

The husband himself played no part in the litigation of this issue. He fled the jurisdiction after Mostyn J issued a warrant of committal against him in May (following breach of a suspended committal order for failure to pay maintenance in April).