Tetiana Ieremeieva v Sergii Lagur
| Jurisdiction | British Virgin Islands |
| Judge | Wallbank, J. |
| Judgment Date | 04 April 2019 |
| Judgment citation (vLex) | [2019] ECSC J0404-2 |
| Docket Number | CLAIM NO. BVIHCM 2017/0118 |
| Court | High Court (British Virgin Islands) |
| Date | 04 April 2019 |
EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
COMMERCIAL DIVISION
CLAIM NO. BVIHCM 2017/0118
and
Mr. John Wardell, QC, with him Mr. Timothy Collingwood and Mr. Matthew Brown for the Claimants/Respondents
Mr. David Mumford, QC, with him Mr. David Welford for the Second and Third Defendants/Applicants
Ms. Claire Goldstein, with her Mr. Mark Rowlands for the First Defendant
Mr. Robert Nader for the Fourth Defendant
Wallbank, J. (Ag.): The Second and Third Defendants (respectively, Mr. Lagur and Mr. Ivakhiv), as applicants, applied on 26 th April 2018 for the following relief:
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(1) Security for costs of the claim pursuant to the Eastern Caribbean Supreme Court Civil Procedure Rules 2000 (‘CPR’) Part 24.2 in the sum of US$1,442,958; and
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(2) An order that the claimants produce for inspection any documents evidencing a funding agreement (the ‘Funding Agreement’), pursuant to which a third-party funder (the ‘Funder’) has agreed to provide the claimants with funding in connection with these proceedings, under CPR 28.16.
On 5 th December 2018 I delivered the order upon judgment for these applications. The result was that the application for security for costs was refused and the application for inspection of the Funding Agreement was granted. I ordered that costs follow the event in each of these applications, with the quantum to be assessed if not agreed within twenty-one days. All parties were granted liberty to apply in respect of costs. These are the reasons for these decisions.
Mrs. Ieremeieva is the widow of the late Mr. Igor Yeremeiev and Roman is their son. Sofiia is her daughter. She is a minor. Mrs. Ieremeieva, as mother, is her legal guardian. I will refer to the late Mr. Yeremeiev as Igor. Mrs. Ieremeieva and Roman are the claimants. Roman is in his early twenties. Igor died suddenly on 13 th August 2015, following a riding accident. He was in his forties. During his lifetime Igor was a successful businessman. He was a business partner with the applicants (and a Mr. Dyminsky, who is not a party to these proceedings), who had interests in an array of businesses in Ukraine, including in wholesale oil trading, petrol stations, banking, telecommunications, hotels, dairy produce, convenience stores and construction. Igor appears to have played a significant part in the creation of this group. These businesses are together referred to under the brand name “Continuum”, although they are not strictly part of a single corporate group; nor were the individuals (who can be referred to as the ‘Principals’) partners in the strict sense. Igor was also a politician, being an active member of the Ukrainian parliament. He spoke Russian and Ukrainian but, the claimants' evidence is, significantly, not English; nor did he understand English. At the time of his death Igor was largely living apart from Mrs. Ieremeieva, with another woman. Igor and Mrs. Ieremeieva were not divorced although over the years they had discussed it. The claimants say that Igor spent weekends and holidays with Mrs. Ieremeieva and their children and that he had a close relationship with Roman. Igor's passion was horses. He owned a set of stables through a corporate holding structure.
Igor (like the other Principals) had shareholdings in holding companies that directly or indirectly hold interests in the various Ukrainian operating subsidiaries. Igor's shareholdings were, the applicants contend, settled by him on a discretionary trust (the ‘Trust’) for the benefit of Roman and Sofiia by an instrument dated 21 st August 2014 (the ‘Trust Instrument’). The validity of the Trust is one of the central issues in these proceedings. Under the terms of the Trust Instrument, Igor was the initial trustee; Mr. Lagur was to become the trustee in his stead upon Igor's death or incapacity, but it was provided that within six months of that event Mr. Lagur was to appoint a ‘competent, qualified and reputable’ professional trustee to succeed him; and upon the appointment of such professional trustee, Mr. Ivakhiv was to become the Protector.
Following Igor's death and as envisaged by the Trust Instrument, the First Defendant, a professional trust company, ‘Estera’, was appointed trustee by deed dated 31 st May 2016 (the ‘DORA’); and on the same day Estera amended the Trust to become a BVI VISTA trust, by a deed to which Mr. Ivakhiv was also a party (the ‘Amendment Deed’).
In March 2017, the claimants, through their legal representatives in the Territory, Messrs. Conyers Dill & Pearman, wrote to Estera raising questions as to the authenticity and validity of the Trust Instrument and requesting certain information about it. Correspondence ensued, in the course of which (by letter dated 29 th April 2017) Estera identified a concern that the claimants' requests for information were in fact being motivated by an agreement made between Mrs. Ieremeieva and a Mr. Palytsia, by which Mr. Palytsia was funding Mrs. Ieremeieva's legal costs in return for a right to acquire shares in Continuum from her. This correspondence culminated in a letter from Messrs. Conyers Dill & Pearman dated 18 th July 2017, in which the existence of the agreement with a company associated with Mr. Palytsia was confirmed, but it was asserted that ‘our clients are unaware of Mr. Palytsia's business affairs’ and the claimants' requests for the provision of information were pressed.
Without further reference to Estera (or the applicants), on 19 th and 20 th July 2017 the claimants successfully applied ex parte for a proprietary injunction and the appointment of a receiver, that order being made on 20 th July 2017 and continued (without opposition, but on the basis that the defendants reserved their rights to apply to set aside or vary the orders) on 26 th July 2017 (the ‘Injunction and Receivership Order’). When the order was continued, an order was also made (at the suggestion of Estera, but with the concurrence of the claimants at that time) sealing the court file.
The claim form and statement of claim were served on the applicants on 4 th August 2017. In short, claims are brought by Mrs. Ieremeieva in her capacity as Igor's widow, administrator of Igor's estate and heir and by Roman in his capacity as Igor's heir and administrator of Igor's estate, but also (in the alternative) as a beneficiary of the Trust. By these claims the claimants:
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(1) contend that the Trust is void as either a fabrication or a sham; and
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(2) allege that there has been ‘value shifting’ and dissipation of assets within the corporate structure in which the Trust is interested to the detriment of the claimants, and
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(3) seek orders for declarations, accounts, inquiries and compensation.
These claims are vigorously contested by the applicants, who served a lengthy defence on 8 th December 2017. Estera put in a short defence to the claims on 29 th November 2018 and on 10 th January 2018 it applied for directions concerning the steps which it should take in these proceedings. That application was heard on 2 nd May 2018 by Adderley J, who (among other things) ordered that the Amendment Deed be set aside. The present applications were made before that hearing, on 26 th April 2018. At the same time, the applicants also applied for:
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(1) An order staying the claimants' claims on the grounds of abuse of process, including on grounds that the claimants' third-party funding arrangements are champertous;
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(2) Orders restricting provision of documents disclosed in the proceedings by the claimants to the Funder; and
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(3) Discharge or variation of parts of the Injunction and Receivership Order.
These other applications are not presently before the court.
It is the Funding Agreement apparently entered into by the claimants and Mr. Palytsia (or a company associated with him) that is at the crux of the present applications. In the claimants' affidavit evidence sworn in support of the injunction and receivership applications, it was stated:
“Mrs. Ieremeieva and Roman have entered a funding agreement with a company connected with Mr. Palytsia, because they are otherwise unable to fund this litigation as a result of the control exercised by Mr. Lagur and Mr. Ivakhiv. That agreement is private and privileged and privilege is not waived. However, as is normal in such agreements, that company has rights to information concerning the litigation.”
It is Mr. Ivakhiv's evidence that:
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(1) Mr. Palytsia is one of the closest associates of a Mr. Igor Kolomoisky.
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(2) Mr. Kolomoisky is a prominent Ukrainian businessman and politician, who is notorious for his ‘corporate raiding’ activities. The Privat Group with which he is associated is a long-standing competitor to the WOG Group, one of the businesses in which the Trust and the applicants are interested. In 2005/6 Mr. Kolomoisky sought to exploit his minority interest in an oil refinery in which the Principals were also interested to take control of the refinery, allegedly using various means of doubtful legitimacy. His campaign against the WOG Group has continued since. He also sought to acquire Mr. Dyminsky's stake in WOG Holding Ltd. He is reported to have said, publicly, in relation to any company, ‘give me a 1 percent stake and I will take over the entire company’.
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(3) Mr. Palytsia informed Mr. Ivakhiv in a conversation in March 2017 that he had reached an arrangement with Mrs. Ieremeieva pursuant to which he would pay her legal fees, in return for which he would be entitled to buy any shares that she recovered at a discount of 25% to market price. This discount is estimated by the...
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