JSC VTB Bank v Skurikhin & Ors

An interlocutory receivership order may finally determine, between the parties, the factual basis establishing jurisdiction to appoint receivers. A party cannot use liberty to apply to reopen issues, evidence or arguments that were available at the original hearing. Reopening may be justified by a genuine material change of circumstances, but not ordinarily by a development wholly within the applicant’s control.

For equitable execution, de facto control of assets held by a third party is insufficient unless the evidence justifies the inference that the judgment debtor has a binding right to direct their application, tantamount to ownership. A receivership need only have a reasonable prospect of practical utility. An oral disposition of an existing equitable interest is void for non-compliance with section 53(1)(c) of the Law of Property Act 1925, and estoppel cannot circumvent that mandatory requirement.

VTB had obtained unsatisfied judgments against Pavel Skurikhin and secured the appointment of receivers by way of equitable execution over membership interests in Pikeville Investments LLP. The interests were registered in the names of nominees and were said to be held for the Liechtenstein foundation Berenger.

Berenger applied to discharge the receivership order. It argued that Mr Skurikhin had never controlled Berenger, that the order lacked practical utility, and that his later exclusion as a beneficiary was a material change of circumstances. VTB opposed the application and argued that the original findings were final, that reopening was an abuse of process, and alternatively that the interests had never validly been transferred to Berenger.

The central issues were whether Berenger could reopen matters available in 2015, whether the later exclusions justified discharge, and whether section 53(1)(c) prevented the 2005 transfer.

1. Application dismissed. The receivership order was made on the basis that the membership interests were, in equity, assets of Mr Skurikhin. Although such an order is interlocutory, temporary and operates in personam, the findings of fact necessary to establish jurisdiction were final and binding between the parties to the application.
2. Liberty to apply and the expression “until further order” accommodated changes of circumstances and consequential directions. They did not permit a party to deploy evidence and arguments which could reasonably have been deployed at the original hearing. Applying Johnson v Gore Wood [2002] 2 AC 1, Chanel Ltd v Woolworth & Co [1981] 1 WLR 485 and Masri No. 3 [1987] 1 QB 1028, Berenger’s failure to participate was an abuse of process. Lack of funds did not justify a second hearing.
3. For equitable execution, assets held through a trust or analogous foundation may be treated as the judgment debtor’s where the debtor has a right to call for them or a binding right to direct their application. De facto control alone is insufficient. Here the evidence justified the inference that Mr Skurikhin acted as a mandatory through Mr Meier and that his instructions were binding. The 80/20 guideline did not restrict that power.
4. A receivership need only have a reasonable prospect of practical utility. The order was directed to the Italian properties and related enforcement steps in England and Italy. Liechtenstein’s refusal to recognise or enforce the order did not make it fruitless.
5. The exclusions from Berenger and Olympic were effective under the respective foreign laws, but they were brought about to advance Mr Skurikhin’s interests and could not be relied upon as a material change of circumstances. In any event, his continuing power to direct distributions to nominees meant that the basis of the receivership remained.
6. On issue 4, the trust over the Pikeville interests was governed by English law. The 2005 oral direction was a disposition of an existing equitable interest and was void under section 53(1)(c) of the Law of Property Act 1925. Proprietary estoppel and other equitable doctrines could not validate it. However, the termination of the old LLP memberships and creation of new membership interests in 2008 and 2010 enabled the new members, subject to a constructive trust, validly to declare trusts in favour of Berenger. That made the earlier defect academic.
7. VTB’s application to stay payment of Berenger’s costs in an earlier security application was refused. The evidence relied on had already been contemplated when that costs order was made.

The application to discharge the Receivership Order was dismissed. The court was to hear submissions on the terms of the order.

First-instance decision on Berenger’s application to discharge the receivership order. The judgment refers to earlier High Court decisions in the same litigation, including [2015] EWHC 2131 (Comm), but no appeal from the present decision is stated.