National Bank Trust v Yurov & Ors

In a post-judgment application to vary a worldwide freezing order, the defendant bears the burden of persuading the court that no other assets are available to meet legal or living expenses. The evidence must be full and fair. The court may consider undisclosed assets, third-party funding and assets held by a spouse or other person who may assist.

The policy favouring enforcement weighs heavily against permitting frozen assets to fund resistance to enforcement. A stay of execution pending a fresh fraud claim requires particularly strong justification and must serve the interests of justice. Permission to sell frozen assets may also be refused where the proposed transaction would be futile or undermine existing enforcement.

Following a fraud trial resulting in a judgment exceeding US$800m against Mr Belyaev and others, a worldwide freezing order was made and later varied. Mr Belyaev applied to restore a legal expenses allowance, obtain permission to sell frozen vehicles and properties, stay execution of the judgment in several jurisdictions, and discharge the order so far as it concerned assets beneficially owned by his wife.

The application was made after earlier orders had removed his legal expenses allowance and reduced his living expenses allowance. He relied on the need to fund living costs, legal representation and a proposed fraud claim concerning the judgment. The central issues were whether he had discharged the burden of showing that no other funding was available, whether a stay would serve the interests of justice, and whether he had any basis to challenge the restraint over the assets beneficially owned by him.

1. Applications to vary the freezing order. The application to reinstate a legal expenses allowance and to permit sales of frozen assets was dismissed. In a post-judgment context, the policy favouring enforcement was important: Emmott v Michael Wilson & Partners Ltd [2019] 4 WLR 53 was applied.
2. The defendant seeking access to frozen assets bears the burden of persuasion that no other assets are available. The relevant principles, drawn from Serious Fraud Office v X [2005] EWCA Civ 1564 and Tidewater Marine International Inc v Phoenixtide Offshore Nigeria Ltd [2015] EWHC 2748 (Comm), require full and fair disclosure. The court may maintain healthy scepticism about unsupported assertions, consider assets of persons who may assist, and assess the overall justice of the case.
3. Mr Belyaev failed to discharge that burden. There was a real possibility that he owned an undisclosed Connecticut gun collection worth about US$3.8m. He had also funded substantial foreign legal costs through unidentified third parties and there was a real prospect that Mrs Belyaeva, who had means and whose assets largely derived from his income, would fund his expenses. The reasoning was consistent with the approach illustrated by North of England Coachworks Ltd v Khan [2020] EWHC 1972.
4. There were additional reasons not to permit sales. A sale of the Connecticut property would be futile because the claimant had a judgment lien. A sale to fund the purchase of another property risked undermining enforcement. Enforcement and registration proceedings concerning the South Carolina property also made permission inappropriate. The court therefore concluded that varying the order would not be in the interests of justice.
5. Stay of execution. The application for a three-month stay pending a proposed fresh fraud claim was dismissed. The burden was greater than in an application pending appeal. The court applied the interests-of-justice approach described in Assetco Plc v Grant Thornton UK LLP [2019] EWHC 592 (Comm), taking account of the rejected appeal applications, the claimant’s existing enforcement steps and the prejudice a stay would cause. No possible justification for a stay had been shown.
6. The court directed that specified witness statements and the skeleton argument should not be supplied from the court records unless edited to remove material alleged to be privileged, referring to Civil Procedure Rules 1998 CPR 5.4B and CPR 5.4C. The application to discharge the freezing order concerning the 38% beneficially owned by Mr Belyaev was also refused, since Mr Belyaev could not obtain an order which had previously been refused to Mrs Belyaeva.

The judgment records that the Court of Appeal dismissed the defendants’ applications for permission to appeal against the underlying fraud judgment by order dated 6 January 2021. The present decision was a first-instance determination of Mr Belyaev’s subsequent applications concerning the freezing order and enforcement.