Andrey Rogachev v Mikhail Goryainov

On termination of a joint venture, the balancing payment is to be determined by an account based on the parties’ actual contributions, drawings, profits and the open-market values of retained assets. Where accounting records are unreliable, the court may use carefully supported proxies, including comparable market rates for revenue and management costs. Contemporary business records, expert agreement and the substance of transactions may justify treating informal or technical loans, cash payments and related-party arrangements according to their commercial reality. Valuation must reflect market conditions, including the appropriate local currency, existing tenancies and reasonable allowances for management, selling costs and renewal expenditure.

The claimant and defendant formed a 50–50 joint venture involving Moscow retail sites. The venture was terminated, and the parties agreed which sites each would retain. They asked the court to determine the detailed issues needed to calculate the balancing payment, without fixing the final sum at trial.

The disputes concerned contributions, drawings, capital and operating expenditure, market profits, control of sites during an interim period, and the valuation of five retained sites as at 30 June 2023. The court also identified limited matters for determination at a consequential hearing.

The court determined the principal accounting and valuation issues but left calculation of the final balancing payment, and any remaining disputes, for agreement or a consequential hearing.

1. Contributions and drawings. The acquisition cost of V177 was to be treated as approximately US$22m, as recorded in the Register. The evidence showed that the price included both share acquisitions and repayment of vendor-company borrowing, together with cash and commission payments. The Register was not binding, but it was a comprehensive document produced after negotiation and investigation and carried substantial evidential weight.
2. The US$1.714m associated with the Aminievskoye payment had not been returned and was therefore a drawing by the defendant. Payments of US$670,000 to an agent in connection with K25 were contributions by the claimant, but were not also drawings by the defendant. The US$875,289 lost in Rontek was a loss of the joint venture, because the money had been used for joint venture purposes. Office expenditure was likewise joint venture expenditure.
3. Capital expenditure. Cash capital expenditure was to be assessed by examining contemporaneous descriptions in account 50 and the cash registers, rather than relying wholly on the register of fixed assets or requiring bank evidence alone. The defendant’s capital expenditure was accepted on the basis of the automatically extracted accounting records and tested samples. Loan interest incurred to fund capital expenditure was included because no agreement excluded it.
4. Profits and drawings. The defendant’s markets were in shared control before November 2015, so profits or losses for that period were to be shared equally. For the claimant’s markets, unreliable accounting records justified using adjusted market rates as a proxy for revenue and a broad-brush allowance of about US$55,000 for facilitation payments. Management costs were assessed at 5 per cent of revenue for all markets. Depreciation was not deducted where that would double-count renewal expenditure.
5. Valuation. The sites were valued by the income method as open-market values at 30 June 2023. The valuation was to be carried out in rubles because that reflected the Moscow market. A 5 per cent allowance for management costs and a 1 per cent renewal allowance, each calculated by reference to revenue, were appropriate. V177 was valued with Lenta as anchor tenant because the letting was part of the market reality and no agreement required it to be disregarded.
6. A consequential hearing would address any unresolved balancing-payment calculation, two minor payments totalling approximately US$38,000, and possible double-counting between operating and capital expenditure.

First-instance judgment. The judgment does not state any prior appellate decision.