Lyubov Andreevna Kireeva v Alina Zolotova & Anor

An unless order requiring a litigant to certify that funding arrangements and a banking route were in place must be answered accurately and substantively. Identifying only the account from which money is to be sent does not identify a route: the certificate must explain how funds will reach the relevant destination, including any material intermediate steps. A materially inaccurate certificate is ineffective, without any need to establish bad faith. In any event, bad faith by persons authorised to arrange funding can taint a certificate given by the litigant’s solicitors, so that the litigant cannot rely on it. Minor inadvertent inaccuracies may be addressed through relief from sanctions, but a crucial inaccuracy can trigger the unless order. Reliance on a certificate that should never have been provided may also constitute an abuse of process warranting strike-out.

The claimant, acting as bankruptcy trustee, sought to recover a luxury Italian villa for the bankruptcy estate. The claim concerned the effectiveness of a share transfer in the English company registered as owner of the villa. The trial was adjourned on terms, including payment of costs and a certificate by 31 August 2024 confirming that funding arrangements were in place and specifying the banking route.

The claimant’s solicitor certified that funds would be transferred directly from the funder’s owner’s Moscow bank account to the solicitors’ account. The High Court held that the specified route was materially inaccurate, and that bad faith by persons involved in arranging the funding tainted the certificate. The claim was therefore struck out under the unless order, with abuse of process as an alternative basis: [2024] EWHC 2705 (Ch). The appeal challenged the findings of inaccuracy, bad faith and abuse of process.

1. Appeal dismissed. The certificate was materially inaccurate when given. In context, the requirement to provide details of the banking route required more than identifying the source account. A route meant the method of getting funds from the Moscow account to the English solicitors’ account. The word “directly” materially represented that the transfer would be made without an intermediary, such as another bank or payment agent.
2. The fact that inter-bank transfers may operate through correspondent banks did not remove the substantive distinction between a direct bank-to-bank transfer and a transfer via another bank or payment agent. The certificate was forward-looking. It could be accurate only if the necessary payment instructions had already been given and accepted before the relevant banking deadline. No such instructions had been given or accepted.
3. Material inaccuracy alone was sufficient to invalidate the certificate and cause the unless order to take effect. Bad faith was not necessary. This did not mean that every minor inadvertent inaccuracy would require strike-out, since relief from sanctions remained available and the court could act under the overriding objective. The inaccuracy here was crucial and no application for relief had been made.
4. In any event, the High Court was entitled to find that the persons responsible for arranging the funding knew the true position and allowed the certificate to be provided. Their conduct tainted the certificate and the solicitors’ act because they were authorised to negotiate funding and compliance with the order on the claimant’s behalf. The certificate could not be relied upon when those responsible for the arrangements knew that it could not properly be given.
5. The abuse-of-process ground did not arise for decision. The court nevertheless agreed that, even if the certificate had been technically valid, reliance on it was an abuse of process and strike-out was an available and proper remedy. Lord Justice Bean and Mr Justice Cobb agreed with Lord Justice Nugee.

• Court of Appeal (Civil Division) — Appeal dismissed. The order of Sir Anthony Mann striking out the claim under the unless order was upheld: [2024] EWHC 2705 (Ch).
• High Court of Justice, Business and Property Courts, Insolvency and Companies List (ChD) — Sir Anthony Mann held that the claim stood struck out as at the end of 31 August 2024 for failure to comply with the unless order, alternatively for abuse of process.