A divorcee has, for the second time, fended off a man’s claim to her ex-husband’s multi-million pound property, which she claims is the only UK asset available to provide for her and her two children.
In a December 2010 ruling, Mostyn J ruled that Janna Kramen’s claim on the property, South Lodge, in Walton-on-Thames, beneficially owned by her former husband Boris Agrest, meant that he should set aside the purchase by Georgy Chesnokov of the sole share in the property’s legal owner, Everclear Ltd, for $4m.
The judge found that Agrest’s disposition of Everclear – a corporate vehicle used by to minimise his liability to tax – was a “sham” intended to defeat his ex-wife’s claim to financial relief, but that Kremen secured a court order barring Agrest from dealing with the property before the purchase was concluded. He found that, though Chesnokov did not act in bad faith initially, he proceeded with the purchase after learning of Kramen’s claim to the property.
After failing in an appeal against that ruling, Chesnokov then brought proceedings against Agrest under an indemnity, and obtained judgment in default of a defence in August 2011.
He sought a charging order over the property, but Mostyn J refused to grant it, finding that Chesnokov was seeking to undo his earlier judgment.
Now the Court of Appeal has rejected Chesnokov’s latest appeal, Moore-Bick LJ ruling that he was the “author of his own misfortune” by proceeding with the purchase of Everclear after he had become aware of Kramen’s claim on the property.
He said that Kramen was awarded a £12.5m sum by the judge in divorce proceedings in February last year, and that South Lodge is the only asset available in the UK that might be used to satisfy that order.
He said that there is £400,000 equity in the property which, together with funds previously paid into court, meant that £1m was at stake for Kramen, whilst Chesnokov holds a judgment for £1.46m against Agrest, which he claimed may prove worthless.
Moore-Bick LJ continued: “However, as the judge found, he is a wealthy man in his own right and since Mr. Agrest still holds, or has had the benefit of, the bonds transferred in part-payment of the price, and given the judge’s findings about the relationship between him and Mr. Chesnokov, I am not prepared to assume that there is no prospect of the debt’s being repaid in some form or another in due course. That is one factor that counts against him, but there are also other, more powerful, factors.
“I agree with the judge that this is an exceptional case, not because Mr. Chesnokov is seeking to assert a claim against what is once again Mr. Agrest’s property, but because of the circumstances in which the debt which he seeks to recover was incurred.
“The contract to purchase Everclear, and by that means South Lodge, was not binding on Mr. Chesnokov until he had obtained mortgage finance and before that had happened he had become aware of Ms. Kremen’s claim and of the order prohibiting Everclear or Mr. Agrest from disposing of any interest in the property.
“Nonetheless, he proceeded with the purchase in circumstances where he must have been aware that there was at least a risk that the transaction would be challenged and might be held to have been ineffective. He was, therefore, the author of his own misfortune and in my view that undermines to a very significant extent any expectation he might otherwise have had as a judgment creditor that the court would make an order to enable him to recover the losses incurred as a result.
“That is all the more so in circumstances where Ms. Kremen and her children would be likely to suffer a degree of hardship if a charging were made in his favour.
“The reality is that the equity in South Lodge is likely to be exhausted within a relatively short time, but in any event, for the reasons I have given, I do not think that the interests of justice would be served by making a charging order absolute over the property on any terms in favour of Mr. Chesnokov.”
Thorpe LJ added: “Whilst the wife needed every penny that she could get to meet her needs and the needs of the children the appellant is a significantly rich man seeking to extricate himself from a bad deal which he had chosen to strike with full knowledge of the risks that he ran and without any additional consideration to justify the risks.”
Kremen v Agrest and anr Court of Appeal (The Chancellor, Thorpe and Moore-Bick LJJ) 5 February 2013
Frank Feehan Q.C. (instructed by Horne Engall & Freeman Llp) for the appellant (Chesnokov)
Christopher Stirling and Mr. John Hamilton (instructed by Richardson Smith Solicitors) for the respondent (Kremen)
A divorcee has, for the second time, fended off a man’s claim to her ex-husband’s multi-million pound property, which she claims is the only UK asset available to provide for her and her two children. In a December 2010 ruling, Mostyn J ruled that Janna Kramen’s claim on the property, South Lodge, in Walton-on-Thames, beneficially owned by her former husband Boris Agrest, meant that he should set aside the purchase by Georgy Chesnokov of the sole share in the property’s legal owner, Everclear Ltd, for $4m. The judge found that Agrest’s disposition of Everclear – a corporate vehicle used by to minimise his liability to tax – was a “sham” intended to defeat his ex-wife’s claim to financial relief, but that Kremen secured a court order barring Agrest from dealing with the property before the purchase was concluded. He found that, though Chesnokov did not act in bad faith initially, he proceeded with the purchase after learning of Kramen’s claim to the property. After failing in an appeal against that ruling, Chesnokov then brought proceedings against Agrest under an indemnity, and obtained judgment in default of a defence in August 2011. He sought a charging order over the property, but Mostyn J refused to grant it, finding that Chesnokov was seeking to undo his earlier judgment. Now the Court of Appeal has rejected Chesnokov’s latest appeal, Moore-Bick LJ ruling that he was the “author of his own misfortune” by proceeding with the purchase of Everclear after he had become aware of Kramen’s claim on the property. He said that Kramen was awarded a £12.5m sum by the judge in divorce proceedings in February last year, and that South Lodge is the only asset available in the UK that might be used to satisfy that order. He said that there is £400,000 equity in the property which, together with funds previously paid into court, meant that £1m was at stake for Kramen, whilst Chesnokov holds a judgment for £1.46m against Agrest, which he claimed may prove worthless. Moore-Bick LJ continued: “However, as the judge found, he is a wealthy man in his own right and since Mr. Agrest still holds, or has had the benefit of, the bonds transferred in part-payment of the price, and given the judge’s findings about the relationship between him and Mr. Chesnokov, I am not prepared to assume that there is no prospect of the debt’s being repaid in some form or another in due course. That is one factor that counts against him, but there are also other, more powerful, factors. “I agree with the judge that this is an exceptional case, not because Mr. Chesnokov is seeking to assert a claim against what is once again Mr. Agrest’s property, but because of the circumstances in which the debt which he seeks to recover was incurred. “The contract to purchase Everclear, and by that means South Lodge, was not binding on Mr. Chesnokov until he had obtained mortgage finance and before that had happened he had become aware of Ms. Kremen’s claim and of the order prohibiting Everclear or Mr. Agrest from disposing of any interest in the property. “Nonetheless, he proceeded with the purchase in circumstances where he must have been aware that there was at least a risk that the transaction would be challenged and might be held to have been ineffective. He was, therefore, the author of his own misfortune and in my view that undermines to a very significant extent any expectation he might otherwise have had as a judgment creditor that the court would make an order to enable him to recover the losses incurred as a result. “That is all the more so in circumstances where Ms. Kremen and her children would be likely to suffer a degree of hardship if a charging were made in his favour. “The reality is that the equity in South Lodge is likely to be exhausted within a relatively short time, but in any event, for the reasons I have given, I do not think that the interests of justice would be served by making a charging order absolute over the property on any terms in favour of Mr. Chesnokov.” Thorpe LJ added: “Whilst the wife needed every penny that she could get to meet her needs and the needs of the children the appellant is a significantly rich man seeking to extricate himself from a bad deal which he had chosen to strike with full knowledge of the risks that he ran and without any additional consideration to justify the risks.” Kremen v Agrest and anr Court of Appeal (The Chancellor, Thorpe and Moore-Bick LJJ) 5 February 2013Frank Feehan Q.C. (instructed by Horne Engall & Freeman Llp) for the appellant (Chesnokov)Christopher Stirling and Mr. John Hamilton (instructed by Richardson Smith Solicitors) for the respondent (Kremen)
