SITTING AT THE ROYAL COURTS OF JUSTICE
Strand, London, WC2A 2LL
B e f o r e :
Mr C Hale QC & Mr N Fairbank (instructed by Sterling Lawyers) for the 1st Respondent
The 2nd Respondent as a Litigant in person
Mr E Sheppard (instructed by DWF Law LLP) for the Claimant
The 3rd and 4th Respondents did not appear
Hearing dates: 6th 23rd October, 28th October, 5 November
Crown Copyright ©
The Honourable Mr Justice Cohen :
i) When they first met, whether it was in late 2000 or Autumn 2001, and when they began to cohabit, whether it was in 2002 or as late as 2007. W asserts the earlier dates and H the later dates.
ii) The origins of the wealth that H had acquired by the time that they met. Was H a self-made man, as W asserts, or was his wealth created on the coat-tails of what his mother had built up. Did, in reality, his mother have any assets of significance.
iii) The extent of H's pre-marital wealth in 2002-2007 and the extent to which its value was diminished by the 2008 Global Financial Crisis and the annexation of Crimea in 2014. W's case is that there has been no such reduction in value but rather that H's wealth has grown throughout the marriage.
iv) The origin and the identity of the provider of the funds for the purchase of three of the four London properties.
v) Whether or not H has divested himself or lost all his fortune so that he is in negative equity, as he asserts, or whether he has substantial undisclosed wealth in Ukraine and USA in addition to the London properties, as W asserts.
vi) Whether the documents that H has produced, being agreements between H and respectively his mother, AS and GS, are shams in the sense of being created for the purposes of this litigation to distance H from the ownership of assets which are his.
vii) The circumstances in which H says that he and W entered into agreements for the division of their assets in 2015 and the effect of the agreements, if found to be genuine.
viii) Whether W has a sharing claim and whether it is capable of quantification.
ix) The extent of W's needs for herself and O.
H and W's early relationship
i) The parties had not "lived together, maintained any common household or kept any marriage relations" since 2011;
ii) They had lived separately for about 7 years;
iii) They lived in Ukraine.
i) Since the end of 2014 W and O had moved to another place of residence and from that time W had prevented O from meeting H;
ii) It was obvious that W could not independently support the family and ensure adequate financial situation for the upbringing of O;
iii) W was currently living with her parents, sister and child and sister's husband in a one room apartment in Ukraine and that in consequence O's residence should be committed to his father.
The foundation of the family wealth
"The borrower undertakes to return to the lender the amount of money specified before December 1 2015 or according to the additional agreement between the lender and the borrower investing in the interests of the borrower in real estate outside Ukraine".
i) GS handed over $8m for a period of 9 years without there being any upside in terms of security or interest or share in any profit;
ii) Drafted as it was at H's behest, why does it refer to the development of a family business within the framework of the fiduciary agreement when it is no part of H's case that the money was ever used for the family business or within the 2004 Agreement and nor was any annex entered into?
iii) Why the discrepancy between "family business" and "my business"?
iv) Is it sheer chance that the agreement expires in December 2015, which just happens to be the time that H was required to complete on the purchase of the HG Property?
v) Why does the agreement make provision for the purchase of real estate outside Ukraine which at that time had been no part of the experience of either H or GS?
i) There was no interest or security;
ii) H says that he was in financial difficulties following the banking crisis of 2007-2008 and that was why he needed to borrow more money from GS. If H needed the money for business purposes why does the agreement say that the cash was an advance for the purchase of real estate and other property?
iii) Within a year H was buying property in London and within a short time had spent more than £4m on London property and the investors bond. Why did he need to borrow at all?
The OR Property
The LG Property
I ought to contact Stephen Landes, who advised from an accountancy point of view, on the transfer/gift of the property, to make sure that a simple transfer for no money will be ok please confirm I may contact him".
It was nice to talk to you!
We would like to emphasise again for better understanding that Mr OS is a non-resident beneficiary (sic) of L Ltd, IU is a resident of UK but she is not a beneficiary of the company".
The HG Property
"Dear Bill, We are pleased to inform you that Mr OS and his wife IU have finalised their choice of the future apartment they would like the last to be held in a way of "joint tenants". . The price is £6,425,000 inclusive of one parking space and a storeroom as one of the variants, the purchase can be made through personal IU's account with Coutts Bank in Switzerland the origin of the funds will be based on a contract of loan which is entered with our offshore company (emphasis added) the amount of the loan £7m and will be provided for a period of 5 years. In this regard we would much appreciate to receive the information from you which form of payment would minimise the number of questions in relation to OS (as to a PEP) and to IU as a resident of UK".
The parties "came to an agreement on the intention to conclude a marriage contract during the marriage, in view of the following preconditions" and then it sets out various terms.
We (the spouses) acting voluntarily in accordance with own free expression of will that corresponds to our internal will, being in sound mind and clear memory, understanding the meaning of our actions, having previously familiarized ourselves with the requirements of the current legislation as to the invalidity of legal acts, and intending to settle the property relations between the spouses have concluded this Marriage Contract as follows:
1.1 By this Contract the Husband and Wife settle property relations between them, including the determination of legal regime of the property obtained during the period of registered marriage, determination of property rights and duties of each of the Spouses, etc. (There is then set out details of certain Ukrainian real property, motor vehicles).
1.2 All property, including movable and immovable, including, but not limited to: apartments, housing estates, land plots, vehicles, monetary funds, currency values, securities, corporate rights, etc., wherever it is, purchased and/or obtained by the Husband or the Wife before the registration of the marriage, is personal property and belongs on the basis of personal private ownership to that of the Spouses in whose name it was purchased or obtained.
1.3 All property, including movable and immovable, including, but not limited to: apartments, housing estates, land plots, vehicles, monetary funds, currency values, securities, corporate rights, etc., wherever it is, purchased and/or obtained by the Husband or the Wife during the marriage as a gift, in order of inheritance, as well as under other free legal acts (agreements) that are of personal nature, is personal private property of that of the Spouses to whom the property was transferred during the period of the marriage, including received as a gift and/or inherited.
1.4 All property, including movable and immovable, including, but not limited to: apartments, housing estates, land plots, vehicles, monetary funds, currency values, securities, corporate rights, etc., wherever it is, purchased and/or obtained by the Husband or the Wife during the marriage, but at the expense of the funds that belong to the Husband or to the Wife personally, including as a result of previous sale of the property that belonged to the Husband or Wife on the basis of the right of private ownership, or as a result of debt forgiveness or gift in favour of the Husband or Wife, who is the party to corresponding legal acts. Etc., is personal private property of that of the Spouses, at the expense of whose funds such property was purchased.
1.7 All other, not mentioned in the paragraphs 1.5-1.6 of this contract, movable and immovable property, including but not limited to: apartments, housing estates, land plots, vehicles, monetary funds, currency values, securities, etc., wherever it is (in Ukraine or abroad in the territory of other countries), purchased and/or obtained in the name of the Husband after the registration of marriage before the conclusion of this contract, by agreement of the Spouses is personal property and belongs on the basis of the right of personal private property to the Husband.
1.8 All corporate rights formalized in the territory of Ukraine in the name of the Wife after the registration of marriage before the conclusion of this contract, by agreement of the Spouses, belong on the basis of the right of personal private property to the Husband.
1.10 In case of the dissolution of the marriage all objects of movable and immovable property, including, but not limited to: apartments, housing estates, land plots, vehicles, monetary funds, currency values, securities, corporate rights, etc., wherever it is, belonging to the Husband or to the Wife are considered personal private property of that of the Spouses, to whom it will belong as of the moment of the dissolution of marriage.
1.11 In case of the dissolution of marriage the property that belongs to the Parties on the basis of the right of personal private property in accordance with this contract and the property that belonged to the Parties before the registration of the marriage, shall not form the part of the property that is subject to the division.
2. PECULIARITIES OF LEGAL REGIME OF CERTAIN TYPES OF PROPERTY
2.2 Monetary funds in the accounts with bank institutions, any bank deposits, including interest accrued on the same, existing as of the date of the conclusion of this Contract, shall be considered personal private property of the Husband from the moment of opening of such accounts, regardless of the date of the conclusion of this contract and of the fact in whose name of the Spouses the account is opened with the bank institution.
3. ADDITIONAL CONDITIONS
3.3 The second of the Spouses shall not be liable for the agreements made by the other of the Spouses without his/her written consent.
3.4 Each of the Spouses shall be liable with respect to the obligations assumed towards the creditors within the limits of the property belonging to him/her.
3.5 The parties have agreed that as of the moment of the signing of this Contract the Husband undertakes to ensure the conclusion in favour of the Wife of the contract of transfer of the right to claim to investment contract No. X/PH-Y of X as to the investment of three-room apartment located at the address: apt. 48, AB str., city of Kyiv, total area 127,38 square meters.
At the same time the Husband shall undertake also to:
- Ensure the fulfilment in the mentioned apartment of the repair sufficient for comfortable living of the child;
- Ensure the purchase in the name of the Wife of the parking slot maximally close to the house where the apartment indicated in this paragraph is located.
3.6 Each of the Spouses shall assume equal responsibility for the maintenance, education and study of common children, including in the case of the dissolution of the marriage, till the full age (majority) of the children.
3.7 The Husband shall undertake during the period of the marriage and in case of its dissolution till the moment the common child of the Spouses reaches the full age to allot to the Wife monthly amount of funds for the maintenance of the child agreed by the Spouses. The amount of the mentioned monthly maintenance and the form of its provision will be agreed by the Spouses additionally by means of conclusion of separate agreement.
3.8 The Husband during the period of marriage and in case of its dissolution additionally allots to the Wife annually the funds for the payment of expenses, in accordance with the bills for the study, health improvement and recreation of common children of the Spouses, received and agreed with the Husband.
4. FINAL PROVISIONS
4.8 This contract includes full volume of agreements between the Parties with respect to the subject of this contract, annuls and makes null and void all other obligations that could be adopted or made by the parties in oral or written form before the conclusion of this contract.
4.9 The Notary has explained to the Parties the provisions of the current legislation as to the order of conclusion of marriage contracts, reasons and consequences of their recognition as null and void, the article 203 of the Civil Code of Ukraine, articles 92-103 of the Family Code of Ukraine.
i) At 1.4 all property belongs to the spouse "at the expense of whose funds such property was purchased." Thus, W loses all her property interests in England and elsewhere, save for one Kiev apartment which H transfers to her.
ii) Not only is this inconsistent with the Property Agreement, which it superseded, but leaves her massively worse off than she was just days before. She ends up with 1 Kiev flat and 2 used cars in place of the OR Property and half the Spanish property.
iii) There is no disclosure of any of H's business interests or his bank or savings accounts.
iv) There is no spousal provision by way of maintenance. How was W expected to support herself?
Its terms read as a document heavily weighted in favour of H and it is manifestly disadvantageous to W.
Radmacher  UKSC 42
69. The safeguards in the consultation document are designed to apply regardless of the circumstances of the particular case, in order to ensure, inter alia, that in all cases ante-nuptial contracts will not be binding unless they are freely concluded and properly informed. It is necessary to have black and white rules of this kind if agreements are otherwise to be binding. There is no need for them, however, in the current state of the law. The safeguards in the consultation document are likely to be highly relevant, but we consider that the Court of Appeal was correct in principle to ask whether there was any material lack of disclosure, information or advice. Sound legal advice is obviously desirable, for this will ensure that a party understands the implications of the agreement, and full disclosure of any assets owned by the other party may be necessary to ensure this. But if it is clear that a party is fully aware of the implications of an ante-nuptial agreement and indifferent to detailed particulars of the other party's assets, there is no need to accord the agreement reduced weight because he or she is unaware of those particulars. What is important is that each party should have all the information that is material to his or her decision, and that each party should intend that the agreement should govern the financial consequences of the marriage coming to an end.
71. In relation to the circumstances attending the making of the nuptial agreement, this comment of Ormrod LJ in Edgar v Edgar at p 1417, although made about a separation agreement, is pertinent:
"It is not necessary in this connection to think in formal legal terms, such as misrepresentation or estoppel; all the circumstances as they affect each of two human beings must be considered in the complex relationship of marriage."
The first question will be whether any of the standard vitiating factors: duress, fraud or misrepresentation, is present. Even if the agreement does not have contractual force, those factors will negate any effect the agreement might otherwise have. But unconscionable conduct such as undue pressure (falling short of duress) will also be likely to eliminate the weight to be attached to the agreement, and other unworthy conduct, such as exploitation of a dominant position to secure an unfair advantage, would reduce or eliminate it.
i) There was no disclosure process between the parties. Whilst W would have had knowledge of H's English assets there was no disclosure of any income, business interests or of accounts or any picture given of H's wealth.
ii) The agreement could never be regarded as fair. It made no proper provision for meeting the needs of W and O, then aged 7.
iii) Whilst I am satisfied that W had a lawyer who had some input, I am not satisfied that she received any legal advice. She says that she met Mr P only once for a short period. She would not have had much opportunity as she was only in Kiev for a few days before the document was signed and it is not one that would be easy for a lay person to follow.
iv) There is a real sense of W being hurried into the agreement. Surrounded as she was both in Turkey and then in Kiev by H and his coterie of friends and advisors who were both older and wiser than W, I accept that she would have felt outgunned.
v) That it was unfair and failed to make proper provision may be inferred from H's open offer to transfer the OR Property to W.
The HG Property Completion
i) The parties created a trust according to which GS transferred the right to claim a debt under the 2006 loan agreement and H transferred the real estate at the HG Property;
ii) H agreed to act in the interests of GS and undertook to pay the revenue and capital to GS in accordance with this trust agreement. This included paying to GS the income and capital of the trust fund on a quarterly basis;
iii) The trust was to be terminated in the event of GS within 3 years from the date of the trust calling for the transfer to her of the property;
iv) Written amendments to the agreement were permitted.
i) No valuation took place of the flat in December 2015. On the face of it the trust agreement satisfied the debt under the loan agreement for $8m by the transfer of apartment. How could GS know whether or not she was receiving an asset of an appropriate value for her loan?
ii) Why was H receiving the rent when under the terms of the agreement it was due to GS?
iii) In a confused attempt to explain this, H and GS sought to explain that there was further accounting still to be done between them when the apartment was finally transferred to her with, at different times, each of them claiming that money was due either to GS or to H. Mr Sheppard's attempts on behalf of GS to say that this amounted to a verbal variation to the agreement was not one that had any evidential basis.
iv) Why had GS never drawn the income which is sitting in Ms P's client account?
v) Why has GS, who formerly was so interested in H's business affairs and who is herself a banker, become so uninterested as to the value of the property which was being substituted for her loan and as to the reality or otherwise of H's need for continued use of her funds?
The NG Property
"The property he is buying is a freehold house comprising three flats effectively Mr OS will be purchasing two upper flats from one seller and the garden flat and the freehold from another seller, who is a relative of the owner of the upper flats. Both sellers are acting together and the total price of £4,750,000 has been agreed. Mr OS's plan is to redevelop all three flats and possibly sell in the future two upper flats and retain or sell the garden flat. Mr OS may be getting a mortgage to fund part of the purchase.
"The sellers expect the exchange to be done next week therefore there are a few questions in relation to the purchase structure that Mr OS needs to have answers for cons and pros / tax implications of purchasing the property in a trust where his sons would be a beneficiaries, types of trusts and their tax position, SDLT (linked transactions less multiple dwelling relief, less 3% first property allowance? Or are there better options?), basic CGT for trusts in comparison to a private buyer.
"Providing Mr OS is happy with the advice given he could consider further consultations and cooperation with your firm in this and other transactions.
I look forward to hearing from you soon."
I write to report on your proposed purchase of the above freehold property.
This transaction is much more straightforward and I therefore propose to report in a simpler fashion.
The contract provides for the purchase by S Ltd of the freehold and three leasehold interests in the property. The contract attached shows you as the buyer. I am getting a further version showing S Ltd as the buyer.
You control S Ltd absolutely.
You will control the whole of the property as well. Though it may be that the leases become important in the future, when you come to sell one or more of them, they are not important now, as you will own or control the whole property. I therefore do not intend to go through the leases in detail if there is something that, in future, needs changing, you can change it.
The price is £4,750,000. 10% is payable on exchange. You have sent me that.
We have discussed SDLT in emails between us and your advisers and the plan at the moment is to contract in the name of S Ltd , but on completion imm3ediaytely (sic) to transfer the ground floor flat (or part of it) to trustees to hold that property for your sons on a bare trust providing for the property to vest in them at a future date, yet to be agreed.
As usual, the contract provides that you must satisfy yourself as to the physical condition of the property. If there are defects in it, they are your problem, not the sellers.
Importantly, risk passes to you on exchange and you must therefore insure the property from now, not from completion." [emphasis added]
The HG Property revisited
"I can say at this stage that my intention is only to obtain payment of that $2m debt from OS, since he borrowed the money not from IU. I do not intend to proceed against IU at this stage."
1. The 1986 "Trust Deed"
2. The 2004 "Fiduciary Agreement"
3. The 2005 receipts
4. The 2006 loan agreement and acknowledgement
5. The 2009 loan agreement
6. The 2010 loan agreement between H and IK
7. The 2015 Property Agreement.
8. The 2015 Trust Deed between H and GS.
9. The February 2017 investment agreement between S Ltd and K Company
10. The 2017 annex transferring S Ltd to the family trust
11. The 2017 loan between H and Mrs R
12. The 2018 decision appointing AS as manager of the trust
13. The 2018 decision transferring S Ltd shares to AS
14. The November 2019 particulars of claim of GS
I shall use these numbers in the following paragraphs.
i) Coincidentally, these documents have been printed on different printers malfunctioning in similar ways over a period of approximately 15 years;
(ii) These documents were all produced on the same printer which was in use and malfunctioning in a similar way over a period of approximately 15 years, or
(iii) These defects appear on these documents as they were produced on a single machine over a much shorter period of time.
They point out that it is not for them to say which is the more likely.
The standard of proof
13. My Lords, I would invite your Lordships fully to approve these observations. I think that the time has come to say, once and for all, that there is only one civil standard of proof and that is proof that the fact in issue more probably occurred than not. I do not intend to disapprove any of the cases in what I have called the first category, but I agree with the observation of Lord Steyn in McCann's case (at 812) that clarity would be greatly enhanced if the courts said simply that although the proceedings were civil, the nature of the particular issue involved made it appropriate to apply the criminal standard.
14. Finally, I should say something about the notion of inherent probabilities. Lord Nicholls said, in the passage I have already quoted, that
"the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability."
15. I wish to lay some stress upon the words I have italicised. Lord Nicholls was not laying down any rule of law. There is only one rule of law, namely that the occurrence of the fact in issue must be proved to have been more probable than not. Common sense, not law, requires that in deciding this question, regard should be had, to whatever extent appropriate, to inherent probabilities. If a child alleges sexual abuse by a parent, it is common sense to start with the assumption that most parents do not abuse their children. But this assumption may be swiftly dispelled by other compelling evidence of the relationship between parent and child or parent and other children. It would be absurd to suggest that the tribunal must in all cases assume that serious conduct is unlikely to have occurred. In many cases, the other evidence will show that it was all too likely. If, for example, it is clear that a child was assaulted by one or other of two people, it would make no sense to start one's reasoning by saying that assaulting children is a serious matter and therefore neither of them is likely to have done so. The fact is that one of them did and the question for the tribunal is simply whether it is more probable that one rather than the other was the perpetrator."
"It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason, a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance"
and I also have in mind the views of Robert Goff LJ (as he then was) in The Ocean Frost  1LLR 57 where he said
"Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, references to the witness' motives and to the overall probabilities can be of very great assistance to a Judge in ascertaining the truth."
H's resources in Ukraine
"I believe that the respondent owns directly, or indirectly via his mother, at least 12 properties, both commercial and residential, in the Ukraine with a collective value of at least c.$8.5m."
There is no explanation as to why her estimate of value has gone up 3-4 fold.
Standard of living
"This was lavish. That no expense was spared to setting up our successive London homes is one measure of this" [grammar corrected].
Her Form E casts more light on the homes in Ukraine and the staff and cars.
The parties' open positions
i) She seeks the transfer of the OR Property into her sole name
ii) The necessary share transactions shall be undertaken so that the LG property, the HG Property and the NG Property become hers absolutely;
iii) The Spanish holiday home should be transferred into W's sole name
iv) H should pay a lump sum equivalent to the total level of her debt, namely some £3.1m
v) H should pay O's school fees and maintenance to the sum of £20,000 pa.
i) The OR Property should be transferred to W
ii) The Spanish property should be sold and the proceeds divided equally
iii) H should pay child maintenance in the sum of £19,200 pa.
The OR Property £795,400
The LG property (in current condition) £1.940m
The HG Property £5.577m
The NG Property £4.050m
Spanish flat (50%) £430k
Lump sum £3m
Total £15,800,000 plus the retention of her Kiev home so as to produce a total of about £16m.
 My broad conclusions as to the approach the court should take when
dealing with non-disclosure are as follows. They are broad because, as I have
sought to emphasise, non-disclosure can take a variety of forms and arise in a
variety of circumstances from the very general to the very specific. My
remarks are focused on the former, namely a broad failure to comply with the
disclosure obligations in respect of a party's financial resources, rather than
 (i) It is clearly appropriate that generally, as required by s 25 of the
1973 Act, the court should seek to determine the extent of the financial
resources of the non-disclosing party.
 (ii) When undertaking this task the court will, obviously, be entitled to
draw such adverse inferences as are justified having regard to the nature and
extent of the party's failure to engage properly with the proceedings.
However, this does not require the court to engage in a disproportionate
enquiry. Nor, as Lord Sumption said, should the court 'engage in pure
speculation'. As Otton LJ said in Baker v Baker, inferences must be 'properly
drawn and reasonable'. This was reiterated by Lady Hale in Prest v Petrodel
at para :
' the court is entitled to draw such inferences as can properly be
drawn from all the available material, including what has been
disclosed, judicial experience of what is likely to be being concealed
and the inherent probabilities, in deciding what the facts are.'
 (iii) This does not mean, contrary to Mr Molyneux's submission, that
the court is required to make a specific determination either as to a figure or a
bracket. There will be cases where this exercise will not be possible because,
the manner in which a party has failed to comply with their disclosure
obligations, means that the court is 'unable to quantify the extent of his
undisclosed resources', to repeat what Wilson LJ said in Behzadi v Behzadi.
 (iv) How does this fit within the application of the principles of need
and sharing? The answer, in my view, is that, when faced with uncertainty
consequent on one party's non-disclosure and when considering what
Lady Hale and Lord Sumption called 'the inherent probabilities' the court is
entitled, in appropriate cases, to infer that the resources are sufficient or are
such that the proposed award does represent a fair outcome. This is,
effectively, what Munby J did in both Al-Khatib v Masry and Ben Hashem v
Al Shayif and, in my view, it is a legitimate approach. In that respect I would
not endorse what Mostyn J said in NG v SG (Appeal: Non-Disclosure) 
EWHC 3270 (Fam),  1 FLR 1211, at para (vii).
 This approach is both necessary and justified to limit the scope for,
what Butler-Sloss LJ accepted could otherwise be, a 'cheat's charter'.
As Thorpe J said in F v F (Divorce: Insolvency: Annulment of Bankruptcy
Order)  1 FLR 359, although not the court's intention, better an order
which may be unfair to the non-disclosing party than an order which is unfair
to the other party. This does not mean, as Mostyn J said in NG v SG,
at para , that the court should jump to conclusions as to the extent of the
undisclosed wealth simply because of some non-disclosure. It reflects, as he
said at para (viii), that the court must be astute to ensure that the
non-discloser does not obtain a better outcome than that which would have
been ordered if they had complied with their disclosure obligations.