Key findings

Key findings in the English divorce judgment – AAZ v BBZ [2016] EWHC 3234 (Fam)

Submission to jurisdiction: Farkhad had submitted to the jurisdiction of the English Court, by letter from his solicitors, Sears Tooth, dated 18th June 2015.¹

No justification for departing from the sharing principle: Farkhad failed to prove any valid reasons or ‘departure points’ which would justify the matrimonial property being divided other than equally 50:50. In particular, Mr Justice Haddon-Cave found the following:

• First, that the marriage endured from 1993 until 2013 as Tatiana contends (and was not ‘over’ in 1999 or in 2004 as Farkhad contends).² Mr Justice Haddon-Cave found that:³

H’s essential argument appears to be that between 1999 (or 2004) and 2013 the parties only came together for the sake of their children.

However, H has produced no valid documentary evidence to support his case on de facto separation, nor any witnesses, nor has he chosen to appear before the court to be cross-examined on this point.

…
The broad picture is that, during the marriage, W and the children lived in Surrey and H, as an international businessman, travelled frequently for his work, principally to Russia. However, the family base was always the English property and H would return there to be with his family within the time permitted by the Revenue for non-resident taxpayers. Family holidays were always spent abroad: in the Maldives, in ski resorts, but principally in the holiday property in France.

For these reasons, on the evidence before me, I am satisfied and find as a fact that, notwithstanding the temporary hiatus described above, Hand W’s marriage lasted over 20 years from 1993 to October 2013 when issued her petition; and the marriage only finally came to an end, after a failed attempt at reconciliation, in late 2014.⁴

• Second, that there is no need to consider H’s case on post-separation accrual because the wealth was generated during, and not after, the subsisting marriage.⁵ Mr Justice Haddon-Cave found that:⁶

Farkhad asserts he was wealthy before his marriage to Tatiana in 1993. Farkhad’s bare assertion has, however, not been supported either by any schedule of the value of his pre-marital assets or any documentary or independent evidence…

It is axiomatic that if a party is going to assert pre-marital assets, it is incumbent on them to prove the same by clear documentary evidence (per Mostyn J in N v F [2011] 2 FLR 533 at [24]). H has failed to do this and, accordingly, failed to prove any case on pre-marital assets.

• Third, that all the (considerable) wealth that was generated during the marriage is matrimonial property.⁷

Mr Justice Haddon-Cave found that there had been no special or stellar contribution by Farkhad that justified a division of assets in his favour. Instead:⁸

53. Whilst H clearly worked very hard to create wealth out of the Russian company and was resourceful, H’s evidence falls far short of the exceptionality (or ‘genius’) test elucidated in authorities…

54. The following further points are pertinent.

First, H’s contribution was not ‘unmatched’ (to use Holman J’s words in Gray v. Work): at the same time as H was away travelling and building up the his Russian company in Russia, W was ‘keeping the home fires burning’ in Surrey, running the home and caring for the boys, as well as H’s daughter in earlier years, on her own in what was then a foreign country to her.

Second, this was a case of the realisation of the Russian company’s value built up during the previous 20 years when the marriage subsisted, not merely of fresh accrual. H at one stage sought to argue that the Russian company’s share were ‘worthless’ in 2004 because he could not sell them. This was clearly not the case because he sold 51% to the MNC in 2005. In any event, the point is academic because it is a fact that H sold his remaining shares in the Russian company in 2012 for US$1.375 when the marriage was subsisting.

Third, W is now only seeking 41% of the assets instead of a 50:50 split, which gives some margin of appreciation (see further below).

55. In my judgment, the present case is a paradigm example of what Lord Nicholls was talking about in White when he said at [989]:

“If, in their different spheres, each contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets”.

56. For these reasons, I reject any case made by H that he made a special or ‘stellar’ contribution to the marital assets such as to justify a departure from the equality principle.

Findings in relation to Farkhad’s entities:

Cotor Investment SA: Cotor was found to be the Husband’s nominee and to hold all its assets absolutely for Farkhad on a ‘bare trust’

Source: the judgment of Mr Justice Haddon-Cave dated 15 December 2016 at [84]

Akhmedov 2013 Discretionary Trust: Mr Justice Haddon-Cave set aside dispositions Farkhad had made to a Trust, on the basis they were designed to put his assets out of the reach of Tatiana:

63. [Farkhad]’s case is that his wealth from the sale of his Russian company [Northgas] shares is held in the Discretionary Trust, which is a Bermudian trust (“the Trust”), [Farkhad]’s case is that within the Trust structure are Panamanian, Cypriot and Isle of Man companies which each hold assets in the form of (i) a majority share in a Moscow property, (ii) the yacht [M/Y Luna], (iii) a plane, (iv) a helicopter, (v) a modern art collection and (vi) large cash funds and investments administered by UBS in Zurich.
[…]

93. The timing is telling. The Deed of Trust dated 17th March 2015 was executed four days before [Farkhad] signed his first witness statement in !he present proceedings. By the Deed of Trust, [Farkhad] purported to assign to the Trust the entire 100% issued share capital in the three offshore holding companies [ Avenger Assets Corporation of Panama, Carolina Ltd and Lucy Ltd] relating to the yacht, plane and helicopter. In addition, [Farkhad] also assigned to C Ltd his 60% shareholding in a Cypriot company which held a Moscow property. (I shall refer collectively to these as “the March 2015 Companies”).

94. On the same day, 17th March 2015, H executed a document described as “Declaration of Trust” by which he purportedly assigned to C Ltd as Trustee of the Trust his right, title and interest of whatsoever nature in all the March 2015 Companies. [Farkhad] also declared himself to be Trustee of the March 2015 Companies in favour of the Trust C Ltd and undertook to deal with the March 2015 Companies only as directed by C Ltd (a company of which, of course, he was sole director). In my view, it is clear that [Farkhad] was attempting to hide the March 2015 Companies in an offshore trust because he was faced with [Tatiana]’s imminent claims in these proceedings…

95. On 21st March 2015, only four days after effecting the March 2015 Disposition, H signed a witness statement in support of his application for a stay of these (English) proceedings in favour of Russia on the grounds of forum non conveniens. In his witness statement, H asserted that he was merely “…one of a number of discretionary beneficiaries of an offshore trust which is beneficially interested in the … assets [of the March 2015 Companies] … “. It is clear that this was a transparent attempt to put the assets of the March 2015 Companies out of his (legal) reach and to inhibit W’s ability to claim or include those assets as part of the marital asset reckoning or, at least, to make enforcement of W’s claims more difficult.

Source: the judgment of Mr Justice Haddon-Cave dated 15 December 2016 at [63], [93]-[96] (emphasis added)