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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Ravendark Holdings Ltd v Rotenberg & Ors [2021] EWCA Civ 1661 (10 November 2021) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2021/1661.html Cite as: [2021] EWCA Civ 1661 |
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
FAMILY DIVISION
MR JUSTICE MOOR
FD14F00348
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE NEWEY
and
SIR RICHARD McCOMBE
____________________
RAVENDARK HOLDINGS LTD |
Appellant |
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- and - |
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(1) NATALIA ![]() (2) ![]() ![]() ![]() ![]() (3) ![]() (4) ROTEX GMBH (5) PALMOTO HOLDINGS LTD |
Respondents |
____________________
Fenner Moeran QC and Sassa-Ann Amaouche (instructed by JMW Solicitors LLP) for the First Respondent
Richard Todd QC and Simon Webster QC (instructed by Grosvenor Law) for the Second Respondent
The Third to Fifth Respondents did not appear and were not represented
Hearing dates: 19 and 20 May 2021
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Crown Copyright ©
Covid-19 Protocol: This judgment was handed down remotely by circulation to the parties' representatives by email, release to BAILII and publication on the Courts and Tribunals Judiciary website. The date and time for hand-down is deemed to be 10:30am 10th November 2021.
Lord Justice Moylan:
Background
"6. Upper Ribsden was purchased by Ravendark Holdings Limited (hereafter "Ravendark") for £27.5 million on 26 April 2012. Ravendark had been incorporated in the British Virgin Islands on 6 February 2012. The shares in Ravendark were held by professional trustees, Royalmed Management Ltd. The Wife had found Upper Ribsden and the Husband had instructed solicitors, Hogan Lovells, to act in the purchase. On 20 March 2012, Ravendark entered into a loan facility agreement with Olpon Investments Ltd (hereafter "Olpon") for the provision of a loan to finance the purchase of Upper Ribsden. The agreed chronology says that Olpon is owned/controlled by the Husband.
7. On 3 April 2012, Olpon provided £5.5 million to Ravendark. Of this, £2.65 million was used for the deposit on the property together with a sum of £100,000 previously provided. On 17 April 2012, a further £29 million came from Olpon, making a total loan of £34.5 million. Of this, just under £28,989,010 was sent to Hogan Lovells for the balance of the purchase price, including to cover the stamp duty. The indicative completion statement shows stamp duty of £4.125 million. It also shows the cost of a panic room door and a safe being installed at a total cost of just over £19,500.
8. One of the major issues in the case is who owns Upper Ribsden. On 21 March 2012, a declaration of trust was entered into which declares that Royalmed holds the shares in Ravendark as nominee and on trust for Mr Dmitry Kalantryskiy (hereafter "DK"). On 4 April 2012, Ravendark granted a two-year lease to enable the Wife and children to occupy the property at a rental of £20,000 per month. The Wife and children moved into Upper Ribsden on 13th May 2012 so that the children could attend school in this country."
"At any time during the existence of the Loan Facility, the Lender may request that the Company pledge its interest in Real Estate and/or arrange for the pledge of shares in the Company in a form and on terms satisfactory to the Lender."
Proceedings and judgment below
"72. I make the following specific findings as to Upper Ribsden. The Wife found the property. She wanted it bought for the occupation of the family whilst in England for the education of the children. As the marriage had not broken down at that point, it was intended to be a matrimonial home. She asked the Husband to secure its acquisition and he agreed. He instructed Hogan Lovells and used AO to liaise with them as to the purchase of the property. AO, from whom I have not heard, was not acting for DK. It is accepted he thought he was acting for the Husband not DK and he was right in thinking that, as he was.
73. I find that the purchase price was negotiated by the Husband and Wife. The money to buy the property came from Olpon. I recognise that Olpon is not a party to this litigation, but I am quite satisfied that this was the Husband's money being provided from a company he controlled to purchase what was intended to be a matrimonial home. I had understood that he was the 100% owner of the shares in Olpon although I was told during argument that he holds 99.5% of the shares. The holder of 0.5% of the shares was not identified and I draw the inference that it is another nominee. In any event, nobody is saying that Olpon owns this property.
74. DK provided no money towards the purchase. The entire purchase price, stamp duty and money for the refurbishment works came from the Husband. I am quite satisfied that the involvement of DK was solely to hide the true beneficial ownership of the property. As AO said to the security staff on 2 May 2012 "MrRotenberg is not to be shown as the owner of the property". This was confirmed by the Husband to the Wife in a text when she asserted it was her house. He wrote "you have nothing and I bought this house for our children and to myself".
75. It was an entirely uncommercial arrangement so far as DK was concerned. He only received the rent for a year but did not complain. The rent of £240,000 was less than 1% of the value of the property at purchase. It has never been increased. It is exactly the same as the amount the Wife gets for her property in London that cost £8.73 million. The rent is to be compared with the interest on the alleged loan which was around £1,038,000 in the first year alone. DK therefore made a notional loss of almost exactly £800,000 after only a year. This was to go on for eight years."
"78. If any reinforcement for this were needed, it is to be found in the way in which the Husband has offered part or all of this property to the Wife in negotiations from the very beginning. How was he able to offer to place it into the trust arrangement proposed at the Ritz Hotel as early as 14 March 2013 if it was not his to place in a trust? His open offer dated 9 July 2014 was to transfer 50% of the property to the Wife. In the agreement, he agreed to give her the entire property. He could not have done any of this unless it was his. In the order itself, he undertook to acquire the Surrey property and/or the shares in Ravendark. He did not say he had to use his best endeavours to do so. Paragraph 32 is in terms that he "will" procure the transfer of the Surrey property into the sole name of the Wife. He was clearly not worried about any potential difficulty."
At [79], the Judge found "that the Husband was in charge and DK did the Husband's bidding".
"80. I am quite satisfied that the Husband could have insisted on the transfer. After all, he could have exercised clause 4.3 of the loan agreement to require Ravendark to pledge its interest in Upper Ribsden and/or arrange for the pledge of the shares in a form and on terms satisfactory to the Husband. In a commercial arrangement, the lender could then apply for possession but that would not be necessary here as the family already has possession.
81. Both Mr Marshall on behalf of DK and Mr Webster on behalf of the Husband rely heavily on the fact that the Wife does not allege sham. I am quite clear that there is no need for her to do so. The arrangement was exactly the same as the one in Prest v Petrodel, namely Ravendark held Upper Ribsden for the Husband by way of a resulting trust, given that he had provided the purchase price and intended all along to retain the ownership. There is no question of sham. Ravendark was properly established. The declaration of trust of the shares in favour of DK is legitimate, albeit that Ravendark had no significant assets. Indeed, there was a perfectly legitimate vehicle by which the Husband could force a return of the property to him via clause 4.3. He could even get the shares if he wanted them.
82. The loan agreement is therefore a complete red herring. Again, the document is not a sham. It is just the means by which the Husband can reassert control of the legal ownership if he needs to do so. All he had to do was exercise clause 4.3. In that way, the legal title to the property can be returned to its beneficial owner."
"83. It follows that I find that Upper Ribsden is held by Ravendark on resulting trust for the Husband on the basis that he provided the entire purchase price via his company, Olpon. There is absolutely no injustice to DK in my findings. After all, he has paid not a penny for the property. He has never even seen it. He accepts it is worth less than the outstanding loan and the rent is, at present, some £1.4 million per annum less than loan interest. In any event, it is what he agreed with the Husband."
At the end of his judgment, at [88], the Judge said that he would also declare that RHL "owes no further money to Olpon".
Appeal
"4.3 The Learned Judge thus expressly found that a resulting trust had arisen on the basis of the provision of the purchase price by Olpon.
4.4. Accordingly, despite engaging in a factual analysis in paragraphs [63] to [80] of the Judgment of the parties' dealings and intentions in relation to the Property, these were ultimately put aside in arriving at the finding of resulting trust which was based upon the advance of purchase monies.
4.5. There was no finding of an express trust nor was there any suggestion that an express trust had arisen. Nor was there a finding of a constructive trust."
"An express agreement, relied on to the detriment of a party claiming a beneficial interest, may found an interest under a common intention constructive trust outside the scope of the domestic consumer context"
He also relied on the authorities referred to by Lewin, namely Agarwala v Agarwala [2013] EWCA Civ 1763 and Kahrmann v Harrison-Morgan [2019] EWCA Civ 2094. In the latter decision, Henderson LJ, at [99], said that, "There is no reason why constructive trusts of a traditional kind may not arise in a commercial context". That case concerned an express agreement/common intention between a Dr Kahrmann and a business associate of his and neighbour, a Mr Hawkins, in respect of the future ownership of the freehold of two properties and an inferred agreement/common intention in respect of enfranchisement rights in respect of the same properties. Henderson LJ found the elements necessary to establish an express common intention constructive trust including, at [89], that Dr Kahrmann had acted to his detriment. He also noted, at [100], that that case was, "in some respects, of an intermediate character".
Determination
LORD JUSTICE NEWEY:
SIR RICHARD McCOMBE: