Ann Nilsson & Anor v Mohammad Babar Iqbal & Anor
[2024] EWHC 49 (Ch)
Paul David Allen v Khadzi-Murat Derev & Anor
9 March 2023
[2023] EWHC 387 (Ch)
High Court
A bankrupt couple claimed they gifted their expensive home to avoid creditors. The judge didn't believe them because they had no proof, and so ordered the house to be sold to pay off their debts.
Key Facts
- •Mr. Khadzhi-Murat Derev (Mr. Derev) was declared bankrupt in Russia and the bankruptcy was recognized in England and Wales.
- •Mr. Derev and his wife, Zukhra Mussaevna Dereva (Mrs. Dereva), jointly own Flat 5, 14 Montpelier Street, London, valued at £11-£11.5 million.
- •Mr. Allen, a designated person under the Cross-Border Insolvency Regulations 2006 (CBIR), applied for a declaration of beneficial interests, possession, and sale of the property.
- •Mr. and Mrs. Derev initially claimed joint beneficial ownership but later asserted a gift to Mrs. Dereva and their children.
- •Mrs. Dereva was also declared bankrupt in Russia.
- •The property is subject to a defaulted mortgage of approximately £7.8 million.
Legal Principles
Effect of recognition of foreign bankruptcy under CBIR.
Re Olusoji Samson Tomoye [2020] EWHC 1965 (Civ)
Principles for asserting beneficial interest in property held in joint names.
Stack v Dowden [2007] AC 776; Lewin on Trusts 20th edition, paragraph 10-063; Guest v Guest [2022] UKSC 27
Orders for sale and possession in bankruptcy after one year.
Insolvency Act 1986, section 335A
Effect of non-attendance of witnesses at trial.
CPR 32.5; William v Hinton [2011] EWCA Civ 1123
Outcomes
Declaration that beneficial interest in the property is held in equal shares by Mr. and Mrs. Dereva.
Insufficient evidence to displace the presumption that beneficial ownership follows legal title. Mr. and Mrs. Dereva's statements were considered vague, unsubstantiated, and inconsistent with prior statements, and their failure to attend for cross-examination further weakened their case.
Order for possession and sale of the property.
No exceptional circumstances were established to prevent the sale in the interests of creditors under section 335A of the Insolvency Act 1986.