The Court of Appeal has increased a Russian businessman’s living expenses allowance under a worldwide freezing order to an amount equivalent to approx. £240,000 per month.
Vneshprombank LLC (“VPB”) is a Russian bank in liquidation. It claims to have been the victim of a £1.34 billion fraud committed by Mr Bedzhamov and his sister Ms Markus (the former President of VPB). Ms Markus has since been imprisoned in Russia. Mr Bedzhamov says the allegations against him are politically motivated and false, and has claimed asylum in England. He was informed by police of attempts to kidnap him in Monaco and London in 2016 and 2017.
In March 2019, a worldwide freezing order was made against Mr Bedzhamov over assets up to the value of £1.34 billion (the “WFO”). Mr Bedzhamov applied to increase his allowance for living expenses under the WFO. The judge granted the application in part and set that allowance at £80,000 per month. Following the order, Mr Bedzhamov had to move out of his rental property in Park Lane. Mr Bedzhamov appealed.
The issue on appeal was whether, in setting a figure for living expenses, a judge should engage in a counterfactual exercise. That is, whether the judge should (i) simply determine as a question of fact what the defendant’s living expenses were before the making of the freezing order; or (ii) assess what would have happened to the defendant’s lifestyle in the absence of the freezing order. VPB submitted that Mr Bedzhamov’s financial resources had deteriorated dramatically, and he would not have continued to fund his lavish former lifestyle if the freezing order had not been made.
The Court of Appeal allowed Mr Bedzhamov’s appeal. It held that the correct approach would have been to allow a figure for ordinary living expenses which would enable Mr Bedzhamov to maintain his previous standard of living. Accordingly, and “ring fencing” significant items of expenditure, it amended the allowance to permit him to pay amounts on rent, school fees, private security, medical expenses and other living expenses, equivalent in total to approx. £240,000 per month. It also permitted him to pay a rental deposit on a new London residence of up to £144,000.
Robert Anderson QC, Tom Richards and Celia Rooney appeared for Mr Bedzhamov at first instance. Andrew Trotter appeared for Mr Bedzhamov on appeal.