In the latest instalment of this ongoing saga, on 29 November 2024, Bryan J handed down judgment which was excoriating of the conduct of two fraudsters – Mr Andrew Ruhan and Dr Gerald Smith – in the wake of HPII obtaining judgment against Mr Ruhan in February 2022 for c.£160m.
Bryan J held that Mr Ruhan colluded with Dr Smith, his former archenemy, to form “the unholiest of unholy alliances” and entered a scheme designed to undermine and frustrate HPII’s judgment. They fabricated false claims against Mr Ruhan amounting to £0.85 billion seeking to (a) dilute HPII’s unsecured creditor position in any insolvency of Mr Ruhan, and (b) create an avenue for Mr Ruhan to transfer his assets out of HPII’s enforcement reach.
The court held that Mr Ruhan personally paid for the totally meritless claims to be issued against himself (“the Ozturk Proceedings”), only to then admit the claims in full and allow a default judgment to be entered against him. He charged his assets to a company named MDL and then transferred certain of them pursuant to a “settlement”.
The Judge concluded that Mr Ruhan and Dr Smith had woven a “web of deceit” which came undone under scrutiny at trial, including because they failed to keep up with the lies they were spinning, and tripped up on a number of occasions.
HPII successfully claimed under section 423 IA 1986, the court holding that the operative parts of the scheme amounted to a transaction defrauding creditors. The judgment contains a useful discussion of whether granting a charge can amount to a transaction at an undervalue (it can), and whether consideration can be given or received at all when a party purports to compromise claims against him, which claims he himself is behind and knows are fabricated (it cannot). James Pickering KC argued s.423 issues at trial.
HPII was also successful under the Marex tort, in proving that Dr Smith and his companies had knowingly assisted Mr Ruhan to breach HPII’s judgment rights. The court also set aside the default judgment against Mr Ruhan and struck out the Ozturk Proceedings as “a paradigm example of abusive proceedings”. Samuel Hodge argued these issues at trial.
James and Sam were instructed by Spring Law.
The full Judgment is below.
