maxim moskalev wins UK legal case Moskalev v Yanishevskiy (BR-2020-000554) Solicitors London

Client Case Study: Moskalev wins against Yanishevskiy for improper Statutory Demand

The Respondent to an application to set aside a statutory demand must bear the costs of the application, even if they withdrew the demand shortly after the application was filed.

In the case of Moskalev v Yanishevskiy [2021] EWHC 1575 (Ch), Insolvency and Companies Court Judge Barber found for the Applicant, Mr Maxim Moskalev, determining him to be the innocent and successful party and awarding costs in his favour.

Background – Application to Set Aside Defective Statutory Demand

Mr Moskalev, an EU Cypriot National, had been served a statutory demand by Mr Dmitry Yanishevskiy in England for a High Court of Hong Kong default judgment (argued obtained by fraud in Hong Kong).

A statutory demand is a prelude to issuing a bankruptcy petition and can have serious consequences. Therefore, once the improper Statutory Demand was served, Mr Moskalev instructed us to represent him in England and Wales and apply to set aside the statutory demand.

The application was made on the basis his centre of main interests (COMI) was not in England and Wales (it was Cyprus) and that the Hong Kong judgment was obtained based on a fraudulent document. In essence there were substantial grounds for disputing the debt claimed in the statutory demand such that the Statutory Demand was improper and must be set aside.

Refusal to Pay Costs of Improper Statutory Demand

Mr Yanishevskiy, via his legal advisers Ontier LLP, unwisely refused to withdraw the demand and offered extensions of time, which we rejected. Eventually, the penny dropped for the other side and after the application was issued and served but before the hearing they finally withdrew the demand, but maintained and wasted a great deal of time and money arguing wrongly that there should be no order as to costs.

We successfully argued that Mr Yanishevskiy’s refusal to withdraw the demand warranted a costs order against him.

Judgment in Moskalev v Yanishevskiy

ICC Judge Barber held that Mr Moskalev had acted properly and raised his reasons for dispute in a timely manner and Mr Yanishevskiy had failed to withdraw the demand in a timely manner, entirely at his own risk of costs.

The judge made an order for costs in favour of our client, Mr Moskalev, as he had raised substantial and meritorious grounds for disputing the debt and Mr Yanishevskiy subsequently withdrew the demand for those very reasons. The Judge determined that

“Numerous reasoned grounds for disputing the statutory demand were raised in the Applicant’s solicitor’s letter of 18 November 2020. This letter should have told the Respondent, at a glance, that the matter was not suitable for disposal by way of statutory demand and bankruptcy proceedings. The Respondent was given a fair opportunity to withdraw the statutory demand (the application to set aside was not issued until 27 November 2020, some 9 days after the letter of 18 November). His failure timeously to do so was at his own risk as to costs.”

ICC Judge Barber

Therefore, Mr Moskalev was deemed the successful party in this case and indeed costs in the sum of £47,400 were ultimately paid by Mr Yanishevskiy to our client. The lesson to be learned here is for parties to litigation to understand that if they behave abusively and issue improper statutory demands (or bankruptcy or winding-up petitions) they will be punished by the Courts by way of a costs order. In this case the Court held it was clearly appropriate to make an order for costs.

Case Title: Mr MAXIM MOSKALEV v Mr DMITRY YANISHEVSKIY; Court: Chancery Division (THE HIGH COURT OF JUSTICE, BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES, INSOLVENCY AND COMPANIES LIST (ChD)); Judgment Date: 17 June 2021; Reported: [2021] EWHC 1575 (Ch); [2021] 6 WLUK 712; [2021] BPIR 1568; Court Ref: BR-2020-000554

Optimal Legal Results.

Our litigators deliver advanced legal strategies.

We analyse and work out the legal merits of running your case to trial. We calculate and advise on legal risk factors and the litigation rules in England & Wales. We factor in your risk-appetite, costs sensitivity and determination. Together, we plan the best possible result.

You’ll receive strategic legal advice from a barrister and solicitor at your first fixed fee meeting.