Background
8.B is W’s older brother by 4-5 years. They are the two children of their father by his first marriage and he has two children by his second marriage. Their father founded in 1993 a business which now owns a very large number of stores in Central Russia. Although there are many companies within the structure, I shall for convenience refer to it as “the business”. As a result, W’s family has become very wealthy. The business is run by their father and B. B, aged 46, has worked in the business from an early stage when he finished his university degree. Father and son control the strategic direction of the business, as I so find. The father, mother and each of the two children have a 25% shareholding. W avers that her use of and benefit from her shareholding, including the receipt and use of dividends, is at the direction and discretion of her father.9.W’s work in the business started later than that of B. She says that she began her employment in 2008. She described her role in her Form E as “Financial and Operations Manager.” Her work for the business has been punctuated to some extent, though I do not know the full details, by the demands of being a mother of two girls. and of the litigation which has consumed H and W over the last 2 years.10.W described herself in evidence as being in charge of the banking operations of the business, but without any strategic or executive power. She says that her role in the business is operational rather than managerial. 11.H does not accept this description. He regards her as the brains behind the business and the person who takes all the relevant decisions as to how the Group’s money is used. He described her as “the financial architect of the family business and it is (W) who has control of the business and private accounts of the family.”12.During her time at university, W’s parents had purchased for her as a graduation gift in 2001 a flat in Moscow, which she owns to this day.13.H and W married in Moscow in 2006. They spent the early years of their married life in Russia and their elder daughter A was born there soon after the marriage. She is now aged 16.14.Between 2011-2013 the parties lived in London to give A a taste of education in England. They returned to Russia during school holidays. The family lived in a rented flat when in London during term-time.15.In 2016 H and W returned to London to continue A’s education in London and they have remained in England until recently, in W’s case as a result of injunctions obtained against her when the marriage broke up amidst much acrimony soon after the events which I am called upon to determine.16.In addition to his involvement in the family business, B had his own investment business. Among his investments, in 2015 he purchased a hotel in Spain and one in Austria and completed the purchase of another hotel in Austria in 2017. It was B’s unchallenged evidence that W gave him significant help in the acquisition process of these expensive assets. As a result, he gave her as a reward 300,000,000 roubles, which is the sterling equivalent of about £3m. He did so through the mechanism of “a donation agreement” dated 15 February 2016 which as translated sets out that:“1.1 The Donor (B) transfers funds on a non-repayable basis in the amount of RUB300m … to the Donee (W) and the Donee undertakes to accept these monetary funds as a gift.1.2 The transfer of funds is conducted in a non-cash way – by transferring to a personal account according to the bank details provided by the Donee.”17.The benefit of a donation agreement in Russian law as explained in the document provided to me is that it clearly establishes the transaction as a gift and avoids any argument that it is a repayable sum. It releases what would otherwise be the debtor from the obligation to repay the funds received without consideration and establishes the clear intention to transfer the funds as a gift.18.B’s evidence was that the agreement was drawn up by in-house lawyers in the family business. The money was transferred into W’s Russian bank account.19.The veracity of this donation agreement has not been challenged. B described it as an act of gratitude/reward for a job for him which was well done by W. It was not a reward for anything that she did in connection with the family business. B said that how the money was expended by W was a matter for her, although its timing was proximate to the purchase of what became the family home, and the money was no doubt always seen as being likely to be used for that purpose.20.Soon after this gift was made, W purchased in her sole name Flats 3 and 4, 29 DS, for £6.25m. The purchase price was made up from a combination of B’s gift and pre-existing savings made by W. There is no suggestion that H made any financial contribution to the purchase. The family moved into the home in or about August 2016. A re-joined her old school. 21.B was also interested in obtaining an English education for his daughter who at that time was aged 13. She moved to England in time for the start of the academic year 2016 and lived with H and W. Very soon after she arrived, H and W’s second daughter was born. 22.B began looking for a flat to buy for himself in the area. His 3 pre-requisites were that:i)The flat must be very close to where his sister W lived;ii)He wanted to have similar views across the square and from the back of the premises as W had from her home, they being particularly leafy;iii)He wished his flat to have a generally similar layout to that which W had in her home.23.He did not confine his search to DS and viewed other premises in nearby localities. There was one flat in a neighbouring building in DS which he was keen to purchase and a price of £7.8m was agreed, but after considerable enquiry it transpired that the owner’s planning permission for works to be carried out had lapsed. B says that this caused him to pull out of the purchase, but the vendor says that he was in the process of rectifying the problem and was told by H that B was no longer interested in buying a London home as his daughter was leaving London.24.B’s desire to purchase his own London home was furthered by the fact that H and W’s home was on occasions overcrowded. With H and W’s two children and a nanny in residence, there was a shortage of room for B’s daughter when W and B’s mother came to stay, which she did not infrequently, and for him when he visited London.25.Between 2016-2017, B made 5 visits to London to see his daughter but also to look at properties which might have been of interest to him. He has produced a copy of his passport showing entry to the UK, which I accept despite H’s denial of him making several visits. Towards the end of 2016 B was introduced by H and/or W to SB, a property agent who had helped them find their flat.26.As 2017 went on, B and his wife took the decision to withdraw their daughter from school in London at the end of the academic year. This was fuelled by their failure to find suitable accommodation that they wanted and by the birth of their youngest child, leading to the decision that they would like the family to be united for several years until their daughter came back to England for university education.27.There is a dispute as to whether B abandoned interest in buying a London home when his daughter returned to Russia or whether he remained interested, albeit at a less urgent level. W says that she continued to keep an eye open for properties that met his demands. H says that B gave up and no longer had any interest in owning a London property.28.B has produced a letter from his Russian bank stating that at all times since December 2016 until 2020 he had in his sterling account a sum in excess of £8.7m. This was the result of a series of currency conversions in November-December 2016. It was, on B’s case, available specifically for the purchase of his London home and would have paid for his purchase of the property which had the planning issue. H doubts the veracity of the letter. I see no reason to go behind it. 29.It is agreed between the parties that if a property had been purchased by B in or about 2017 the purchase would have been made in his own name.30.I am further satisfied that B was a very high earner at this time. He has produced tax returns which he says show that in the tax years 2014 and 2015 he received in Russia a total net income of the sterling equivalent £16.4m. H doubts the veracity of these documents too, but I see no reason to do so.31.There was in the neighbouring building to the family home a property which was its close twin and was just the other side of the party wall. It appeared to have been left unoccupied for some time, but in summer 2019 H observed removals taking place and asked SB to make enquiries as to who owned it and whether it might be for sale. This was not a straightforward process because the property was held in the name of an overseas corporation. The identity of the underlying individual was eventually established and contact made, revealing that he would be prepared to sell at the right price. It is the case of B and W that W suggested to B that he should buy it as meeting his requirements.32.By about the end of September 2019 a price was agreed. The discussions took place between either H or SB on the one hand and the vendors on the other. B was not directly involved in the negotiations as he speaks no English. W was in Russia for nearly all the time between summer 2019 – February 2020. She was working flat out in the family business and H had the time and inclination to manage the purchase process. H says that he dealt “with the purchase… almost entirely alone.” He reported back to W, who in turn reported to B.33.There was no written or email communication that I have been shown between H, W and/or B in relation to the transaction. There was correspondence with solicitors and accountants to which I will return, but there was nothing between any of the three parties. W and B say this was because they each far prefer dealing with the other by telephone where they can get an immediate response and discuss matters. Although both are proficient with emails it is neither’s preferred means of communication.34.I am entirely satisfied that B made the following payments:i)To SB, five payments between October 2019 – May 2020 totalling £62k and were made to SB’s business entity. In each instance SB invoiced B for his services in connection with the purchase of the new flat. SB had said to W and H that his charges for negotiating the transaction would be £100k. The balance between what B paid and that sum had been paid by H to SB in small tranches as time went on out of the joint account of H and W.Whether W knew of these payments made by H from the joint account is a dispute which I need not resolve, but the background is relevant. It is H and SB’s case that because SB had done a lot of work for B on potential business transactions in the period of about 2016-2018 which B had for various reasons pulled out of, it was decided to make payments to help SB out of a cashflow problem that he had. The payments were made between October 2016 – January 2020. They are suggestive that either B or W/H was still looking for a London home because these were payments on account of whatever fees SB would charge for a new purchase.ii)B paid directly into the account of XYZ, solicitors, (“XYZ”) £755k on 19 February 2020 and £7,845,787 on 26 August 2020. These payments came directly from his personal Russian sterling account and were made for the exchange of contracts and completion of the purchase of the new flat, inclusive of tax and costs of purchase. The actual transfer of funds from B’s account was initiated by W who had B’s authority to do so.35.The new flat was purchased in the name of W and in the conveyancing documents she is declared to be the sole beneficial owner.36.It is the agreement between B and W in respect of the purchase which is at the core of this case. It is the task of the Court to determine what were the real intentions of B and W as to who would have the beneficial interest in the new flat.37.In the light of the cases of the parties, I regard it of significance that these payments to XYZ, as I find:i)Came from B’s personal account;ii)Were not the subject of a donation agreement;iii)Came from an account that he held with his Russian bank in £ sterling; andiv)Were made out of his taxed income.38.It is H’s case that these payments were:i)A gift to H and W or, alternatively and variably, to W alone; and/orii)They were payment for the work that she was doing for the family business; and/oriii)They were a means of transferring part of the family wealth to W as a family member and owed nothing particularly to B.39.W’s disclosure by way of her Form E attachments shows that since October 2019 W had at all material times in her UK Coutts account approximately £12.7m. She therefore did not need B’s largesse to pay for the transaction if it was intended to be for the benefit of her, either alone or with H.40.Exchange on the purchase took place on 28 February 2020 and completion on 1 September 2020. It is relevant in this context to consider the state of the marriage between H and W. 41.The marriage had long had its difficulties. H says that on 24 July 2020 he discovered, as he believes, that W was having an affair. On 27 July 2020 W told H that she wanted a divorce. H says that he informed B and they had a discussion about the marital situation on 7 August 2020.42.It therefore follows that on H’s case, B’s transfer of the very substantial sum to complete the purchase took place with full knowledge of the crisis in the marriage. Within 10 days of completion of the purchase of the new flat H had instructed divorce solicitors and his petition was filed on 21 September 2020.43.It is agreed between the parties that notwithstanding the completion of the purchase nearly two years ago, the new flat has remained unoccupied and in its original state, save for occasional periods when the children’s nanny has stayed there when the presence of the maternal grandmother left insufficient room for her in the family flat.44.On 6 February, shortly before the remission by B of the exchange monies to the conveyancing solicitors, W wrote to the Russian bank asking for information as to how she should deal with the formalities relating to the transaction and saying (as translated): “We are buying a real estate. According to the deal I buyer. And I want to make a payment from (B’s) instead of me according to the donation agreement.Check please the documents……As I understand, I also need a donation agreement. What else do you need?”45.There was then a telephone call between W and the bank officer with whom she was dealing, who then replied (as translated):“For currency control, we need 3.A letter from you in Russian in this form: I … ask my brother … to make payment instead of me on favor … in the amount …under the contract…In this case, the donation agreement is not needed.We will be able to make a payment and send it to (B) in the online bank for confirmation.”46.W explained that her reference to the purported need for a donation agreement was a confusion on her part because she thought that foreign currency controls required such an agreement in circumstances when the purchase was to be in her name rather than that of her brother, who was providing the funds. She pointed out, in my judgment persuasively, that:i)From the heading given by the bank in the email exchange it is plain that the discussion was taking place in the context of currency control;ii)That had it been a gift to her by B, the money could simply have been transferred into W’s personal account, as happened in 2016;iii)If it were a gift, there would have been a donation agreement as there was in 2016.47.H contended in evidence that there was a donation agreement between B and W which they have failed to disclose. This was not put to B. There is no evidence to support this contention and I reject it.