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Commercial disputes, Company law, Joint venture and partnership disputesTuesday 16 January 2024

Judgment handed down in Lazarichev & Ors v Lyndou [2024] EWHC 8 (Ch)

There is a rich strain of jurisprudence as to whether the term “residence” in various contexts necessarily connotes “lawful residence”. However, this question has rarely, if ever, been tested in the context of an application for security for costs.

On 9 January 2024, HHJ Keyser KC (sitting as a Judge of the High Court) handed down judgment in Lazarichev & ors v Lyndou [2024] EWHC 8 (Ch). Max Mallin KC and Jia Wei Lee, instructed by Harcus Parker Limited, acted for the successful respondent, Mr Tsifamei Lyndou. This case presented what is believed to be the first opportunity to consider the question of whether “resident” within the meaning of r25.13(2)(a) means “lawfully resident”.

Mr Lyndou, a Belarussian national, had issued proceedings in 2021, alleging that, having conceived a business idea, he shared it in confidence with the defendants and entered into a joint venture or partnership with them with a view to developing a business based on the idea, and that the defendants later excluded him from the business. He advances various grounds of claim, including breach of confidence and unlawful means conspiracy, and seeks a declaration that shares in the business are held on trust for him.

On 28 April 2022, the appellants issued a security for costs application, on the basis that that Mr Lyndou was neither resident in the jurisdiction, nor in a Convention State within the meaning of CPR r25.13(2)(a). At the time of issuing his claim, Mr Lyndou was living in Belarus. But by mid-2022, when the security for costs application was issued, Mr Lyndou had emigrated to Poland. On its face, therefore, he was, in fact, factually resident in a Convention State. The appellants nonetheless persisted with their application, alleging that Mr Lyndou had obtained his residence in Poland by presenting false information on his residency application (which Mr Lyndou denied). It was accordingly said that Mr Lyndou’s residence in Poland was unlawful, and that unlawful residence did not constitute residence within the meaning of r25.13(2)(a).

The application was refused by Master Pester in a judgment dated 16 June 2023, on the basis that residence for the purposes of r25.13(2)(a) was a factual question [link to previous judgment here]. The appellants appealed, advancing six grounds of appeal. HHJ Keyser KC, sitting as a Judge of the High Court, dismissed every ground of appeal.

It is notable that the lawfulness of Mr Lyndou’s residence per se was not actually challenged. Rather, the appellants’ case rested on an allegedly false declaration given by Mr Lyndou in procuring his residence permit. It was therefore not enough simply for the appellants to argue that “resident” meant “lawfully resident”, because Mr Lyndou would have satisfied even that wider test. Rather, the appellants had to, in effect, contend that r25.13(2)(a) effectively provided for residence to be vitiated by any allegedly unlawful means. This construction of r25.13(2)(a) was rejected ([26]).

Importantly, however, the Judge also found that, even if the above difficulties were put aside, “resident” should not be taken to mean “lawfully resident”.  He found that, as a matter of construction of r25.13(2)(a), “resident” was a question of fact. The lawfulness of a person’s residence was not of itself relevant, unless there was clear evidence that a person was at immediate risk of deportation. But save in a very clear case, the court should not seek to decide questions of lawfulness of residence, leaving that issue to the immigration authorities of the relevant State. In the present case, the evidence was that Mr Lyndou was habitually and normally residing in Poland, and it was inappropriate to speculate as to whether Mr Lyndou was lawfully resident in Poland.

HHJ Keyser KC’s carefully reasoned judgment rewards close reading. His decision presents welcome clarity on a novel and difficult legal question.

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