kirill pisarev yacht

Oligarch’s $30M superyacht was too small for the family, unwilling to pay $1.2M commission

When your superyacht is not quite super enough, the only thing to do, clearly, is to sell it off and buy a better one

You can save this article by registering for free here . Or sign-in if you have an account.

Article content

When your superyacht is not quite super enough, the only thing to do, clearly, is to sell it off and buy a better one.

But Russia’s youngest billionaire soon found himself in choppy waters when he did just that and ended up in the Appeal Court Thursday fighting a claim for $1.2 million commission.

Kirill Pisarev, 46, a property magnate, is said to have become “unhappy” with the $30 million, 47-metre yacht he bought in 2010 after just six months of ownership, because it was not big enough for him, his wife and their four children.

Enjoy the latest local, national and international news.

• Exclusive articles by Conrad Black, Barbara Kay, Rex Murphy and others. Plus, special edition NP Platformed and First Reading newsletters and virtual events.
• Unlimited online access to National Post and 15 news sites with one account.
• National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.
• Daily puzzles including the New York Times Crossword.
• Support local journalism.

Create an account or sign in to continue with your reading experience.

• Access articles from across Canada with one account.
• Share your thoughts and join the conversation in the comments.
• Enjoy additional articles per month.
• Get email updates from your favourite authors.

Don't have an account? Create Account

London’s Appeal Court heard he told a boat broker that he had realised the vessel — called 4You and furnished with an open air fitness centre, spa, pool and piano — was “too small for his family” before he sold the yacht to a company owned by Alexander Miliavsky, another wealthy Russian businessman, in 2012, for just over $30 million.

He had commissioned a “new build” $40 million 55-metre yacht, under the same name of 4You, which was much more spacious and easier for himself and his family to enjoy, the judges were told.

However Pisarev ended up in court over the sale of his yacht, after the brokers who managed and crewed it, Moran Yacht and Ship Inc, claimed he owed them a $1.2 million commission on the deal.

Their claim for the cash was thrown out by the High Court in 2014, and yesterday Lord Justice Christopher Clarke killed off the yacht brokers’ hopes of overturning that ruling. Moran claimed one of their employees had shown Miliavsky the yacht in May 2010, and that he had expressed a clear interest in buying it, saying it was “the perfect yacht” for him. The brokers argued that this viewing led directly to the sale to Miliavsky two years later, thus earning them a commission.

Whilst Pisarev admitted Miliavsky, a friend of his, had been aboard the yacht in May 2010 with a Moran employee, he said it was not on his instructions and had not led to the sale.

Miliavsky agreed with Pisarev that, at the time, he had no intention of buying the yacht and had only gone aboard briefly because of the “persistence” of the Moran employee.

Sitting with Lord Justice Lewison and Sir Terence Etherton, Lord Justice Clarke said Milavsky already owned a yacht at the time, “with which he was quite content”, and it was “not surprising” that he was then uninterested in buying Pisarev’s. He added: “In those circumstances it is not necessary for us to consider whether the judge was right to hold, as he did, that Moran were not involved in the sale.”

The judge dismissed the appeal and ordered Moran to pay Pisarev’s $130,000 legal costs bill.

Pisarev amassed his huge fortune not through the usual oligarch method of buying cut-price national resources, but through a hugely successful property development company, PIK Group, a company he co-founded in 1994.

There are estimated to be no more than 6,000 40-metre-plus yachts in the world. Famous names include Eclipse, owned by Chelsea football club owner Roman Abramovich, and the $240 million Octopus, which belongs to Paul Allen, the co-founder of Microsoft.

Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark nationalpost.com and sign up for our daily newsletter, Posted, here .

Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.

Secret RCMP report warns Canadians may revolt once they realize how broke they are

Poilievre to force confidence vote over looming carbon tax increase

Rahim mohamed: gender critical nurse wins public opinion battle against woke activists, they disappear without a trace after landing in toronto. then came one missing a passport, leigh revers: i am a professor at u of t, and i was sanctioned for encouraging debate, the best online deals in the canadian retail space right now.

Silk & Snow, Good American and Best Buy, to name a few

International: 30 bestselling books of the week for March 16

These are the 30 bestselling books from international authors this week.

Advertisement 2 Story continues below This advertisement has not loaded yet, but your article continues below.

Amazon Big Spring Sale: The best deals in Canada 2024

Shop top deals in spring fashion, cleaning products, home organization, fitness gear and more

Capturing Botswana through the lenses of my Swarovski binoculars and smartphone attachment

How these new products transformed my safari experience

These are shaping up to be the top nail trends of 2024

Celebrity nail artist Gina Edwards sounds off on the hottest nail trends of the year.

This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here . By continuing to use our site, you agree to our Terms of Service and Privacy Policy .

You've reached the 20 article limit.

You can manage saved articles in your account.

and save up to 100 articles!

Looks like you've reached your saved article limit!

You can manage your saved articles in your account and clicking the X located at the bottom right of the article.

ABDÜLHALIM ALTINEL LAW

Case Studies​

Case briefing | the 4 you case, moran yacht & ship inc -v- kiriil pisarev galaxias maritime limited.

INTRODUCTION

• This is a claim by brokers for commission on the sale of a superyacht belonging to a company owned by a wealthy Russian, Kirill Pisarev. On 18 May 2010 the claimant yacht brokers showed the yacht to another wealthy Russian, Alexander Miliavsky. The brokers had no further contact with Mr Miliavsky thereafter, but some 21 months later, in February 2012, one of Mr Miliavsky’s companies agreed to buy the yacht from Mr Pisarev’s company for €19.8 million. The brokers say that they showed the yacht to Mr Miliavsky pursuant to instructions given by Mr Pisarev on 11 May 2010 to market the yacht for sale and that they were an effective cause of the sale to Mr Miliavsky’s company, and are therefore entitled to commission. Mr Pisarev and his company say that although he did instruct the brokers to market the yacht some months later, at the time when they showed the yacht to Mr Miliavsky they did so on their own initiative and not on Mr Pisarev’s instructions, and that in any event the brokers were not an effective cause of the later sale.
• There are four issues to be determined:

                  a. Did Mr Pisarev instruct the claimant brokers to market the yacht at the meeting on 11 May 2010?

                  b. If so, were the brokers an effective cause of the sale to Mr Miliavsky’s company?

                  c. If so, to what commission are the brokers entitled?

                  d. Is Mr Pisarev personally liable for the tort of inducing breach of contract?

• The claimant, Moran Yacht & Ship Inc (“Moran”), is a yacht broker. The company is owned by Robert Moran, who is also its Chief Executive Officer. It is a Florida company based in Fort Lauderdale, but with offices in several countries. One such office is in Moscow. Robert Moran’s brother Paul is employed by the company as a senior sales executive.
• The first defendant, Kirill Pisarev, is a wealthy Russian with business interests in various fields including property investment and development. The principal entity through which he conducts such business is a Russian company called PIK. He is the ultimate beneficial owner of the second defendant, Galaxias Maritime Ltd, a British Virgin Islands company. Mr Pisarev and Paul Moran first met in September 2009 at the Monaco Boat Show. At that time Galaxias was soon to take delivery of a 47 metre luxury yacht, the “4YOU”, which was being built in Holland at the Heesen Shipyard. Mr Pisarev asked if Mr Moran could recommend a captain to take command of the yacht. Mr Moran recommended Captain Gordon Scott, who was duly hired as captain in October 2009.
• Paul Moran and Mr Pisarev met again at the Fort Lauderdale Boat Show in October 2009. They struck up a friendly relationship and Mr Pisarev appointed Moran to be the managers of the yacht and its exclusive chartering broker.
• The “4YOU” was delivered from the shipyard in December 2009 and was taken to the Caribbean for the winter season. Mr Pisarev and his family first tried out their new acquisition in January 2010. After a week’s cruise, Captain Scott reported that they had had “a fabulous time on the yacht”.
• However, in addition to the usual and expected teething issues with a new vessel which are generally sorted out by the shipyard during the warranty period, there were two matters which Mr Pisarev had not expected. One was that the yacht was less stable, and the other was that it was noisier, than he had anticipated. Both of these matters were the consequence of the design of the yacht as an aluminium hulled semi displacement vessel. This meant that it was lighter and faster than a steel hulled vessel, but these drawbacks were the trade off for this additional speed. Once this was explained to Mr Pisarev, he accepted the position and was no longer concerned.
• In or about March or April 2010 Paul Moran discussed with Mr Pisarev an opportunity to buy another yacht, to be constructed at the Amels Shipyard in Holland at what was considered to be a bargain price. This would be a slightly larger yacht, 54 metres in length. Moran was very keen to persuade Mr Pisarev to buy an Amels yacht, partly no doubt because it regarded this as an attractive opportunity for him, but also because it would generate commission for Moran not only on the sale from Amels but also (as Moran anticipated) on the sale of the “4YOU”, which Mr Pisarev would need to sell in order to pay for a new Amels yacht.
• On 11 May 2010 Mr Pisarev visited the Amels Shipyard with Paul Moran and Lidia Tsareva (a broker employed by Moran at its Moscow office) in order to see the quality of work of which Amels was capable and to discuss the proposal that he should purchase a new yacht. The discussion included possible changes to the standard specification which Mr Pisarev would want and ways of financing such a purchase. It was recognised on all sides that if he were to purchase a new Amels yacht, Mr Pisarev would need to sell the “4YOU”. It is (now) Moran’s case that at this meeting Mr Pisarev instructed Moran to market the “4YOU” “discreetly” or “confidentially” for sale for an asking price of between €27.5 and €28 million. That is denied by Mr Pisarev, who accepts that he was interested in buying an Amels yacht and that the sale of “4YOU” was discussed, but insists that he gave Moran no instruction to market the yacht on his behalf and did not know that it was doing so.
• It is Moran’s case that it did then begin to market the yacht in accordance with Mr Pisarev’s instructions, showing it to a number of potential buyers between May and September. The extent to which it did so is in dispute, but it is common ground that Ms Tsareva did show the “4YOU” to Mr Miliavsky on 18 May 2010. This happened when the yacht was at Monaco, just after the Monaco Grand Prix, which was one of the highlights of the summer season for wealthy yacht owners in the Mediterranean. Although it is accepted that Ms Tsareva showed the yacht to Mr Miliavsky, almost everything else about this visit is disputed. I return to this issue at [96] below.
• There was a meeting in Moran’s Moscow office on 7 June 2010 attended by Mr Pisarev and representatives of Amels as well as Paul Moran and Ms Tsareva. The purchase of an Amels yacht was discussed further, including discussion of different cabin layouts prepared by Amels.
• Following this meeting, on 16 June 2010 a letter of intent was signed by Galaxias for the purchase of an Amels yacht. This required a deposit of €250,000, but was not a binding commitment to purchase. It was in effect a down payment in order to reserve a building slot at the Amels yard.
• A further letter of intent was signed on 7 July 2010 for the purchase of a new 54 metre Amels yacht with a specification to be agreed, at a price of €26.6 million with a €250,000 non-refundable deposit payable within 5 days. Delivery of the new yacht was to be in June 2012. The letter of intent was accompanied by a financing proposal from Amels which included this provision regarding the marketing of the “4YOU”:

“A separate clause will be added to the building contract/loan agreement, which reflects that the Heesen 47m 4YOU will be marketed after this summer through Moran and that in case of selling 4YOU, the Buyer will pay in money according to the payment scheme of the building contract.”

• The final terms of the proposed shipbuilding contract between Galaxias and the Amels shipyard for the new yacht were agreed by early September. The contract was signed on 7 September 2010.
• At some stage in September 2010, although there is a dispute as to precisely when this occurred, Mr Pisarev instructed Moran to market the “4YOU” by general advertisement and at all major boat shows, including the Monaco Boat Show and Fort Lauderdale Boat Show. It is Moran’s case that this was not a new instruction to market the yacht. All that was new about it was that, whereas previously Mr Pisarev’s instructions had been to market the yacht to selected potential buyers confidentially and without advertising, he now asked that it be advertised more generally. It is the defendants’ case that it was only in September that Mr Pisarev instructed Moran to market the yacht at all.
• It was Moran’s case, and Paul Moran’s evidence, that at the Fort Lauderdale Boat Show which took place between 28 October and 1 November 2010, he and Mr Pisarev had dinner together every evening and that during one of these dinners he gave Mr Pisarev a copy of Moran’s standard sales terms (a “Worldwide Central Agency Listing Agreement” dated 11 October 2010) which he asked Mr Pisarev to sign, but that Mr Pisarev said that this was not necessary because he and Paul Moran were friends and did not need such documents. Moran’s pleaded case was that in this way its standard terms (which entitle it to a commission of 10%) came to govern the parties’ relationship and, moreover, did so retrospectively to the instruction said to have been given on 11 May 2010. The defendants say that this incident never happened. It is unnecessary to determine this particular factual dispute as in closing Mr Yash Kulkarni for Moran abandoned reliance on Moran’s standard terms as governing the parties’ relationship and Moran’s entitlement to commission.
• However, it is not in dispute that Moran was engaged to market the “4YOU” for sale from (at latest) September 2010 onwards, and that it duly did so. It is also not in dispute that although it was always Mr Pisarev who gave the relevant instructions on behalf of Galaxias and made any decision about whether to sell the yacht or at what price, and whether to accept or not any offers that were made, the contractual relationship between the parties was between Moran and Galaxias. Although in this action Moran seeks to hold Mr Pisarev personally liable for the tort of inducing breach of contract, it does not suggest that he ever undertook any personal contractual liability.
• The first offer to purchase the “4YOU” came in early September 2010, just before the Amels contract was signed on 7 September but at about the same time as its terms had been agreed and Mr Pisarev had authorised its execution.
• On 11 October 2010, Moran announced a “new central agency” (ie an exclusive agency) for the yacht, advertising it for sale at a price of €27.75 million.
• By early June 2011 the yacht had not been sold, although a number of offers had been made. However, whether because the price offered was too low or for other reasons, none of these came to anything. Paul Moran’s evidence was that this was a very difficult time for the yacht market generally as banks were not providing finance. It appears that by this time, and whether fairly or not, Mr Pisarev was beginning to lose confidence in the efforts being made by Moran on his behalf. On 8 June 2011 Paul Moran sought to reassure Mr Pisarev that the marketing of the “4YOU” was its “top priority”.
• There were further offers made during June and July 2011, but these too did not result in a sale. In late August, Mr Pisarev agreed to a reduction in the asking price. In late September 2011 the yacht was inspected by Alex Banning of Y.CO, another yacht broker, with his client. This led to an offer by his client’s company, Junport, on 25 September 2011. By 29 September, however, negotiations through Moran had reached a sticking point – at any rate as between the brokers – on the question of commission.
• Eventually an agreement with Junport was concluded without Moran’s involvement. The reason why Moran was excluded is not altogether clear. It was Moran’s case, and it sought and obtained a freezing order on this basis on 24 October 2011, that Mr Pisarev was simply being greedy, seeking to exclude Moran from its right to commission. It appears, however, that there was more to it than this and that, for whatever reason, Mr Pisarev had lost all trust and confidence in Moran and believed that it was pursuing its own interests to maximise commission on the sale of the yacht rather than seeking to protect his best interests. Clearly the relationship between Mr Pisarev and (at least) Paul Moran had been close, but it now turned sour. Whether or not he was right in what he supposed (which it is not necessary to decide) I find it hard to accept that Mr Pisarev would simply cut Moran out of any commission for no reason at all. In the event, however, the Junport deal was not concluded and the freezing order was discharged by consent.
• During December 2011 Mr Pisarev had dinner with Mr Miliavsky, a business associate, at a restaurant in Moscow. He told Mr Miliavsky that the “4YOU” was for sale and that the original price had been reduced. Mr Miliavsky remembered the name of the yacht and told Mr Pisarev that he had been on board in May 2010. The two men discussed whether Mr Miliavsky might be interested in buying the yacht.
• They met again at a business meeting in Courchevel in France during January 2012. Again they discussed the yacht. Mr Pisarev’s evidence was that he told Mr Miliavsky that the latter could have the yacht for €22 million and Mr Miliavsky offered €19 million. However, this was more in the nature of an indication of what Mr Miliavsky might be willing to pay than a firm offer. Mr Pisarev encouraged Mr Miliavsky to inspect the yacht and, at the end of January, Mr Miliavsky did so. He told Mr Pisarev that he was interested in buying the yacht. Mr Pisarev and Mr Miliavsky then had a series of telephone calls in which they negotiated the sale price, eventually agreeing on a figure of €19.8 million.
• On 29 February 2012 a contract was signed between Galaxias as the seller and Mr Miliavsky’s company, Gildo Finance Corporation. Completion was on 2 April 2012. It is this sale on which Moran claims to be entitled to commission.

THE CHANGES IN MORAN’S CASE

• Although Moran’s case now is that instructions were given by Mr Pisarev to market the yacht on 11 May 2010, that case was never pleaded and was only advanced in the skeleton argument served on behalf of Moran shortly before the trial. Although Mr James M. Turner QC for the defendants did not object to this case being advanced, he submitted that it was important to trace the way in which Moran’s case has changed.
• In the Particulars of Claim, served on 18 April 2012, the case advanced was that:

“In or about September 2010, [Mr Pisarev], on behalf of [Galaxias], verbally engaged [Moran], through Mr Paul Moran on behalf of [Moran], as exclusive broker to market the Yacht for sale (‘the Contract’).”

• This was supported by a statement of truth signed by Moran’s solicitor, who had previously sworn an affidavit to the same effect in support of the application for a freezing order at the time of the proposed Junport sale. There was no hint of any earlier engagement, either in the affidavit or the Particulars of Claim, although both documents did go on to rely on the written Worldwide Central Agency Listing Agreement dated 11 October 2010 referred to at [16] above.
• The Particulars of Claim then pleaded that Ms Tsareva introduced Mr Miliavsky as a potential purchaser and showed him the yacht “in or about September 2010”, that is to say after the verbal engagement earlier in the same month.
• The Defence was served on 13 June 2012. It included this paragraph:

“On or about 18 May 2010, Mr Alexander Miliavsky was shown round the Yacht by [Ms Tsareva] without the Defendants’ knowledge and at a time when the Yacht was not for sale and [Moran] had neither permission nor authority to seek potential buyers of it.”

• It is now common ground that the date of 18 May 2010 is correct. Thus, from the outset, the defendants have correctly identified the date on which Mr Miliavsky was shown the yacht and have made clear that this happened at a time when Moran had no instructions to market the yacht for sale. It has, therefore, always been critical to Moran’s case to prove that it was engaged to market the yacht before Mr Miliavsky was shown round.
• On 12 July 2010 Moran served Further Information about its case in response, among other things, to a request to specify the date of the conversation in September 2010 in which it was alleged that Mr Pisarev had engaged Moran. This prompted a change in Moran’s case. The response was:

“On 7 th  June 2010, Mr Paul Moran met [Mr Pisarev] at [Moran’s] Moscow office and discussed the purchase of another newbuilding under construction at the Amels Shipyard in Holland (‘the Amels newbuilding’). In order to purchase this vessel, [Mr Pisarev] wished to sell “4YOU” and accordingly he instructed Mr Paul Moran to market the vessel ‘quietly’ to existing clients of [Moran]. [Mr Pisarev] informed Mr Paul Moran and Lidia Tsareva of [Moran] that [Moran] would be exclusive agents for the sale of the yacht. …

During the period June — September 2010 [Moran] showed “4YOU” to the following prospective purchasers (at least): Alexander Miliavsky … with a view to eliciting offers to purchase the vessel.”

• Later in the same document a further response stated that:

“As described, [Moran] had been marketing “4YOU” at the request of the Defendants since June 2010. …”

• Finally in this Further Information, in response to a specific request to confirm that the pleaded date of September 2010 as being the date on which Mr Miliavsky had been shown the yacht was correct, Moran pleaded:

“In or about September 2010 a Mr Miliavsky was introduced by Lidia Tsareva of [Moran] and visited “4YOU” as a prospective purchaser.”

• This Further Information was also supported by a statement of truth signed by Moran’s solicitor.
• Thus, when given the opportunity to revise its case in the knowledge that the defendants’ case was that Mr Miliavsky’s visit had been on 18 May 2010, Moran did change its case as to the date of its verbal engagement. It no longer contended that this had occurred in September, but now said that it had occurred at the meeting on 7 June 2010. At the same time it introduced a new aspect of the verbal engagement, to the effect that Mr Pisarev’s instruction had been to market the vessel “quietly” to Moran’s existing clients. However, Moran continued to insist that Mr Miliavsky’s visit had not taken place until September, and thus after Moran’s engagement on 7 June 2010. This cannot have been done without careful thought being given not only to whether Mr Miliavsky’s visit had been on the date of 18 May 2010 as alleged by the defendants, but also to whether instructions had been given before that date for the yacht to be marketed.
• Witness statements were served on behalf of Moran. Paul Moran’s statement, dated 29 November 2013, repeated the case pleaded in the Further Information, that instructions to market the yacht had been given at the meeting on 7 June 2010 at Moran’s Moscow office, and that Moran began showing the yacht to potential buyers in June 2010. However, Mr Moran said nothing about the instruction having been to market the vessel “quietly” or only to existing Moran clients. He did say that Mr Miliavsky had been shown the yacht during the period June — September 2010 (ie not in May). Ms Tsareva’s evidence about when Moran had been instructed was rather vague. In her statement, dated 16 October 2013, she said only that Moran was appointed “from June 2010” and that Mr Miliavsky visited “during the last two weeks of June 2010”.
• Moran also served supplementary witness statements from Paul Moran and Ms Tsareva. In his supplementary statement dated 26 February 2014 Paul Moran stated, for the first time, that the instruction to market the yacht had been given in May 2010, but he said that the meeting at Amels took place on 10 (not 11) May. Once again, he said nothing about such marketing being done “quietly”. Nor did he mention the price at which the yacht was to be marketed. He said:

“At this meeting, Mr Pisarev stated that he could only finance the Amels 177 if he sold “4YOU”, and he informed me that he wanted us to sell the vessel. I took this to be an instruction to sell the vessel, which was confirmed in my meeting on 7 June 2010 in Moscow.”

• Mr Moran did not explain how it had happened that his previous statement had placed these previous instructions as having been given at the meeting on 7 June 2010 in Moscow.
• Ms Tsareva’s supplementary statement, dated 13 March 2014, did not say anything about when the instructions had been given, but did say that Mr Miliavsky’s visit to the “4YOU” in Monaco had been in May 2010 during the Monaco Grand Prix. She said that her previous reference to a visit in June was an error due to relevant information being unavailable to her as a result of her computer having been stolen.
• That being the state of the written evidence, Moran’s case in opening was that the defendants instructed it to market the yacht “on a discreet basis” in May 2010 although none of its written evidence had said anything about such marketing being done quietly. By the conclusion of the trial, however, it had become clear that the meeting at Amels had taken place on 11 (not 10) May 2010.
• When they came to be cross examined, neither Ms Tsareva nor Paul Moran could give a satisfactory explanation of these changes in Moran’s case or even of how it had happened that their initial witness statements said what they did.
• Ms Tsareva said that it was very hard to remember dates and that not only had her laptop been stolen (an explanation which had been given in her witness statement and also in a witness statement by Robert Moran which said that this had happened in March 2011) but also that there had been a system failure on Moran’s server, also in March 2011, which had caused a loss of her outgoing e-mails (a problem which had not previously been mentioned, despite repeated requests for disclosure by the defendants’ solicitors). However, while I would accept that it is not easy to remember dates, none of this would explain her failure to remember that the visit to the yacht by Mr Miliavsky had taken place during the time of the Monaco Grand Prix, a memorable event in May whose date was easily ascertainable, and not in September or June.
• Paul Moran acknowledged that, as was apparent from documents from his computer which were only disclosed on the first day of the trial, Moran had at all times had available to it material which showed that there was a visit to Amels on 11 May 2010. He insisted also that he remembered distinctly the meeting which had taken place. If this was true, there should have been no difficulty in Moran advancing from the outset the case now advanced, that it was at the 11 May 2010 Amels meeting that Mr Pisarev had given instructions to market “4YOU”. Whatever problems (if any) may have existed with Ms Tsareva’s computer should not have had any effect on Moran’s ability to plead its current case if that case had been true. When asked to explain the omission of any reference to the 11 May 2010 Amels meeting in the pleadings or his initial witness statement, Paul Moran could only say rather lamely that “the meeting, I don’t know, must have slipped my mind”.
• On behalf of the defendants Mr Turner submitted that the changes in Moran’s case were significant for two reasons. The first was their impact on the credibility of the Moran witnesses. The second is that the defendants were prejudiced because Moran’s disclosure was focused on its pleaded case of an instruction in September (or subsequently June) rather than May 2010.
• Mr Kulkarni submitted, however, that this was no more than sloppiness by the Moran witnesses. However, I find that very hard to accept. In my judgment the changes of case and the inadequacy of the explanation for the very limited disclosure given by Moran in relation to the May period do mean that the Moran witnesses’ evidence needs to be approached with considerable caution.

THE WITNESSES

The claimant’s witnesses

• Moran called four witnesses. None of them, in my judgment, gave satisfactory or reliable evidence.

Lidia Tsareva

• I have already mentioned the excuses given by Ms Tsareva for the vague and inaccurate evidence given in her witness statements – not only a theft of her laptop but also a breakdown in Moran’s computer system, both apparently occurring at the same time, although it was only the former which had been mentioned in her (and in Robert Moran’s) written evidence. These are easy excuses to make, but I am not persuaded that they have any substance. Other documents from the period when e-mails were supposed to have been lost were disclosed, including some which were disclosed on the first day of the trial, which were evidently regarded by Paul Moran as supporting Moran’s case (indeed the copies disclosed bore his and Robert Moran’s manuscript annotations pointing out how they did so).
• Moreover, when Ms Tsareva was first asked about the explanation given for her mistake about the date of Mr Miliavsky’s visit, she referred only to the previously unmentioned system breakdown. It was only when it was pointed out to her that what she had previously said was that her computer had been stolen that she said that this had happened as well. This suggested, at the very least, a degree of carelessness about the accuracy of her evidence. She claimed also to have been in contact with Amels during the two weeks or so before the trial, asking Amels to send copies of e-mails from the May/June 2010 period, and said that Amels had sent e-mails which were “very helpful” to Moran’s case, but these (if they existed) were never disclosed.
• It was then pointed out to Ms Tsareva that in any event there should have been no difficulty in remembering that Mr Miliavsky’s visit took place during the time of the Monaco Grand Prix, not least because in order to reach the yacht Mr Miliavsky and his wife, accompanied by Ms Tsareva, had to climb over some of the crash barriers which had been installed for the race. Moran’s initial case (for which Ms Tsareva was the source of the information) that Mr Miliavsky had visited in September and Ms Tsareva’s first witness statement (saying that the visit had been in June) were therefore completely inexplicable.
• Ms Tsareva also claimed that e-mails existed dated 20 May 2010 in which she had offered “4YOU” to another potential buyer (ie not Mr Miliavsky) which had been provided to Moran’s solicitors. These e-mails were never disclosed. In view of all these matters I cannot regard Ms Tsareva as a reliable witness.

Robert Moran

• Robert Moran was the president, CEO and owner of Moran. His evidence generally was highly argumentative. On 14 April 2009 he pleaded guilty in the United States to a charge of filing a false income tax return. His offence consisted not only of failing to declare income of some US $25,000 on which tax was payable, but also of failing to disclose the existence of a Swiss bank account containing total assets of US $3.4 million, which he knew he was obliged to disclose. Mr Moran admitted the conviction when it was put to him, as he had to, but sought to minimise its seriousness, maintaining that his criminality was limited to the failure to pay income tax on the US $25,000 interest earned on the account. Reference to the court papers showed that this was misleading, and that the deliberate failure to disclose the US $3 million in the account was itself criminal. This was indicative of Mr Moran’s tendency to gloss the facts when he could in order to present his position in a more favourable (or less unfavourable) light.
• Mr Turner submitted that this conviction, and Mr Moran’s evidence about it, were relevant for two reasons – partly as reflecting generally on his credibility, and partly that a conviction for failing to disclose information which he knew he was obliged to disclose was relevant in considering the defects in Moran’s disclosure, with apparently helpful selected documents being disclosed on the first day of the trial and an inadequate explanation for the absence of documents from the critical May 2010 period. I accept those submissions, although they are no more than factors to be taken into account in considering Mr Moran’s evidence and the reasons given concerning loss of documents.
• Mr Moran said also that he was told by his brother Paul and by Ms Tsareva before the October 2011 application for a freezing order in connection with the Junport sale that Mr Pisarev had told them at the 11 May 2010 meeting at Amels that he wanted to sell the “4YOU” immediately. When asked why that was not included in his solicitor’s affidavit in support of the application (for which he was the stated source of information) or in any of the pleadings or witness statements in this case prior to Paul Moran’s supplementary statement, he could only say that he had no idea. His evidence that he had been told this from the outset was obviously untrue.
• Mr Moran’s evidence about commission rates was also unsatisfactory. His evidence was that he was the only person in his company authorised to agree commission rates. Ms Tsareva gave similar evidence. She said that commission was nothing to do with her and outside her authority and that commission rates were always determined by Robert Moran. She was taken to an e-mail dated 19 April 2011 in which she had written to Mr Pisarev, in the context of an offer to buy the “4YOU” at a price equivalent to €21 million which Moran had received, that:

“Also, please note that it is very important that you and Paul discuss the brokerage commission for the sale of the yacht. The standard commission rate is 5% from the sale price.”

• Her response was that this was written “1 million percent” on Robert Moran’s instructions, because she had no authority to say anything about commission rates without first being told by him exactly what to say. Robert Moran, however, disowned this e-mail. He accepted (apparently reluctantly) that he had told her to put the rate of 5% in the e-mail but insisted that Ms Tsareva was wrong to say that the standard rate of commission was 5% (Moran was claiming to be entitled to 10%) and denied that this was what he had told her to say. Rather, he said that Ms Tsareva did not know what the standard rate was and that he had told her to offer to accept a rate of 5% on the particular deal being considered by way of concession from the usual higher rate. I would accept that there is no “standard rate” and that commission is negotiated on a case by case basis, but I see no reason to doubt that Ms Tsareva wrote what she did on Robert Moran’s instructions. The difference between what she wrote and what he says that he told her to write is too great to be explained away as the result of a misunderstanding.

Gordon Scott

• Captain Scott did not provide a statement in the initial exchange of witness statements. His statement was one of the supplementary statements served by Moran in response to the defendants’ statements. Three points should be mentioned which, in my judgment, show that his evidence cannot be relied upon.
• First, in his witness statement Captain Scott said that Mr Pisarev’s first stay on the yacht lasted until the end of January 2010 and that Mr Pisarev was unhappy with the performance and stability of the “4YOU” and said that he would like to sell it. He was wrong about the duration of the stay, which had been only for one week, and did not mention the “fabulous time” e-mail referred to at [6] above. Moreover there is no contemporary record of any unhappiness with the yacht or indication of a wish to sell at this very early stage even though Captain Scott accepted that this was a matter which he would have reported to Moran. I conclude that this supposed almost immediate desire to sell was invented. Mr Pisarev was happy with the “4YOU” albeit that, when Moran presented him with the opportunity to acquire an even better Amels yacht at a very attractive price, he was prepared to consider it.
• Second, Captain Scott’s statement went on to say that after Mr Pisarev’s January Caribbean cruise, the yacht sailed to Florida for warranty work to be carried out, and that while it was there Paul Moran and another Moran broker “showed the yacht to various clients who were interested in buying the yacht”. When Robert Moran gave evidence he was asked about this and said it was a mistake by Captain Scott: what had happened was that the yacht was shown to clients who were interested in having a similar yacht built at the Heesen shipyard and that it was even illegal in the United States to show foreign flagged vessels for sale or charter. That may be true, although Captain Scott’s evidence, as stated in his witness statement, had been very clear, and appeared to be included in order to support his evidence that Mr Pisarev had decided to sell “4YOU” as early as January 2010. When Captain Scott was asked about what he had said in his witness statement (only a few minutes after he had confirmed its truth on oath) he said that it was wrong. It appears that, having heard Robert Moran’s evidence about this the previous day, he had decided to change his evidence.
• Third, Captain Scott’s written evidence stated that:

“Throughout the Summer of 2010, the owner of the MY 4YOU, Mr Pisarev used the vessel with his family and friends. When ever the yacht was in an area where it could be shown to perspective [ sic .] clients, Moran Yacht and Ship did so.”

• This was clearly intended to convey the impression (a) that Mr Pisarev was on board when prospective buyers were shown round and therefore knew that the yacht was being offered for sale by Moran and (b) that the yacht was shown to many such prospective buyers during the summer months. However, Captain Scott accepted in cross examination that he was not suggesting that Mr Pisarev was on board when prospective buyers were on board apart from in May during the Grand Prix (as to which see [65] below) and September at the Monaco Boat Show (by which later month it is common ground that Moran had been instructed to market the yacht). He was forced to accept also that between 22 May and the beginning of September the itinerary and chartering commitments of the yacht were such that there were almost no opportunities for buyers to be shown round and that he had no recollection of any such visits. The evidence in his witness statement was highly misleading.
• I have already referred to the fact that documents from Paul Moran’s computer were only disclosed on the first day of the trial when they clearly should have been disclosed from the outset and to the unexplained discrepancy between his written evidence and his claim in oral evidence to have a clear recollection of the 11 May 2010 Amels meeting (as to which see further [77] to [79] below). His evidence regarding the clause in the letter of intent referred to at [13] above was also surprising (see [88] below).

The defendants’ witnesses

• The defendants called Mr Pisarev and Mr Miliavsky.

Kirill Pisarev

• Mr Pisarev’s evidence was generally clear, consistent and credible. He focused on the questions asked and gave responsive answers, not trying to argue a case in the way that the Moran witnesses had done. He was prepared to make appropriate concessions and accepted that the sale of “4YOU” had been discussed at the Amels meeting, although no instruction to sell had been given.
• He acknowledged that due to severe losses in the Russian real estate market in 2009 he had lost a lot of his wealth and that liquidity in 2010 was tight, albeit that (as he put it) for him cash flow difficulties did not mean that he did not have €5 or €10 million available. He acknowledged also the possibility that Paul Moran or Ms Tsareva may have brought clients on to the yacht during the period of the Grand Prix at Monaco, but explained that there were a lot of people on board, enjoying the atmosphere of the Grand Prix and drinking champagne, and that he was quite willing for Paul Moran to bring guests with him, but that nobody had told him that such clients were there to inspect the yacht as potential buyers. That evidence rang true. He agreed also that Ms Tsareva had told him that she had shown somebody the yacht, the relationship with Moran being such that he was quite happy for this to happen, but insisted that she had not told him that it was with a view to selling the yacht.
• Mr Kulkarni referred to correspondence in response to the October 2011 freezing order in which Mr Pisarev’s solicitors had stated that there was no central sales agreement in place and never had been, suggesting that this was an untrue statement made on Mr Pisarev’s instructions which therefore affected his credibility adversely. In context, however, it is clear that Mr Pisarev’s solicitors were not denying that Moran had been instructed to sell the yacht, but were merely denying the contention (now abandoned by Moran) that Moran’s written “Worldwide Central Agency Listing Agreement” governed the parties’ relationship (see [16] above). In my judgment the solicitor’s statement casts no doubt on Mr Pisarev’s credibility.
• Mr Kulkarni relied also on an offer made on behalf of Mr Pisarev in December 2011 to pay €300,000 to Moran and to waive a claim for French VAT of about €195,000, submitting that this was a recognition of liability to pay commission on a sale to Mr Miliavsky. In my judgment it was no such thing. I do not accept that Mr Pisarev even had a sale to Mr Miliavsky in mind at that stage. What his offer recognised was that Moran was able and determined, as it had shown in relation to the abortive Junport deal, to interfere with any sale of the yacht. By that stage Mr Pisarev was very keen to sell the “4YOU” and knew that Moran had shown it to a considerable number of potential buyers since September 2010, any of whom could have ended up buying the yacht. It could well have made sense to buy Moran off. Similarly, I attach no significance to the fact that the sale contract with Mr Miliavsky’s company included a clause which recognised that Moran might assert a claim to commission. That is very different from recognising any right to commission on Moran’s part.

Alexander Miliavsky

• Mr Miliavsky gave his evidence with considerable charm. Although he is a business associate of Mr Pisarev and has some social dealings with him, they were not (and are not) close personal friends. Mr Miliavsky had no personal interest in this litigation (it was suggested to him at one point by Mr Kulkarni that he did, but that suggestion was clearly based on a misunderstanding and was properly withdrawn) and had no reason to do other than give accurate evidence to the best of his recollection. I am satisfied that is what he did.
• One aspect of his evidence was particularly criticised by Mr Kulkarni. When Mr Miliavsky visited the “4YOU” in May 2010 he already owned a smaller yacht, the “MOSCA”, with which he said that he was quite content. He said that he was not really interested in buying another yacht at that time. Mr Kulkarni put to him an e-mail dated 30 July 2010, apparently forwarded from his own computer, which referred to “boat for sale”, and suggested that this referred to the “MOSCA” and undermined Mr Miliavsky’s evidence on that point. However, the very limited documentary material available about this is insufficient for any such conclusion to be reached. As Mr Turner pointed out, Mr Miliavsky had no reason to lie about this and I do not accept that he did so. There is no evidence that the “MOSCA” was being advertised for sale at this time and it is hard to think that it could have been advertised without Moran being aware of this.

THE 11 MAY 2010 MEETING AT AMELS

• Mr Kulkarni put Moran’s case in two ways. His primary case was that express instructions were given by Mr Pisarev at the meeting held on 11 May 2010 at the Amels shipyard to market the yacht at a price of between €27.5 and €28 million. Alternatively, however, he submitted that Mr Pisarev was aware that Moran was marketing or would be marketing the yacht and that an instruction to do so, or at any rate an agreement to pay a reasonable commission in the event of a sale, should be implied.
• Three of the witnesses were present at the 11 May 2010 meeting at the Amels shipyard and therefore in a position to give evidence about whether Mr Pisarev gave instructions at that meeting to market the yacht for sale.
• I have referred at [37] and [40] above to Ms Tsareva’s written evidence, which gives no support at all to Moran’s case about this meeting. Her oral evidence was given by video link from Moscow and was not assisted by occasional breaks in communication or by the fact that she did not have some documents which were only disclosed by Moran on the first day of the trial.
• Ms Tsareva’s oral evidence was that she would never have shown the yacht to Mr Miliavsky if Mr Pisarev had not instructed her that the yacht was for sale and that he had said that it should be marketed discreetly and not advertised. She said that he had already made clear, after his January Caribbean cruise, that he did not like “4YOU”. She insisted that it was at the Amels meeting that Mr Pisarev had made up his mind that he wanted to go ahead with the purchase of a new yacht, even though no documents were signed until much later and it was only later that Amels confirmed that it could provide Mr Pisarev with changes to the standard specification that he wanted. In fact, although Mr Pisarev liked what he saw at Amels and was certainly interested, the documents show that he was by no means committed to proceed at this stage. A later e-mail from Paul Moran, dated 6 July 2010, recognised that even at that date Mr Pisarev might decide “not to go ahead”, in which case all he would lose would be his deposit of €250,000.
• However, when it came to Ms Tsareva’s evidence about what instructions were actually given at the Amels meeting, her evidence about the price at which the yacht was to be sold was rather unclear. When first asked whether Mr Pisarev had told her the price at which the yacht should be offered for sale, her response was not to say that he had, but that she knew that Mr Pisarev had spent about €27.5 to €28 million on “4YOU” and that he would want to get his money back, and therefore knew that something in this region would be the asking price, but that he would not necessarily have given her a price.
• Later, when she was pressed further about the price, she would say no more than that a price of €27.5 to €28 million was discussed:

“Q … The reason the figures are different, Miss Tsareva, is because at that time Mr. Pisarev had not agreed an asking price or given one to you. That’s right, isn’t it?

A No, sorry, not right. Mr. Pisarev gave us in the meeting with Amels the clear instruction to sell the motor yacht 4YOU, and I wouldn’t call my office and tell them they can offer their client a boat for 27 million. I wouldn’t even drive from Antibes with Mr. Miliavski to show him the vessel. I just wouldn’t do it because I wouldn’t have had instructions to sell the motor yacht 4YOU. It just doesn’t happen in the brokers’ world.

MR. JUSTICE MALES: Can I just clarify something, Miss Tsareva. I understand you are saying that Mr. Pisarev instructed you to sell the yacht. What I’m not clear about is whether you are saying that he gave you an asking price at this meeting in May.

A Sir, we discussed prices. We discussed what the boat was worth. We discussed what we can sell it for. We discussed it. You know, now if you ask me and say, “Do you remember that it was exactly 27,700,000 or 27,000,000?” then no, I do not remember what exactly the price was. But we discussed quite a small corridor that was obvious for the people who were there to — and this corridor obviously showed later on in October in the asking price. This price, I explained to you where it came from. It came from the contract price, plus the money that Mr. Pisarev had spent on the boat.”

• Taking this evidence as a whole, Ms Tsareva’s evidence, therefore, was not that Mr Pisarev told her that the price for the yacht would be €27.75 million, the price which she said that she gave to Mr Miliavsky, but that it was understood that this was the kind of price which he would need in order to recover what he had spent on “4YOU” and that a price in the range of €27.5 to €28 million was discussed.
• I have referred at [37] and [38] to Paul Moran’s written evidence. In cross examination he gave very detailed and precise evidence about what had happened at the Amels meeting which went much further than his written evidence:

“Q And if Mr. Pisarev has instructed you to sell the yacht at Amels on the 11 th  May 2010 you would have remembered that, wouldn’t you?

A I remember it, absolutely, because at the meeting in Amels when we had the meeting — how it transpired with the meeting in Amels, I flew on the 10 th  May, which was why there was some confusion whether the 10 th  and the 11 th  May, which I am sure you will bring up, and I arrived I think on the 10 th  May in Holland. We met at the shipyard on the 11 th , we met in the offices of Amels with Rob Luijendijk, who is the managing director, and Yohan Karls, who is their technical director. We sat down, had formalities, pleasantries, introductions. We talked about the Amels Shipyard. They pulled out plans on the boats they were building at the moment which were 54 metres, not 55. Then we went and toured around the shipyard and had a look at a 54 metre being built. The quality on the boat was a lot, lot better than Heesen. Kirill recognised that. He liked the size, he liked the layout, he liked the feel of the boat, the strength, the boat’s strengths. We came back into the facility, into the offices, and sat down discussing the boat.

After the meeting with them me and Kirill sat there with Lidia but in — sorry, I go back. In the meeting Kirill asked Rob Luijendijk would he take the trade of 4YOU on a new Amels. Would he take a trade. Rob Luijendijk said no. Kirill asked him could he get finance for the project. Rob Luijendijk said he would check, he couldn’t answer that yet. When Rob Luijendijk left the office with Yohan I sat there with Kirill and we were discussing it, and he said, “Offer my boat for sale”. I said to him, “What number, how much?” Only an owner can tell you how much. I cannot tell an owner how much to sell his boat for. He said, “Between €27½ million and €28 million”. I said, “Okay”. That’s when we instructed Lidia. Lidia knew about it. She sent an email. I called Captain Scott, I don’t know if it was that night or the night before, and I said, “Confidentially, the boat is for sale”. I flew back that night with Kirill. I think we left the shipyard at 4:30, we flew out of Brussels to the south of France, to the Monaco Grand Prix. We were friends then. We went out for dinner, we had drinks, we had dinner the whole of the show. I met him throughout the summer, was in his house in Cap Ferrat with his family, with his children, played football with his children, because he was a friend. He had come to Fort Lauderdale to visit me, spent time with me every day in Fort Lauderdale, lunch, dinner, going out. We continued to have a very strong friendship. So I would not put words into an owner’s mouth by saying his boat was not for sale. He has to tell me and he has to tell me the number.”

• He added a little later that the instruction was to offer the vessel “discreetly”.
• It is extraordinary, given such a full and precise recollection, that Moran’s eventual case on this obviously critical meeting was not pleaded from the outset or even set out in Mr Moran’s witness statements. It should also be noted that there is a difference, although only of emphasis, between Mr Moran’s and Ms Tsareva’s evidence about the discussion of price. Mr Moran said that it was entirely Mr Pisarev’s decision and that, apparently without any discussion, Mr Pisarev came up with a price of between €27.5 and €28 million. Ms Tsareva’s evidence, set out above, was that there was discussion, and that the price finally determined was based upon what Mr Pisarev would need in order to recoup his investment in “4YOU.”
• Mr Pisarev’s evidence was that the possibility of selling the “4YOU” was discussed at the Amels meeting, but no instruction was given:

“Q I will put the case for the last time. At this meeting on the 11 th  May 2010 you instructed Moran to market the yacht for sale discreetly at that stage.

A Not at all; not at all. We had a discussion about the prices, about the market, but there was no direct instruction to sell the boat.”

• Later in the cross examination Mr Kulkarni put a different version of what might have happened:

“MR. KULKARNI: During your evidence yesterday, Mr. Pisarev, you acknowledged that there would have been discussion about selling the 4YOU. Your evidence today seems to be different to that, which is that there was no discussion.

A No, it was general discussion, general discussion about all the situation in general, because, of course, if, for example, in the future, I make a decision to buy the boat, I have to sell it, and it was discussion. But there was no exact – how to say – command to sell, instruction to sell.

Q So, when you were having these general discussions about selling the 4YOU, can you remember what sort of words you would have used?

A Not at all.

Q Might you have said something like, “We need to find out how much the 4YOU can fetch”?

A Probably, but I don’t remember.

Q You may possibly have said, “Could you find out how much the 4YOU could fetch?”

A I’m a businessman, and I understand more or less the price of this boat. Probably, during the discussion, we touched upon this point, but I don’t really remember all the circumstances of this discussion and all the wording.

Q So you could have said it, but you do not remember?

A I don’t remember.”

• Mr Kulkarni explained that while Moran’s primary case was that there had been a direct instruction to market the yacht for sale, an alternative case was that Mr Pisarev had said words such as “Could you see what the vessel will fetch” and that this would amount to an instruction. However, neither Paul Moran nor Ms Tsareva gave any evidence to support the alternative case and I do not regard Mr Pisarev’s evidence in the passage set out above as a sufficient foundation for any finding that this is what occurred. Nor would I accept that such words, if they had been used, would amount to an instruction to offer the yacht for sale.
• I accept the evidence of Mr Pisarev that no instructions were given to market the yacht at the Amels meeting, although the possible future sale of the yacht was discussed. I do so for four reasons.
• First, Mr Pisarev was a truthful and reliable witness. The evidence of Paul Moran and Ms Tsareva was not reliable, for the reasons already given.
• Second, there is no contemporary record of any instruction to market the yacht having been given. If this had happened as the Moran witnesses now say, it is very likely that internal e-mails recording and referring to this instruction would have been generated. The closest to any such record is an e-mail dated 20 May 2010 from a colleague of Ms Tsareva’s in Moran’s Moscow office to a lady called Svetlana in which it is said that:

“I have spoken to my director Lidia Tsareva about our conversation and received new information that motor yacht 4you about which we have already informed you today, confidentially became for sale … the vessel is ready to be sold at 27 mil euro.”

• This was not, as Mr Kulkarni submitted it was, an internal Moran document. Svetlana was (or was representing) a potential client. When Ms Tsareva was asked about this document, she sought to explain the statement that the yacht was “ready to be sold” at a price of €27 million (when her evidence had been that Mr Pisarev’s asking price had been €27.5 to €28 million and that she had given Mr Miliavsky a price of €27.75 million only two days earlier) by drawing a distinction between the seller’s asking price and the broker’s opinion as to what the seller would take. I do not accept that explanation. It is most unlikely that in the first indication of a price to a potential buyer Ms Tsareva’s colleague would have knocked between €500,000 and €1 million off the asking price. In my judgment this e-mail is entirely consistent with the defendants’ case that Moran expected that “4YOU” would be for sale and was acting on its own initiative to try and put together a deal which could be presented to Mr Pisarev, and that it believed that in view of his outlay on the yacht and the discussion at the Amels meeting a price in the region of €27 million would be acceptable to him.
• I would add that, on its face, the e-mail suggests that Ms Tsareva’s colleague had been discussing “4YOU” with a potential buyer even before his conversation with Ms Tsareva, which goes some way to undermine the Moran evidence that a yacht would not be discussed with a potential buyer without the owner’s instructions that it was for sale.
• Third, the letter of intent signed on 7 July 2010 provided expressly that “4YOU” would be marketed through Moran “after this summer” (see [13] above). That is a contemporary statement of what the parties expected to happen and how the sale proceeds were to be applied. It would not have made much sense to include such a clause if Mr Pisarev had already given instructions for the yacht to be sold immediately. Paul Moran’s evidence was that this was a clause insisted upon by Amels for its own protection because it was concerned that without selling the “4YOU” Mr Pisarev would not have the funds to pay for his new Amels yacht. But he also said that Mr Rob Luijendijk of Amels knew that the yacht was already being marketed by Moran from May onwards. If that were so, it would be very odd that Amels should put forward a clause which was not only factually inaccurate but would fail to give it the protection it needed in the event that “4YOU” was sold during the summer period. While the possibility of a misunderstanding by Amels cannot be completely ruled out, this clause supports the defendants’ case.
• Fourth, it would be surprising if Mr Pisarev had made a decision to sell “4YOU” at a time when, however interested he may have been in an Amels yacht, discussions with Amels were only at a very preliminary stage. Indeed Paul Moran’s e-mail of 6 July 2010 to Mr Pisarev’s assistant Alexander Goubarev recognised that even at that stage Mr Pisarev might decide not to go ahead with the Amels purchase, in which case he would lose no more than his deposit of €250,000. That Mr Pisarev gave the instruction to sell at or about the time in September when the Amels contract was signed (or when it was clear that it was about to be signed) is far more probable than that he gave it in the firm terms alleged as early as 11 May 2010. It is not surprising that Moran’s initial case put the instruction in September rather than May. That was always inherently probable.
• Mr Kulkarni put to Mr Pisarev documents suggesting that Moran sent him an offer to purchase “4YOU” for a price of €21 million at the beginning of September 2010, to which he countered with an offer to take €25 million, all this happening before the Amels shipbuilding contract was executed. It was suggested that this contradicted his evidence that instructions to sell the yacht were only given after the execution of the shipbuilding contract. Mr Pisarev accepted that it might be that he was wrong in saying that instructions were given after the Amels contract was signed, but it was definitely at the beginning of September. Even if Mr Pisarev’s statement was wrong, that does not in my judgment support any inference that such instructions had been given as early as 11 May 2010. As Mr Pisarev also pointed out, by this time it was clear that the yacht would be for sale and it was at least possible that Moran was putting forward this offer knowing that would be so. Indeed by the time of these events the Amels contract had been agreed and was ready for execution, even if not yet formally signed.
• Mr Kulkarni submitted that it was contrary to commercial common sense to think that Moran would market the yacht for sale unless it had been instructed to do so. I do not agree. Although the Moran witnesses denied that this was their practice, the disclosed documents show several examples of brokers seeking to drum up interest or to put together a deal without instructions to do so. There is nothing implausible about the idea that Moran should seek to interest buyers in the yacht with a view to presenting Mr Pisarev with an offer in circumstances where it knew that he was becoming interested in the Amels purchase for which a sale of “4YOU” would be necessary. It was certainly in Moran’s commercial interest to do what it could to promote the Amels business, which would bring it commission not only from Amels but also on the sale of “4YOU”. I find that this is what Moran did.
• Accordingly, Moran’s case that there was an express instruction must fail. So too must its case of implied agreement based on Mr Pisarev’s knowledge of and acquiescence in Moran’s marketing of the yacht to prospective buyers in and from May 2010. I accept his evidence that he had no such knowledge.

EFFECTIVE CAUSE

• The issue whether Moran was an effective cause of the sale to Mr Miliavsky’s company arises only if I am wrong to conclude that no instructions to market the yacht were given by Mr Pisarev at the 11 May 2010 Amels meeting and that there was no implied contract. If there were no such instructions or implied contract, Mr Kulkarni accepts that Moran acted on its own initiative in showing the yacht to Mr Miliavsky and has no claim to commission. If, however, Moran was acting pursuant to Mr Pisarev’s instructions, the question arises whether Moran was an effective cause of the eventual sale to Mr Miliavsky’s company.
• The law on whether an agent or broker can be regarded as the (or an) effective cause of a transaction was not in dispute. It is summarised in  Chitty on Contracts  Vol. 2 (31 st  ed) para 31.145, as follows:

“Subject to clear indications to the contrary, where the agency contract provides that the agent earns his remuneration upon bringing about a certain transaction, he is not entitled to such remuneration unless he is the effective cause of the transaction being brought about. On this point there is a substantial body of case law, resulting from the use of words such as “find” or “introduce” a purchaser. Thus in  Millar v Radford  the plaintiff was retained by the defendant to find a purchaser of the defendant’s property or, if that was not possible, a tenant. A tenant was found and the plaintiff was paid his commission. Over a year later the tenant bought the property from the defendants. The plaintiff claimed commission although he had not been in any way concerned with the sale. The Court of Appeal held that he was not entitled to commission, since he had not brought about a sale and was not the effective cause of it taking place. The agent need not, however, be the  immediate  cause of the transaction, provided that there is sufficient connection between his act and the ultimate transaction. Thus, an auctioneer was instructed to sell the island of Herm by auction or otherwise, but the island failed to reach the reserve price at the auction. A potential buyer then asked the auctioneer for the name of the owner and, upon receiving it, purchased the island directly from him. It was held that the auctioneer was entitled to his commission. If the transaction which results in a sale is different from that which the agent was engaged to bring about, it will be a matter of construction whether the parties intended remuneration to be payable in the changed circumstances. If the agent was the effective cause of the ultimate transaction the court may make the necessary implication or may imply a new contract from the fact that the agent continued to act at the principal’s request towards completion of the new transaction. But if the ultimate transaction was of a wholly different nature from that contemplated or worked towards, the agent may not be entitled to remuneration. Thus, where an agent employed to find a buyer introduced a government department which then compulsorily acquired the property, he was not entitled to commission.”

• As Waller LJ put it in  Nahum v Royal Holloway and Bedford New College  [1999] EMLR 252, in order to satisfy the test of “effective cause” a claimant must show that “it was his actions that really brought about the relation of buyer and seller” between the two principals.

Mr Miliavsky’s 18 May 2010 visit

• It is common ground that Moran’s only relevant involvement with Mr Miliavsky was when Ms Tsareva showed him the yacht on 18 May 2010. If Moran was the effective cause of the eventual sale, that can only have been because of what it did on that occasion. In order to apply these principles to the facts of this case it is necessary to consider the rival evidence about that visit.
• The evidence about Mr Miliavsky’s visit to the yacht on 18 May 2010 came from Ms Tsareva, Captain Scott and Mr Miliavsky himself.
• Ms Tsareva’s written evidence was that the visit lasted for “several hours”, but in her oral evidence she said that it lasted for “definitely not less than an hour and a half”, during which she and Captain Scott showed Mr Miliavsky round twice. She said that he was very interested, saying that it was “the perfect yacht” for him, but was too expensive and that he would not pay more than €20 million, a price which she knew Mr Pisarev would not be willing to consider at that time. She said that she had told Mr Pisarev about Mr Miliavsky’s visit, but there was no documentary evidence to support that assertion and I do not accept it.
• Captain Scott’s evidence was also that the visit had lasted several hours (in cross examination he said two or three hours) that Mr Miliavsky was shown round twice and that he asked numerous questions, including about the yacht’s engines and generators and its performance in a seaway.
• Mr Miliavsky’s evidence (and the defendants’ case) is that he was not interested and made it clear that he was not interested in purchasing a yacht at this time as he already owned a yacht, the “MOSCA”, with which he was quite content, that he only agreed to go on board “4YOU” as a result of Ms Tsareva’s persistence, and that he spent very little time on board (no more than about 15 or 20 minutes looking round and a similar time having a cup of tea) and gave Ms Tsareva no reason to think that he was a potential buyer. He accepted that Ms Tsareva would have told him the price, but said that it did not register with him as he was simply not interested. He said that Ms Tsareva did not tell him that the yacht belonged to Mr Pisarev (whom he knew). Indeed Mr Miliavsky’s evidence was that he regarded Ms Tsareva as far too pushy in her approach and over familiar in her manner (using the familiar form of “you” in Russian on first acquaintance which Mr Miliavsky regarded as inappropriate).
• I accept Mr Miliavsky’s evidence on this issue.

Decision on effective cause

• In my judgment Moran was not the – or even an – effective cause of the sale of “4YOU” to Mr Miliavsky’s company. It was not Moran’s actions which really brought about the sale. I reach that conclusion for seven related reasons.
• First, the visit to the yacht on 18 May 2010 was short, perfunctory and, from Mr Miliavsky’s point of view, not serious. He was not interested at that stage in buying “4YOU” and did not seriously inspect the yacht with a view to purchase.
• Second, the long lapse of time between 18 May 2010 and December 2011, although not conclusive, suggests that the transaction discussed in December 2011 was in effect a new transaction and not the resumption of a transaction which had begun some 19 months beforehand.
• Third, the discussion of “4YOU” which began in the Moscow restaurant in December 2011 was in fact a new discussion. Mr Pisarev did not know that Mr Miliavsky had already inspected the yacht and did not (as Mr Kulkarni submitted he had) approach him because of that inspection.
• Fourth, Moran had no relevant contact with Mr Miliavsky after May 2010. If Ms Tsareva had thought he was a serious potential buyer as a result of his visit if only the price were reduced to something of the order of €20 million, it is surprising that Moran never attempted to contact him up to the time when its services were terminated in October 2011.
• Fifth, Mr Miliavsky’s own circumstances had changed materially between May 2010 and December 2011. In May 2010 he was not interested in buying a new yacht and did not have funds readily available to do so. In April 2011, however, he did buy a new yacht, but it was a 32.5 metre yacht called “PANTARAN” and not the “4YOU”. By December 2011 he had sold some businesses and as a result was cash-rich and in a position to consider another purchase.
• Sixth, although he remembered it, Mr Miliavsky did not rely on his visit to the yacht in making his decision to buy “4YOU”, but carried out his own inspection at Loano in Italy in January 2012. The two visits were different in character. In May 2010 Mr Miliavsky visited briefly, with no interest in buying. In January 2012 he inspected the yacht as a potential buyer.
• Seventh, the evidence suggested that wealthy Russians like Mr Pisarev and Mr Miliavsky are routinely circulated (bombarded might be a better word) by brokers with information about yachts which are for sale. It seems probable, therefore, that in the period between September 2010 and October 2011 when Moran was advertising the “4YOU” for sale, he would have been sent such information. If he was, he paid it no attention and showed no interest in it.
• In these circumstances I conclude that there was no sufficient (in fact there was very little) connection between Mr Miliavsky’s visit to the yacht in May 2010 and his purchase of it in January/February 2012. His visit was part of the history, but no more than that.

COMMISSION RATE

• In view of the conclusions reached so far, it is unnecessary to determine what would have been a reasonable commission rate. Although Moran began by claiming a rate of 10% in reliance on its standard terms, Mr Kulkarni rightly recognised in closing that this case could not be pursued in view of Paul Moran’s evidence. He relied on three pieces of evidence: first, a discussion between Moran and other brokers in the context of an offer then under consideration, in which the other brokers had sought clarification whether the price of €23 million proposed by Moran included commission of 8% or 10%; second, the proposed terms of the Junport deal, which had initially included commission of 9% which was then negotiated down to 5%; and third, Ms Tsareva’s e-mail stating that “the standard commission rate is 5%” (see [55] above). To this I would add Mr Pisarev’s evidence that commission was normally in the range of 3% to 5% of the price, as well as other references in the documents to rates of 2½% or even 1½%. Ultimately Mr Kulkarni contended for a figure of 5%.
• The material on which to base a conclusion in these circumstances is rather thin. It appears that commission would normally be the subject of discussion between the parties, so that much would depend on the circumstances of the market in general and the particular transaction being discussed. For example, a broker might be willing to accept a lower rate than usual rather than lose the deal altogether, and much might depend on whether there was a single broker involved or brokers acting for each party, in which case the commission would have to be divided between them, as in the case of the first and second of the three matters relied on by Mr Kulkarni.
• If it had been necessary to reach a decision about this I would have concluded, taking account of the evidence to which I have referred, that a fair and reasonable rate of commission for Moran would have been 4% of the sale price of €19.8 million, that is to say €792,000.

INDUCING BREACH OF CONTRACT

• Moran contends that Mr Pisarev is personally liable for the tort of inducing his company, Galaxias, to breach its contract to pay commission. Since I have found that Galaxias was not in breach of contract, this claim does not arise and it is unnecessary to say much about it.
• I would observe only that, even if Galaxias was in breach of contract for failing to pay commission, and even if Mr Pisarev knew this to be the case (knowledge that the act procured is in fact a breach of contract being an element of the tort:  OBG Ltd v Allan   [2007] UKHL 21 ,  [2008] 1 AC 1  at [39] to [41] ( per  Lord Hoffman) and [191] to [192] ( per  Lord Nicholls)), it would remain a case where all that had happened was that a company (Galaxias) had failed to make a payment which its ultimate beneficial owner, in accordance with whose instructions the company would act, knew to be due. To hold the beneficial owner liable in tort in such circumstances would appear to drive a fairly large hole through the principle of limited liability. However, it is on the facts of this case unnecessary to explore this point further.
• For the reasons given above Moran’s claim fails. It was not instructed to market the “4YOU” in May 2010 and, even if it had been, it was not an effective cause of the eventual sale to Mr Miliavsky’s company. There is no basis for a claim against Mr Pisarev personally.

Privacy Overview

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.

Accessibility Links

Billionaire wins fight over £15m yacht that was too small

Size is everything when you are a Russian billionaire.

Yacht brokers who claimed that they helped Kirill Pisarev, a London-based property magnate, to offload his “too small” £15 million superyacht have lost a demand for more than half a million pounds in commission.

The Court of Appeal was told that Mr Pisarev, 46, realised that the 47-metre yacht was too small for himself, his wife, and their four children within six months of buying it in 2009. In 2012 he sold it to a friend, Alexander Miliavsky, another Russian billionaire, having commissioned a brand new 55-metre yacht deemed sufficiently large for his family, at a cost of £20 million.

The Florida-based yacht brokers Moran Yacht and Ship Inc, who managed and crewed the boat, brought

• Breaking News
• University Guide
• Meghan Markle
• Prince Harry
• King Charles III

Russian billionaire sells his £15million 47-metre superyacht with huge sundeck and exceptional accommodation for 12 guests because it is 'not big enough'

• London-based Kirill Pisarev, 46, one of Russia's youngest billionaires, sold the yacht because it was not big enough
• Yacht 'custom built without compromise' boasts five cabins, 85 square metre sundeck, gym, jacuzzi and WiFi
• Pisarev is now locked in Court of Appeal battle after company claimed he owed a £615,000 commission on the sale

By Amie Gordon For Mailonline

Published: 08:43 EST, 11 February 2016 | Updated: 12:50 EST, 11 February 2016

View comments

A London-based Russian billionaire sold his £15million 'custom built without compromise' superyacht because it was 'not big enough' for his family of six.

Property magnate, Kirill Pisarev, 46, one of Russia's youngest billionaires, is said to have quickly become 'unhappy' with the boat, despite it boasting five cabins, a 'huge' 85 square metre sun deck and 'exceptional levels of comfort with accommodation for up to 12 guests.'

Mr Pisarev, who bought the 47-metre yacht through a company in 2010, became disillusioned with her after just six months of ownership, telling a boat broker he had 'realised the vessel is too small' for him, his wife and their four children, London's Appeal Court heard.

He sold the yacht to a company owned by another wealthy Russian, Alexander Miliavsky in 2012, for just over £15m, having commissioned another 'new build' £20m 55-metre yacht for himself and his family to enjoy.

But he ended up in court over the sale after the brokers who managed and crewed the boat, Moran Yacht and Ship Inc, claimed he owed them a £615,000 commission on the deal. 

Scroll down for video  

The £15m, 47-metre yacht (left) boasts a number of leisure and entertainment facilities, including gym equipment, WiFi and a jacuzzi. It was sold by Russian billionaire Kirill Pisarev (right) but a company claims he owes some £615,000

Relax on the high seas: The stunning yacht, which is now at the centre of a legal battle, boasts a number of luxuries amenities including its own on-deck jacuzzi

Now available to charter, anyone hiring the super yacht can also take advantage of its recreational facilities, such as three-seat Yamaha VX Cruiser Jet-Skis

Their claim for the cash was thrown out by the High Court in London in 2014, but now they are trying again in the Court of Appeal and court papers have revealed for the first time details of the billionaire's lavish lifestyle.

The yacht had been used by Mr Pisarev to entertain guests during the 2010 Monaco Grand Prix and also boasted leisure and entertainment facilities including on-board WiFi, a deck jacuzzi, a gym and exercise equipment. 

The boat, which can now be hired online, was a finalist in the Showboats Design Awards 2010 and is available for charter around destinations including the French and Italian Rivieras, St Tropez, Monaco and the Mediterranean. 

Guests can also choose from a number of luxurious 'extras' to hire such as Yamaha jet skis, scuba diving, snorkelling and fishing equipment, and water skis.

Mr Pisarev, who bought the 47-metre yacht through a company in 2010, became disillusioned with her after just six months of ownership, telling a boat broker he had 'realised the vessel is too small' for him, his wife and their four children. Pictured, the exterior dining area

Race across the ocean: The yacht was used by Mr Pisarev to entertain guests during the 2010 Monaco Grand Prix - who no doubt made good use of leisure and entertainment facilities such as this exercise equipment

Mr Pisarev sold the yacht to a company owned by another wealthy Russian, Alexander Miliavsky in 2012, for just over £15m, having commissioned another 'new build' £20m 55-metre yacht for himself and his family to enjoy. Pictured, the on-board bathroom 

Sir Terence Etherton, Lord Justice Lewison and Lord Justice Christopher Clarke, were told by Moran's QC, Stephen Auld, that the brokers are claiming an estate-agent style commission for having 'showed the yacht' to Mr Miliavsky early in 2010, two years before he bought it.

However Mr Pisarev says the Florida-based brokers were not brought on board to find a buyer until September 2012, after Mr Miliavsky viewed the yacht, and so are not due a penny.

RELATED ARTICLES

Share this article

The judges were told how Mr Pisarev 'had a fabulous time with his family' aboard the yacht during a Caribbean tour in late 2009 and early 2010. He also used it 'to entertain business associates during the Monaco Grand Prix in May 2010.'

But he soon became 'unhappy' and Moran was told in 2010 that, 'after having it for half a year the owner (Mr Pisarev) has realized the vessel is too small for him and his family.'

The upper salon and piano: The super yacht '4YOU' was built in 2009 by boat builders, Heesen, while Omega Architects is responsible for her beautiful exterior and interior design

The yacht, 4YOU, comes with three deck levels including a foredeck, lounge and dining area 'that provide privacy when in port' and 'exceptional levels of comfort' with accommodation for up to 12 guests

The master bedroom: Mr Pisarev's old yacht, pictured here, will keep guests cool and comfortable with air conditioning in its five staterooms 

Specifications given on the website of the Dutch company that built the yacht state it has a top speed of 12 knots, a range of 2,750 nautical miles and is 'custom built without compromise.'

It features foredeck seating and dining, a nine metre beam, five cabins and a 'huge sundeck measuring almost 85 square metres' which 'can be dedicated to any purpose – sunbathing, dining, entertaining or working out in the gym.'

'Three other deck levels include a foredeck, lounge and dining area that provide privacy when in port. Providing maximum interior volume results in exceptional levels of comfort with accommodation for up to 12 guests.'

Mr Pisarev amassed his huge fortune not through the usual oligarch method of buying cut price national resources, but through hugely successful property development company, PIK Group, a company he founded with friend Yury Zhukov in 1994.

He has a home in Knightsbridge and, through his company, invested £110m in an office development at 78 Cannon Street, in the City. 

He also bid more than £900m to acquire Chelsea Barracks but lost out to Christian Candy's CPC Group and a Qatari investor.

The Appeal Court hearing continues.

With foredeck seating and dining, a nine metre beam, five cabins and a 'huge sundeck measuring almost 85 square metres', the sundeck 'can be dedicated to any purpose – sunbathing, dining, entertaining or working out in the gym'

Mr Pisarev's former yacht has a top speed of 12 knots, a range of 2,750 nautical miles and is 'custom built without compromise'

The Russian billionaire was able to purchase - before subsequently selling - this yacht after amassing a huge fortune through his successful property development company, PIK Group

The court has heard how Mr Pisarev 'had a fabulous time with his family' aboard the yacht during a Caribbean tour in late 2009 and early 2010. Now it is available for charter around destinations including the French and Italian Rivieras, St Tropez, Monaco and the Mediterranean

Share or comment on this article: Russian billionaire Kirill Pisarev sells his superyacht because it's 'not big enough'

Most watched news videos.

• World's politest protestor waits for show to end before interrupting
• British Airways crew Holly Walton filmed making 'racist' gestures
• Prince William makes sweet remark about wanting Kate by his side
• 'Loch Ness monster' seen moving around in 'compelling' video
• Deliveroo rider seen after biting off customer's thumb
• Reeves: We are falling behind our competitors
• Bodycam shows Riley Strain speaking to cops night he went missing
• Nigel Farage interviews Donald Trump at Mar-a-Lago in exclusive
• Shocking clip of man's best friend taped to lampost by angry neighbour
• Ireland's Varadkar steps down from his position as Prime Minister
• Incredible drone footage shows inside of melted Fukushima reactor
• Wills waves to cheering crowds in first outing since trip with Kate

Comments 60

Share what you think

• Worst rated

The comments below have not been moderated.

The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline.

We are no longer accepting comments on this article.

• Back to top

Published by Associated Newspapers Ltd

Part of the Daily Mail, The Mail on Sunday & Metro Media Group

Find anything you save across the site in your account

The Rise and Fall of Russia’s Most Acclaimed Theatre Director

By Joshua Yaffa

This past Saturday night, as it has regularly for nearly two hundred years, the stage of the Bolshoi Theatre, draped by its famous scarlet and gold curtain, featured the long-anticipated première of a new ballet. Tickets sold out within hours last month, with many left waiting in a long line in the cold outside the box office. The Bolshoi’s capacious hall, ringed by teetering loggia boxes, was filled with so many members of the ruling élite —from Vladimir Putin’s press secretary, Dmitry Peskov, to the head of Channel One, Konstantin Ernst—that the event seemed an updated version of an old Communist Party Central Committee congress.

The highly anticipated ballet was “Nureyev,” a staging of the life and work of the famed dancer and choreographer Rudolf Nureyev, whose defection from the Soviet Union, in Paris, in 1961, was an international sensation. Its director was Kirill Serebrennikov, who, at forty-eight years old, is Russia’s most celebrated and internationally known theatre director, an artist whose tastes run to the ambitious, provocative, and avant-garde. The dancing in “Nureyev” is broken up by the intermittent reading of text aloud, which muses on the fused ideas of art and exile. One passage, which quotes a letter received by Nureyev after he had emigrated to Europe, laments how Russia is a country that “does not value its heroes.” The close of the first act features a sensuous and lyrical pas de deux between Nureyev and Erik Bruhn, the acclaimed Danish dancer and Nureyev’s partner of many decades, which shows the couple falling in love after meeting, in Copenhagen, in the nineteen-sixties.

During the performance, Serebrennikov was at home, in his two-bedroom apartment on Prechistenka Street, where he was in his fourth month of house arrest. Last spring, prosecutors accused Serebrennikov of fraud. They alleged that the famed director embezzled sixty-eight million rubles, or more than a million dollars, in state money during the production of theatrical festivals and performances over several years. If found guilty, Serebrennikov could face up to ten years in prison. (While under house arrest, Serebrennikov is barred from speaking with journalists.) He is one of four defendants charged in the wide-ranging case, which is, at once, numbingly typical (the Putin state regularly makes a show of putting on trial those it says misallocate budget funds) and deeply abnormal (Serebrennikov’s arrest brings to mind another Russian theatre director, Vsevolod Meyerhold, who was executed by firing squad, in 1940, during the Stalin-era purges). Few in Moscow think that Serebrennikov’s problems are really due to money.

Vladislav Lantratov in “Nureyev.”

On Saturday, after the performance, members of the ballet’s production team came onstage to take their bows wearing shirts reading “Freedom to the director!,” with Serebrennikov’s face on them. Some in the audience shouted out, “Bravo, Kirill!”—cries of praise for the one person not present onstage, as if shouting Serebrennikov’s name could, in an act of fitting surrealism, return him to the theatre.

As is frequently the case in today’s Russia, the facts of Serebrennikov’s criminal case are overshadowed by the myriad, often contradictory interpretations of its existence: What message is the Kremlin trying to send to the country’s artistic and cultural figures? If Serebrennikov did commit a transgression, what was the true nature of it? Or is the randomness of the charge the point, the idea that any director or artist or performer could end up in Serebrennikov’s position? No matter the answer, many observers see his case as a sign of a deeper and troubling turn in Russian political life, a symbol—and a warning—of a state that has grown more inflexible, rapacious, and unpredictable, liable to turn even on those it once fêted. It is not accidental that Serebrennikov came to face criminal charges at a time when Russia’s ruling ideology has turned inward and conservative, at times veering toward the outright retrograde and obscurantist.

“Nureyev” should have premièred last July. But, two days before the first show, the director of the Bolshoi suddenly announced its cancellation. The supposed reason was that the ballet was “not ready,” but that seemed unlikely. A dance critic at Kommersant , a Russian daily, who saw snippets of rehearsals, declared that the world of ballet has not produced anything “bigger and more significant” in years, and that its choreography is like “breathing.” She predicted that “Nureyev” would be the Bolshoi’s most “successful and profitable ballet since the fall of the U.S.S.R.” A more probable culprit, then, was the ballet’s nudity and overt theme of homosexual love. (Nikita Mikhalkov, a powerful film director close to the Kremlin, told Vice that the Bolshoi was not the place to “hang Nureyev’s cock.”) Rumors swirled of a call to the Bolshoi from a high-ranking Kremlin official, or a politically influential Orthodox cleric, which could have led to the theatre’s abrupt decision not to stage the work. That Serebrennikov would soon fall out of favor and be charged with fraud suggests that officials targeted his ballet.

Yet Putin’s Russia is marked by a discursive, nonlinear quality, full of contradictions for anyone trying to decode the meaning of events. This weekend, after a five-month delay, the Bolshoi hosted the première of “Nureyev” after all; but, just as his art is being celebrated on the country’s premier stage, Serebrennikov remains out of sight, awaiting trial, the outcome of which will define the relationship between art and the state in the Putin era going forward. The question is what is the aberration and what is the norm—that a ballet like “Nureyev” played on the main stage of the Bolshoi or that its director is under house arrest?

Serebrennikov was always a particularly Russian type of rebel: one who sought, and attained, mainstream success, often with the blessing and support of the state. He was, for a while, the house avant-gardiste of Putin-era Russia. Serebrennikov grew up in Rostov-on-Don, a city in southern Russia known for its scrappy, mafiosi-tinged local folklore. His mother was a Russian teacher, his father a urologist—in other words, archetypical members of the late-Soviet provincial intelligentsia. Serebrennikov was educated as a physicist, but showed a talent for theatre from an early age, and was a popular director of local plays and televised films.

In the early two-thousands, when Serebrennikov was in his thirties, he came to Moscow, where he staged a number of successful performances at the Sovremennik, a theatre founded during the Khrushchev thaw, in the nineteen-fifties, and the Moscow Art Theatre, the historic stage made famous by Konstantin Stanislavsky and his eponymous acting method. This fall, I spoke with Mikhail Shvydkoy, who was Russia’s Minister of Culture from 2000 to 2004, and who remains a high-profile and influential figure in the arts. Shvydkoy presided over a relatively laissez-faire period in the state’s role in culture, including support for innovative, and at times unconventional, art forms—sometimes making the ministry more progressive than other arms of the state, or even the viewing public. (During our conversation, he told me, “I always repeat the words of Alexander Pushkin: ‘The government is the sole European in all of Russia.’ ”)

Shvydkoy watched Serebrennikov’s career develop and saw him as a person of thoroughly modern sensibilities, with the desire to push against the conservative strain in Russian theatre, but also with the professionalism and creative ability to execute that vision. “Kirill is very talented and very genuine,” Shvydkoy told me. “Yes, he is extravagant, and he creates a certain element of provocation in his art, but this is natural and correct.” All the same, Shvydkoy went on, “He always existed inside the system: he worked with Moscow’s largest theatres, at the Bolshoi, he filmed movies.”

Serebrennikov’s star rose in tandem with the Putin system’s own, very purposeful, flirtation with contemporary art. For a time, in the mid-to-late two-thousands—Putin’s second Presidential term and the short-lived reign of Dmitry Medvedev—the Kremlin had an interest in a kind of stage-managed modernization, which, in the arts, led to state support for innovation and experimentation, much of it controlled, but some of it less so. Anna Narinskaya, a longtime journalist and arts critic, told me that, by fostering the avant-garde, the Kremlin hoped to send different messages to different audiences. For the West, it was an “invitation to get involved,” as Narinskaya put it: for a while, foreign curators and architects and contemporary artists regularly passed through Moscow to present or oversee large-scale projects. Russia’s own intelligentsia and creative professionals were meant to see the state’s interest as a “call for collaboration—come work for us.” And the country’s young people got a relatable style, an aesthetic that was attractive and modern.

Not that Serebrennikov and others had much of a choice. Much of Russian cultural life is dependent on state funding for its existence; that is especially true in the dramatic arts, as nearly all of the country’s more than six hundred major theatres are state institutions, which rely on government support for seventy per cent of their budgets. Fund-raising and endowments largely do not exist. “You don’t have a choice between making a film with state participation or without,” Narinskaya said. “The question is: Do you want to make a film at all?”

In the mid- to late two-thousands, the person behind the Kremlin’s efforts to attract—some might say co-opt—artists and cultural figures was Vladislav Surkov, a top adviser to Putin who was the architect of Russia’s postmodern, make-believe politics. Surkov is a self-styled cultural sophisticate, whose tastes range from William Burroughs to Tupac Shakur. He and his deputies would regularly fly to Salzburg for the opera. It was also Surkov who came up with the term “sovereign democracy” to describe the Putin system, essentially a clever way of masking soft authoritarianism. He deftly created stylish youth groups and political parties. One summer, Surkov arranged for a beloved Russian alternative rock singer, Zemfira, to perform at a pro-Putin youth camp in the countryside. In Moscow, he organized a regular evening of poetry and experimental theatre with actors who trained with Dmitry Brusnikin, a director and pedagogue with a cultish following.

It wasn’t long before Surkov took an interest in Serebrennikov, and Serebrennikov in Surkov. Alexey Chesnakov, a former Kremlin political adviser who worked for Surkov, told me that Surkov knew that Serebrennikov and other artists of his ilk “felt things very subtly, in a way that Surkov understood, and other officials did not, and could, in a way, elevate the state.” The two men were not especially close, but their interests did, in part, overlap. Serebrennikov could use the resources of the state to realize his creative ambitions; and Surkov could harness the talents of people like Serebrennikov to further his own vision of Putin-era cultural life, at once vibrant and edgy, yet within prescribed boundaries. “It was a time when a lot of people were attracted to the state, to the process that was taking place, when it wasn’t just profitable to be close to the state, but also interesting,” Chesnakov said.

Narinskaya, the journalist and critic, recalled Surkov as “this kind of gray cardinal.” It seemed, she said, that Surkov “ran the whole of Russia from behind the scenes—he was demonic, mysterious; how could you not be interested in him? Plus, he had the power to give you a lot of money.” As for Serebrennikov’s part, Narinskaya went on: “He knew how to make nice with the bosses. He was friends with ministers and oligarchs and beautiful socialites.”

In some ways, the relationship between Serebrennikov and Surkov resembled that between Meyerhold—the avant-garde director shot during the purges—and Lev Trotsky, the Bolshevik revolutionary; or between Isaac Babel, the famed writer, and Nikolay Yezhov, the sociopathic head of Stalin’s secret police. Both Meyerhold and Babel were, for a time, bathed in the attention of the Soviet state, only to eventually fall victim to its terror, shot during the purges. Yet neither Serebrennikov’s rise nor fall was so dramatic. What’s more, Serebrennikov never had any ideological affinity with the regime; in fact, it was quite the opposite. His politics were quite obviously liberal from the beginning, and, in 2011 and 2012, he even frequented anti-Putin protests. Surkov’s innovation was to realize that one could downplay ideology: his bet was on style, not substance.

The height of Serebrennikov’s artistic dalliance with Surkov, and the universe he represented, came in 2011, when Serebrennikov staged a theatrical production of “Almost Zero,” a novel likely written by Surkov under a thinly disguised pen name. In his book on Putin-era Russia, “Nothing Is True and Everything Is Possible,” Peter Pomerantsev described the sold-out première, in Moscow. The crowd was full of “hard, clever men who rule the country and their stunning female satellites,” Pomerantsev writes. For the play, Serebrennikov cleverly switched out the main character’s cold cynicism, the theme of Surkov’s novel, and made him wracked with doubt and self-loathing. Serebrennikov’s actors talked directly to the audience, accusing them of being “at ease in a world of nepotism, corruption and violence.” Pomerantsev described their reaction. “The bohemians in the audience laughed uncomfortably. The hard men and their satellites stared ahead unblinking, as if these provocations had nothing to do with them,” he writes. “Many left at the interval. Thus the great director pulled off a feat entirely worthy of the Age of Surkov: he pleased his political masters—Surkov sponsors an arts festival that Serebrennikov runs—while preserving his liberal integrity.”

Not long after, Oleg Kashin, a Russian journalist fond of provoking his subjects, asked Serebrennikov why he chose to collaborate with Surkov. Serebrennikov’s answer was, effectively: Why not? He said that “Almost Zero” was a “talented, representative, and interesting work that, in a very serious way, speaks to our time.” He went on to tell Kashin, “I don’t think that theatre should only engage in pure art, stuck in its ivory tower. I’m interested in theatre, and cinema, that deals with life, is right in the thick of it, asking disturbing questions, ready to pronounce some unpleasant words.”

In March, 2011, aides at the Ministry of Culture passed a message to Serebrennikov: he should ask for the state’s blessing. Dmitry Medvedev was then President, and he, as much as Surkov, was responsible for the state’s interest and support for cultural projects and contemporary art. Medvedev had championed the idea of building a top-down, state-led business incubator, called the Skolkovo Innovation Center, and now he wanted to do something similar in the arts. The notion circulating at the time was to launch a new state-supported festival, Platforma, with Serebrennikov as one of its directors. “He was told that if he were to come forward with this request, it would be approved,” a former employee of the Ministry of Culture said, of Serebrennikov’s role.

For a time, the experimental stagings at Platforma—which, in addition to theatre, explored dance, music, and media art—were among the most relevant and energetic in the country. Serebrennikov’s production of “Scumbags,” a raw, cruel play about Russia’s lost generation of the nineteen-nineties, was a particular hit. Around the same time, in 2012, I remember seeing his staging of “The Golden Cockerel,” an opera by Nikolai Rimsky-Korsakov, which Serebrennikov turned into a satire of contemporary Kremlin politics. A military parade with huge missiles towed across the stage was an allusion to Russia’s annual Victory Day parades; a horde of children glorifying the Tsar was a nod to the pro-Putin youth groups fomented by Surkov. But, over time, the hollowness of the idea that the Russian state could manufacture creativity and innovation became obvious. Skolkovo faded from relevance, and Platforma lasted only three years.

In 2012, the Moscow city government appointed Serebrennikov to take over the Gogol Center, a struggling venue on a side street behind the Kursky train station. Before Serebrennikov arrived, the theatre had trouble drawing a sizable crowd and had taken to blocking off half the seats in the main hall. His appointment was controversial, especially among the theatre’s actors, a conservative bunch, who staged protests in front of the mayor’s office and sent protest letters to everyone from the Duma to the prosecutor’s office. Serebrennikov fought back and eventually turned a core group of his former pupils into Gogol’s primary troupe. Under Serebrennikov, the Gogol Center staged a number of successful performances, including “The Idiots,” which was inspired by the Lars von Trier film, from 1998, and played at the Avignon Festival. His staging of Ivan Goncharov’s “A Common Story,” is a judgment of compromise, a warning of the seductions and comforts that come with growing close to the ruling system. Last year, I went to the Gogol Center for a one-off performance that blended historical drama and political testimonials, on the theme of Stalin’s funeral, in 1953, and the legacy of Stalinism in present-day Russia. It was uneven, and preachy in parts, but probing and sincere. The Gogol Center offers a new kind of venue for Moscow, a cultural space in the most sweeping sense of the word, where people gather not just to watch a play but to listen to lectures, participate in seminars and master classes, or simply sit around and talk in the café.

Marina Davydova, a prominent critic and the editor of the magazine Theater , told me that she warned Serebrennikov that this period could not last long, just as the freewheeling cultural age after the Bolshevik Revolution gave way to the stifling artistic controls of Stalinism. “Don’t get too close to power,” she recalled telling Serebrennikov. “There are people inside the system who are supporting you now—but others will come to fight them, and, when they do, they will destroy you in the process.” She added, “This was not a moral demand, but an understanding of the algorithms of history.” At the time, Serebrennikov waved off her concern. “Don’t worry,” he told her. “We’re not that close.”

The Russian state’s relationship to the world of culture began to shift in late 2011 and early 2012, when, in response to election fraud and Putin’s decision to return to the Presidency, a large-scale protest movement emerged on the streets of Moscow. The demonstrators were largely middle-class professionals: Serebrennikov’s audience, and the sort of people whom Surkov thought he could cleverly manage. Putin responded by turning toward a new ideology, a mishmash of conservative values, anti-Western resentment, disdain for urban élites, and an elevation of the Orthodox Church. Putin demoted Surkov, and named Vladimir Medinsky as Minister of Culture. Medinsky is a nationalist ideologue with spurious academic credentials—amateur researchers have provided evidence that one of his dissertations was poorly sourced and full of errors—who shifted the ministry in a strongly conservative direction. His arrival was “abrupt and palpable,” said the former employee in the ministry. “We started to get all these questions about why we are supporting this strange and unnecessary art.”

A period of political revanche followed, both inside the Kremlin and outside, and the limited tolerance for free expression allowed in the Medvedev era was withdrawn. In 2012, three women from the pop group Pussy Riot were put on trial. And, after 2014, when Russia found itself in a geopolitical standoff with the West over Ukraine, the country’s politics, and cultural life, became increasingly curdled by reflexive aggression and paranoia.

A policy paper issued by Medinsky’s Ministry of Culture called for “a rejection of the principles of tolerance and multiculturalism.” Contemporary art was unwelcome: “No experiments with form can justify the substance that contradicts the values traditional for our society.” Medinsky ordered the ministry to end its support for Serebrennikov’s Platforma festival. In 2016, Serebrennikov directed a film, “The Student,” which mocked the country’s increasing clericalism and intolerance. It was visceral and unpleasant viewing, and won the François Chalais Prize at the Cannes Film Festival. Serebrennikov and the state that effectively employed him were moving in opposite directions.

First, three of the employees at Serebrennikov’s Gogol Center, including the financial director, were arrested last May. At that point, Serebrennikov was a witness, but it was clear that he would end up a target, as well. The crux of the accusation was that his production studio embezzled state funds meant for the Platforma festival. It appeared to be an absurd charge. At one hearing, prosecutors claimed that a performance of “A Midsummer Night's Dream” had never happened at all. But the play had won several awards, was performed abroad, and was reviewed widely. Prosecutors dismissed news clippings presented by the defense, saying, “A newspaper article cannot confirm that the performance took place.”

Hopes of the theatre’s supporters were buoyed in May, when the influential director of Moscow’s Theatre of Nations handed Putin a letter in support of Serebrennikov and his colleagues. Putin, accepting the letter, was heard to utter the word “fools,” presumably about the overzealous investigators leading the case. But maybe Putin’s insult was directed toward somebody else, perhaps the defendants and their sympathizers. Or, perhaps, Putin himself no longer has the same omnipotent hold over the country’s investigators and secret policemen.

On August 22nd, Serebrennikov was in St. Petersburg, filming a movie on the life of Viktor Tsoi, a Soviet rock legend and counterculture hero from the nineteen-eighties. Russian police arrested Serebrennikov and took him back to Moscow, driving through the night. In the morning, a judge sentenced him to house arrest while awaiting trial. At the hearing, Serebrennikov said, “The charges brought against me are impossible and absurd. I thought that we were engaged in a bright and powerful project for our country, our homeland.” He finished by asking for his release on bail—an appeal that was denied. “I am an honest person, and I ask the court to allow me to work,” he pleaded.

The indictment centers on the studio’s use of obnal , or off-the-books cash. It’s a tricky question, because obnal is, in essence, a way of turning entirely legal funds into illicit funds, which can be spent on whatever you choose: to line one’s own pockets, or, simply, to procure necessary goods and services. State funds can only be released a certain period of time after a particular good or service has been delivered. But for a large theatre, all sorts of venders demand payment right away: repairmen, prop studios, lighting technicians. Thus, in principle, Serebrennikov and his colleagues at the theatre studio could be left with the need for technically illegal cash for entirely legal means. The law itself became a kind of trap.

“It’s quite obvious to me that they did not create a criminal group in order to steal money,” said Shvydkoy the former Minister of Culture. “They created their company in order to make plays and works of art—and, in the process, it’s possible they could break the law somewhere.” If anything, he suggested, Serebrennikov was led astray by his own success, imagining that he was more protected and secure than he really was. Shvydkoy offered a riddle in the form of a Latin saying: “What is allowed to Jupiter is not allowed to the bull,” he said. “And the moment when a bull begins to feel like Jupiter, all manner of funny things start happening.”

The most recent work of Serebrennikov’s to première at the Gogol Center was “Little Tragedies,” a series of small dramas of Russian life, based on Pushkin’s verse. It made its début in September, when Serebrennikov had already been sentenced to house arrest. “Staging a play without its director is, of course, frightening, and a great responsibility,” said Alexei Agranovich, the actor playing the “Miserly Knight,” who, in the play, hoards not gold, as Pushkin wrote it, but books. We met in the Gogol Center’s café, an open space of wood and brick, which hums with the ambient busyness of actors waiting for rehearsal and people stopping in for a coffee or slice of cake. Agranovich told me that, as he sees it, those wielding influence in the Kremlin today “don’t understand why they need a place like this, what is the benefit for them.”

He said that the officials in charge simply don’t have a clue what Serebrennikov and his art are all about—and that scares them. “It’s like an old person flipping through some Salinger,” Agranovich said. “For them, this is just some incomprehensible shit. And, if this shit begins to stink, and spreads around, they decide to have a look. Where do they look? At the money side of things. Because that is a language the state understands.” I asked Agranovich if he thought Serebrennikov’s success had led him to danger, and if he and his team were inattentive to the shifting reality around them. “Who knows,” he said. “Maybe some mistakes were made—but they were sincere ones, childish, naive. Anyway, it’s impossible to play a game successfully when the rules change four times in the course of a match.”

In October, I went to see Sophia Apfelbaum, who is the director of Russian Academic Youth Theatre, a large, storied state theatre across from the Bolshoi. She had previously worked at the Ministry of Culture, where she led the department that provides support to contemporary art, including the Platforma festival. That made her a witness in the case, and some weeks prior she had gone to the Investigative Committee for questioning. “For a certain while, Serebrennikov was in favor, but that turned out to be a disappointment,” she told me. Ultimately, she blamed the state’s own capriciousness: what it had championed in one moment, it recoiled from in the next. In her office, she handed me a copy of a 2011 decree, with Putin’s signature, calling on the state to fund the Platforma festival. She emphasized that she acted in accordance with the instructions she was given by the government. Platforma, she said, was an “outstanding, absolutely preëminent art project. It’s sad this story ended in such a way.”

I asked her what sort of effect the charges against Serebrennikov had had on those inside the Russian arts and theatre scene. “The idea of having a rational conversation with the state is gone,” she said. “Now everyone feels tight, like they’re in a fishbowl, that at any moment the authorities could show up with some sort of economic charges for them, too.” On October 26th, just a few weeks after we spoke, Apfelbaum went again to the Investigative Committee, where she was told that she was no longer a witness but a suspect herself. She is now under house arrest, like Serebrennikov, awaiting trial for allegedly serving as an accomplice in the theft of millions.

A few days after Serebrennikov’s arrest, a director named Ivan Vyrypaev released an open letter, addressed not so much to the authorities as to his peers in the world of the arts. Vyrypaev is the former head of Praktika Theatre, a popular space in Moscow for modern and experimental productions. Last year, he left for Warsaw, where he is one of the founders of a theatrical studio. His letter is an emotional appeal to refuse further coöperation with the Russian state. Vyrypaev begins by commenting on the actors, directors, and artists who showed up in support at Serebrennikov’s court hearing in Moscow.

“In the meantime, most of you continue to shoot your films, put on plays and receive grants from the ministry of culture,” he writes. “One way or another, by collaborating with this regime while thinking that we can change something in this country, or make a meaningful contribution to change, through our art and our role in society, we are only fooling ourselves and our country once again. And this, I’m sorry to say, looks quite childish.”

Toward the close of the letter, Vyrypaev says that those who think they can outwit the state while maintaining a clean conscience are deluding themselves. “Living a double life is actually what put Kirill Serebrennikov behind bars,” he writes. The letter was controversial among cultural figures in Moscow, with many finding it self-serving and overly simplistic. It was first published on the online portal Snob, whose editors admitted that some on staff found it “demagogic, provocative, and insulting.”

I reached Vyrypaev at the Polish Theatre, in Warsaw, where he was in rehearsals for his new production of “Uncle Vanya,” which also premièred this past Saturday, the same day as “Nureyev.” Vyrypaev feared that he had been misunderstood. “I understand theatrical life in Russia is impossible without the state. I didn’t mean that you should stop working, no longer show up at the theatre or take money from the Ministry of Culture,” he clarified. Still, he feared that the constant searching for funding had become a kind of flirtatious game with the ruling regime. “I left because I no longer wanted to coöperate, but I can’t propose this to all my colleagues. It wouldn’t be humane. I had the chance to leave, but not everyone has this opportunity.”

Vyrypaev emphasized that the real point of his letter was to make his friends and peers think in advance of Russia’s Presidential elections, next year, when Putin will run for a fourth term. During Putin’s last campaign, in 2012, the Kremlin enlisted a number of cultural luminaries to lend their image and reputation to Putin’s reëlection bid. Vyrypaev told me that he wrote his letter with “five or six” specific people in mind. “These people understood perfectly that I was talking to them,” he said. “I know that, during the campaign, some officials will ask for help, and I want to see how they react. No heroism is required. You don’t have to declare anything, or go for some public feat like I did. Just when they call, say you have the flu, or are filming somewhere on location.”

Vyrypaev told me that several years ago he was invited to a meeting of cultural figures organized by United Russia, the country’s loyal pro-Kremlin party. He said he couldn’t make it—he was awaiting the delivery of a new washing machine. Vyrypaev acknowledged that, “Back then you could joke like that. Now they might not find it so funny. Maybe there would be consequences.”

One of the most devious tricks of the Putin system is that the consequences, just like the transgressions they are meant to enforce, are left purposefully vague. Even the unofficial, unwritten rules aren’t really rules at all, but rather a whispered language of hints and suggestions. One criminal case with a figure like Serebrennikov is more than enough for everyone in the world of arts and culture to understand that the state expects something new and different from them. But what? Davydova, the theatre critic, suggested one answer. “If you do something a little too radical—and only you can guess where this line is located—then they will show up and look for something,” she told me. “And, of course, they’ll find something. You think even a place like the Bolshoi is clean? If they wanted to come up with financial violations, I’m sure they could find plenty.”

It’s hard to say what Serebrennikov’s mistake was, if he made one at all. Perhaps the error was merely that he believed, up until the end, that it was possible to have a conversation with those who had, in fact, long ago stopped speaking with him. Serebrennikov once told an interviewer that, no matter the government or system, “you need to go and talk.” As he put it, “You tell them, ‘I know that you, the state, are lying, mercenary, but by law you must help theatre and the arts, so be good—fulfill your obligations.’ For the sake of theatre, I’m not ashamed to do this.”

By signing up, you agree to our User Agreement and Privacy Policy & Cookie Statement . This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

By Evan Osnos, David Remnick, and Joshua Yaffa

By Benjamin Kunkel