Wharf Land and a group of property professionals, including a member of the British aristocracy, have been ordered to pay a wealthy Russian entrepreneur £2m for their part in a property deal that turned sour.

Judge Rose this morning found in favour of Pavel Lisitsin’s company, Ludsin Overseas, in his claim against Wharf Land Investments, its director Douglas Maggs, his business partner the honourable Charles Balfour and Eco3 director Alexander Shadrin.

She ordered the defendants to pay £1.4m, plus a £356,127 interest payment and costs of £250,000 for ‘fraudulently misrepresenting’ to Lisitsin the nature of a property deal in Reading.

Following the case, Lisitsin said: “I do now believe in the ethical and professional standard of the English judicial system and this could be the single major reason to do business in this country.”

The Judge said that although Wharf Land appeared to be “very seriously insolvent” the defendants would be “well able to meet the judgement,” and were not likely to “remove themselves from the jurisdiction…nor make themselves bankrupt” to avoid paying.

In court documents filed before the case, Lisitsin claimed:

• that he was approached in June 2005 by a Russian broker named Alexander Shadrin, who informed him that Maggs was seeking investors in a 170 acre site near Reading called Sandford Farm.
• that Shadrin said the site was available to buy from Oracle and Persimmon for £12.5m.
• that Maggs intended to obtain planning consent for the site, which would then be sold or refinanced within six months, and investors would be repaid with a return of at least 100%.
• that Maggs then set up a company called Bound Oak Properties and, using Lisitsin’s investment and a loan from Investec, bought the site for less than £10m and sold it on to the special purpose vehicle set up by Wharf on behalf of the group of investors for more than £12m.

Although Abbey National refinanced Investec’s loan, by 2009 the planning consent had still not been obtained, and the bank appointed receivers to the site, rendering Lisitsin’s investment worthless.

Wharf Land then bought the site from the receivers.

In the judgement, Judge Rose said: “I conclude that Mr Maggs and Mr Balfour were fully aware of and complicit in the fact that Dr Shadrin had not disclosed the two-tier structure of the deal to Mr Lisitsin and that so far as Mr Lisitsin was concerned, the deal was a straightforward purchase of the site from Hicks Persimmon by Sandford farm Property for about £12.3m.”