Alexander Gorbachev v Andrey Grigoreyvich Guriev
| Jurisdiction | England & Wales |
| Judge | Lord Justice Popplewell,Lord Justice Dingemans,Lord Justice Males |
| Judgment Date | 28 March 2023 |
| Neutral Citation | [2023] EWCA Civ 327 |
| Docket Number | Case Nos: CA-2022-001544 and CA-2022-001553 |
| Court | Court of Appeal (Civil Division) |
| Year | 2023 |
[2023] EWCA Civ 327
Lord Justice Males
Lord Justice Popplewell
and
Lord Justice Dingemans
Case Nos: CA-2022-001544 and CA-2022-001553
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
COMMERCIAL COURT
Mr Justice Jacobs
Royal Courts of Justice
Strand, London, WC2A 2LL
Richard Mott and Harry Stratton (instructed by Enyo Law LLP) for the Appellants
Mark Belshaw (instructed by CMS Cameron McKenna Nabarro Olswang LLP) for the First Respondent
Hearing date: 21 March 2023
Approved Judgment
This judgment was handed down remotely at 10.00am on 28 March 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
This is an appeal by T.U. Reflections Limited (‘TU’) and First Link Management Services Limited (‘First Link’; together, ‘the Trustees’) against the costs order of Mr Justice Jacobs dated 22 July 2022, by which he ordered the Trustees to pay the costs of a failed jurisdiction challenge in respect of a third party disclosure application by the First Respondent, Mr Gorbachev. The Judge ordered the Trustees to pay the costs, applying the general rule in CPR 44.2(2)(a) that an unsuccessful party will be ordered to pay the costs of a successful party. The Trustees argue that he should have applied the general principle for third party disclosure applications, reflected in CPR 46.1, which is that a successful applicant should pay the third party's costs of the application unless the third party has behaved unreasonably.
CPR 46 is concerned with “Costs-Special Cases”. Rule 46.1 governs pre-commencement disclosure and orders for disclosure against a person who is not a party. In relevant part it provides:
'(1) This paragraph applies where a person applies –
(a) for an order under –
[…]
(b)(i) section 34 of the Senior Courts Act 1981; or
[…]
(which give the court power to make an order against a non-party for disclosure of documents, inspection of property etc.).
(2) The general rule is that the court will award the person against whom the order is sought that person's costs –
(a) of the application; and
(b) of complying with any order made on the application.
(3) The court may however make a different order, having regard to all the circumstances, including –
(a) the extent to which it was reasonable for the person against whom the order was sought to oppose the application; and
(b) whether the parties to the application have complied with any relevant pre-action protocol.
The proceedings
The First Respondent, Mr Gorbachev, and the Third Respondent, Mr Guriev, are in a dispute over an interest in a valuable Russian fertiliser business called PJSC PhosAgro. This dispute was originally listed for a six-week trial commencing in January 2023 but has now been relisted to commence in April 2024.
One of the issues at trial will be how and why Mr Gorbachev was financially supported between 2004 and 2012 through two Cyprus law trusts: the Gamini Trust, of which TU is the trustee, and the Goaliva Trust, of which First Link is the trustee (together, the ‘Cyprus Trusts’). TU and First Link are Cypriot companies with Cypriot directors and advisers. Mr Gorbachev's case is that these have been operated by close associates of Mr Guriev.
The disclosure application
From 2006 onwards, the Trustees were advised by a partner at Lawrence Graham LLP, Mr Nick Jacob, who thereafter joined Forsters LLP. As a result, Forsters have possession in this jurisdiction of documents which Mr Gorbachev contended were likely to be relevant to issues in the action.
In 2021, Mr Gorbachev's solicitors wrote to Forsters seeking disclosure of documents. Forsters responded on 30 April 2021 saying that it was reviewing the documents it held, with the intention of seeing whether it would be possible to disclose some of the documents with the agreement of its clients, but that in any event the application against it was inappropriate because the documents belonged to its clients, and that the appropriate course would be to seek disclosure from the clients in Cyprus by an application there or letters rogatory procedure. There was some dispute about the precise identity of its clients which is not material to the current appeal, for which purposes they can be taken to be the Trustees.
In correspondence in June 2021 Forsters identified that there were about 4,500 electronic documents and 7 physical folders within the scope of the material sought, from 29 June 2006 to date. It repeated its view that an application against the firm was inappropriate. It also reiterated that it remained willing to take a pragmatic approach by exploring whether its clients would consent to disclosure of particular identified documents, but that it appeared that Mr Gorbachev's stance was an insistence on an order for disclosure of all the material which was widely defined. That was indeed Mr Gorbachev's position.
In August 2021, Mr Gorbachev issued an application seeking non-party disclosure from Forsters under CPR 31.17 and s 34 of the Senior Courts Act 1981. The scope of the documents sought was:
“…the following classes of documents concerning the assets, liabilities, and operation of the Gamini Trust and the Goaliva Trust (the ‘Cyprus Trusts’), including in relation to an option (the ‘Option’) (or multiple options) to acquire shares in PhosCo Industries Ltd (‘PhosCo’):
1) all documents and information provided to Mr Nick Jacob, …., or others working on Mr Jacob's files, in respect of the Cyprus Trusts, PhosCo and the Option or multiple Options; and
2) all advice given by Mr Jacob or others in respect of the Cyprus Trusts, PhosCo and the Option or multiple Options
insofar as those documents, information and advice pre-date 1 January 2014.”
Following service of evidence, Mr Gorbachev's disclosure application came on before His Honour Judge Pelling QC on 11 April 2022. At the hearing, after being invited to do so by the judge, Mr Gorbachev applied orally and without notice for an order joining the Trustees to the application; and for permission to serve the application on them out of the jurisdiction and by alternative means. This application was granted, the judge holding that there was a serious issue to be tried, that the disclosure application fell within the gateway at CPR PD 6B para 3.1(20) (‘the para 20 gateway’); and that service out and by an alternative means was appropriate because the documents in question were with Forsters.
On 12 April 2022, Mr Gorbachev served the disclosure application on the Trustees in accordance with HHJ Pelling QC's order by delivering them to Forsters' offices within the jurisdiction and emailing them to the specified email addresses.
The jurisdiction application
The Trustees applied to set aside the order of HHJ Pelling on the grounds that the Court had no jurisdiction to permit service outside the jurisdiction of a disclosure application against a foreign non-party, and/or should not exercise such jurisdiction. The application notice issued on 20 April 2022 challenged jurisdiction on the basis that the disclosure application did not fall within the para 20 gateway. By letter of 9 May 2022 the grounds were widened, without objection, to include an alternative argument that the court should not exercise jurisdiction because to do so would trespass on the letter of request regime set out in the 1970 Convention on the Taking of Evidence Abroad in Civil or Commercial Matters.
The jurisdiction application was heard by Mr Justice Jacobs on 6 July 2022. He was concerned only with whether the jurisdiction application should succeed, not with the merits of the disclosure application. By an order dated 20 July 2022, the Judge dismissed the jurisdiction application for the reasons given in a reserved judgment ( [2022] EWHC 1907 (Comm)). Following a hearing to deal with a number of consequential issues, he made an order on 22 July 2022 which included an order that the Trustees pay Mr Gorbachev's costs of and occasioned by the jurisdiction application.
Males LJ granted permission to appeal against the Judge's substantive decision on jurisdiction on three grounds. Permission on the fourth ground, relating to his costs order, was adjourned to be considered after the appeal. On 30 September 2022 the Court of Appeal (Nicola Davies, Males, Lewis LJJ) dismissed the Trustees' appeal ( [2022] EWCA Civ 1270) and ordered that they pay Mr Gorbachev's costs of the appeal.
The disclosure application (against both Forsters and the Trustees) was heard by Robin Knowles J CBE on 3 November 2022. He determined that the applications did not comply with CPR 31.17 because they did not sufficiently identify the documents or classes of documents sought. He adjourned the applications with liberty to amend and restore them, which is what Mr Gorbachev has subsequently done. The applications are due to be heard on 2 May 2023.
In the meantime on 4 January 2023 the Supreme Court refused the Trustees' application for permission to appeal against the Court of Appeal decision on the jurisdiction application. The Trustees were ordered to pay Mr Gorbachev's costs of the unsuccessful application.
Neither the costs order made by the Court of Appeal nor that of the Supreme Court are challenged by the Trustees. The only issue now on appeal is whether the Judge was correct to order the Trustees to pay Mr Gorbachev's costs of the jurisdiction application at first instance. That is the subject matter of the fourth ground, for which...
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