Jonathan Paul Thielmann v Galina Besharova
| Jurisdiction | England & Wales |
| Judge | Greenwood |
| Judgment Date | 22 November 2022 |
| Neutral Citation | [2022] EWHC 2879 (Ch) |
| Docket Number | Claim No: BR-2014-001699 |
| Court | Chancery Division |
[2022] EWHC 2879 (Ch)
ICC Judge Greenwood
Claim No: BR-2014-001699
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
Royal Courts of Justice
Rolls Building
Fetter Lane
London EC4A 1NL
Mr Tony Beswetherick KC (instructed by Holman Fenwick Willan LLP) for the Applicants
Mr Lloyd Tamlyn (instructed by Spencer West LLP) for the Respondent
Hearing date: 20 October 2022
Remote hand-down: This Judgment was handed down remotely at 10.30am on 22 November 2022 by circulation to the parties or their representatives by email and by release to The National Archives.
Introduction
This is an application made by Ms Galina Besharova, the former wife of the late Mr Boris Berezovsky, to strike out under the inherent jurisdiction of the court, an application (“ the Preference Claim”) made against her under s.340 of the Insolvency Act 1986 (as modified by the Administration of Insolvent Estates of Deceased Persons Order 1986) (“ the IA 1986”) by the Respondents (“ the Trustees”) acting as the Joint Trustees of Mr Berezovsky's insolvent estate.
In essence, Ms Besharova, represented by Mr Lloyd Tamlyn of Counsel, says that because the Trustees refuse to disclose various relevant but (admittedly) privileged documents, “ no fair trial” of the Preference Claim is or will be possible, and that it therefore comprises an abuse of the court's process. In response, the Trustees, represented by Mr Tony Beswetherick KC of Counsel, say that the application is misconceived, and that the Trustees' proper reliance on privilege, a fundamental and substantive right, does not (indeed cannot) render the process “ unfair”.
Mr Berezovsky died on 23 March 2013, and on 29 April 2013, two of the Trustees, Mr Nicholas Wood and Mr Kevin Hellard (both of whom are partners in Grant Thornton LLP) were appointed as Joint Receivers over his Estate by Order of Mr Justice Morgan. On 10 April 2014, by further Order of Mr Justice Morgan, they were appointed as General Administrators of the Estate, and one of Mr Berezovsky's daughters, Ekaterina, was appointed as Special Administrator. On 30 October 2014, the General Administrators presented a debtor's petition for an Insolvency Administration Order, having concluded that the Estate was insolvent, and that Order was made on 26 January 2015.
The Preference Claim was issued on 28 April 2021, in respect of a payment of £2.5 million (“ the Payment”) made by Mr Berezovsky to Ms Besharova on 24 July 2012, some 8 months before Mr Berezovsky died. It was supported by the First Witness Statement of Mr Jonathan Thielmann made on 28 April 2021. Mr Thielmann has day to day conduct of the administration of Mr Berezovsky's insolvent estate; he is an employee of Grant Thornton LLP. In short, the Trustees' case in respect of the Payment is that it was a preference within the meaning of s.340(3) of the IA 1986; they seek appropriate relief (but essentially, repayment) to restore the position to what it would have been had the Payment not been made.
The Preference Claim is defended (Ms Besharova has served a Statement made on 22 October 2021) and has been set down for a 4-day trial in January 2023, but in respect of its substance, I understood it to be common ground that:
i) Ms Besharova received the Payment on 24 July 2012 (“ the Payment Date”) in partial discharge of a debt owed to her by Mr Berezovsky, of £5 million; that she was therefore at that time one of Mr Berezovsky's creditors;
ii) the effect of the Payment was to put Ms Besharova into a position which, on the Insolvency Administration Order being made in respect of Mr Berezovsky, was better than the position in which she would otherwise have been; that she was therefore “ given a preference” within the meaning of s.340(3) of the IA 1986;
iii) because Ms Besharova was an associate of Mr Berezovsky (by virtue of s.435 of the IA 1986) it is presumed that he was influenced by the desire to produce that effect; in other words, that it is for Ms Besharova to rebut the statutory presumption; and,
iv) the Payment was made within 2 years of Mr Berezovsky's death and so within the relevant time period specified in s.341(1)(b) of the IA 1986.
Accordingly, at least two issues arise on the Preference Claim:
i) “ the Desire Issue” — whether Ms Besharova is able to rebut the statutory presumption that Mr Berezovsky was influenced by the relevant desire in making the Payment; and,
ii) “ the Insolvency Issue” — whether Mr Berezovsky was insolvent as at the Payment Date or became insolvent in consequence of it.
As at the Payment Date, Mr Berezovsky was pursuing, as Claimant, a number of extremely substantial claims, described by Mr Thielmann at paragraph 27 of his First Statement:
“ (a) The Deceased had commenced a claim against Mr Roman Abramovich in the Commercial Court on 1 June 2007 (2007 Folio 942) claiming a sum in excess of US$5.6 billion ( the Abramovich Proceedings). The trial took place over 43 days between October 2011 and January 2012. At the date of the Payment, judgment was awaited. Judgment was given on 31 August 2012, shortly after the Payment, dismissing the Deceased's claims in full. A summary of the judgment was delivered in open court, with copies of the full judgment (in draft) being provided to the parties. The Deceased was liable for his own and for Mr Abramovich's very substantial legal costs (ultimately agreed at £35 million as recorded in a consent order dated 12 October 2012 …). At the time of the Payment, the Deceased would have been well aware of the risk of failure in the claim and his exposure.
(b) On 12 December 2008, the Deceased had commenced a claim in the Chancery Division (HC08C03549) against the joint interim administrators of the estate of Mr Patarkatsishvili and numerous others, claiming damages/equitable compensation for alleged breaches of fiduciary duty and other related matters in connection with a joint venture agreement ( the Main Action). The Deceased commenced a further claim in the Chancery Division against many of the same defendants and Vasily Anisimov, a Russian businessman, together with several entities controlled by him on 18 February 2009 (HC09C00494) claiming approximately US$585 million in connection with the Deceased's alleged ownership interest in a valuable Russian ore and mining company called Metalloinvest ( the Metalloinvest Action).
(c) On 9 March 2009, the Deceased had commenced a claim against Mr Patarkatsishvili's estate and others (including a company called Salford Capital Partners Inc), again in the Chancery Division (HC09C00711) for circa US$10 million ( the Salford Action and, together with the Main Action and the Metalloinvest Action, the Chancery Actions).
(d) There was a common factual background and overlapping factual issues relevant to the Abramovich Proceedings and all of the Chancery Actions. At a joint case management hearing, it was decided that these overlapping issues would be dealt with first in the Abramovich Proceedings, with any findings of fact determined as preliminary issues. The parties to the Chancery Actions would then be bound by the findings of the overlapping issues as determined in the Abramovich Proceedings.
(e) As at the date of the Payment, I understand that the Chancery Actions were stayed pending determination of the overlapping issues in the Abramovich Proceedings. Following the judgment in the Abramovich Proceedings, the Chancery Actions were swiftly settled by the Deceased, although some of the actions did still continue between the other parties without the Deceased's involvement.”
Ms Besharova contends that that “ the value of the Claims at the Payment Date” — in other words, the “ value” of Mr Berezovsky's claims against Mr Abramovich and of those which he was pursuing in what were described by Mr Thielmann as the “ Chancery Actions” is of “ obvious” relevance both to the Insolvency Issue, and to his perception of his solvency and prospects as at that date, and thus to the Desire Issue. Amongst other things, in correspondence, she has therefore requested disclosure by the Trustees of documents in respect of those Claims, including privileged documents relating, for example, to any settlement offers made by the various defendants at about the time of the Payment Date, or any advice on their merits.
In consequence of her requests, by letter dated 26 November 2021, the Trustees disclosed six relevant, privileged documents (“ the Documents”) and in respect of those documents, privilege was waived. However, that waiver of privilege was expressly limited to those documents only. Ultimately, it is because and on the basis of the Trustees' refusal to disclose any further, additional privileged documents, that Ms Besharova's application is made.
Thus, in his Skeleton Argument at [24], Mr Tamlyn said that “ in short”:
“ a. Documentation relating to the Claims is, [Ms Besharova] contends, of obvious relevance to the issues in the [Preference Claim] (solvency, and desire);
b. The Trustees appear to be in control of that documentation;
c. The Trustees (court officers) have refused to waive privilege in those documents;
d. Therefore [Ms Besharova] contends that no fair trial of the [Preference Claim] is possible, or will prove to be possible.”
and at paragraph [26], that:
“ the legal basis for the strike out … is … clear. [Ms Besharova] submits that where X claims relief against Y, and there is a risk that Y will not receive a fair trial by reason of (inter alia) X's choosing not to disclose documents relevant to the trial, the court will exercise its...
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