Vneshprombank LLC (a company registered and (in Liquidation) in the Russian Federation) v Georgy Ivanovich Bedzhamov
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Falk |
| Judgment Date | 25 May 2021 |
| Neutral Citation | [2021] EWHC 1360 (Ch) |
| Docket Number | Case No: BL-2018-002691 |
| Date | 25 May 2021 |
| Court | Chancery Division |
[2021] EWHC 1360 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice
Rolls Building, Fetter Lane, London EC4A 1NL
Mrs Justice Falk
Case No: BL-2018-002691
Andrew Mold QC and Jack Watson (instructed by Keystone Law) for the Claimant
Justin Fenwick QC and Mark Cullen (instructed by Mishcon de Reya LLP) for the First Defendant
Adam Baradon (instructed by Signature Litigation LLP) for the Third Parties
Hearing date: 11 May 2021
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction and preliminary points
This decision relates to issues arising in respect of a search order made by Arnold J on 27 March 2019 and executed two days later. References in this judgment to the “Search Order” are to Arnold J's order as subsequently varied.
An order made at a case management conference (“CMC”) on 18 March 2021 required the parties to attempt to agree a list of issues relating to the conduct of the Search Order which would be considered at a separate one day hearing. That order also halted material additional work on reviewing material imaged under the Search Order pending a further order of the court. This judgment follows that further hearing.
This is not the first occasion on which the operation of the Search Order has been considered in some detail. In addition to amendments made to it in the first few months after it was granted, there was a two day hearing in respect of it before me in July last year. Outstanding issues following that hearing were resolved in a judgment handed down on 5 August 2020 ( [2020] EWHC 2114 (Ch)), referred to in this judgment as the “2020 judgment”.
I should make a preliminary point about confidentiality. The hearing before me was in public and this judgment will be published without any redactions. Prior to the hearing the parties agreed a consent order which provided for material derived from the Search Order to be included in confidential bundles and referred to in confidential annexes to witness evidence and skeleton arguments, circulation of which (or in the case of certain skeletons unredacted copies of which) would be restricted. At the hearing I made an order under CPR 31.22(2) that such material should be treated as not having been read by the court or referred to at a hearing held in public, and that any application pursuant to CPR 5.4C to view the material would need to be made on seven days' notice. This was intended to continue to protect the confidentiality of material derived from the Search Order. A further provision of my order was intended to safeguard the continuing effect of the order made following the 2020 judgment, namely that material determined to be “listed items” (as to which see [9] below) should only be released by the Claimant's solicitors to those instructing them subject to the provision of certain undertakings, with material that is not listed not being released at all. These matters may be revisited at or following trial.
I heard oral submissions from Mr Mold for the Claimant, Mr Fenwick for the First Defendant and Mr Baradon for the Third Parties. I am grateful to them for their clear submissions.
Background
The background is set out in the 2020 judgment, and I will not repeat it in any detail. In brief, the underlying claim relates to what the Claimant (“VPB”) alleges is a massive fraud carried out by the First Defendant, Georgy Bedzhamov (“GB”), together with his sister Larisa Markus, who was President of VPB. VPB was declared bankrupt on 14 March 2016, and a Russian state corporation called the Deposit Insurance Agency (“DIA”) was appointed to act as liquidator. GB resists the claim, and denies his participation in any fraud.
The claim against GB was issued in December 2018, although the claim form was anonymised and the court file was sealed pending an application for freezing and search orders. The Search Order was initially obtained, together with a worldwide freezing order, without notice. A 40 day trial is listed for January 2022. Disclosure has been made, although there are outstanding issues which it is anticipated will be addressed at a hearing during June. Witness statements and expert reports are due to be served in July and September respectively. There is also a planned process for identifying core documents for the trial, and preparing narratives in respect of them, between July and November.
As explained in the 2020 judgment, the Search Order permitted a search of premises which were said in the affidavit evidence to be “GB's London office”. In fact, the premises are rented by the Second Third Party, Berkeley Square Investment Partners Limited (“BSIP”), a company wholly owned and managed by the First Third Party, Maxim Golodnitsky (“MG”). MG is a friend of GB and they have conducted business transactions together. GB did visit the property regularly, but he did not have an office there. BSIP also provides advice to a number of clients, of which GB is one. The court was not told that other clients' data could be on the premises. BSIP's clients are individuals who are generally exiles from the Russian Federation, and most are seeking or have been granted political asylum. Information provided by those clients to MG and BSIP includes sensitive personal and business information, including information that is legally privileged.
The Search Order permitted searches for hard copy documents and, of particular relevance to this decision, electronic imaging of data stored on any electronic data storage devices “situated on the premises”. It provided for images to be held by computer specialists appointed by VPB, originally Consilio, to the order of the supervising solicitor, Fiona Simpson of Kingsley Napley LLP (the “Supervising Solicitor”), who would hold them to the order of the court. The order contemplated a process of searching the material for “listed items”, being items listed in Schedule B to the order. The listed items set out in Schedule B are primarily aimed at identifying GB's assets or assets under his control (defined as “Bedzhamov Assets”), but documents relating to claims made by VPB in these proceedings are also covered.
Only one of the six data storage devices selected for imaging, a mobile phone, was GB's. The others comprised four computer hard drives and a phone belonging to MG. The total number of documents imaged was 514,069, of which only around 5% were GB's.
As explained in the 2020 judgment at [25], a protocol for the review of material was developed, the detail of which has since been modified on several occasions. This involved documents selected for review being checked first for privilege and incrimination by the Third Parties' solicitors Signature Litigation LLP (“Signature”) (in respect of the Third Parties' dataset) and by GB's solicitors Mishcon de Reya LLP (“Mishcon”) (in respect of items promoted to that stage by Signature and in respect of GB's dataset). Documents not excluded at those stages would be reviewed by VPB's then solicitors PCB Litigation LLP (“PCB”), with those documents regarded by them as listed items being reviewed by Signature and Mishcon, and with disputes being referred to the Supervising Solicitor.
Delays
Some, albeit limited and slow, progress was made with a review of the electronic images in the first few months after the Search Order was executed. Work then stopped in early July 2019 when PCB went off the record. PCB was replaced by Keystone Law (“Keystone”), but a combination of the impact of the handover, data breaches and other issues meant that there was no resumption of the search process before the hearing before me in July 2020, at which a revised version of the protocol was agreed (2020 judgment at [26] and [27]). My hope was that this would allow the search process finally to be completed in an orderly fashion, and in particular by the then main deadline for disclosure, 30 October 2020, without materially impacting on preparations for the trial.
Unfortunately, my hopes have been disappointed. There were difficulties in accessing the document review platform and, significantly, a number of further security breaches were discovered (in addition to ones that had previously occurred, referenced in the 2020 judgment). These problems ultimately led to VPB recognising that Consilio should be replaced. Epiq were appointed in their place by a consent order dated 2 October 2020. That order included a revised protocol which provided for the review finally to recommence on 12 October 2020 with a revised timetable.
In her Twelfth Report, dated 16 March 2021, the Supervising Solicitor identified three main causes for the overall delay. These were (1) the replacement of PCB by Keystone; (2) the data breaches, which the Supervising Solicitor attributed to a failure by Consilio to appreciate the absolute need for confidentiality and data security (despite instructions and warnings from the Supervising Solicitor); and (3) the failure of the Consilio platform to keep an audit trail of items agreed to be...
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