Loudmila Bourlakova & Ors v Oleg Bourlakov & Ors

Introduction

The First Defendant, Mr Oleg Bourlakov, died on 21 June 2021. He was survived by his wife, Loudmila Bourlakova, and his daughters, Veronica, the Fourth Claimant, and Elena. For the reasons set out in the judgment of Mr Justice Trower dated 26 May 2022 [2022] EWHC 1269 (Ch), the English Court has determined that it has jurisdiction over the claims being litigated here by the Claimants against Mr Bourlakov and associated parties. I came to the same view with respect to certain proposed amendments to those claims advanced by the Claimants, which amendments, I approved for the reasons given in my judgment dated 8 September 2023 [2023] EWHC 2233 (Ch).

It is not necessary for me to set out in any detail those claims, save to note that they concern an alleged scheme by Mr Bourlakov “of dishonest and/or improper and/or unlawful actions with the ultimate objective of maximising his own share of assets which are (or have been) assets of each of the separate members of the Bourlakov nuclear family … and minimising or even extinguishing Mrs Bourlakova’s share”, said to have been undertaken with the assistance of the other Defendants.

The value of the assets comprising the subject matter of these proceedings is measured in excess of a billion dollars. As well as being high value, the underlying dispute is complex, implicating multiple parties in different jurisdictions and related litigation internationally. That dispute extends to Mr Bourlakov’s estate (Estate), including as to the validity of his Russian language will and, importantly in the present context, disputes as to the appointment in different jurisdictions of representatives of the Estate. Such representatives have been appointed in Monaco, Latvia and Russia, albeit no such appointment has been made in this jurisdiction, Mr Bourlakov apparently not holding any assets in England and Wales.

On 12 October 2023, I heard an application by the Claimants for an order pursuant to CPR, Part 19.12 for the appointment of a representative of the Estate. I also heard an application by the (then) Monegasque Provisional Administrator of the Estate, A&S Expertise SAS, an accountancy firm, acting by its Chairman, M. Bruno Bayemi (A&S), for his appointment as a representative of the Estate pursuant to CPR, Part 19.12. A&S’ application was supported by the Seventh and Eighth Defendants (Kazakovs). It is fair to say that, in light of litigation developments in Monaco shortly before that hearing, there was some uncertainty as to whether A&S would remain Provisional Administrator. Given that uncertainty, A&S proposed the adjournment of both applications to allow the position in Monaco to become clearer.

Having heard from the Claimants, A&S and the Kazakovs, I declined that course (or the other potential ways forward suggested by A&S) for the reasons set out in my order (at [11]-[21]). A&S therefore withdrew its application and, for the reasons also set out in my order (at [23]-[29], reproduced below), I approved the appointment of Mr Nicholas Jacob, a solicitor, trust and estate specialist and partner in Forsters LLP, as the representative of the Estate pursuant to CPR, Part 19.12(1):-

Following Mr Jacob’s appointment, a further hearing was held on 26 October 2023 to address consequential matters when I made the following further orders in relation to Mr Jacob’s authority:-

Having performed the role of CPR, Part 19.12 representative of the Estate in these proceedings for some four months and, having since his appointment corresponded in relation to the scope of his role, principally with the Claimants and the Kazakovs, Mr Jacob applied on 28 February 2024 for certain related directions or guidance. That application came before me on 16 July 2024.

Although there was (and remains) no issue as to the power of the Court to appoint Mr Jacob under CPR, Part 19.12(1), it is helpful to set out here the provision in full and the historical background to that Rule since it will inform the discussion later of the guidance now sought and the respective arguments advanced before me on his application for directions:-

On its terms, CPR, Part 19.12(1) is plainly concerned with the appointment of representatives in the context of claims in this jurisdiction already on foot when the relevant interested person died. For a claim to proceed or for someone to have had an interest in it, it must have been ongoing when the person interested in it died (see Millburn-Snell v Evans [2012] 1 WLR 41 per Rimer LJ at [22]). As Mr Jacob noted in his skeleton argument, the law relating to CPR, 19.12(1) appointments is limited. The related notes to the White Book explain that “[t]he general rule of joinder (r.19.2) applies where a party to proceedings has died and a formal grant of representation (whether probate or letters of administration) is taken out in respect of his estate.  …. Rule 19.12(1) applies where a party to proceedings (whether claimant or defendant) has died and that person has no personal representative. …. These orders have the effect of making the deceased’s estate bound by any rulings which the court may make in the proceedings (r.19.12(5)).” I agree with this summary save to note that the Rule’s ambit is broader than (deceased) parties to a claim but extends to (deceased) persons with an interest in such a claim (see too Millburn-Snell at [28]).

As to the reasons for the current Rule, I was taken in submission to some of the history, including the previously expressed dissatisfaction with the historical Chancery practice of administration ad litem explained in 1852 in the following terms in the First Report of the Chancery Commissioners (Ch. Com. 1) (at [17]-[18]):-

Section 44 of the Court of Chancery Act 1852 gave effect to this recommendation in the following terms:-

This was subsequently reflected in the Rules of the Supreme Court (RSC), culminating in Order 15(1) of the 1965 Rules in the following terms:-

At the end of the last century, the RSC were, of course, replaced by the Civil Procedure Rules, the corresponding provision originally found in CPR, Part 19.8(1), more recently CPR, Part 19.12. As to the latter, Williams, Mortimer & Sunnucks on Executors, Administrators and Probate (22nd Ed.) note (at [15-45]) that:-

For the sake of clarity, the second sentence above presumably concerns claims not yet issued (as those are addressed by CPR, Part 19.12(2)) since a (deceased) claimant will clearly have “had an interest” (within the meaning of CPR, Part 19.12(1)) in a claim brought by him prior to his death.

There was much focus at the hearing on the pre-condition to the operation of Rule 19.12(1), namely the absence of a personal representative (and related grant of administration), the routes by which such a personal representative could (or could not) have been appointed in this case, the powers and duties engaged upon such appointment and the related supervisory powers of the Court. Given that the role of trustees and executors is well understood under English law, that focus was, perhaps, unsurprising. In part, it was also set up in contradistinction to the appointment of a representative under CPR, Part 19.12, the Kazakovs pointing out that there was no inherent jurisdiction to make an appointment of that nature, the role being a creature of statute, there being no elaboration in the Rule itself as to the powers exercisable by such a representative and the law providing little related guidance. By contrast, there is a regime in place, not only imputing to administrators the same rights and liabilities as executors, but also enabling the Court to support, supervise and provide protection for them in the exercise of their powers. This includes the Court’s ability in certain circumstances to give them directions, to sanction or ‘bless’ steps to be taken by them and to relieve them from personal liability. Notwithstanding that sophisticated regime, it is quite clear that neither the Claimants nor the Kazakovs are willing to fund Mr Jacob in the role of Estate administrator even if Mr Jacob were to consent to such an appointment.

Although reference to the well-established position of trustees and executors was useful, as noted, the rationale of the Rule in its original statutory incarnation was to avoid the need for a formal grant of administration and joinder of any administrator to the proceedings. Indeed, as Robert Walker LJ noted in Berti v Steele Raymond (A Firm) [2001] EWCA Civ 2079 (at [5]), CPR, Part 19.8(1) (now 19.12(1)) “…gives the court quite wide powers to dispense with the need for a formal grant of probate or letters of administration after the death of a party ... .” Moreover, CPR, Part 19.12 clearly does have quite some history of its own. As Rimer LJ noted in Millburn-Snell (at [27]) of the original statutory incarnation of the Rule as had been discussed in Lean v Alston [1947] KB 467:-

Nor does the latest incarnation operate in a vacuum, CPR, Part 19.12 sitting alongside other Rules concerning further circumstances in which the Court can appoint a representative without the need for the person represented to become a party. As the notes to Section II of Part 19 (concerned with “Representative Parties”) explain (at [19.8.0]):-

So, in addition to the circumstances envisaged by CPR, Part 19.12, Part 19 also permits an appointment of a representative for another in proceedings where (i) they have the same interest in a claim (CPR, Part 19.8) (ii) the latter is unborn, unfound or not easily ascertainable (CPR, Part 19.9) and (iii) the former is a trustee, executor or administrator acting in that capacity, the joinder of the beneficiaries to the relevant proceedings not being required (CPR, Part 19.10). At the hearing before me, there was little, if any, reference to these other provisions. However, their different contexts notwithstanding, they offer useful insight for present purposes. For example, Lloyd v Google LLC [2022] AC 1217 indicates that the power in (the then) CPR, Part 19.6 (now 19.8), itself has considerable history, perhaps best encapsulated (at [38]) in the following terms:-

Related considerations inform the equivalent modern rule (CPR, Part 19.8), the Supreme Court stating in Lloyd (at [71]) that:-

Likewise, there was considerable emphasis before me in the CPR, Part 19.12 context on the need for a representative appointed thereunder to act in the best interests of the estate in the conduct of the proceedings. That consideration too is reflected in some of the cases involving the exercise of that power. So, for example, one of the specific factors weighing in favour of its exercise by Bryan J in Gattaz Properties Limited and another v Versant Developments and Homes Limited and nine others [2021] EWHC 3657 (Comm) (at [153(iii)]) was “that the rights and obligations of the estate are likely to be affected by this litigation and serious allegations are made against Mr Mikhailenko which it would be appropriate for the representative to have the opportunity to defend in whatever are considered to be the best interests of the estate”.

As Lloyd continued (at [75]), the need for the exercise of any power under the CPR to give effect to the overriding objective (CPR, Part 1.2(a)) informs the analysis:-

As reflected in the reasons for my 12 October 2023 order, it was by reference to a number of the above considerations, as they are engaged in this case, that I considered it appropriate to exercise my power in favour of the appointment of Mr Jacob pursuant to CPR, Part 19.12. It is with those considerations well in mind that Mr Jacob’s application for directions also falls to be considered.

Mr Jacob’s application notice dated 28 February 2024 sought orders that:-

Mr Jacob also sought an extension of time for service of the defence on behalf of the Estate, albeit that aspect was not argued before me as it had since been agreed with the Claimants. I have now approved a consent order to that end.

By way of general observation at the outset, although I provided in my 26 October 2023 order for Mr Jacob to apply for further directions, it struck me that some of those now sought were canvassed in somewhat general terms. I have considered all the directions sought but, given their framing, it has not been possible and/ or desirable on some matters to provide more definitive guidance than that indicated below. I should also add that, by the time the application came before me, the differences between the parties on a number of the points had narrowed. Finally, it is appropriate to mention that Mr Jacob gave notice of his application to all the parties to these proceedings, to the Latvian and Russian trustees of the Estate and to potential beneficiaries of the Estate. A&S were also notified, albeit it seems that they had been removed as representatives, only then to have been very recently re-appointed. I understand that only the Russian trustee has responded, intimating its assumption that Mr Jacob will be obliged “to inform them when he makes procedural decisions within the actions and to take into account the opinion of the LLC Gryphon in the conduct of its affairs.”

I now turn to the specific directions sought.

As to Mr Jacob’s duties, it is important to keep well in mind the purpose of his appointment. He is not the personal representative of the Estate. Indeed, his appointment was made because no such person was in place. Rather, Mr Jacob was appointed under CPR, Part 19.12(1) to represent the Estate for the purpose of the proceedings within which the appointment is made. That appointment does not confer more general rights or obligations on him in relation to the Estate. As to what his responsibilities do entail, I agree that the analogy with a litigation friend is helpful and that the observations in OH v Craven [2017] 4 WLR 25 (at [14]) are insightful in this context, reflecting as they do some of the considerations already indicated above in the Part 19 context:-

Similarly, Mr Jacob’s role in this case is to familiarise himself with the claims and, with the benefit of the legal advice received from his legal team, to take steps to represent the best interests of the Estate as a whole for the purpose of these proceedings. The Kazakovs appeared initially to take exception to the suggestion that Mr Jacob would need “to weigh impartially the interests of all persons potentially interested in the Estate, whether as creditors or beneficiaries” (as was reflected in paragraph 25(ii) of the reasons for my order dated 12 October 2023), albeit such difference as there was ended up being one of emphasis. This merely reflects the reality that there are multiple and competing claims against the Estate, whether as potential beneficiary and/ or creditor, and that it does not fall to Mr Jacob to determine which of those claims might, in fact, be good. The corollary is that Mr Jacob should act impartially as between those claiming to be interested as such, considering their interests collectively, not individually. That does not mean that Mr Jacob is required to act neutrally between the parties. To the contrary, the promotion of the interests of the Estate as a whole in the conduct on its behalf of these proceedings will, in all likelihood, set up positions adverse to one or more of those claiming to be interested in it.

I should also add that this does not mean that the Estate should adopt speculative positions in the litigation. Objective assessment of potential lines of defence, including their evidential basis, may well lead to litigation positions properly being taken with less ambitious or fruitful outcomes but with prospects reasonably considered to be better.

I did not understand any of the foregoing to be contentious as between those who appeared before me at the hearing. However, as the Kazakovs indicated, what then follows from these propositions might be. As to this, several different points emerged in the course of correspondence between the parties and the witness evidence on this application, as to which there appeared to be a narrowing of positions prior to the hearing, with a small number of points upon which Mr Jacob continued to seek clarification, namely whether he:-

Mr Jacob also sought guidance on whether, in performing his role, he was obliged to consult certain persons. By the time of the hearing at least, it was common ground that Mr Jacob owed no duty to consult particular potential beneficiaries or creditors for much the same reasons as those expressed above with respect to the scope of his general duty to act in the best interests of the Estate as a whole for the purpose of the proceedings. I share that common view. The Claimants had also earlier suggested that Mr Jacob should give consideration to whether to consult one or more of the persons known to claim an interest in the Estate. I agree with Mr Jacob that this made little sense, at least if formulated in terms of a duty. Nor, indeed, did the Claimants press the point in submission.

In their evidence, the Kazakovs suggested that Mr Jacob was under a positive duty to consult or take account of the views of those representatives appointed in other jurisdictions who have a broad control of the assets of the Estate. It seems that, as proposed, such a duty would extend to at least the Latvian trustees and, with its very recent re-appointment in Monaco, A&S. At the hearing, the Kazakovs indicated that, if Mr Jacob were a trustee or properly appointed personal representative of the Estate, they would accept that there was no such duty. In this case, however, Mr Jacob may need to take decisions such as whether to settle the claim against the Estate, those decisions affecting the assets of the Estate not vested in him, including possible choses in action benefitting the Estate which he may seek to deploy by way of set-off and/ or counterclaim. If Mr Jacob does not consult with A&S, there is no accountability for his actions.

I found this argument unpersuasive for a number of reasons. First, as was common ground, a foreign grant of representation is not (without more) recognised as having any force in England and Wales (Jennison v Jennison [2022] EWCA 1682 Civ (at [50])). As such, there seems no proper basis for recognising a duty to consult with a foreign administrator either; second, at a more practical level, there are at least three overseas administrators, in Russia, Latvia and Monaco, the last two at least seemingly appointed in respect of the Estate’s assets worldwide. As such, there may well be a conflict between their views with no obvious way for Mr Jacob to reconcile them. Consultation may therefore confound rather than bring clarity; third, in my view, the Kazakovs’ approach (not limited to this issue) understates Mr Jacob’s standing. He has been appointed by the Court as the most suitable candidate as representative for the reasons given in my order of 12 October 2023. He is accountable, both as Court appointee and officer of the Court.

It was also suggested by the Kazakovs that Mr Jacob should consult with relevant entities such as Foundations, claimed by some to be holding assets belonging to the Estate and, therefore, potentially affected by his decisions. Like Mr Jacob, I found this proposition puzzling. It is clear that there are rival claims to assets held by third parties but such matters are not for Mr Jacob to resolve. What light such consultation might shed on the performance of Mr Jacob’s role is, therefore, unclear and insufficient to warrant the imposition of a related duty even if its nature and scope were certain.

The Kazakovs’ stronger point is that there may be other persons or entities that hold evidence or information which might assist Mr Jacob in the performance of his role. However, Mr Jacob already recognises the need to inform himself about the claims and will, in all likelihood, already have given consideration to potential available sources of such information and will continue to keep the position under review. Accordingly, to the extent that Mr Jacob considers it appropriate, he can, of course, consult such persons as he see fits for the performance of his role (including any of those mentioned above). However, I see no basis for saying that he should be subject to a related obligation, let alone, again, one so uncertain in scope.

The parties were agreed that Mr Jacob should have the ability to apply to the Court for further directions, and appeared to acknowledge that there may be matters which should be kept confidential from the docketed judge. I agree. However, the Claimants expressed the view that such directions should only be sought where the relevant step proposed to be taken by Mr Jacob was sufficiently significant to make such an application reasonable and proportionate. The Kazakovs contended that there was no obvious jurisdiction for Mr Jacob to seek such further directions, CPR, Part 19.12 being silent on the point.

As to the latter point, it is quite clear that CPR, Part 19.12 must be read in conjunction with the other provisions of the CPR, including the overriding objective under CPR, Part 1, the Court’s general powers of case management under CPR, Part 3 and the general rules about applications under CPR, Part 23. The High Court also has the inherent power to control its own processes and procedures. There is no lacuna as suggested by the Kazakovs.

I should add that the Claimants also argued that it would be open to Mr Jacob to apply for directions under CPR, Part 64, albeit the Kazakovs said that this route would not be open to them. It is not necessary for me to resolve that debate. Even if the Kazakovs are right, the fact that there is a bespoke procedure for claims relating to the administration of estates and trusts, does not indicate that the Court is unable or ill-equipped to entertain applications for guidance from representatives appointed pursuant to other specific powers under the CPR.

In my view, the idea that a CPR, Part 19.12 representative could not seek appropriate guidance or directions would be a surprising one. Indeed, the hearing before me was convened for that very purpose and there was no suggestion that this was ineffective. Although I endorse the Claimants’ suggestion of moderation in advancing any related application, there is no need for me to circumscribe the circumstances in which such applications should be made. Despite my earlier observations concerning some of the rather general points debated before me, I am satisfied that Mr Jacob understands when such an application should properly be made. I consider the other arrangements proposed in the draft order for notice, listing and evidence to be appropriate.

There was more limited discussion before me about Mr Jacob’s power under paragraph 2 of my order of 26 October 2023 to obtain copies of materials that Mr Bourlakov would have been entitled to call for in his own right, a question having arisen as to whether this was limited in territorial scope such that Mr Jacob could not take steps to call for such documents from abroad. The Claimants were initially concerned that Mr Jacob might be seeking to limit the reach of that order in that manner. However, he has since confirmed that he is not. Indeed, all parties before me were agreed that Mr Jacob should have the power to take appropriate steps to compel the production of such documents from abroad where these were not voluntarily provided. Mr Jacob identified such potential steps as applying where appropriate (i) for his appointment to be recognised in the foreign jurisdiction where the relevant document-holder is present and seeking assistance from the Court there (ii) under CPR, Part 34.13 for a letter of request to be issued to the Court of the relevant foreign State in which the documents are held and/ or (iii) to this Court for appropriate orders where the document-holder is a party to these proceedings.

When I made my order on 26 October 2023, it was not my intention that it should be limited to documents within this jurisdiction nor, indeed, do I read it as saying as such. However, given the international nature of these proceedings concerning claims in multiple jurisdictions, and the need for clarity in dealings with any foreign Court, I am satisfied that it should be made explicit in my order that Mr Jacob has the power to take such steps as may be available to him to call for such documents as may be held by foreign document-holders as Mr Bourlakov was or would have been entitled to call for in his own right, including privileged material.

The parties appear to be agreed that Mr Jacob does not have the power under CPR, Part 19.12(1) to bring a counterclaim on behalf of the Estate. That position appears to be based on there being no counterclaim on foot at the time of Mr Jacob’s appointment. As already noted, it is clear from authorities such as Millburn-Snell that Part 19.12(1) is concerned with enabling the forward prosecution of a claim extant at the time of the death of a person interested in it. The Kazakovs say that the corollary is that the Estate would not be able to defend itself properly in circumstances in which Mr Jacob might, for example, discover a counterclaim which the Estate could not then bring.

Although I agree that considerations of fairness and more practical issues such as constraints on the ability to compromise might arise in those circumstances, those circumstances do not arise here. The jurisdictional threshold for the engagement of CPR, Part 19.12(1) requires (i) an existing validly instituted claim and (ii) the relevant deceased person to have had an interest in that claim. Both are satisfied here, Mr Bourlakov having had a clear interest (as defendant) in the proceedings already commenced against him by the Claimants prior to his death. That being the case, and Mr Jacob since having been appointed to represent the Estate, the claim will now progress in accordance with the provisions of the CPR, with such further directions from the Court as may be required for that purpose.

Relevant CPR provisions include the Estate’s ability to (i) file a defence (CPR, Part 9.2(b)) (ii) rely in its defence on the contention that it is entitled to money from the Claimants and set off against the claim (whether or not also an additional claim) (CPR, Part 16.6) and (iii) make a counterclaim against the Claimants by filing particulars of counterclaim which, if filed with the defence, would not require the Court’s permission (CPR, Part 20.4). The position is no more complex than that. Indeed, in my view, it would be very odd if, for example, the Estate could admit or deny (as appropriate) in its defence the asserted claim to ownership of a contested asset or the existence of an alleged partnership with the Seventh Defendant, Mr Kazakov, and seek to prove that position at trial, but could not counterclaim against the Claimants for a declaration in terms of that position.

Accordingly, I am satisfied that Mr Jacob does have the power to make a counterclaim (or, indeed, other additional claim) pursuant to CPR, Part 20.

The question of the ability (or otherwise) of Mr Jacob to settle or compromise a claim on behalf of the Estate is, in my view, straightforward as well. The Kazakovs say that there is nothing in CPR, Part 19.12 which gives a representative power to compromise proceedings and therefore no jurisdictional basis for him to take that step. Although the Kazakovs are correct that nothing is stated in terms in CPR, Part 19.12 as to the power to compromise, I am satisfied that Mr Jacob has that power, it being inherent in his appointment as representative of the Estate that he is able to take such steps for the purpose of these proceedings.

In this context, CPR, Part 19.9, concerning representation of interested persons who are unborn, cannot be found or cannot easily be ascertained, provides some useful insight. Part 19.9(6) explains the Court’s ability to approve a settlement where it is for the benefit of all the represented persons. Implicit from the Court’s power to approve a settlement is the power of the appointed representative to enter into a settlement of the claim. There is no reason why a representative appointed under CPR, Part 19.12 should not be able to settle as well, that power being part and parcel of the conduct of proceedings generally, the representative being appointed for the purposes thereof.

Accordingly, I am satisfied that the power to represent the (now deceased) interested person for the purpose of the proceedings carries with it the power to settle. CPR, Part 19.12 does not require the Court to approve a settlement. However, Mr Jacob has indicated that he would wish to seek such approval in the event of such a compromise. I accept that this would be an appropriate course.

Mr Jacob also sought the Court’s clarification that it is the Estate, not Mr Jacob personally, that is responsible for costs orders made during the course of the proceedings. The Claimants and the Kazakovs did not demur from this once it was properly understood that Mr Jacob was saying that, since he was not a party to the proceedings, he would not be the proper respondent to any costs order made under CPR, Part 44. As Mr Jacob accepted, that does not mean, however, that he is not amenable to section 51 of the Senior Courts Act 1981 and the Cout’s related power under CPR, Part 46.2 to make a costs order against non-parties. With that clarification, I agree that this reflects the correct position.

At the hearing before me on 12 October 2023, a draft directions order was proposed, including an order exonerating Mr Jacob from liability as representative, save for loss or damage caused by acts or omissions that were fraudulent, dishonest or in bad faith. At that hearing, A&S argued that such an order was not appropriate. Having heard only limited argument, I expressed my then provisional view that, if Mr Jacob was unable to obtain insurance for liability arising from his appointment as representative in these proceedings, I was minded to accede to the exoneration order sought. In the event, consideration of consequential matters went off for a fortnight when I made the order I did on 26 October 2023. However, at that further hearing, the exoneration question was not raised. It is not necessary for me to set out the detail but it appears that there was some confusion in the meantime as between Mr Jacob and the Claimants’ solicitors which meant that the point was not pressed further before me at the time even though, as I am satisfied he did, Mr Jacob still wished for an order in those terms to be sought. Mr Jacob was not represented at either hearing.

In any event, some four months into his role, Mr Jacob has made his application for directions, including renewing the request for an exoneration order. As to this, although Mr Jacob’s approach at the hearing before me was fair and impartial, repeatedly emphasising his desire to avoid controversy or criticism, he also stressed the various statements by the Kazakovs as to Mr Jacob’s potential liability if he took a ‘wrong turn’. Although it is not necessary to recite every example, PCB Byrne LLP’s letter of 29 January 2024, the fifteenth witness statement of Ms Seborg dated 31 May 2024 and the Kazakovs’ skeleton argument are indeed replete with references to the risks to Mr Jacob if he does or does not take certain steps in relation to almost all aspects of the directions discussed before me, including the risk of intermeddling, and potential liabilities for breach of duty, many of those observations accompanied by a reservation of the Kazakovs’ rights and indication of potential recourse against Mr Jacob. By way of example, the Kazakovs conveyed the following in the letter of 29 January 2024 in the context of consultation:-

I note these matters not to single out or criticise the Kazakovs. I should also say that Ms Sandells eschewed any notion that these were ‘threats’ and explained that these were said in response to Mr Jacob’s solicitation of her clients’ views. Indeed, it is also quite apparent from the letter from the Claimants’ solicitors dated 12 January 2024 that their clients too held their own strong views as to any suggested consultation duty. However, those strong views not only reflect significant distrust on both sides, they also reveal that, although we are still (perhaps surprisingly given its age) in the foothills of this litigation, Mr Jacob is clearly on notice that he may be exposed to significant liabilities and litigation activity against him personally.

Coupled with that, the evidence and submissions also reveal the Kazakovs’ clear dissatisfaction with what they consider to be the limitations of the CPR, Part 19.12 procedure and their preferred course of a grant under Rule 30 of the Non-Contentious Probate Rules. In that regard, despite A&S’ own abortive application for appointment pursuant to CPR, Part 19.12 last year, it seems from the oral submissions that the Kazakovs now have in mind the appointment of A&S in this jurisdiction under some form of grant, reflecting their reservation at the 12 October 2023 hearing of their position with respect to any future role by A&S here.

These matters play out against the background of international litigation activity between the parties in multiple jurisdictions, with seemingly no stone left unturned on either side, or legal expense spared in its pursuit. As noted, that encompasses not just the substantive dispute but related disputes about Mr Bourlakov’s will, the administration of the Estate and the identity of the relevant administrators appointed in those jurisdictions. As I myself found not long after becoming the docketed judge, this litigation is extraordinary, not merely in terms of the value of the assets being argued over, but also the intensity of that litigation activity and the parties’ efforts on all sides to secure litigation advantage. In short, everything it seems is fair game. This is the context before Mr Jacob has taken any steps of greater potential moment in the litigation proceedings before this Court, for example, in terms of the Estate’s position in its defence. It is therefore unsurprising that, at the latest hearing, Mr Jacob’s counsel made clear that, if such exoneration was not given, Mr Jacob would feel compelled to relinquish his role. I accept that this was not a fait accompli but rather a reflection of the reality of his position.

It is against that background too that I now re-visit the question of prospective exoneration of Mr Jacob. As to my power to make such an order, this was not disputed when the matter was originally raised on 12 October 2023. A&S’ objection then was that a solicitor and officer of the Court in Mr Jacob’s position should not be under any lesser obligation in carrying out his duties than any other solicitor retained by the Estate. The Kazakovs did not comment then on this aspect. The Claimants’ position then was that, without the exoneration provision, it would not be possible to find a professional representative willing to undertake the role, the Kazakovs had not objected to it and such a provision is ordinarily included in modern wills and trusts.

Although the Claimants remain neutral on the question of exoneration, the Kazakovs now argue that such an order should not be made. First, they say that CPR, Part 19.12 contains no reference to limiting the liability of a representative. Although again correct, the exoneration issue is concerned with the exercise by the Court of its power to appoint under CPR, Part 19.12. Inherent in that power is the Court’s ability to determine the terms of that appointment. I see no reason, in principle, why the Court could not prospectively exonerate the representative on the terms sought by Mr Jacob. The more compelling question is whether that would be appropriate here.

Given the highly unusual circumstances of this case, in particular the significant litigation risks in play, I am satisfied that exoneration should be provided in the form of order sought by Mr Jacob. With the value of the assets in issue, the rival claims thereto and the multi-jurisdictional aspects, Mr Jacob’s potential exposure is a matter of significant concern, heightened in this case by the litigation propensities of the interested parties and the likelihood of Mr Jacob too becoming a litigation target if one or more of those parties apprehend some tactical benefit in pursuing proceedings against him.

In this case, the Estate does not apparently include assets within this jurisdiction from which Mr Jacob could be indemnified. There is a deed of indemnity in place between the Bourlakovas and Mr Jacob, including in respect of Mr Jacob’s liability for his actions as representative. However, this is not secured and may well be difficult to enforce. Mr Jacob does benefit from his firm’s professional indemnity insurance policy. The policy limits have not been disclosed but, given the size of his firm and the requirements of the Solicitors’ Regulation Authority with respect to minimum coverage levels, I am satisfied that these are indeed likely to be a ‘drop in the ocean’ compared to the size of liabilities potentially in play. Finally, based on the evidence as to his firm’s efforts to investigate the possibility of further coverage, and the uncertainties surrounding the potential liabilities, I am also satisfied that the prospect of securing additional insurance, if not illusory, is highly unlikely, at least on terms reasonably capable of acceptance by an insured in Mr Jacob’s position. In this regard, it is notable that the Kazakovs have even suggested that the failure to obtain sufficient insurance coverage might itself be a breach of Mr Jacob’s duty.

The risk for Mr Jacob with such exposure would not only sound in potential liability and costs. Were he to become embroiled in litigation, and even assuming he even felt able to remain in his role, defending any such litigation may well cause his independence to be questioned to such an extent as to make it impossible for him to continue to serve as Estate representative. That would mean not only the Estate not being properly represented in these proceedings or, possibly, at all, it would mean significant uncertainty as to the future conduct of these proceedings as a whole. In my view, the Claimants’ prognostication at the hearing before me on 12 October 2023 has been properly tested and borne out.

I recognise, of course, that Mr Jacob owes duties as representative to act in the best interests of the Estate for the purposes of these proceedings. Acceding to his request might, therefore, mean no recourse for the Estate if he falls short of those duties (other than by way of dishonesty). That said, given the insurance position already described and the fact that Mr Jacob is an individual, such recourse would likely be limited in any event, at least compared to the potential liabilities he might face. Balanced against the benefit to the Estate of having continued independent representation in litigation as intense as this, the suggested disadvantage of potential lack of recourse against Mr Jacob is not so compelling. Indeed, it is also significant in this context that Mr Jacob is a solicitor and officer of the Court and that he is accountable to the Court as such. He is also present within the jurisdiction.

In my view, it is also relevant for present purposes that, were trustees or executors to be appointed to perform a similar function to Mr Jacob, it is common for the appointing instrument to exonerate them in advance in the same way. Even if no such exoneration clause is included in the relevant trust instrument, the Court has the power under section 61 of the Trustee Act 1925 to relieve trustees from liability. It is also common practice for solicitors’ firms instructed to conduct and manage litigation to seek to limit their liability by contract. In this case, of course, Mr Bourlakov is in no position to consent to such exoneration but I am satisfied that all relevant parties are on notice of the issue (as they were back in October 2023), that it has been properly ventilated before me and that its renewed advancement by Mr Jacob does not, as the Kazakovs suggested, give rise to a conflict on his part.

Weighing all these considerations, including those indicated at the beginning of this judgment, not least the overriding objective and the need for the case to be dealt with justly and at proportionate cost, I am firmly of the view that I should make the order for prospective exoneration. For the avoidance of doubt, this will have effect from the date of Mr Jacob’s appointment. I have considered whether the exceptions to the draft order should be expressed in more expansive terms (for example to encompass negligence or to operate only beyond the policy limits of Mr Jacob’s firm). However, I have reached the view that this would not be appropriate.

The above provides such guidance in relation to Mr Jacob’s application as I presently consider appropriate. The parties are requested to seek to agree a draft minute of order addressing all consequential matters arising upon this judgment. In terms of substantive matters, the parties are at liberty to address me further about it but it presently seems that specific orders are only likely to be useful in relation to those matters reflected in paragraphs 4-10 of Mr Jacob’s proposed draft order. In the event that any matters cannot be agreed by the end of this term, the parties should notify my clerk by then of that fact and identify the areas of disagreement. I shall then make further directions for how any outstanding matters should be resolved. My present view is that these should be dealt with in writing.

This judgment was circulated in draft to the parties on the morning of 25 July 2024, with a request that a note of any obvious errors or corrections be provided by noon on 26 July 2024. I am grateful to the parties for their co-operation in providing a composite list.

At 4.54pm on 26 July 2024, my clerk also received a letter from the Claimants’ solicitors, stating in relation to Section H (above) concerning Mr Jacob’s power to make a counterclaim that:-

My clerk also received late on Friday evening a letter from Mr Jacob’s solicitors in which they expressed their client’s neutrality on the provision of further submissions on this issue but his concern about the Claimants’ position on the funding of his representation of the Estate. My clerk also received an e-mail from the Kazakovs’ solicitors, objecting to the Claimants’ suggestion that the draft judgment should be re-visited.

I have considered the Claimants’ request. Although, as noted (at [42] above), it was common ground between the parties that Mr Jacob did not have power to advance a counterclaim, it is not correct to say that submissions were not made on the existence of such power. The issue was squarely before the Court in those terms in Mr Jacob’s application notice and proposed draft order. Mr Jacob and the Kazakovs addressed it, albeit briefly, in their skeleton arguments (at [58(1)] and [47] respectively). My understanding of their arguments is summarised in the judgment (at [42] above). In their skeleton argument (at [33]), the Claimants merely noted the parties’ common position and their non-objection to Mr Jacob’s related proposed direction. In oral submissions, the parties did not specifically address the issue beyond noting their common ground and, in the case of Mr Jacob, referring to his skeleton argument on the point and the suggested “uncurable lack of jurisdiction” to bring a counterclaim.

The parties were, of course, aware that the Court might not share their view. If they had wished to say more about it, it was open to any of them to have done so during the hearing before me. Having considered the issue further after the hearing, I came to the view that there was, in fact, no jurisdictional impediment for the reasons given (at [43] above). I did not go on to consider the consequences that might follow for this case or possible further directions that might be required, those issues, by contrast, not having been ventilated. If required, the Court’s further assistance can be sought on them. There is, however, no basis for taking the exceptional course of the suggested excision of, or qualification to, Section H of the judgment.

I therefore decline the Claimants’ request. If any party considers that I am wrong about Mr Jacob’s power to make a counterclaim, it is, of course, open to them to seek permission to appeal. In the meantime, the Claimants and Mr Jacob are encouraged to resolve their funding differences in short order. If, however, the Court’s assistance is required on that aspect, this too can be sought, again in short order.