Berezovsky v Hine & Ors

Whether it is alleged that the trust arose by:

Answers:

…

Mr Berezovsky’s primary case is that the trust was an express trust, which arose as a result of the settlors’/ settlor’s binding agreement and/or continuing intention that Mr Abramovich would hold the trust property on trust for the beneficiaries, which became fully constituted on the date specified in paragraph 31 above [25 December 2000].

there was a bilateral joint venture agreement between Mr. Berezovsky and Mr. Patarkatsishvili extending to all commercial ventures (“the Bilateral JVA”); and ii)Mr. Abramovich knew about such Bilateral JVA and its alleged scope.

During the course of argument, Mr. Rabinowitz QC, leading counsel representing Mr. Berezovsky, indicated that the Response should be read as referring to a Bilateral JVA between Mr. Berezovsky and Mr. Patarkatsishvili limited to aluminium assets and RusAl. Mr. Abramovich’s strike-out application accordingly encompassed that alternative case sought to be made by Mr. Berezovsky, notwithstanding that it had not been pleaded.

Although the existence and scope of the Bilateral JVA between

The RusAl Issues were discrete issues, whose separate trial was feasible and whose inclusion for determination in a joint trial would remove the major source of risk of inconsistent findings. There did not appear to be other obvious candidates to join the RusAl Issues in the fold of issues to be determined in the Abramovich Action so as to bind all parties. The other issues were not sufficiently common, nor sufficiently severable, nor practicably triable within the Abramovich Action.

In saying that the other matters common to both proceedings were not practicably triable within the Abramovich Action, we clearly had in mind our own observation at paragraph 26 about the Bilateral JVA issues in the Chancery Actions. We pointed out that, if the Bilateral JVA issues were introduced into the Abramovich Action, all parties to the Chancery Actions would, as a matter of principle, have to be allowed to deploy their case upon it in full:

“It was not always clear whether it would have involved the parties bringing in the whole of their documentary case on (for example) the bilateral joint venture into the Abramovich Action. If it did, then it would expand the Abramovich Action to an extent which (at the moment at any rate) is apparently undesirable (if indeed the litigation would remain triable as a result). The Joint Venture in the Main Action is to be tested by considering a large number of complex financial transactions (or at least that is the present intention), and they would have to be brought into the Abramovich Action if that issue were to be fully determined there. It would hugely increase the scope of the Abramovich Action.”

There remained some risk of inconsistent findings in this area, but it was not plain that the Bilateral JVA would be central, and the risk would have to be accepted: judgment at paragraph 28(vii).

he had an ownership interest in the five aluminium plants which were subsequently pooled with Mr. Deripaska’s assets on the basis of the alleged Bilateral JVA; see Answer 26 of the Response;

the alleged Bilateral JVA gave Mr. Berezovsky an interest in the offshore companies which bought the aluminium assets and which contributed to the formation of RusAl; see Answer 27 of the Response; and

Mr. Abramovich knew of the existence of the alleged Bilateral JVA between Mr. Berezovsky and Mr. Patarkatsishvili, and that it extended to all their commercial interests.

If the existence and scope of the Bilateral JVA (and Mr. Abramovich’s alleged knowledge of the same) (“the New Issues”) were to be accepted as issues for determination in the Abramovich Action at the joint trial in October 2011, the practical implications for a fair trial would be very serious indeed. Any inclusion of the New Issues would be seriously prejudicial to Mr. Abramovich.

As the Overlap Issues are currently defined, they do not include the New Issues. The Chancery Defendants would therefore not be bound by any findings by the Commercial Court at the joint trial, and, theoretically, the New Issues would have to be retried in the Chancery Actions (where they are amongst the central issues in those actions). That would give rise to the possibility of inconsistent findings, which is exactly what the court was seeking to avoid in its previous joint judgment. Mr. Berezovsky was not seeking to redefine the Overlap Issues.

But in reality, the determination of the New Issues in the Abramovich Action would put the Chancery Defendants in a very difficult position. They would clearly be adversely affected by a decision in the Abramovich Action that there was a Bilateral JVA, even if such finding was not, technically, binding on them. The reality is that any Chancery Judge would be very slow to come to a different finding on the New Issues from that of the judge hearing the Abramovich Action. The Chancery Defendants would be entitled to be heard on the Bilateral JVA issues at the joint trial, and yet, in order to be heard effectively, they would have to deploy all the material available in the Chancery Actions where the issue was central.

Mr. Abramovich would need to obtain all the disclosure relating to the Bilateral JVA from Mr. Berezovsky and the Chancery Defendants, none of which he had obtained to date. This, effectively, was most of the disclosure in the Chancery Actions, which amounted to a huge volume of material.

The process of obtaining and digesting that material, putting it to existing witnesses and, if necessary identifying further witnesses to call in relation to the New Issues, would be a substantial task for Mr. Abramovich’s legal team. There was simply no time available before trial to perform that task in any sensible fashion.

If Mr. Abramovich were forced to deal with the Bilateral JVA issues in the Abramovich Action, the only feasible alternatives would be:

There was no injustice to Mr. Berezovsky in not being permitted to amend his claim against Mr. Abramovich to raise the New Issues. Mr. Berezovsky had amended his case on numerous previous occasions; he had had every opportunity at earlier stages to plead the point against Mr. Abramovich, had he wished to do so. It should be inferred that he had taken a deliberate tactical decision not to do so. In those circumstances, it was not acceptable for a point of this significance to be taken at such a late stage before trial, given the disruption and prejudice that any such amendment would cause.

issues, if they were to be introduced into the joint trial in October 2011. Not only would the scale of the documentation be vastly increased, but so would the extent of the evidence - both in chief and in cross-examination - and the length of the arguments.

There was no suggestion that the allegations in relation to the New Issues were unarguable.

The allegation that Mr. Berezovsky was party to a Bilateral JVA with

There was no prejudice to Mr. Abramovich or any of the Chancery Defendants. There was no need to amend the scope of the Overlap Issues to encompass any issues relating to the Bilateral JVA. Mr. Berezovsky accepted that, given its centrality to the Chancery Actions, the Chancery Defendants should not be bound by the Commercial Court’s decision on the Bilateral JVA.

The only issues that the court would need to resolve, to deal with the newly pleaded case against Mr. Abramovich, so far as the existence of any Bilateral JVA was concerned, was whether the Bilateral JVA extended to the interests which Mr. Patarkatsishvili acquired in the underlying aluminium assets, and, following the merger with Mr. Deripaska’s aluminium interests, RusAl. There would be no need to decide any wider issues as to whether the Bilateral JVA was “an all-encompassing joint venture” and/or whether it applied to all commercial assets regardless of the source of the funds. Nor was it necessary to decide whether there was an economic divorce as between Mr. Berezovsky and Mr. Patarkatsishvili in 2006 (these were wider issues that arose in the Chancery Actions).

It was wrong for Mr. Abramovich to contend that he would be prejudiced because he had not had disclosure in relation to the Bilateral JVA issues. On the contrary, he had had disclosure of all the documents in the Chancery Actions that related to RusAl and, pursuant to the provisions of paragraph 7 of the August 2010 Order, could have applied for inspection of any documents that fell within “train of inquiry” disclosure relating to the Overlap Issues or the Further Issues.

Mr. Abramovich, at all material times, knew that Mr. Berezovsky was going to say that he had an interest under the Bilateral JVA. Pursuant to paragraph 7(2) of the August 2010 Order, he had been provided with a list of all disclosure given in the Chancery Actions. Accordingly, had he chosen to do so, he could easily have applied for inspection of any document relevant to the Bilateral JVA at a much earlier stage.

Moreover, Mr. Abramovich, in his witness statement had already dealt with what he said was his limited knowledge of the commercial relationship between Mr. Berezovsky and Mr. Patarkatsishvili. Likewise, Mr. Anisimov had, in his witness statement, addressed the question as to whether there was a Bilateral JVA between Mr. Berezovsky and Mr. Patarkatsishvili in relation to the aluminium assets and RusAl. Furthermore, the Badri proofs recently disclosed pursuant to the order made in the Abramovich Action also addressed the Bilateral JVA. Therefore, there could be no prejudice caused to Mr. Abramovich by the elevation of what was always recognised as an evidential issue into a pleaded issue, which founded a claim against Mr. Abramovich.

In those circumstances, it was unreal for Mr. Abramovich and the Chancery Defendants to contend that in the Chancery Actions, Mr. Berezovsky would be free to allege that Mr. Patarkatsishvili was referring, in the alleged proofs of his witness statement, to a Bilateral JVA with Mr. Berezovsky and/or a threeway joint venture agreement with Mr. Abramovich, but in the Abramovich Action Mr. Berezovsky would only be free to contend that Mr. Patarkatsishvili was speaking about a three-way joint venture.

Notwithstanding that, as Mr. Rabinowitz accepted, Mr. Berezovsky’s pleadings, as they currently stood, asserted a Bilateral JVA with Mr. Patarkatsishvili extending to all commercial investments (see, in particular, paragraph 27 of the Response), that was too wide and would, for the purposes of the Abramovich Action, have to be amended. All that was sought to be alleged in the Abramovich Action was a Bilateral JVA between Mr. Berezovsky and Mr. Patarkatsishvili limited in scope to the aluminium assets and/or RusAl.

In all the circumstances it would be unjust if Mr. Berezovsky were not permitted to pursue this new claim against Mr. Abramovich.

Mr. Berezovsky had a beneficial interest in RusAl or the aluminium assets underlying RusAl as a result of a specific Bilateral JVA with

The proposed amendment to Mr. Berezovsky’s case, which, in effect the Response seeks to introduce, as it were, by a side door, comes at a staggeringly late stage in proceedings that have already been going on for several years. As a reading of the judgments of Sir Anthony Colman and the Court of Appeal on the strike-out application demonstrates, Mr. Berezovsky has significantly altered the formulation of his claim against Mr. Abramovich, or shifted its focus, on several previous occasions.

In Worldwide Corporation v GPT Ltd [1998] EWCA Civ 1894 (reviewed with other similar authorities by Gloster J in her recent judgment on Mr. Abramovich’s application to amend in Berezovsky v Abramovich [2011] EWHC 1143 (Comm) at paragraph 34-36), the Court of Appeal (Bingham CJ, Peter Gibson and Waller LJJ) said (at page 10):

“Where a party has had many months to consider how he wants to put his case and where it is not by virtue of some new factor appearing from some disclosure only recently made, why, one asks rhetorically, should he be entitled to cause the trial to be delayed so far as his opponent is concerned and why should he be entitled to cause inconvenience to other litigants? The only answer which can be given and which, Mr Brodie has suggested, applies in the instant case is that without the amendment a serious injustice may be done because the new case is the only way the case can be argued, and it raises the true issue between the parties which justice requires should be decided.

We accept that at the end of the day a balance has to be struck. The court is concerned with doing justice, but justice to all litigants, and thus where a last minute amendment is sought with the consequences indicated, the onus will be a heavy one on the amending party to show the strength of the new case and why justice both to him, his opponent and other litigants, requires him to be able to pursue it.”

We do not consider that a serious injustice would be caused to Mr. Berezovsky if he were not allowed to raise the New Issues in the trial of the Abramovich Action in October 2011 as against Mr. Abramovich. Mr. Berezovsky already has a number of ways in which he formulates his claim against

We have not been taken to any material to show or to support the strength of Mr. Berezovsky’s new claims based on the Bilateral JVA specifically in regard to the aluminium assets and/or RusAl as against Mr. Abramovich. The Badri proofs do not, in our view, do so. It is fair to say, however, that none of the defendants submitted that the new case was not an arguable one.

The proprietary claims based on the Bilateral JVA are all claims that Mr. Berezovsky will be running in the Chancery Actions as against the Chancery Defendants. He will remain entitled to do so.

On the other hand, if the permitted amendment to Mr. Berezovsky’s claim against Mr. Abramovich based on the alleged Bilateral JVA in relation to the aluminium assets and/or RusAl, were allowed to proceed in the Abramovich Action, both Mr. Abramovich and the Chancery Defendants would suffer substantial prejudice.

First, so far as Mr. Abramovich is concerned, we accept Mr. Sumption’s submission that, if the amendment to Mr. Berezovsky’s case were allowed, the disclosure burden would be intolerable. We reject Mr. Rabinowitz’s submission that Mr. Abramovich could (and should) have applied for inspection of the documents disclosed in the Chancery Actions relating to the alleged Bilateral JVA at an earlier stage. Until the Response was served in April 2011, there was absolutely no reason why Mr. Abramovich should have concerned himself with reviewing documents that related exclusively to the alleged Bilateral JVA. We also reject the submission made by Mr. Rabinowitz that it must always have been clear to Mr. Abramovich that the New Issues were issues that were going to fall to be decided in the Abramovich Action. Of course Mr. Abramovich would have appreciated that Mr. Berezovsky’s relationship with Mr. Patarkatsishvili would form part of the background to Mr. Berezovsky’s claims in the Abramovich Action. But Mr. Abramovich would have had no reason to understand that allegations of a Bilateral JVA with Mr. Patarkatsishvili were going to constitute the foundation of a proprietary claim in trust as against him (whether express, resulting or constructive). Nor do we consider that Mr. Brindle ever conceded the point.

Mr. Adkin informed us that, in the Chancery Actions, approximately 95,000 documents have been disclosed (as compared with 5,600 documents in the Abramovich Action). Over 70,000 of those were documents which Mr. Abramovich had not seen, because they had not been identified as relevant to the Overlap Issues. The likelihood is that the vast majority of these 70,000 documents are relevant to the issue as to whether there was an over-arching Bilateral JVA between Mr. Berezovsky and Mr. Patarkatsishvili in relation to all their commercial investments.

We reject, too, Mr. Rabinowitz’s suggestion that Mr. Abramovich (or, indeed, the Chancery Defendants) could adequately defend the new case sought to be raised in the Abramovich Action, that there was a Bilateral JVA specifically in relation to the aluminium assets and/or RusAl, simply by reference to the documents that have already been disclosed in relation to the RusAl Issues. The reality is that, up until the recent hearing, Mr. Berezovsky’s case has always been that there was an over-arching Bilateral JVA with

If that were to occur, further consideration would have to be given to the definition of the Overlap Issues. Either they would have to be expanded (effectively to include many of the principal issues in the Chancery Actions), or the Chancery Defendants would run the risk of an adverse finding which, although not technically binding, might have serious repercussions for their respective positions in the Chancery Actions. Realistically, they would have to engage in the litigation of such issues at the joint trial, so as to seek to avoid inappropriate evidential findings, or to ensure that the appropriate evidence was on the transcripts.

The only realistic alternative, if Mr. Berezovsky were to be allowed to raise this late claim against Mr. Abramovich, would be to adjourn resolution of the RusAl Issues as against Mr. Abramovich and the Chancery Defendants until after the trial of the Chancery Actions, or possibly to the trial of the Chancery Actions. Even Mr. Berezovsky does not suggest that this course would be an attractive one. We see no reason why it should be adopted. All the parties are geared up for the determination of both the Sibneft claim and the RusAl Issues in October 2011 at the joint trial. Substantial investment on all sides will no doubt have been made in the expectation that the matters would be resolved at that trial. There is no reason why Mr. Abramovich or the Chancery Defendants should have to suffer the uncertainty and anxiety caused by yet further delay in the determination of the RusAl Issues, simply because Mr. Berezovsky seeks to add to or alter his case once again.

Finally, Mr. Berezovsky’s proposed amendment seeking, in effect, to import into the Abramovich Action many of the principal issues which are centre stage in the Chancery Actions, completely undermines the careful case management structures put in place pursuant to the August 2010 Order. We are in effect being invited to tear up that order and start again. In our judgment, to do so would make a mockery of the court process, and, in particular, of the effective management of these types of high-value, heavy cases which the Commercial Court and the Chancery Division try to achieve. Wider considerations relating to the administration of justice and the consequences so far as other court users are concerned are also engaged.

In the absence of any real or substantial prejudice to Mr. Berezovsky, and taking into account all the above factors, we do not consider that it would be fair or in the interests of justice to allow him to pursue these new claims against Mr. Abramovich at this late stage. Even if there were any prejudice to Mr. Berezovsky in not being able to pursue this additional claim against Mr. Abramovich, that is something that, in our judgment, he should have to bear, rather than any prejudice should be caused to the other parties. The timing of the attempted introduction of the new case is his responsibility.