In the case of Thielmann & Ors v Besharova [2022] EWHC 2879 (Ch) it was held that the Trustees’ reliance on privilege was not unfair and as a result, a strike-out application by the Respondent was rejected.
Trustees’ of the estate of Boris Berezovsky pursued the Respondent (Ms Besharova) in respect of a Preference Payment in the sum £2.5 million paid to Ms Besharova on 24 July 2012, some 8 months before Mr Berezovsky died:
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 Berezovsky was pursuing various legal claims at relevant times and the Respondent wanted certain documents in the possession of the Trustees. The Trustees waived privilege over a few documents but not others and this appears to have led to suggestions of unfairness due to matters of alleged relevant documents not being disclosed to Ms Besharova. It seems Ms Besharova claimed this affected her ability to obtain a fair trial and so it appears that she issued an application to strike out the Trustees’ Preference claim.
This failed as explained by the judge:
In my judgment, the principles having been stated, it is plain that Ms Besharova’s application to strike out the Preference Claim must fail, whether based on the First or the Second Argument. The reasons for its failure are essentially simple.
However framed, the basis of the application is, as stated in the penultimate paragraph of Mr Tamlyn’s Skeleton Argument, that “The position remains [which is to say, that it remains, despite the Trustees’ disclosure of the Documents] that the key privileged documentation which would tell [Ms Besharova] what the various claims were worth at the Payment Date has not been produced.”In other words, Ms Besharova’s complaint is that highly relevant material has been withheld, which makes it more difficult to evidence her defence, which makes the litigation process “unfair”, and thus abusive.
There is however a fundamental flaw in that argument. The only alleged “unfairness” is, as explained above, an inevitable consequence of the Trustees’ assertion of the right to privilege, nothing more. It cannot conceivably be said that this consequence, “whilst not inconsistent with the literal application of .. the rules, [is] nevertheless manifestly unfair to [Ms Besharova]” or that it brings “the administration of justice into disrepute”, such as to render the Preference Claim (or the assertion of privilege) abusive.
On the contrary, it is no more or less than one acknowledged, almost inevitable feature of the “ordinary and proper use” of the rules, as for example in Derby Magistrates itself, where the ultimate issue was an allegation of murder, of the utmost seriousness, and yet highly probative material was nonetheless lawfully withheld. There is no additional or further feature or combination of circumstances to distinguish this case from any other. As I have explained above, the right to privilege is itself fundamental to the fair operation of the litigation process.
Mr Tamlyn urged the point that the Trustees have “chosen” to assert privilege (inviting comparison with the Pakistan case discussed above). But that case was different and is distinguishable – the Trustees did not, by their own acts or choices, bring about their ability to rely on privilege (as Pakistan brought about its ability to rely on limitation) – the privilege existed in any event (indeed, it is a matter of chance that the Trustees are in a position to waive it at all).
Although therefore, as explained above at paragraph 70, I would hesitate to say that reliance on privilege, regardless of its effect in combination with other circumstances or facts, could never, by definition, and as a matter of principle, be abusive, or render a process abusively unfair, this is not such a case.
Nor does it make any difference (the Second Argument) that the Trustees have waived privilege in the Documents, but in no others.
As to that, any relevant, consequential unfairness would be met by (a) an application for further disclosure on the basis of collateral waiver (an application that has not been made) or (b) possibly, if it is open to the court to do so, by drawing adverse inferences against the Trustees at trial, or (c) in any event, by the court refusing to accept their claim as insufficiently evidenced; it is difficult for a litigant to complain of procedural unfairness in a case where she is given process rights to meet that unfairness, but has chosen not to rely on them.
Those rights, set out in the preceding paragraph, represent the limits of what is relevant and available to Ms Besharova; they are the means by which, within the process, any “unfairness” born of a limited waiver is to be met; they do not however lend any support to the quite distinct allegation of abuse, as explained above at paragraph 76(iv) and (v). In any event, I agree with Mr Beswetherick that the Trustees could simply disavow reliance on the Documents, in which case, although they would remain available for use by Ms Besharova, it would become impossible to say against the Trustees that they are taking unfair advantage of their own partial waiver.
Those conclusions are sufficient to deal with the application. But in any event, there is nothing in the wider circumstances which lends it any support.
i) First, Ms Besharova has adduced evidence in opposition to the Preference Claim, and is defending it. A 4 day trial has been listed. By comparison, in the Pakistan case, the Law Debenture case, and the Hamilton case, in each of which the court identified an abuse or possible abuse of process, the effect on the complaining party or on the litigation process, was or would have been profound, comprising an absolute inability even to raise a case, or the “absolute impossibility” of trying it. Whilst I am willing to assume that the withheld materials are relevant and would therefore add to the information available to Ms Besharova and her advisors (albeit they might of course not support her case) the degree of prejudice caused to her by their unavailability (or the disruption of the process) is far from that which was found in the three cited cases.
ii) This was perhaps reflected in Mr Tamlyn’s submissions, referred to above, that the court “will exercise its inherent jurisdiction to strike out or stay the proceedings”, where there is a (mere) “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” (a submission which in any event I have rejected). Furthermore, it is to some extent implicit in Ms Besharova’s argument that the court should stand over this application to trial (stated in the Application Notice itself) that it is not currently possible to establish a high degree of difficulty in advancing her defence.
iii) Second, although to some extent Ms Besharova has identified the documents which would need (on her case) to be disclosed in order to meet her complaint (for example, Mr Tamlyn referred me to SW’s letters of 21 July 2021), they have not been clearly specified, even as classes of document, despite the draconian nature of the remedy sought. It would be wrong to hold that the Trustees are acting abusively without at the same time specifying exactly what they would need to do in order meet the complaint raised. Moreover, as stated above, I must take into account the overriding objective, and the principles of proportionality in the conduct of litigation – it is not clear to me that the Trustees are not being asked to conduct disproportionate searches (and I note, from the Consent Order referred to above, that it was previously agreed that in respect of the Insolvency Issue and the Desire Issue, there were – as ever – limits on the disclosure to be given by the Trustees).
iv) Third, although she seeks to strike out the Trustees’ claim on the footing that they have asserted privilege, thus depriving her of relevant materials, Ms Besharova does so herself, as is her right. As I have said, the material withheld by Ms Besharova is quite capable of being critically probative. In substance, to accede to her application would be to afford her greater process rights than those available to the Trustees.
Finally, given those conclusions, and my reasons, I decline to adjourn the application to trial. For exactly the reasons that I dismiss it now, it would in my judgment be dismissed at trial.
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