Berezovsky v Hine & Ors [2011] EWHC 1776 (Ch)

[2011] EWHC 1776 (Ch)Case No IHC 354/112007 Folio 942IN THE HIGH COURT OF JUSTICECHANCERY DIVISIONandQUEEN'S BENCH DIVISIONCOMMERCIAL COURTVenue Royal Courts of Justice, Strand, London, WC2A 2LLDate 7 th July 2011
Before
The Hon Mr. Justice MannThe Hon Mrs Justice Gloster, DBE
Between
BEREZOVSKYClaimantHINE & OTHERSDefendantsBORIS ABRAMOVICH BEREZOVSKYClaimantROMAN ARKADIEVICH ABRAMOVICHDefendant
Laurence Rabinowitz Esq, QC, Richard Gillis Esq, QC and Roger Masefield Esq(instructed by Addleshaw Goddard LLP) for Claimant(in the Commercial Court Proceedings and in the Chancery Proceedings)Jonathan Sumption Esq, QC, Daniel Jowell Esq, QC and Richard Eschwege Esq(instructed by Skadden Arps Slate Meagher & Flom) for Defendant(in the Commercial Court Proceedings)Jonathan Adkin Esq (instructed by Hogan Lovells International LLP) for Family Defendants(in the Chancery Proceedings)Ali Malek Esq, QC, Miss Sonia Tolaney QC and Miss Anne Jeavons(instructed by Freshfields Bruckhaus Deringer LLP) for Anisimov Defendants(in the Chancery Proceedings)David Mumford Esq (instructed by Macfarlanes LLP) for Salford Defendants(in the Chancery Proceedings)Hearing Hearing dates: 8 th& 9 th June 2011
Judgment
[1]This is a short judgment in relation to the application made on 16 May 2011 by the claimant, Mr. Boris Berezovsky (“Mr. Berezovsky”) in the Commercial Court proceedings (2007 Folio 942) (“the Abramovich Action”), for permission for each party to rely on the report of an expert in the field of contemporary Russian history, limited to the following areas:
“(1) The privatisation of Russian state-owned assets in the 1990s and the ‘loans for shares’ auctions; (2) Business practice in Russia in the 1990s and early 2000s; (3) The extent to which Mr. Berezovsky and the defendant (“Mr. Abramovich”) were able to exercise political influence in the 1990s and early 2000s; (4) State action to attack private business interests; (5) The nationalisation of ORT.” which I shall refer to as “the Relevant Areas”
. I heard argument on this matter at the CMC on 8 June 2011.[2]On 16 June 2011, I notified the parties that I had decided to make an order permitting such evidence to be adduced, but on terms that the order would be without prejudice to either party’s right to contend, at any future time (whether at, or before, trial), that the whole of, or any particular passage in, any expert report served pursuant to such order was irrelevant, not properly the subject of expert evidence, or for any other reason inadmissible or ought to be excluded.[3]The background to the application was as follows. The issue as to permission for such an expert was first raised by Mr. Berezovsky at the CMC on 29 July 2010. On that occasion, I directed the parties to seek, in the first instance, to agree a statement of the historical facts which they considered to be relevant. I indicated that if, and to the extent that, agreement could not be reached, then Mr. Berezvosky would have liberty to apply for permission to call expert evidence in relation to articulated, defined areas of disagreement. Attempts by the respective parties to agree draft statements of historical facts have proven unsuccessful, at least to a certain extent. The parties have reached agreement on a limited number of relevant historical propositions. However, Mr. Berezovsky contends that there remain a number of important areas where no, or no sufficient, agreement has been reached with Mr. Abramovich. To that end, he seeks permission to serve an expert report dealing with the five areas identified above.[4]CPR Rule 35.1 provides that:
“Expert evidence shall be restricted to that which is reasonably required to resolve the proceedings.”
[5]It is well established that in order to fulfil the conditions of CPR Rule 35.1, a court must be satisfied that the expert evidence is properly admissible and will genuinely assist the trial judge in determining the matters which are in issue. The burden of establishing these two requirements rests upon the party that seeks permission to adduce the expert evidence concerned: see JP Morgan Chase v Springwell Navigation [2006] EWHC 2755 (Comm) per Aikens J (as he then was) at paragraph 19. It is also clear that, in deciding whether those conditions are satisfied, the court must make a judgment on at least three matters: i) how cogent the proposed expert evidence will be; ii) how helpful it will be in resolving any of the issues in the case; iii) how much it will cost and the relationship of that cost to the sums at stake (Mann v Messrs Chetty & Patel (a firm) [2000] EWCA Civ 267 at paragraph 17).[6]Given the sums at stake in the Abramovich Action, the last matter is not a material consideration.[7]Mr. Berezovsky’s proposed expert is a Professor Stephen Fortescue of the University of New South Wales, who is said to be an eminent political scientist and a leading expert on the Russian oil and metal industries in the period relevant to these proceedings.[8]Mr. Sumption QC, leading counsel for Mr. Abramovich submitted that two critical issues of fact lie at the heart of the litigation: i) first, whether or not Mr. Abramovich used words intentionally to convey a veiled threat to influence the Russian government to expropriate Mr. Berezovsky’s and Mr. Patarkatsishvili’s interests in Sibneft unless Mr. Berezovsky and Mr. Patarkatsishvili sold those alleged interests to Mr. Abramovich; and second ii) in relation to RusAl, whether, at a meeting at the Dorchester Hotel, it was orally agreed that Mr. Abramovich would hold half of his shares in RusAl on trust for Mr. Berezovsky and Mr. Patarkatsishvili, and if so, whether all the merger arrangements in relation to RusAl were to be governed by English law.[9]Mr. Rabinowitz QC, leading counsel for Mr. Berezovsky, submitted that expert evidence relating to the identified areas will be likely to be of assistance to the court in one of three, closely-related, ways. First, he submits that it will enable the court to assess the inherent probability or improbability of aspects of the factual evidence in an area where the court would not feel on safe ground in the absence of such evidence. Second, he submits that expert evidence will assist in the establishing of objective background facts which are relevant to the determination of other questions of fact, or mixed questions of fact and law. Third, he submits that it will assist in the determination of issues relating to the alleged nationalisation of ORT. Mr. Berezovsky relies on the circumstances of the ORT transaction and its aftermath as both having inspired what Mr. Berezovsky alleges was Mr. Abramovich’s “… plan of intimidation with respect to Sibneft and as evidence of the relationship between Mr. Abramovich and Mr. Putin”.[10]Mr. Sumption QC, leading counsel for Mr. Abramovich, submitted that the application should be dismissed in relation to the five areas.[11]He submitted that the expert evidence which Mr. Berezovsky wishes to introduce would not assist in answering either of the two principal questions in issue in the proceedings. He argued that the material would be likely to consist of opinion to the effect that things have happened in other cases of the kind Mr. Berezovsky alleges to have happened here, or else would be likely to be evidence of fact about what happened in this very case, given by someone who cannot claim the direct experience claimed by witnesses of fact. He further submitted that many of the areas which the purported expert evidence was likely to cover would be no more than statements in broad terms, or related to irrelevant matters, or be no more than gossip or highly contentious and controversial matters which were of marginal relevance anyway. Mr. Sumption also made detailed submissions as to why each of the proposed heads of expert evidence were not properly the subject matter of expert evidence at all, or, alternatively, should properly be the subject of direct evidence.[12]I saw force in a number of the submissions made by Mr. Sumption. For example, looking at page 80 of Exhibit MRH9, which is a document entitled: Propositions falling within the topics referred to in the Seventh Witness Statement of Mr. Hastings on which Mr. Berezovsky previously sought agreement from Mr. Abramovich (which foreshadows the type of purported expert evidence which Mr. Berezovsky seeks to adduce), I take the view that there are many elements which, if reflected in expert evidence, might well to be found to be inadmissible as such.[13]However, having said that, I take the view, as I indicated during the course of argument, that, given the nature of Mr. Berezovsky’s case, the court would be assisted by evidence relating to the general historical, political or economic situation in Russia at the time. I think Mr. Rabinowitz has a valid point that in order properly to assess what the probabilities were of the claims being put forward by Mr. Berezovsky being correct, the court will need to have an understanding - at least a general level - of the contemporaneous political and/or economic situation in Russia, and at least some understanding of the history of Russia since 1990. It seems to me that an appreciation of what might roughly be described as the Russian political landscape is likely to be necessary (or, at least, helpful) in enabling me to weigh the respective contentions of each side: see Amalgamated Metal Corporation v Wragge & Co [2011] EWHC 887 (Comm) at paragraph 16. Although that evidence could theoretically be provided through books and articles, there are a number of practical advantages in such evidence being put forward through a qualified historian or economist, not least, the expediency of having an expert in the field summarise what he identifies as being the relevant material necessary for my determination of factual matters.[14]There is clearly precedent for historians, political scientists or economists being called to give expert evidence even in situations where witnesses of fact might, arguably, be called to give such evidence, or documentary evidence examined relating to the same subject-matter: see Law Debenture Trust Corporation v Ural Caspian Corporation Limited (unreported) [date?].[15]However, given my concerns (arising, in particular, from the articulation of the so-called “expert” issues in the document to which I have referred) that some areas which Mr. Berezovsky wishes Professor Fortescue to address may well not satisfy the relevant test for expert evidence, I do not consider it appropriate for me to give a definitive ruling until I have seen the actual evidence which Mr. Berezovsky proposes to adduce. For that reason I have directed that the liberty which I have given to Mr. Berezovsky to adduce an expert report is without prejudice to any arguments which any party might wish to raise subsequently as to its admissibility. If Mr. Abramovich or his legal advisors take the view that Professor Fortescue’s actual expert report is indeed objectionable, for the reasons submitted by Mr. Sumption in his oral submissions, or otherwise, they will have an opportunity at the beginning of the trial to oppose the introduction of the whole or any part of Professor Fortescue’s report. If the content of the report causes difficulty for Mr. Abramovich’s expert (in the sense of having to deal with any particular topic) in the meantime, pending a determination of admissibility, the court will entertain any application that may be made to defer service of Mr. Abramovich’s expert report in response.[16]I should also make it clear that I do not expect to see lengthy expert reports from either side. For obvious reasons, the court will be best assisted by a concise, succinct and well-structured expert report dealing with the relevant areas in a disciplined fashion.[17]For all the above reasons, I made the order in the terms which I did.