A Master’s decision to order disclosure of internal non-contemporaneous documents upheld on appeal (Re Scherbakov (deceased))

24 Mar 2023

Dispute Resolution analysis: On appeal, an order for disclosure against neutral Interim Administrators of the estate of a deceased person, requiring the search of review of non-contemporaneous internal documents has been upheld.

Re Scherbakov (deceased) [2023] EWHC 440 (Ch)

What are the practical implications of this case?

This is an interesting decision about the proper approach to disclosure on the part of neutral parties who are officers of the Court and the reference in paragraph 7.6 of PD57AD to contemporaneous documents. It emphasises that in such circumstances, the neutral parties and their legal advisers will be best placed to assess what documents are or may be relevant to the dispute. Accordingly, the Court will give significant weight to the assessments they have undertaken, even where it means estate funds are to be spent undertaking the disclosure exercise. On the interpretation of PD57AD the Court confirmed that, notwithstanding the reference in paragraph 7.6 to ‘contemporaneous’ documents, it was not the case that documents created after the cause of action accrued fell outside the scope of the Practice Direction. This was apparent when the Practice Direction as a whole was considered and it was wrong to place too much emphasis on the single word in paragraph 7.6.

What was the background?

This was an appeal against an order of Deputy Master Teverson dated 13 October 2022. On 10 June 2017, Vladimir Alekseyevich Scherbakov dies in Belgium. Two proceedings are now ongoing. In the Probate Claim, there is a dispute about who inherits his estate. In the other claim (the “KPHL Claim”), there is a dispute about whether the shares in a BVI company fall into Mr Scherbakov’s estate.  Two partners at Farrer & Co LLP were appointed Interim Administrators pending suit of Mr Scherbakov’s estate. The Interim Administrators take a neutral stance in relation to both sets of proceedings. The parties, including the Interim Administrators, were ordered to give Model D Extended Disclosure only of “documents that came into their control other than from one of the other parties in relation to a variety of issues. The Interim Administrators carried out investigative work in order to identify and get in assets of the estate. In the course of those investigations, they spoke to a number of persons involved in the deceased’s affairs. By a letter of 27 May 2022, the Interim Administrators informed the parties that they intended to search and review internal documents for disclosure purposes, including attendance notes and internal emails. They estimated it would cost between £68,500 and £91,500 to search 18,500 internal emails. They accepted that privilege may apply to many of these documents and invited suggestions from the other parties as to how the search could be refined in order to reduce costs. In subsequent correspondence, the Interim Administrators identified 2 alternative options, the first involved reviewing 4,500 documents costing about £16,500 to £22,000. Option 2 returned only 138 documents, the review of which would cost about £500 – £650. The Claimants objected to the Interim Administrators spending any estate funds. The Interim Administrators sought guidance from the Court pursuant to PD51U para 11 (in force at the time). The Master ordered the Interim Administrators should carry out a reasonable and proportionate search of their internal documents to identify material which made be material to the issues in the proceedings. The Claimants appealed.

What did the court decide?

All three grounds of appeal were dismissed. The first ground was that the Master erred in permitting the Interim Administrators to search and review documents which are not contemporaneous. The Claimants argued that PD57AD 7.6 had been misapplied in this regard and that it applied only to documents contemporaneous with the cause of action and excluding from disclosure documents which are created later. This argument was rejected on appeal. Several examples were given which demonstrated that this interpretation would lead to the exclusion from disclosure of documents which are important for the fair resolution of the claim. It was, in any event, an interpretation at odds with other parts of the Practice Direction, including paragraphs 8.3 and 9.6. The second ground was that the Master erred in finding that the internal documents may be potentially probative witness material. This concerned a decision within the Master’s discretion and, therefore, to succeed, the Claimants needed to show that the decision was plainly wrong (i.e. outside the generous ambit within which reasonable decision-makers might disagree. The Master’s reasoning was upheld on appeal. The Claimants relied on the decision of Lord Carlile of Berriew QC in Tesco Stores v OFT [2012] CAT 6, however, that case was distinguished from the present case and was held in any event not to be setting out a statement of general principle. The third ground was that the Master erred in law and fact in failing to find that the disclosure of the internal documents not lead to a just and proportionate resolution of the real issues in dispute and might generate lengthy and expensive satellite disputes. This too was a challenge to an exercise of the Master’s discretion. This ground was rejected. The Master was right not to be drawn into speculation about the possibility of satellite litigation. The possibility of such satellite litigation was acknowledged by the appeal court, however, those considerations did not outweigh the possibility that the documents would contain relevant information.

Case details

  • Court: Business and Property Courts, Property, Trusts and Probate List (ChD)
  • Judge: Mark Anderson KC (sitting as a Deputy High Court Judge)
  • Date of judgment: 2 March 2023

Article by Phillip Patterson – first published by LexisNexis


Phillip Patterson

Call: 2008


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