Berezovsky v Abramovich

Extensive deployment of privileged material in interlocutory proceedings for the purpose of advancing a party’s case on the substantive merits engages collateral waiver. The deploying party cannot later withdraw the material from consideration or preserve privilege until trial by saying that it has not yet decided whether to rely on it. The principle prevents cherry-picking and applies where the material relates to the merits of the action as a whole.

Permission to amend pleadings is governed by a broad discretion directed to the interests of justice. The court must balance the amendment’s arguability, the stage of the proceedings, prejudice to each party, the conduct of the parties and the effect on other litigants. Costs alone may not adequately compensate for disruption, but an amendment made six months before a long trial may properly be allowed where the opposing party suffers no real or substantial prejudice.

The judgment gave reasons for orders made after interlocutory applications in substantial commercial proceedings between Boris Berezovsky and Roman Abramovich. The applications concerned disclosure of privileged communications between Berezovsky’s former solicitors and Patarkatsishvili, and permission for Abramovich to re-amend his defence.

The disclosure application followed the earlier dismissal of Abramovich’s reverse summary judgment and strike-out applications by Sir Anthony Colman, whose decision was reported at [2010] EWHC 1511 (Comm), and by the Court of Appeal at [2011] EWCA Civ 153. The central issues were whether references to the privileged material during those proceedings caused collateral waiver, and whether Abramovich should be permitted to withdraw an admission that English law governed the alleged Sibneft tort and plead Russian law, including limitation.

1. Disclosure. The application for disclosure of the Patarkatsishvili materials was granted. Berezovsky had extensively deployed information derived from privileged solicitor interviews in support of his case on the merits during the summary judgment proceedings. That deployment engaged collateral waiver, even though no documents had been expressly referred to and he had not decided whether to use the evidence at trial.
2. The court was bound by the approach in Dunlop Slazenger International Ltd v Joe Bloggs Sports Ltd [2003] EWCA Civ 901. Once privileged material had been deployed at an interlocutory stage for merits purposes, it was too late to turn back the clock. The possible exception for a genuinely limited waiver did not apply where deployment related to the merits of the action as a whole.
3. The reasoning was reinforced by Somatra Ltd v Sinclair Roche & Temperley [2000] 1 WLR 2453. The Court of Appeal had treated the principles governing waiver of without-prejudice privilege as the same as, or at least closely similar to, those governing legal professional privilege. It was unjust to permit one party to use privileged material to advance its case on the merits at an interlocutory hearing while preventing the opponent from using related material at trial. The approach in Derby & Co Ltd v Weldon (No 10) [1991] 1 WLR 660 was not confined to cases where the material was also intended for imminent deployment at trial.
4. Disclosure was ordered immediately. The possibility that the defendant could have sought it earlier did not justify delay, particularly where the claimant had already obtained the advantage of deploying the material.
5. Re-amendment. Permission was granted to withdraw the admission that English law governed the alleged Sibneft tort and to plead that Russian law applied, with a Russian limitation defence and alternative French-law contentions. The proposed case was properly arguable, and its merits were not examined in detail.
6. Under Civil Procedure Rules 1998 Part 17, rule 14.1 and paragraph 7.2 of Practice Direction 14, the discretion was broad and required an overall assessment of justice. The amendment was not abusive. The trial remained about six months away, the proposed issues substantially overlapped with existing factual matters, and the claimant’s additional work did not amount to real or substantial prejudice. The defendant’s prejudice if prevented from advancing a reasonably arguable limitation point outweighed the claimant’s prejudice.

The judgment records that the defendant’s earlier reverse summary judgment and strike-out applications were dismissed by the Commercial Court, in [2010] EWHC 1511 (Comm), and on appeal by the Court of Appeal, in [2011] EWCA Civ 153.

This judgment concerned subsequent interlocutory applications in the continuing proceedings.