Joint Stock Company "Aeroflot Russian Airlines" v Berezovsky

On an application for a receiver over a deceased person’s estate, the court’s focus is the best interests of the estate, including beneficiaries, creditors and potential creditors. The jurisdiction is not a means by which a hostile litigant can control the estate or protect its own position. Receivers appointed for the estate act independently and owe their duties to the estate, indirectly protecting those interested in it. The applicant is not their client and cannot instruct them. Information supplied by an interested party must be assessed independently. The court may appoint a suitable candidate where delay would prejudice the estate, while taking account of independence and the candidate’s existing information.

Aeroflot applied for the appointment of receivers over the estate of Boris Berezovsky after his death. Two executors remained, but no person was in post to represent the estate. Aeroflot was engaged in hostile litigation with the deceased and had not established that it was a creditor, although it had standing to make the application. The principal issues were whether receivers should be appointed, who should be appointed, the terms of appointment and the costs of the application.

1. Appointment. The court had jurisdiction under section 37 of the Senior Courts Act 1981. It was appropriate to appoint receivers because no one was in post to represent the estate and matters might need to be addressed without delay.
2. Proper focus. The appointment had to be considered from the standpoint of the best interests of the estate and interested parties. Those interests included beneficiaries, creditors and possible creditors. Aeroflot’s approach, based on its position as a hostile litigant and seeking protection through a freezing-style receivership, was not the proper basis for appointment. The function of the receivers was not to protect Aeroflot.
3. Choice and independence. Despite concerns arising from Aeroflot’s provision of confidential information to Grant Thornton, the two nominated Grant Thornton members were appointed. They were the candidates most advanced towards an effective appointment, and no rival candidate was before the court. The judge relied heavily on counsel’s reassurance that the information supplied was not adverse to the respondents or beneficiaries.
4. Duties and instructions. The receivers were to act for the estate. Their duties were to the estate and indirectly to beneficiaries and creditors. Aeroflot was not their client and could not instruct them. Information supplied by Aeroflot was to be treated as information from a self-interested third party and independently assessed by the receivers.
5. Costs. The receivers’ reasonable remuneration, costs and expenses properly incurred were payable out of the estate until further order. Miss Gorbunova’s costs were payable out of the estate on the indemnity basis. Aeroflot was awarded three-quarters of its proper inter partes costs on the standard basis, with its ex parte costs disallowed.

The application was first heard ex parte on 19 April 2013. No substantive ex parte order was made, apart from directions for the future hearing. The inter partes application was then determined by the High Court on 29 April 2013.