Aeroflot v Berezovsky

Court-appointed receivers are officers of the court. They investigate, obtain information to appropriate but not excessive lengths, and report to the court. They are not adversaries required to provide disclosure or answer requests under the Civil Procedure Rules.

Where a proposed step would change the receivers’ function, impose substantial costs on the estate and produce uncertain or limited benefit, the court should assess whether the likely benefit justifies the certain cost. A court may instead defer the step and preserve it for later restoration. In assessing representation of a deceased person’s estate, the court may consider whether there is a reasonable probability that the estate will be insolvent, as contemplated by Insolvency Act 1986, section 271.

Following the death of Boris Berezovsky, the court had appointed receivers to preserve and collect estate assets. Miss Berezovskaya was later appointed administratrix for limited purposes while Aeroflot’s Part 8 claim concerning the proper representation of the estate remained unresolved.

The receivers sought a limited grant of administration so that they could obtain further documents and investigate the estate’s solvency. Miss Berezovskaya sought directions requiring the receivers to provide information, documents and explanations, partly in anticipation of possible Beddoes applications. The court determined whether either application should result in directions or further orders.

1. Receivers’ application. The receivers’ proposed access to principally privileged estate information was intended to improve their report on solvency, rather than to preserve or safeguard assets. To do so, they would have had to assume a new administrative function. The court was not satisfied that the additional information would materially improve the solvency assessment, while the resulting costs to the estate were certain and potentially substantial. The application was therefore adjourned generally with liberty to restore, rather than dismissed.
2. Status of the receivers. The receivers were officers of the court, not protagonists or opposing parties. Their duty was to investigate and report to the court. They were not subject to ordinary requests for disclosure or information under the Civil Procedure Rules, although they were willing to answer reasonable requests and provide reasonable explanations.
3. Solvency and representation. The court considered that the eventual issue might be whether there was a reasonable probability that the estate would be insolvent within section 271 of the Insolvency Act 1986, as amended by article 5 of the Administration of Insolvent Estates of Deceased Persons Order 1986. A definitive determination of solvency might be impracticable because of disputed third-party claims, quantum and beneficial ownership. The court would assess the available evidence as best it could.
4. Miss Berezovskaya’s application. The suggested Beddoes applications did not justify compulsory disclosure. The court might consider the likely dividend in an insolvent estate, rather than merely the nominal claim, but the solvency issue might remain too uncertain. It was preferable, as a matter of case management, for the Part 8 claim concerning representation of the estate to be advanced before litigation against the estate. No order was made on Miss Berezovskaya’s application.
5. Costs. Applying the principle in Re Wilson Lovatt & Sons Limited [1977] 1 All ER 274, the receivers were ordered to pay one half of Streathers’ costs of its witness statement and attendance, assessed at £3,000, with the question of indemnity from the estate reserved. The receivers’ costs of their application, and Miss Berezovskaya’s costs of both applications, were payable from the estate. No order was made for Mr Cotlick’s costs.

The judgment concerned interim and case-management applications in ongoing High Court proceedings. The court recorded earlier orders appointing receivers and appointing Miss Berezovskaya as administratrix for limited purposes. No appeal was determined in this judgment.