Morina & Ors v Scherbakova & Ors (Re Estate of Vladimir Alekseyevich Scherbakov)

Factual and Procedural Background

These two claims, referred to as "the Probate claim" and "the KPHL claim," concern the estate of Vladimir Alekseyevich Scherbakov ("Vladimir"), a Russian businessman who died in Belgium on 10 June 2017. Vladimir was under criminal investigation in Russia at the time of his death and had moved to Belgium from England in January 2016. The Probate claim involves disputes over the validity and effect of Vladimir's English Will dated 28 October 2015, his domicile at death, and the governing law for succession. The First to Third Claimants are Brigita Morina ("Brigita") and her children, while the Defendants include Vladimir's former wife Elena Nikolayevna Scherbakova ("Elena") and their adult children from the marriage ("the Adult Children").

The KPHL claim concerns Brigita's claim to be the absolute beneficial owner of shares in Key Platinum Holdings Limited ("KPHL"), a company registered in the British Virgin Islands (BVI). The Administrators of Vladimir's English and BVI estates are parties to both claims, with their role adjusted during case management. The claims were ordered to be case managed and tried together.

Central to the Probate claim are issues such as the validity and execution of the English Will, the presumption of revocation due to the will's original not being found, Vladimir's domicile at death, and the recognition and effect of a Russian Divorce Certificate dated 1991. The KPHL claim focuses on the beneficial ownership of shares, alleged transfers and declarations of trust, and whether these transactions were designed to shield assets from Elena and the Russian investigation.

The proceedings have involved multiple case management conferences, disclosure disputes, and applications concerning the scope of evidence, including expert evidence on Russian divorce law.

Legal Issues Presented

1. Whether the English Will dated 28 October 2015 was duly executed and valid.
2. Whether the English Will should be presumed revoked due to the non-production of the original document.
3. Determination of Vladimir's domicile at the date of alleged revocation and at death, and the applicable law governing succession.
4. The validity and effect of the Russian Divorce Certificate dated 30 April 1991 and its recognition under English law.
5. The scope and extent of disclosure required from the parties, particularly the Administrators, in relation to specific issues identified in the Disclosure Review Document.
6. Whether expert evidence on Russian law concerning the validity and effect of the 1991 Divorce Certificate should be permitted.
7. Whether Brigita is the absolute beneficial owner of the shares in KPHL or holds them on trust for Vladimir's estate.
8. The relevance and admissibility of evidence relating to transactions involving shares in companies other than KPHL as part of a wider scheme to obscure ownership.

Arguments of the Parties

Claimants' Arguments

• Brigita asserts that she and Vladimir became a couple in November 2010 and that Vladimir’s English Will governs his estate outside Russia.
• She claims Vladimir died domiciled in Russia with English law governing succession to his moveable estate.
• She seeks probate of the English Will or a copy thereof, despite the original not being located.
• Brigita contends that the Belgian divorce was a "false divorce" and that the Russian Divorce Certificate dated 1991 is valid.
• She claims beneficial ownership of the KPHL shares by virtue of a series of declarations of trust and share transfers involving trusted associates.
• She submits that disclosure should be limited to matters relevant to KPHL and that extended disclosure relating to over 100 other companies is disproportionate and unnecessary.
• She seeks permission for expert evidence on the validity and effect of the 1991 Divorce Certificate.

Defendants' Arguments

• Elena and the Adult Children dispute the validity of the Russian Divorce Certificate and assert that Vladimir and Elena were divorced in Belgium in 2015-2016.
• They claim Vladimir died domiciled in Belgium, making Belgian law applicable to succession of his moveables.
• The Adult Children deny the validity of the English Will and argue that the original being missing suggests revocation by destruction.
• They maintain that the shares in KPHL were held by Brigita on bare trust for Vladimir and now for his estate, denying her beneficial ownership.
• The Adult Children argue that transactions involving shares in KPHL were part of a wider scheme by Vladimir to obscure ownership and shield assets from Elena and the Russian investigation.
• They seek extensive disclosure relating to multiple companies involved in Vladimir’s business interests, asserting that these are relevant to the KPHL claim.
• They oppose permission for expert evidence on the validity of the 1991 Divorce Certificate, submitting it is not necessary for trial.

Administrators' Position

• The Administrators were initially co-claimants but were ordered to be defendants in the Probate claim.
• They have concerns about the scope and costs of disclosure, particularly regarding documents relating to issues 15 to 34 in the Disclosure Review Document.
• They propose limited disclosure obligations, emphasizing efficiency and cost considerations.

Table of Precedents Cited

Court's Reasoning and Analysis

The court carefully analysed the issues for disclosure, applying Practice Direction 51U which requires issues for disclosure to be key, relevant, and proportionate. It concluded that issues concerning the validity and recognition of the 1991 Divorce Certificate and the Russian Divorce were not key issues for disclosure or trial, as they were temporally remote and not necessary to resolve the core disputes regarding Vladimir's domicile, the validity of the English Will, and beneficial ownership of KPHL shares.

The court distinguished between issues requiring disclosure and those better left for resolution without extensive documentary evidence, thereby striking out Issues 1 and 2 from the disclosure list. It refined Issues 3 and 4 to focus on Vladimir’s understanding of Elena’s rights and the nature of their relationship post-2010, which are material to the claims.

Regarding the KPHL claim, the court accepted the Adult Children’s submission that transactions involving shares in other companies were closely linked to those involving KPHL and thus potentially probative. The court rejected the Claimants’ argument to isolate KPHL from the wider corporate restructuring, noting the timing and similarity of documentation across companies suggested a broader scheme.

The court balanced the need for comprehensive disclosure against proportionality and cost, limiting extended disclosure (Issues 15-17) to twelve specifically named companies, including KPHL. It ordered Model D disclosure for the Administrators and Model C for other parties on these issues.

On the scope of disclosure by the Administrators, the court accepted their proposal to limit disclosure to documents not already provided by or to other parties, to avoid duplication and excessive cost, while leaving open the possibility of further orders if gaps arose.

Finally, the court refused permission for expert evidence on Russian law regarding the validity and effect of the 1991 Divorce Certificate, finding it unnecessary for trial resolution. The court emphasized that the validity of the divorce was not a key issue and that expert evidence would not assist the judge in determining the core disputes.

Holding and Implications

The court’s final decision was to LIMIT disclosure to key, relevant issues and to REFUSE permission for expert evidence on the validity of the 1991 Divorce Certificate.

The court ordered that:

• Issues 1 and 2 concerning the validity and recognition of the 1991 Divorce Certificate be removed from the disclosure list.
• Disclosure on Issues 3 and 4 be maintained and refined to focus on Vladimir’s perception of Elena’s rights and their relationship post-2010.
• Extended disclosure on Issues 15, 16, and 17 be limited to twelve named companies, including KPHL, with Model D disclosure for Administrators and Model C for other parties.
• Administrators’ disclosure be limited to documents not already provided by or to other parties, with the possibility of future variation.
• Expert evidence on the validity and effect of the 1991 Divorce Certificate be refused.

The decision balances the need for comprehensive but proportionate disclosure in complex multi-jurisdictional estate litigation involving significant corporate structures. It avoids unnecessary exploration of collateral issues unlikely to assist the resolution of the core disputes. No new precedent was established; the ruling applies established principles of case management, disclosure proportionality, and expert evidence admissibility to the facts of this case.