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England and Wales High Court (Family Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> Akhmedova v Akhmedov  EWHC 3140 (Fam) (22 November 2019)
Cite as:  1 FCR 411,  4 WLR 15,  WLR(D) 688,  EWHC 3140 (Fam)
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Strand, London, WC2A 2LL
B e f o r e :
| TATIANA AKHMEDOVA
|- and -
|FARKHAD TEIMUR AKHMEDOV
The Respondent did not appear and was not represented
Hearing date: 4 November 2019
Crown Copyright ©
Mrs Justice Knowles:
"The Executive [Mr Henderson] shall not use or disclose to any person either during or any time after his employment by the Company [CAM] any confidential information about the business or affairs of the Company or FTA [the Husband] (including without limitation his home life, finances, personal circumstances, and any information concerning FTA's family) or of any company or firm associated with the Company or FTA or of any of their respective business contracts, or about any other confidential matters which may come to his knowledge in the course of his employment (whether directly or indirectly) other than for the benefit of the Company. For the purposes of this clause, "confidential information" means any information or matter which is not in the public domain and which relates to the affairs of the Company, FTA, FTA's family, friends and personal acquaintances and/or her/their business contacts."
a. It would be a breach of confidence for X, without the authority of Y, to examine, or to make, retain, or supply copies to a third party of, a document whose contents are, and were (or ought to have been) appreciated by X to be, confidential to Y. As a matter of principle, and in the absence of a defence, Y would be entitled to restrain any threat by X to look at, copy, distribute, communicate or utilise any such document, and would also be entitled to enforce the return of any such document or copy [paragraph 69];
b. Y will ordinarily be entitled to obtain an injunction to stop X looking at the documents [paragraph 72] and to prevent X passing on or using the information, subject to any good reason to the contrary on the facts of the case; X could also be ordered to return or destroy the documents [paragraph 73];
c. A claim based on confidentiality is an equitable claim subject to the normal equitable rules, including a discretion to refuse relief on familiar equitable principles [paragraph 74]. The Court of Appeal referred to Istil Group Inc v Zahoor  2 All ER 252 at , in which an injunction was refused to prevent use of privileged emails because of the public interest in the disclosure of wrongdoing and to achieve the proper administration of justice;
d. A husband can claim confidentiality against his wife [paragraphs 84-89];
e. There is no principle (previously referred to as the "Hildebrand Rules") by which a person can engage in self-help by obtaining information which might otherwise be concealed or destroyed [paragraphs 106-107 and 139];
f. However, a claim for breach of confidentiality may be defeated by showing that the documents revealed unlawful conduct or intended unlawful conduct by Y [paragraph 142]. Tchenguiz was not such a case because it was "not suggested that the documents themselves disclose measures taken to defeat the wife's claim";
g. The court will wish to strike a fair balance between two competing concerns, being (a) that X should not obtain an improper benefit of being able to use Y's confidential documents which have been unlawfully obtained, and (b) that Y should not dispose of or hide documents which he is or may become obliged to produce, and that Y should find it more difficult to hide his assets [paragraph 149];
h. Although illegitimately obtained evidence is admissible, the court has a discretion to exclude it [paragraphs 170-177].
Effect of Impropriety
a. In O'Rourke v Darbyshire  AC 581 at 613, Lord Sumner held that no privilege applies to documents "brought into existence in the course of or in furtherance of a fraud to which both solicitor and client are parties". He drew a distinction between obtaining advice on prior conduct and "consulting [a lawyer] in order to learn how to plan, execute or stifle an actual fraud".
b. Fraud here is not confined to "civil fraud in the narrow sense". It has been applied to "all forms of fraud and dishonesty such as fraudulent breach of trust, fraudulent conspiracy, trickery and sham contrivances" and "things which commercial men would say was fraud or which the law treats as contrary to public policy".
c. In Barclays Bank v Eustice  1 WLR 1238, the Court of Appeal held that the purpose of "enter[ing] into transactions at an undervalue the purpose of which was to prejudice the bank" (which fell within the scope of s. 423 of the Insolvency Act 1986) was "sufficiently iniquitous" to engage the exception. The same logic was applied by Munby J (as he then was) to s.37 of the Matrimonial Causes Act 1973 in C v C (Privilege)  1 FLR 115 at paragraphs 34-35.
d. In the present case, the Court of Appeal has previously considered the fraud exception in Z v Z (Legal Professional Privilege: Fraud Exception)  4 WLR 52. On that appeal, Mr Kerman argued that Haddon-Cave J (as he then was) had wrongly applied an "iniquity" test rather than a "dishonesty" test. The Court of Appeal decided not to resolve the question of the appropriate test, but observed at paragraph 57 that "it is not easy to see why the actual decision in Eustice in relation to section 423 of the Insolvency Act 1986 and in C v C (Privilege) in relation to section 37 of the Matrimonial Causes Act 1973, should be questioned, whatever criticisms there may be of some of the reasoning".
e. Both Z v Z and C v C (Privilege) have referred to the long-standing decision in Williams v Quebrada Railway, Land & Copper Co  2 Ch 751. Williams was a case in which it was alleged that a company had given a charge in favour of its agents in order to defeat a prior floating charge. For arcane reasons, that charge did not fall within the scope of the avoidance legislation at the time. Kekewich J nevertheless held that privilege was not available because "… it is difficult to say that this is not commercial dishonesty. It is, in my opinion, commercial dishonesty of the very worst type; and that is fraud".
f. For completeness, it should be noted that the Court of Appeal recently declined to decide whether Eustice remains good law in the light of the subsequent decision of the House of Lords in R (ex p. B) v Derby Magistrates Court  1 AC 487. It was argued that Eustice involves a retrospective evaluative judgment, contrary to Derby Magistrates. The Court of Appeal held that this was as "an important argument which will no doubt have to be decided one day" [see Curless v Shell International Ltd  EWCA Civ 1710 at paragraphs 54-60]. Nevertheless, Eustice has consistently been applied at first instance and any reconsideration of that case should be left to the Court of Appeal. I observe that, as held in Z v Z, even if the "sufficiently iniquitous" test employed in Eustice might be open to question, the application of the exception to cases of fraud on creditors is difficult to criticise.
a. The Wife and her lawyers are entitled to retain the Reviewable Documents, and to use them as if they had been disclosed by the Husband in the proceedings;
b. The Wife is not required to cause a further independent review to be undertaken; and
c. The Wife will provide a copy of the Reviewable Documents to the Husband by email if he so requests.
Guidance: UL v BK
11(1) Before permitting entry to the premises by any person other than the Supervising Solicitor, the Respondent, may for a short time (not to exceed two hours, unless the Supervising Solicitor agrees to a longer period) –a. Gather together any documents he believes may be incriminating or privileged; andb. Hand them to the Supervising Solicitor for him to assess whether they are incriminating or privileged as claimed;
(2) If the Supervising Solicitor decides that the Respondent is entitled to withhold production of any of the documents on the ground that they are privileged or incriminating, he will exclude them from the search, record them in a list for inclusion in his report and return them to the Respondent.
(3) If the Supervising Solicitor believes that the Respondent may be entitled to withhold production of the whole or any part of a document on the ground that it may be privileged or incriminating, or if the Respondent claims to be entitled to withhold production on those grounds, the Supervising Solicitor will exclude it from the search and retain it in his possession pending further order of the court.
As with the PD25A order, Order 3.2 provides for a written report on the carrying out of the order to be sent by the supervising solicitor to the judge who made the order for the purposes of the court file. That report would address any issue of privilege which has arisen if paragraph 11 is incorporated into Order 3.2.
a. There is no prohibition on the search being carried out at the same time as a police search warrant. That practice has been criticised by the Court of Appeal and the European Court of Human Rights in ITC Films Distributors Ltd V Video Exchange (No 2) (1982) 126 S.J. 672;
b. The respondent is not expressly entitled to refuse access until he has received an explanation of the order;
c. The respondent has no right to delay the search briefly to obtain legal advice. This was described as "an important safeguard" in Universal Thermosensors v Hibben  1 WLR 840 at 860;
d. There is no requirement not to remove items until a list has been prepared. In Universal Thermosensors (see above) it was held that this should be ordered "unless this was seriously impractical"; and
e. There is no prohibition on searching or removing items unless the Respondent is present.