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You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> Akhmedova v Akhmedov [2019] EWHC 3140 (Fam) (22 November 2019) URL: https://www.bailii.org/ew/cases/EWHC/Fam/2019/3140.html Cite as: [2020] 1 FCR 411, [2019] EWHC 3140 (Fam), [2019] WLR(D) 688, [2020] 4 WLR 15 |
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version
of the judgment to be published on condition that (irrespective of what is contained in the judgment) in any published
version
of the judgment the anonymity of the children and members of their family must be strictly preserved. All persons, including representatives of the media, must ensure that this condition is strictly complied with. Failure to do so will be a contempt of court.
FAMILY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
TATIANA AKHMEDOVA | Applicant |
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| - and - |
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FARKHAD TEIMUR AKHMEDOV | Respondent |
____________________
The Respondent did not appear and was not represented
Hearing date: 4 November 2019
____________________
VERSION
OF JUDGMENT APPROVED
Crown Copyright ©
Mrs Justice Knowles:
Introduction
Akhmedova
pursuant to UL
v
BK (Freezing Orders: Safeguards) [2014] Fam 35 in respect of certain documents which have been, or may have been, illegitimately obtained. It forms part of the long-running matrimonial litigation between Mrs
Akhmedova
["the Wife"] and her former husband, Mr
Akhmedov
["the Husband"] which has been distinguished by (a) the largest financial order in favour of a wife within this jurisdiction and (b) the fact that the Husband has failed to pay a penny of that award. The Wife is presently seeking to enforce the December 2016 financial order made in her favour by Mr Justice Haddon-Cave (as he then was) and this application should be seen in that context.
v
BK in circumstances where one of the parties is not represented or fails to engage with the litigation.
Factual Background
"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."
very
strong prima facie case that (the Husband) instructed his lawyers to seek to effect transactions and asset holding structures which would defeat (the Wife's) ability to enforce an expected order against him" and "this [fraud/iniquity] exception will apply to documents which are unambiguously in furtherance of the plan/attempts to defeat enforcement of (the Wife's) anticipated order by secretly concealing or dissipating assets". On this basis, 244 documents were identified as reviewable and provided to Withers [the "Reviewable Documents"].
v
BK before conducting the Waistell Review. PCB were instructed in late autumn 2018 and were provided by Withers with a copy of the Reviewable Documents on 20 December 2018.
very
experienced firm of family lawyers. Since its instruction, PCB has been heavily engaged with the Wife's worldwide enforcement efforts, including numerous applications in England as well as coordinating complex and often urgent matters in the Marshall Islands, Dubai, Liechtenstein and New York. Those matters did not require any of the Reviewable Documents to be deployed in evidence.
v
BK had not been followed. It was therefore decided not to rely on the Reviewable Documents, but instead to inform the court of the position. I was told at the hearing in August 2019 that an application in respect of documents would be made. An application was duly issued on 30 September 2019 and on 2 October 2019 I gave directions on my own initiative to list a hearing at which I could consider the Wife's application.
various
means described in the order of Haddon-Cave J dated 21 March 2018. The provisions of my directions order were set out in full in a letter accompanying the application documents sent at the same time. Unfortunately, once the sealed court order was received on 18 October 2019, PCB overlooked the need to serve it on the Husband until 31 October 2019. PCB apologised to the court for this oversight.
The Law
Directions
v
Imerman [2011] Fam 116. In that case, the wife's brother had obtained confidential documents by accessing the husband's computer without permission and copying them. Tchenguiz establishes that:
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 Incv
Zahoor [2003] 2 All ER 252 at [115], 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].
v
BK [see paragraph 56 at (3)-(4)]. The relevant part of the guidance contained therein requires solicitors who receive such documents: (a) to return the documents to the other party's solicitors, who (as officers of the court) can then ensure they are preserved and that proper disclosure is given, or (b) in the event that the other party does not have solicitors acting for him, to obtain directions from the court. In such circumstances the court is likely to direct that independent counsel be appointed to give proper disclosure.
Effect of Impropriety
v
Angate Consulting Ltd [2019] EWHC 1558 (Comm) at paragraphs 126-136 as well as in Istil Group at paragraphs 90-94. Thus, if the Wife's receipt and use of the documents is justified on this basis, there is no breach of confidence at all and, therefore, no question of any relief being granted to restrain such use.
Privilege
v
McLean [2018] 4 WLR 26 at paragraphs 15-18 and in Hotel Portfolio II UK Ltd
v
SMA Investment Holdings Ltd [2019] EWHC 1754 (Comm) at paragraphs 26-39.
vexed.
In the circumstances of this case, it is sufficient to observe that devising a scheme to dissipate assets so as to frustrate enforcement of an anticipated judgment of this Court will engage the exception. The following establishes that proposition clearly:
a. In O'Rourkev
Darbyshire [1920] 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 Bankv
Eustice [1995] 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) [2008] 1 FLR 115 at paragraphs 34-35.
d. In the present case, the Court of Appeal has previously considered the fraud exception in Zv
Z (Legal Professional Privilege: Fraud Exception) [2018] 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 Zv
Z and C
v
C (Privilege) have referred to the long-standing decision in Williams
v
Quebrada Railway, Land & Copper Co [1895] 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 [1996] 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 [2019] 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.
v
Ablyazov [2014] EWHC 2788 (Comm) at paragraph 76. The court should ask whether the communications fall within the ordinary course of a solicitor's professional engagement; if they do not, and are made in furtherance of an iniquitous purpose, they will not be privileged because they will not attract confidentiality. It seems unlikely in the extreme that obtaining advice from a solicitor as to how to evade and frustrate an anticipated judgment could be regarded as falling within the ordinary course of a solicitor's engagement. On the contrary, it is likely to involve the solicitor in serious misconduct.
Discussion
Service
vary
the order or seek further directions. He has not engaged at all with the application or the documents which have been served upon him; for example, he has not opened the documents which were successfully served on him by WhatsApp. Taking account of all the circumstances, I was satisfied (a) that he has been served with the application and given notice of the hearing and (b) that I should proceed to hear the Wife's application.
Directions
v
BK, directions ought to have been sought from the court when Mr Henderson gave her lawyers the Provided Documents and before the Waistell Review took place. She apologised to the court that this course had not been followed by her solicitors then instructed. I find it
very
surprising indeed that Withers failed to make the necessary application to the court required by UL
v
BK as soon as or shortly after the documents were in their possession. In circumstances where the Husband was without a solicitor and was not engaging in the matrimonial proceedings, the wording of the guidance in paragraph 56(4) of UL
v
BK leaves no room for doubt that an application to the court must be made. Whether Withers intended to make an application after the Waistell Review is unclear, but they did not do so.
v
BK is silent on such issues. I make some suggestions as to the way forward at the conclusion of this judgment.
v
BK had been made, it is almost certain that the court would have ordered that the documents be reviewed by an independent lawyer, and the outcome of that review would have been that documents which were relevant and not privileged should be provided to the Wife. However, he recognised that the fact that the court would most likely have given those directions did not mean that the Wife was necessarily entitled to retrospective approval of the steps she took without seeking directions from the court at that time. In the circumstances of this case, he invited me to approve the steps already taken since he submitted that it would be a disproportionate sanction to deprive the Wife of the use of those documents.
view
to bear in mind all the circumstances in exercising my discretion on this issue. At the relevant time the Husband was (a) in contempt of this court's orders, (b) had been found to have engaged in an "elaborate and contumacious campaign to evade and frustrate enforcement of the judgment debt against him" [see paragraph 21 of the judgment of Haddon-Cave J in
Akhmedova
v
Akhmedov
[2018] EWFC 23 (Fam)], and (c) had disengaged with the proceedings with the consequence that he could not be expected to give any or any proper disclosure himself. Those matters would have been reason enough to grant a UL
v
BK application made at the time in order to ensure that the Wife could obtain copies of relevant and nonprivileged documents relating to the Husband's campaign of evasion. This was also a case in which Haddon-Cave J had granted summonses to obtain confidential information from Mr Kerman who was the Husband's lawyer. Those orders were subsequently upheld by the Court of Appeal. I accept Mr Willan's submission that, in those circumstances, it was overwhelmingly likely the court would have allowed the Wife to receive and use relevant information about the Husband's campaign of evasion from another of his (former) advisers, that is Mr Henderson.
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.
very
carefully indeed. It is, in my opinion, a thorough analysis which applied the correct legal principles and erred on the side of caution in that potentially privileged communications where there was an ambiguity as to their iniquitous nature were not included in the Reviewable Documents.
vessel
and the monetary assets which engages s. 423 of the Insolvency Act 1986 and/or s. 37 of the Matrimonial Causes Act 1973. This conduct began in March 2015 (when assets were settled into a Bermudan discretionary trust) through the months leading up to the trial in December 2016 (when all of the assets, including those previously held by the Bermudan trust, were transferred into Liechtenstein structures) and continuing after judgment was obtained (including the further transfer of the
vessel
to Straight). Relying on Eustice and C
v
C (Privilege), there would be no privilege in communications relating to this continuing campaign of evasion.
very
difficult for your Mother to enforce an English judgment". On 10 June 2015 Mr Kerman stated that "the priority right now is to secure everything as quickly as possible, and in the meantime to give Fiona/ your Mother the
very
clear signal that your Father is still prepared to consider an amicable settlement. This should buy your Father the time he needs to get the appropriate protections in place". The reference to "Fiona" is to the Wife's former solicitor. On 23 June 2015 Mr Kerman stated that "…for as long as your Mother continues with the English divorce proceedings the
very
best way for your Father to protect his money and assets would be to move them to (and keep them in) a 'safe' jurisdiction, meaning a country where your Mother could not enforce an English court order - for example, Azerbaijan, Dubai, Qatar etc.". He went on to propose a particular strategy involving charging assets to a friendly bank – "…we were trying to arrange charges over Luna and the aircraft with CBQ [Commercial Bank of Qatar], and the paintings fall into the same category. The protection operates on the basis that once a charge is given to a bank that bank would object to any attempt to enforce a court order against the asset, because the bank is holding that asset as its security". Finally, in an email dated 14 July 2015, Mr Kerman explained that "we have been attempting to safeguard all his assets by placing them in jurisdictions where it would be hard if not impossible for your Mother to enforce any English court order that she might obtain… As you know the best protection for these assets [the
Vessel
and the Artwork] that we have been able to come up with in all the circumstances is that they be charged to an offshore bank. However, quite apart from the risks and uncertainties which are always present in any litigation, the success of this operation is absolutely dependent on whether the bank your Father chooses co-operates with him and actively defends (at your Father's expense) its charges over the assets on the basis that the bank has a security interest in them. It is therefore essential that whatever bank is used understands that this is what it will have to do and will not get 'wobbly' at the last minute if an attack is made". I note that all these communications appear to have been made to one of the Husband's children who was involved with the Husband's financial affairs.
Guidance: UL
v
BK
valuable
it may be in relation to legal professional privilege or indeed in relation to relevance in narrowing the differences and eliminating the need for all parties to examine before the judge the relevance of particular documents. The jurisdiction is a judicial jurisdiction to be exercised by the Crown Court judge. Independent counsel, as the judge said, could assist him – he or she could assist the parties – but the decision would be his" [see paragraph 16 of R (o.a.o.
Van
Der Pijl)
v
Crown Court at Kingston upon Thames [2013] EWHC 3040 (Admin)]. Whilst the role of independent counsel in relation to illegitimately acquired documents in this Division might have been adapted so as to strike an appropriate balance between the parties' competing rights and duties to the court, there can be no doubt that, in a case of dispute, the judge remains the ultimate decision maker.
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 LtdV
![]()
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 Thermosensorsv Hibben [1992] 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.
Conclusion