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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 & Ors  EWHC 1526 (Fam) (12 June 2020)
Cite as:  EWHC 1526 (Fam)
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Strand, London, WC2A 2LL
B e f o r e :
| TATIANA AKHMEDOVA
|- and -
COTOR INVESTMENT SA
QUBO 1 ESTABLISHMENT
QUBO 2 ESTABLISHMENT
AVENGER ASSETS CORPORATION
COUNSELOR TRUST REG.
Graham Brodie QC and Richard Eschwege (instructed by BCL Solicitors) for the Eighth and Ninth Respondents
Charles Howard QC and Charlotte Hartley (instructed by Hughes Fowler Carruthers) for the Tenth Respondent
Tim Owen QC and Tim James-Matthews (instructed by Hughes Fowler Carruthers) for the Tenth Respondent
Hearing dates: 11-13 May; 18-19 May 2020
Crown Copyright ©
This judgment was delivered following a remote hearing conducted on a video conferencing platform and attended by the press. The judge has given leave for this version of the judgment to be published.
Covid-19 Protocol: This judgment was handed down remotely by circulation to the parties' representatives by email and release to BAILII. The date and time for hand-down is deemed to be at 10.30am on Friday 12th June 2020.
Mrs Justice Knowles:
a) an application for disclosure by the Applicant Wife against the Tenth Respondent made on 15 November 2019; and
b) an application by the Tenth Respondent dated 29 November 2019 for (i) disclosure from the Applicant Wife in respect of her litigation funding arrangements (to be heard with the Applicant Wife's application to strike out the Tenth Respondent's counterclaim relating to funding dated 28 February 2020), (ii) disclosure of the "Reviewable Documents" provided by Mr Henderson, and (iii) disclosure of other documents on which the Applicant Wife relies.
Brief Summary of Background and the Claims
a) in December 2016 the Husband was ordered to pay the Wife £453,576,152 by Haddon-Cave J (as he then was) by way of financial remedies consequential on their divorce. The Husband has not voluntarily paid a penny of that award, and enforcement to date has realised only about £5 million;
b) The Husband's main identified assets are (i) a superyacht known as the M/Y Luna ("the Yacht"), (ii) modern art valued in January 2016 as US$145.2 million ("the Artwork") and (iii) cash and securities worth around US$650 million which were previously held by Cotor at UBS ("the Monetary Assets"). Collectively, these are the "Identified Assets";
c) The Yacht and the Artwork were transferred into Liechtenstein trust structures in November 2016, the month before the trial of the Wife's claim for financial relief against the Husband;
d) Between 2015 and 2016 Cotor transferred at least US$60 million from the Monetary Assets to Temur's Swiss bank account;
e) By December 2016, Cotor – as nominee for the Husband – held the Monetary Assets at UBS in Switzerland. On or about 5 December 2016 Cotor transferred those assets to an account in its name at LGT Bank in Liechtenstein, in turn dissipating them such that, by January 2017, nothing remained in that account;
f) In 2018 the ultimate beneficial ownership of a valuable office property in Central Moscow ("the Moscow Property"), then held through a Cypriot company, was transferred from the Husband to Temur.
Claims against Counselor and Sobaldo
a) all the Identified Assets were transferred into Liechtenstein trusts in the weeks immediately before trial in December 2016. This took place in a context where the Husband's lawyer had described a strategy of moving assets to a jurisdiction which did not enforce English judgments (as is the case in Liechtenstein);
b) following judgment and the initiation of proceedings by the Wife in Liechtenstein, the trustees took further steps to move the assets into yet further Liechtenstein trusts to make them harder to trace and recover;
c) Haddon-Cave J held that the Husband has engaged, and continues to engage, in an "elaborate and contumacious campaign to evade and frustrate the enforcement of the judgment debt against him". The Husband is said to have described the English court's judgment as being "worth as much as toilet paper";
d) The Liechtenstein criminal courts have repeatedly concluded that there is a concrete suspicion of fraudulent bankruptcy and money laundering in respect of these transfers.
Claims against Temur
The Wife's Litigation Funding: Strike Out and Disclosure Applications
The Wife's Relationship with Burford Capital
Temur's Counter-Claim and Position: Summary
a) any agreement for the provision of funding by Burford Capital to the Wife;
b) any agreement between the Wife and her solicitors, PCB Litigation, for the provision of legal services;
c) any agreement for the provision of funding between PCB Litigation and Burford Capital in connection with these proceedings;
d) and all communications between the Wife, PCB Litigation and/or Burford Capital relating to the provision of funding or the terms of funding.
The skeleton argument produced by Mr Owen QC and Mr James-Matthews states that this relief is sought on the basis that the funding arrangements that the Wife has entered into with Burford Capital are unlawful because they are contrary to the public policy against the champertous maintenance of litigation [paragraph 1]. Further, it is submitted that Temur's counter-claim raises a novel and important issue of public policy concerning the conduct of family proceedings, namely whether third-party litigation funding, with an interest in sharing the financial spoils of litigation, should be permitted in family proceedings. As Mr Owen QC submitted, Burford Capital – by trafficking in the outcome of the spoils of this matrimonial litigation – hoped to pocket a large reward and make a "big fat killing" for its shareholders. He drew my attention to the unique position of family proceedings in public policy terms in that such proceedings are excluded from the category of legal proceedings for which a legal advisor might enter into a conditional fee agreement [see s.58A of the Courts and Legal Services Act 1990] and sought to draw an analogy therefrom with third party litigation funding.
The Wife's Application to Strike-Out and Position: Summary
Strike-Out: The Law
(1) […] [T]he court may strike out a statement of case if it appears to the court -
a) that the statement of case discloses no reasonable grounds for bringing or defending the application;
b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings […]
Practice Direction 4A - Striking Out a Statement of Case contains within paragraph 2.1 examples of cases which the court may conclude that an application falls within r 4.4(1)(a) as follows:
a) those which set out no facts indicating what the application is about;
b) those which are incoherent and make no sense;
c) those which contain a coherent set of facts but those facts, even if true, do not disclose any legally recognisable application against the respondent.
Champerty: The Law
"91. The costs judge concluded that the 1998 agreements lacked the characteristics that might have rendered them contrary to public policy under the vestigial remnants of the law of champerty. As we considered the evidence and heard the argument unfold, we became increasingly convinced that he was correct. Reflection after reserving our judgment has not shaken that conclusion. The claimants had been brought low by the initial wrong done to them and by the costs and stress of prolonged litigation in which no quarter was given. They were faced with an extraordinarily complicated task in proving the damage that they had suffered and there was a real risk that lack of funds might result in their losing the fruits of their litigation. The 1998 agreements ensured that they continued to enjoy access to justice. They did this without putting justice in jeopardy. The 1998 agreements were not champertous".
Litigation Funding: Relevant Considerations
"…As the judge pointed out, champerty involves behaviour likely to interfere with the due administration of justice. Litigation funding is an accepted and judicially sanctioned activity perceived to be in the public interest. What the judge characterised as "rigorous analysis of law, facts and witnesses, consideration of proportionality and review at appropriate intervals" is what is to be expected of a responsible funder – as the ALF to some extent acknowledges and as did some of the funders in this case in their evidence presented to the judge – and cannot of itself be champertous. I agree with Mr Waller that, rather than interfering with the due administration of justice, if anything, such activities promote the due administration of justice. For the avoidance of doubt I should mention that on-going review of the progress of litigation through the medium of lawyers independent of those conducting the litigation, a fortiori those conducting it on a conditional fee agreement, seems to me not just prudent but often essential in order to reduce the risk of orders for indemnity costs being made against the unsuccessful funded party. When conducted responsibly, as by members of the ALF I am sure it would be, there is no danger of such review being characterised as being champertous."
Temur's Standing to Seek Relief
The Legality of the Wife's Funding Arrangements: Temur's Defence
Third-Party Litigation Funding in Family Proceedings
Temur's Application for Disclosure: Litigation Funding
Temur's Application for a Reporting Restriction Order
"Subject to the 'territorial limitation' above, this order prohibits without the leave of the court the publishing or broadcasting in any newspaper, magazine, public computer network, internet website, social networking website or any form of social media, sound or television broadcast or cable or satellite program service of;
a) Confidential material or information relating to the personal financial affairs or business activities of the Tenth Respondent that has been disclosed in any of the following forms, within these proceedings:
i) in a witness statement, affidavit or oral evidence;
ii) in pleadings or application notices;
iii) in orders or judgments of the court;
iv) In any material filed at court or served on any other parties pursuant to any order made by the court in the proceedings.
b) For the purposes of paragraph 9(a), "confidential material or information relating to the personal financial affairs or business activities" means: tax returns (and the contents thereof), statements or details of any bank accounts, investment portfolios or any trading activity (in particular in relation to all dealings with his UK-based trading platform [name omitted], reference to [his home address], STE Capital Corporation SA and shall further expressly include documents 1-10 as served by the Tenth Respondent in the Schedule headed "Initial Disclosure" dated 21 February 2020."
a) these are matrimonial proceedings which concern the largest award for ancillary relief apparently ever made in this jurisdiction;
b) the Husband has not voluntarily paid a penny of that award and the Wife seeks enforcement against him;
c) and the Wife now claims her son. Temur, has assisted the Husband to evade payment of the award and seeks to enforce settlement via an examination of Temur's financial affairs with a view to recovering from him monies gifted to him by the Husband with the intention of putting those assets out of her reach.
 Open justice is a fundamental principle. The general rule is that hearings care carried out in, and judgments and orders are public: see Article 6(1) of the Convention, CPR 39.2 and Scott v Scott  AC 417 …
 Derogations from the general principle can only be justified in exceptional circumstances, where they are strictly necessary as measures to ensure the proper administration of justice. They are wholly exceptional… Derogations should, where justified, be no more than strictly necessary to achieve their purpose.
 The grant of derogations is not a question of discretion. It is matter of obligation and the court is under a duty to either grant the derogation or refuse it when it has applied the relevant test.
 There is no general exception to open justice where privacy or confidentiality is in issue. Applications will only be heard in private if and to the extent that the court is satisfied that by nothing short of the exclusion of the public can justice be done. Exclusions must be no more than the minimum strictly necessary to ensure justice is done and parties are expected to consider before applying for such an exclusion whether something short of exclusion can meet their concerns as will normally be the case … Anonymity will only be granted where it is strictly necessary and then only to that extent.
 The burden of establishing any derogation from the general principle lies on the person seeking it. It must be established by clear and cogent evidence…
 When considering the imposition of any derogation from open justice, the court will have regard to the respective and sometimes competing Convention rights of the parties as well as the general public interest in open justice and in the public reporting of court proceedings…
Temur's Application for an Order Prohibiting Disclosure to Third Parties
"No party may disclose to any third party (including but not limited to accredited representatives of the media, and including any party's litigation funding service) other than his or her legal representatives any of the following documents (and information contained therein) produced within these proceedings without leave of the court:
a) any applications or pleadings,
b) any witness statements, affidavits including exhibits to either,
c) any document filed or served in the course of court-ordered disclosure (including items 1-10 of the 'Initial Disclosure' produced voluntarily with the tenth respondent's Defence on 21 February 2020),
even if such document has been read to or by the court or referred to at a hearing which has been held in public.
Save that any party may so disclose the above:
i) for the purpose of preparing witness statements for these proceedings and/or
ii) for the purpose of enforcement of the financial remedies order or any related action claiming the financial provision made in that order in any jurisdiction worldwide or responding to an application for such enforcement or claim, or
iii) such as it strictly necessary for the purpose of these proceedings, it being held that it is not necessary for the purpose of these proceedings for a party to disclose any of the above documents to:
media agencies or representatives
public relations/publicity management agencies or representatives, or
provided any such permitted disclosure as set out above shall not take place until the disclosing party's solicitors have obtained a binding written assurance from the recipient that any such disclosure is to remain confidential and is not to be published or disseminated further without leave of the court."
"The Wife may use a document disclosed to her by Temur only for the purpose of the proceedings in which it is disclosed, except where –
a) the document has been read to or by the court, or referred to, at a hearing which has been held in public;
b) the court gives permission;
c) the party who disclosed the document and the person to whom the document belongs agree;
d) for the purpose of the enforcement of the financial remedies order or any related action claiming the financial provision made in that order in any jurisdiction worldwide."
Mr Gourgey QC opposed disclosure restricted to the parties' legal teams only since this was not required by the implied or (under the CPR) express prohibition on collateral use. Restraint on the Wife providing case materials to her litigation funder was permissible under the prohibition on collateral use (see paragraphs 64-66 of Caldero Trading Ltd v Beppler & Jacobson  EWHC 1609 (Ch)). Without sight of that material a funder would not be able to undertake the rigorous analysis which the Court of Appeal had made clear was expected and required of a litigation funder (see paragraph 31 of Excalibur Ventures LLC referred to above)
"A party to these proceedings may use a document disclosed to it by another party only for the purpose of the proceedings in which it was disclosed except where –
a) the document has been read to or by the court or referred to at a hearing which has been held in public (save that material contained therein and covered by the reporting restriction order shall not be published or disseminated as provided for in that order);
b) the court gives permission;
c) the party who disclosed the document and the person to whom the document belongs agree;
d) for the purpose of enforcement of the financial remedies order or any related action claiming the financial provision made in that order in any jurisdiction worldwide or responding to an application for such enforcement or claim."
The precise wording for paragraph (a) above may require some amendment once the parties have collaborated to draft the limited reporting restriction order I have sanctioned.
The Disclosure Applications
The Wife's Disclosure Applications
Temur's Disclosure Applications