IQ Legal TrainingBerkeley Lifford Hall Accountancy Services

Home > Judgments > 2019 archive

Akhmedova v. Akhmedov [2019] EWHC 3140 (Fam)

Judgment by Mrs. Justice Knowles in the long-running litigation between Mrs. Akhmedova and Mr. Akhmedov dealing with an application by Mrs. Akhmedova for directions pursuant to UL v. BK (Freezing Orders : Safeguards) [2014] Fam 35 in respect of Imerman documents provided to her by the former director of Mr. Akhmedov’s family office. The judgement offers suggestions for dealing with Imerman documents where the owner of the documents is not represented and/or is failing to engage in the proceedings.

This judgment 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."[1] Readers should refer to previous judgments listed below for the full background of this litigation.

This hearing concerned the Wife's application for directions pursuant to UL v. BK (Freezing Orders: Safeguards) ?2014? Fam 35 in respect of 'Imerman documents' provided to her by the former director of the Husband's family office ('Mr. Henderson'). The application was made as part of the Wife's efforts to enforce a financial order made in her favour in December 2016 by Haddon-Cave J., as he then was ('the 2016 Order'). The Husband had not appeared or engaged in these and previous proceedings.

Mr. Henderson became the sole director of the Husband's family office in 2014. He was responsible for managing an offshore company holding a portfolio and works of art worth USD 890,065,115 and £90,581,865 respectively at the time of W's enforcement application in March 2018.

In the course of his employment, Mr. Henderson received information relating to the Husband and his companies, including (a) financial information (such as bank statements), (b) information about living costs and expenses, and (c) legal advice, principally from the Husband's English solicitors. Mr. Henderson was dismissed in 2015 and the family office was wound down. He retained electronic records of emails and other documents acquired during his employment.

In May 2017, Mr. Henderson contacted the Wife to offer to help with her efforts to enforce the 2016 Order. In November 2017, he provided to her Lichtenstein and Swiss lawyers a USB sticks containing documents relevant to a strategy deployed by the Husband to evade enforcement ('the Provided Documents'). He also informed the Wife's former solicitors ('FS') of the Provided Documents, who arranged for these to be given to an independent barrister so that he might review them for privileged material. The Wife's FS did not apply for directions in accordance with the guidance in UL v. BK before the review was conducted.

The review concluded that the majority of the documents were prima facie privileged, but concluded that the fraud/iniquity exception applied as there was a strong prima facie case that the Husband instructed his lawyers to effect transactions and structures in order to frustrate the Wife's enforcement of the 2016 Order. On this basis, 244 documents were identified as reviewable and provided to the Wife's FS ('the Reviewable Documents').

In August 2019, the Wife made an ex-parte application for a freezing injunction against some of the Husband's assets. By that time, the Wife had instructed new solicitors, who had not made any application pursuant to the UL v. BK guidance. The issue of non-compliance was raised as part of the Wife's duty of full and frank disclosure. The Wife's legal team decided not to rely on the Reviewable Documents in support of the freezing injunction, and made a separate application pursuant to the UL v. BK guidance, seeking the court's approval of the steps already taken by the Wife's FS to allow the Wife to retain and use the Reviewable Documents for the purposes of enforcement.

Mrs. Justice Knowles summarised the relevant authorities ([17]-[27]), in particular the relevant parts of the UL v. BK guidance (at paragraph 56(3)-(4)) which requires solicitors who receive 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 of non-privileged material is given, or (b) in the event that the other party is unrepresented, to obtain directions from the court [18]. She also highlighted the important "exception" to privilege where the communications are conducted with the intention of pursuing a fraudulent purpose [24].

Having set out the relevant authorities, Mrs. Justice Knowles directed that [36]:

i. The Wife and her lawyers were entitled to retain the Reviewable Documents, and to use them as if they had been disclosed by the Husband in the proceedings;

ii. The Wife was not required to cause a further independent review to be undertaken; and

iii. The Wife would provide a copy of the Reviewable Documents to the Husband by email if he so requests.

Mrs. Justice Knowles made the following remarks:

i. "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." [29];

ii. The fact that the court would most likely have ordered the documents to be reviewed by an independent lawyer and that the outcome of that review would have been that documents which were relevant and not privileged should be provided to the Wife 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 [31];

iii. However, the circumstances at the relevant time would have been enough to grant a UL v. BK application allowing the Wife obtain copies of relevant and non-privileged documents. Those circumstances were [32]:

a. The Husband was in contempt of this court's orders;

b. He had been found by this court to have engaged in an "elaborate and contumacious campaign to evade and frustrate enforcement of the judgment debt against him" (Akhmedova v. Akhmedov [2018] EWFC 23 (Fam) at para. 21); and

c. He had disengaged with the proceedings with the consequence that he could not be expected to give any or any proper disclosure himself.

iv. This was not a case where the Wife unlawfully accessed her Husband's confidential materials or procured another to do so. Mr. Henderson, who was already in possession of the documents, offered some of them to her [33];

v. It would be a disproportionate response to the failure to obtain directions at the relevant time to require the Wife not to use and/or to destroy the Reviewable Documents [33];

vi. Where documents themselves form part of a fraudulent scheme, the documents may not attract the protection of confidentiality in the first place and/or the court might refuse in the exercise of its discretion the grant of any relief in respect of any breach of confidence. There was a compelling argument that the court should not grant relief which is intended to protect the confidentiality of the Husband's documents because these documents are not entitled to receive protection. [34]

Mrs. Justice Knowles was satisfied that the Wife was entitled to retain the Reviewable Documents for the following reasons [37]-[42]:

i. The Review was a thorough analysis, which applied the correct legal principles and erred on the side of caution [38];

ii. Haddon-Cave J. was satisfied in December 2016 that the fraud or iniquity exception applied in this case and that the Husband's conduct was such that it was plain that legal professional privilege should not attach to his communications with his English solicitors regarding the modern art collection and the portfolio of financial assets. [39];

iii. The court had already concluded in previous judgments that there had been a long history of improper dealings with some of the Husband's most valuable assets, including the modern art collection. There would be no privilege in communications relating to this continuing campaign of evasion [40];

iv. Brief perusal of the Reviewable Documents showed that they form part of a fraudulent scheme to defeat the Wife's claims [41];

v. The documents were not confidential (or no relief should be granted to protect any confidentiality) because the 'fraud' exception to privilege applied [42].

Mrs. Justice Knowles concluded her judgment by offering suggestions to resolve potential difficulties arising where the owner of 'Imerman documents' is not represented and/or is failing to engage with the proceedings [43]-[47] :

i. An application to the court for directions must be made where the owner of the documents ('Y') is unrepresented. It should be made as soon as practicable after the documents come into the possession of the person who has received them ('X'). Delay because it is thought by X unnecessary to deploy this material at that time in the litigation is not acceptable [45];

ii. If the court makes an order for a review of the documents by an independent lawyer, it would usually be appropriate for the order to permit Y to make written representations to the independent lawyer that the material is subject to legal professional privilege [46];

iii. The reviewing lawyer should be directed to produce a report which should be provided to both X and Y in any event, and to the court in the event of any disagreement. If there is disagreement, the matter should be referred to court by X's solicitors [46];

iv. Where the reviewing lawyer considers that the assistance of the court is required, X's solicitors should restore the matter to court for directions. The reviewing lawyer should provide a report explaining the basis of any referral to the court. Such application can be avoided if reviewing lawyers err on the side of caution by excluding potentially privileged documents from disclosure where there is an ambiguity as to their iniquitous nature [47].

Finally, Mrs. Justice Knowles suggested that some of the CPR rules on search orders with no equivalent in Order 3.2 on search orders in the Family Division should be incorporated into Order 3.2, particularly those relating to issues of privilege. [48]-[52]

For previous judgments, see:

AAZ v. BBZ and Others (Financial Remedies: Sharing Principle: Special Contribution) [2016] EWHC 3234 (Fam)

AAZ v. BBZ and Others ]2016]?EWHC 3361 (Fam)

Kerman v. Akhmedova [2018] EWCA 307

Akhmedova v. Akhmedov and Others [2018] EWFC 23(Fam)

Akhmedova v. Akhmedov & Ors (Injuctive Relief) [2019] EWHC 1705 (Fam)

Akhmedova v Akhmedov & Others [2019] EWHC 2561 (Fam) and [2019] EWHC 2732 (Fam)

Summary by Roxane Reiser, barrister, 1 Hare Court
You can read the full judgment of Akhmedova v Akhmedov [2019] EWHC 3140 (Fam) (22 November 2019) on BAILII