Kerman v Akhmedova, Court of Appeal - Civil Division, February 27, 2018, [2018] EWCA Civ 307

Resolution Date:February 27, 2018
Issuing Organization:Civil Division
Actores:Kerman v Akhmedova
 
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Case No: B6/2016/4666

Neutral Citation Number: [2018] EWCA Civ 307

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

FAMILY DIVISION

Mr Justice HADDON-CAVE

[2016] EWHC 3349 (Fam)

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 27 February 2018

Before :

SIR JAMES MUNBY PRESIDENT OF THE FAMILY DIVISION

LORD JUSTICE LEWISON

and

LADY JUSTICE KING

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Between :

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Mr Phillip Shepherd QC and Miss Heather Murphy (instructed by Kerman & Co LLP) for the appellant

Mr Hodge Malek QC and Mr Dakis Hagen QC (instructed by Payne Hicks Beach) for the respondent

Hearing dates : 31 January-1 February 2018

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JudgmentSir James Munby, President of the Family Division :

  1. This is an appeal, pursuant to permission granted by King LJ on 16 March 2017, brought by a solicitor, Mr Anthony David Kerman of Kerman & Co LLP, from an order made by Haddon-Cave J on 5 December 2016 requiring him to attend court to give evidence. The order was made on the application of Tatiana Akhmedova, the petitioner wife (``W'') in financial remedy proceedings, FD13D05340, brought by her against three respondents (the second and third having been joined by an order made by Moor J on 25 October 2016): (1) her husband, Farkhad Akhmedov (``H''), (2) Woodblade Limited and (3) Cotor Investment SA. Haddon-Cave J's reasons for making the order against Mr Kerman, and for giving various subsequent rulings to which I shall refer in due course, were explained in a judgment handed down on 20 December 2016: Z v Z and others (Legal Professional Privilege: Fraud Exemption) [2016] EWHC 3349 (Fam), [2017] 4 WLR 84.

  2. Before coming to Mr Kerman's appeal, I need to explain the financial remedy proceedings to the extent necessary to understand the order and rulings which are under challenge.

  3. The final hearing before Haddon-Cave J lasted five days, starting on 29 November 2016 and finishing (judgment being reserved) on 5 December 2016. Haddon-Cave J handed down judgment on 15 December 2016: AAZ v BBZ and Others (Financial Remedies: Sharing Principle: Special Contribution) [2016] EWHC 3234 (Fam), [2018] 1 FLR 153. He gave a further judgment on 20 December 2016: AAZ v BBZ and Ors [2016] EWHC 3361 (Fam). His final order is dated 20 December 2016.

  4. The bulk of the enormous wealth in this case, found by Haddon-Cave J (AAZ v BBZ and Others (Financial Remedies: Sharing Principle: Special Contribution) [2016] EWHC 3234 (Fam), [2018] 1 FLR 153, para 106) to amount to £1,092,334,626, was held by the third respondent, Cotor Investment SA (``Cotor''), a Panamanian company referred to by Haddon-Cave J in the published and reported judgments as P Ltd. Cotor received the sum of US$1.375 billion paid to the husband for his shares in a Russian energy company (paras 13, 77). Included amongst the assets of Cotor at the date of the trial were (a) a modern art collection (paras 110, 135) recently valued at US$112 million (£90,581,865) and (b) a portfolio of cash funds and investments at UBS in Switzerland. In the order he made on 25 October 2016, Moor J recorded the most recent disclosure as showing this standing at $890 million. Haddon-Cave J found (para 84) that ``[Cotor] is H's nominee and that [Cotor] holds all its assets absolutely for H on a `bare' trust.''

  5. Haddon-Cave J awarded the wife a total of £453,576,152 (para 134). He went on (para 135):

    ``W already holds assets of £10,165,162 in value. I order the transfer to her of the contents of the English property (£2,479,125), the Aston Martin (£350,000) and the Modern Art Collection (estimated value £90,581,865). Accordingly, to meet the balance, I order H to pay to W the sum of £350m (three hundred and fifty million pounds sterling) and, for the reasons given in this judgment, [Cotor] shall be jointly and severally liable to pay this sum.''

  6. That judgment, as I have said was handed down on 15 December 2016. On 5 December 2016, the final day of the hearing, Haddon-Cave J had given the wife permission to issue a witness summons on 12 December 2016 to summons Mr Kerman to attend court on 15 December 2016. As permitted by FPR 24.4(2), the order provided that the witness summons should be binding even if served less than 7 days prior to 15 December 2016. The order further provided that:

    ``Except for the purpose of obtaining legal advice, until further order of the court, Anthony D Kerman must not directly or indirectly inform anyone - in particular, any of the above-named Respondents, their connected companies or their agents: (a) that he has been summoned to appear before the court to give evidence; (b) that he is to provide or has provided information to the Applicant and/or the court in connection with these proceedings; or (c) of the nature of the evidence that he is to give or has given as the case may be.''

  7. The Witness Summons, which was in the prescribed form, required Mr Kerman to attend court ``to give evidence in respect of the above claim.'' That was identified as ``Claim no. FD13D05340'', Akhmedova v Akhmedov. The Witness Summons stated that it was issued on the application of ``the applicant'', ie, the wife. It was served on Mr Kerman on 12 December 2016 under cover of a letter of that date from the wife's solicitors.

  8. Mr Kerman (``S'') attended court in answer to the witness summons on 15 December 2016. We were directed to the transcript, but I can take what then happened from Haddon-Cave J's judgment, Z v Z and others (Legal Professional Privilege: Fraud Exemption) [2016] EWHC 3349 (Fam), [2017] 4 WLR 84, paras 4-8:

    ``4 ... He was accompanied by counsel, Mr Warshaw QC. S entered the witness box and was sworn. Mr Dyer QC, W's Counsel, then commenced asking S questions. He first asked S regarding his current position in relation to the respondents and whether he was retained by them. S explained that, whilst he did not have individual engagement letters from H, P Ltd and the second respondent, C Ltd, he was retained by them ``in general terms'' and had acted for H for many years. Mr Dyer QC then commenced asking S questions about S's role in arranging the insurance for the modern art collection. Mr Warshaw QC objected to further questioning on the grounds that it invaded legal professional privilege. I then heard legal argument from Mr Warshaw QC and Mr Dyer QC on the question of legal professional privilege and adjourned the matter at 4 pm until the next day. Overnight, Mr Warshaw QC also applied to set aside the witness summons against S under FPR r 2.3(4).

    5 On 16 December 2016, at 11 am, I ruled against Mr Warshaw QC's objection on the grounds of legal professional privilege and objection to the witness summons, with written reasons to follow. I also refused Mr Warshaw QC's subsequent application for permission to appeal and for a stay of my decision.

    6 Mr Dyer QC then recommenced his questioning of S regarding the modern art collection. S answered Mr Dyer QC's questions on this topic. S revealed that H had moved the modern art collection from a repository in central Europe to a new repository in another European country in November, ie shortly before the trial.

    7 Mr Dyer QC then commenced asking S questions about P Ltd's assets in a portfolio of US$890,065,115. Mr Warshaw QC again objected to this line of questioning on the grounds of legal professional privilege. I heard further legal argument from Mr Warshaw QC and Mr Dyer QC. I ruled against Mr Warshaw QC on this further objection and refused his further application for permission to appeal and a stay. Mr Dyer QC then recommenced questioning S on P Ltd's assets and S answered his questions. S revealed that some US$600m in P Ltd's portfolio had been transferred in November from the central European country into a new trust vehicle in the other European country in another name.

    8 In the light of S's evidence, Mr Dyer QC applied for a further order requiring S to produce documents regarding the modern art collection and P Ltd's portfolio assets. He submitted that S's revelations demonstrated that H had taken further deliberate steps shortly before the trial to make enforcement of any monetary award by the court in favour of W even more difficult. This was a case, he submitted, of ``iniquity on iniquity''. I ruled in favour of Mr Dyer QC and granted the order duces tecum against S, returnable on 20 December 2016.''

    The order duces tecum was dated 16 December 2016. It contained an undertaking by the wife ``to be responsible for the reasonable photocopying and administrative costs incurred by Kerman & Co in producing the documents set out below.'' It also contained a further order:

    ``Mr A D Kerman and any personnel in Kerman & Co must treat the provisions of this order as confidential and nothing in this order may be disclosed pending further order of the court to any other person, including the main respondents listed in the title of these proceedings or any of their agents, and any personnel of [three named institutions], save (i) the applicant or (ii) a lawyer instructed by AD Kerman for the purposes of legal advice.''

  9. I pick up the story from Haddon-Cave J's third judgment, AAZ v BBZ and Ors [2016] EWHC 3361 (Fam), paras 4-7:

    ``4 S, under cross-examination, revealed details of which entities in [Liechtenstein] now held the modern art collection and [Cotor]'s assets. He named an entity called `O1, [an Anstalt in Liechtenstein], and a bank...

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