Legal privilege, Articles 6 and 8, and iniquity
12 August 2014
JSC BTA Bank v. Ablyazov et al 8 August 2014, Popplewell J, read judgment
What you say to your lawyers is truly confidential; no-one, not even a regulator or prosecutor can see it. This is protected by the right to privacy under Article 8, and the right to a fair trial under Article 6 (which includes the right to access to lawyers).
Well, that is the general rule. And this case reminds us that there is an exception to this – when the relationship between client and lawyer is affected by “iniquity”.
As we will see, Mr Ablyazov fell foul of this exception, and papers which he sent to his various solicitors have been ordered to be produced. As we will also see, he appears to be a very bad boy indeed. It is however more difficult to draw the line between his sort of case and that in which a defendant says he has a defence, though in the end is disbelieved by the court.
And one interesting aspect of this judgement is Popplewell J’s clear explanation of this difference – a fine line indeed.
So now to Mr Ablyazov, and his badness.
Mr Ablyazov was chairman of a Kazakstan bank between 2005 and 2009. In that time he and others appear to have helped themselves of to more than $6 billion of its assets. The Bank has obtained judgment for $4.6bn to date, with further proceedings ongoing. Mr A’s account that the claims are politically motivated has not found favour.
It is of course one thing for the Bank to get a judgment, another thing to enforce it. And so the Bank has been very busy seeking to preserve assets in which Mr A is interested. To say the least, they have not been helped by Mr A.
Popplewell J (as the latest of a series of judges not mincing their words) concluded that Mr A, from the first point when he instructed solicitors,
was bent on a strategy of concealment and deceit in relation to his assets which would involve perjury, forgery and contempt as and when such was required for that purpose
It was no part of the Bank’s case that the three eminent City firms of solicitors were party to this strategy, but, the judge found, they were unwittingly used by Mr A to further it. So, for example, he fraudulently backdated a transaction to suggest that he had disposed of his interest in Moscow property worth about $500 million. He set up approaching 1,000 companies of whose existence he did not tell the Bank despite court orders telling him to disclose his assets. And he was found many times over to be in contempt of court for which he was sentenced to various terms of imprisonment. Unsurprisingly he did not hang around in England to serve them, though in the end was arrested in the south of France in 2013, at the request of the Government of Ukraine. Extradition proceedings are ongoing, and he is currently languishing in prison near Lyon.
The judgment: disclosure
Legal professional privilege goes back a long way, at least as far as the 16th century. People must be able to consult their lawyers in confidence, because otherwise they may only tell half the truth. And privilege does not disappear simply because the client tells his lawyer a deliberately untrue story, with a view to convincing a court of it. But it does disappear if there is a widespread conspiracy to deceive the court.
The justification for the distinction is that communications with lawyers furthering an iniquitous purpose negate the necessary condition of confidentiality, and amount to an abuse of the ordinary course of a professional engagement of a solicitor.
But how to draw the line? The judge sought to do so at [93]
In cases where a lawyer is engaged to put forward a false case supported by false evidence, it will be a question of fact and degree whether it involves an abuse of the ordinary professional engagement of a solicitor in the circumstances in question. In the “ordinary run” of criminal cases the solicitor will be acting in the ordinary course of professional engagement, and the client doing no more than using him to provide the services inherent in the proper fulfilment of such engagement, even where in denying the crime the defendant puts forward what the jury finds to be a bogus defence. But where in civil proceedings there is deception of the solicitors in order to use them as an instrument to perpetrate a substantial fraud on the other party and the court, that may well be indicative of a lack of confidentiality which is the essential prerequisite for the attachment of legal professional privilege. The deception of the solicitors, and therefore the abuse of the normal solicitor/client relationship, will often be the hallmark of iniquity which negates the privilege.
So, no easy answer then. But cases in which privilege does not attach for this reason will be rare. It is the concerted attempt to deceive both lawyer and court that appears to be the hallmark of the exception.
At [94]ff, the judge addressed the human rights arguments advanced by Mr A. The right of privacy under Article 8 attaches because the communication involves confidence. And if there is an abuse of the relationship between client and solicitor, there is no such confidence, and further, interference with any rights may be justified.
The judge rejected a submission that it would break new ground in Strasbourg case law to allow the purely economic claim by the Bank to override privilege – namely that there could never be a necessary or proportionate interference with a defendant’s rights. As he countered, the Bank had important private rights not “to have its property stolen”, and there were also public interests in play namely the administration of justice and the rule of law. Rule of law is at the heart of the legitimate aims articulated in Article 8(2). Hence (at [94])
If a person sets out to abuse the lawyer client relationship in a concerted attempt to pervert the course of justice and thwart the legal process, it is necessary to permit sight of the communications by which he seeks to further that purpose, in pursuit of the legitimate aim of upholding the efficacy of the administration of justice and the rule of law.
Similarly, at [97], having accepted that privilege is an important element of the right to access to lawyers, the judge concluded that it was “self evident” that Article 6 rights could not invoked to protect communications aimed at the very opposite of securing a fair trial, namely
the perversion of the course of justice by concealment, perjury and the defiance of court orders.
The judge’s conclusions on the facts (namely that there was a strong prima facie case of iniquity in respect of the asset strategy) did not mean that all communications with the solicitors were opened up, only those which could be said to be in furtherance of the iniquitous purpose. Hence anything about current and former assets fell into this category. But what about documents with a dual purpose, partly iniquitous, partly legitimate? At [107], the judge concluded that privilege would only attach if the dominant purpose was the conduct of litigation independently of the iniquitous asset and concealment strategy.
The privilege against self-incrimination
There is a common law privilege (recognised and confined by section 14 of the Civil Evidence Act 1968) against self-incrimination in respect of UK criminal offences.
There is also a discretion to refuse disclosure of documents which might give rise to a danger of proceedings abroad: [113]. Mr Ablyazov sought to rely on this privilege as a reason not to give disclosure of his solicitors’ files.
The judge rejected this. There was one major limitation on the scope of this privilege, namely that it only attaches to documents ordered to be generated in proceedings (not documents which exist independently of such orders) – see [115], where the judge follows an earlier conclusion of his own in related proceedings. That conclusion destroyed the claim for privilege against self-incrimination.
Discretion
Mr A argued that the complexity of the disclosure exercise stood against the making of such an order. The three firms of solicitors between them hold the best part of 2 million electronic documents and thousands of boxes of paper. All this would be have to be gone through to decide which should be produced because it was in furtherance of the iniquitous purposes – an exercise which might cost £2.5m or so. And this was unlikely to reveal anything of use to the Bank.
The judge was unpersuaded. The documents to be produced might help the Bank, and the sums at stake (over $4 billion unrecovered) warranted it.
Conclusion
Despite these conclusions, legal privilege is a powerful principle not readily overridden by the courts. Only the truly bad boys and girls are likely to fall foul of the iniquity exception, despite the apparent fine line between a lying defendant and iniquity of the type seen here.
Also note the increasingly common response of the courts to human rights arguments. This is, in effect, that domestic principles (here, when privilege does or does not apply) have sufficiently “internalised” HR principles such that acceptance or dismissal of the former leads to acceptance or dismissal of the latter.
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