JSC BTA Bank v Ablyazov & Ors

Legal professional privilege does not attach to communications made in furtherance of crime, fraud or equivalent iniquity. The touchstone is whether the solicitor acts within the ordinary course of professional engagement. Privilege is negated where the client abuses that relationship by using the solicitor, knowingly or unwittingly, as an instrument of an iniquitous strategy.

Where a communication has both an iniquitous purpose and a legitimate litigation purpose, privilege attaches only if the legitimate conduct of litigation, independently of the iniquity, is the dominant purpose. Disclosure may be ordered upon a strong prima facie case that the exception applies. Existing documents created independently of legal compulsion do not attract the privilege against self-incrimination merely because their production is later ordered.

The claimant bank had obtained judgments and extensive freezing, disclosure and receivership orders against its former chairman. The bank alleged that he and his associate had pursued a sustained strategy of concealing and dealing with assets through perjury, fabricated documents and breaches of court orders.

The bank sought disclosure from three firms which had acted for one or both men. The requested documents concerned their current or former assets and related asset injunctions. The material would ordinarily attract legal professional privilege unless it fell within the iniquity exception. The bank did not allege that the solicitors knew of the wrongdoing.

The principal questions were whether there was a strong prima facie case that the solicitors had been used to further the iniquitous strategy, how the exception applied to dual-purpose communications, whether the privilege against self-incrimination prevented disclosure, and whether disclosure was proportionate.

1. The bank’s disclosure application succeeded. There was a very strong prima facie case that the respondents had pursued a strategy of concealing and preserving assets through deceit, forgery, perjury and contempt. The solicitors had been used unwittingly as instruments of that strategy. Such use abused the ordinary solicitor-client relationship and deprived the relevant communications of the confidence required for legal professional privilege: paras [93], [98]–[100], [133], [145].

2. The iniquity exception is not confined to communications concerning crime. It extends to fraud and comparable underhand conduct contrary to good faith, public policy or the interests of justice. It can apply to legal advice privilege and litigation privilege. The decisive question is whether the advice or conduct fell outside, or abused, the ordinary course of a solicitor’s professional engagement: paras [68]–[69], [76]–[93].

3. Merely advancing a case which the client knows to be false does not ordinarily remove privilege. The position may differ where a client deceives solicitors so as to use them to perpetrate a substantial fraud upon another party and the court. Whether the professional relationship has been abused is a question of fact and degree: para [93].

4. The exception affected only communications in furtherance of the iniquity. It did not remove privilege from the entirety of the defence on the merits. Communications concerning or containing information about current or former assets were, however, capable of furthering the strategy because partial truths and concealed information formed part of the deliberately false overall picture: paras [102]–[105]. Further argument was required about the width of the proposed category concerning asset injunctions: para [106].

5. For a dual-purpose communication, the bank did not have to show that iniquity was the dominant purpose. Privilege attached only if the dominant purpose was the proper conduct of litigation independently of the iniquitous strategy. Where the purposes were of equal force, one iniquitous and one legitimate, no privilege attached: paras [107]–[108].

6. The privilege against self-incrimination did not prevent production. It ordinarily does not protect pre-existing documents created independently of the compulsion requiring their production. The documents sought were not created through the compulsive effect of the court’s disclosure orders: paras [110]–[117].

7. The disclosure exercise was extensive and expensive, but proportionate because it offered a real prospect of identifying information valuable to enforcement of judgments exceeding US$4 billion: paras [121]–[133]. Independent joint and common-interest privilege remained protected. Privilege claimed by companies controlled through the iniquitous strategy was subject to the same exception: paras [134]–[135].

8. A final declaration was declined because the iniquity issue had been determined only to the strong prima facie standard. No preservation order was made. The application to exclude material obtained under the search order and the applications for cross-examination and interlocutory disclosure were rejected; the Article 3 challenge concerning another affidavit was left undecided: paras [136]–[144].

This was a first-instance application within extensive enforcement proceedings. Earlier stages described in the judgment included:

• High Court and Court of Appeal: committal findings and related orders were upheld on appeal in [2012] EWCA Civ 1411.
• High Court: the principal contempt findings were made in [2012] EWHC 237 (Comm).
• High Court: receivership, reversal and enforcement orders had previously been made in the continuing litigation. These stages were procedural background and were not judgments appealed in the present application.