Loudmila Bourlakova & Ors v Semen Anufriev & Ors

The iniquity exception prevents legal professional privilege attaching where communications would otherwise be privileged, an iniquity is established on the balance of probabilities, and the necessary connection with the communications is shown. Iniquity is not confined to fraud or dishonesty, but conduct must be sufficiently underhand and contrary to good faith, public policy or the interests of justice. For lawyer communications, the conduct must take the relationship outside normal professional engagement or abuse it. A client’s beliefs about legality may be relevant. There is no general rule that obtaining confidential or privileged information without consent is iniquitous per se, nor an absolute duty to notify and return material immediately. The court must examine the conduct, beliefs and motives in context.

The defendants applied for declarations, disclosure and affidavit information concerning communications between the claimants, their solicitors and private investigators engaged during a substantial asset dispute. They alleged that the iniquity exception deprived communications of legal professional privilege because investigations obtained confidential and privileged material, including through covert recordings, surveillance and a review-counsel process. The claimants denied the allegations. The court considered whether four alleged iniquities involving CT Group, the covert recordings, review counsel and Marengo were established at the interlocutory stage and sufficiently connected to the communications to defeat privilege. The underlying claims and counterclaims remained for trial.

The court declined to grant the Application. None of the alleged iniquities was established.

1. Legal framework. The court adopted the summary of litigation privilege in Al Sadeq v Dechert LLP [2024] KB 1038 (CA). The iniquity exception requires otherwise privileged material, an iniquity established to the requisite standard, and the necessary connection between the iniquity and the documents or communications.

2. Meaning and scope. Iniquity is not limited to fraud or dishonesty. The approach in Barclays Bank Plc v Eustice [1995] 1 WLR 1238 (CA), illustrated by section 423 of the Insolvency Act 1986, showed that equivalent underhand conduct may suffice. Mere disreputable conduct is not enough. For communications involving lawyers, the conduct must take the relationship outside the ordinary scope of professional engagement or abuse that relationship. A client’s beliefs about legality may assist in deciding both whether iniquity exists and whether the relationship remained within that ordinary scope.

3. Interlocutory assessment. The ordinary approach was to decide the issue on the available evidence on the balance of probabilities, despite conflicting and untested evidence. Exceptional circumstances might justify a balance-of-harm analysis because disclosure could have irreversible consequences. This was not such an exceptional case. Where the exception applies, material forming part of or furthering the iniquity may lose privilege, but material is not within that category merely because it would not have existed without the iniquity.

4. No per se iniquity. Imerman v Tchenguiz [2010] EWCA Civ 908, Dubai Aluminium Co Ltd v Al Alawi [1999] 1 WLR 1964 and Pliego and another v Astor Asset Management 3 Ltd and others 2025 EWHC 2968 (Comm) did not establish that setting in motion a process capable of obtaining confidential information without consent was automatically iniquitous. The same applied to unauthorised access to privileged material. Nor did the authorities establish an immutable duty immediately to notify the opponent, return the material and terminate an investigation.

5. Application. The claimants and their solicitors intended to obtain confidential information, but believed the investigations were lawful and that sensitive material came from a whistleblower. They had not intended to hunt for privileged communications, and safeguards were put in place once potentially privileged material was identified. The court declined to decide on the papers whether CT Group had hacked accounts or committed offences in other jurisdictions. The covert recordings were not provided to CT Group for the litigation investigation. The review-counsel arrangement was not iniquitous. The Marengo surveillance and eavesdropping were unattractive, but did not cross the threshold into iniquity.

6. Disposition. The alleged CT Group, covert-recordings, review-counsel and Marengo iniquities were not established. The court did not decide the parties’ remaining objections and invited agreement on the consequential order, with a further hearing if necessary.