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.

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.

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.

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.”

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

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:

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.

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:

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

So, in the event, the final order in the financial remedy proceedings dated 20 December 2016 contained provisions giving effect both to what Haddon-Cave J had said in his first judgment, AAZ v BBZ and Others (Financial Remedies: Sharing Principle: Special Contribution) [2016] EWHC 3234 (Fam), [2018] 1 FLR 153, and to what he said in his third judgment, AAZ v BBZ and Ors [2016] EWHC 3361 (Fam). For present purposes I need say no more, except to note that the order contained, in paragraph 21, the usual ‘clean break’ provision:

To complete the story in relation to the financial remedy proceedings, on 20 December 2016 Haddon-Cave J also made a without notice worldwide freezing order.

To complete the story in relation to Mr Kerman, a further order made by Haddon-Cave J on 20 December 2016 prohibited Mr Kerman from disclosing the judgment in Z v Z and others (Legal Professional Privilege: Fraud Exemption) [2016] EWHC 3349 (Fam), [2017] 4 WLR 84, to anyone other than the wife and her legal advisers, Mr Kerman and his legal advisers.

Mr Kerman’s revised grounds of appeal set out four grounds of appeal. Ground (1) relates to issues in relation to legal professional privilege, grounds (2), (3) and (4) relate to the process by which Mr Kerman was brought before the court and the propriety of the making of what are referred to as the “gagging orders.” It is convenient first to deal with grounds (2), (3) and (4).

I need first, however, to emphasise what this appeal is about and, even more important, what it is not about. The only matter before us is Mr Kerman’s appeal from the matters referred to in Haddon-Cave J’s judgment in Z v Z and others (Legal Professional Privilege: Fraud Exemption) [2016] EWHC 3349 (Fam), [2017] 4 WLR 84. There is no appeal by the husband before us. Indeed, so far as I am aware, he has never sought permission to appeal and his time for doing so has long since expired. We are not hearing an appeal from the judge’s award of £453,576,152 to the wife. We are not hearing an appeal from Haddon-Cave J’s judgments in AAZ v BBZ and Others (Financial Remedies: Sharing Principle: Special Contribution) [2016] EWHC 3234 (Fam), [2018] 1 FLR 153, and AAZ v BBZ and Ors [2016] EWHC 3361 (Fam). The husband was not represented before us, he did not seek to be joined in Mr Kerman’s appeal, he did not address us and, so far as I am aware, he was not even present in court during the hearing of Mr Kerman’s appeal. Mr Kerman and his counsel, Mr Phillip Shepherd QC, were not acting for or representing the husband. They were in court pursuing, and pursuing only, Mr Kerman’s own appeal.

If I seem to belabour these points it is only because there was a significant volume of very inaccurate reporting of the hearing before us, both in the print media and even on the legal blogosphere.

Grounds (2), (3) and (4), as amplified in Mr Shepherd’s skeleton arguments, raise the following matters of complaint:

Proceeding by way of obtaining evidence from Mr Kerman rather than and without having first obtained freezing orders against the husband and Cotor.

Non-compliance with the requirements of section 31G of the Matrimonial and Family Proceedings Act 1984 and FPR Parts 21 and 24.

The inadequacy of the notice given to Mr Kerman of the witness summons and the order dated 16 December 2016 and, in relation to the witness summons, the failure to give Mr Kerman notice of the issues on which he was to give evidence and to provide him with the evidence being relied on to justify the assertion that privilege would not apply because of the ‘fraud exception’ (see below). The consequence of this, it is said, is that, in effect if not intention, Mr Kerman was “ambushed” and he and his counsel were not able in the time to marshal a proper response to the arguments in relation to privilege.

The fact that no notice of either the order dated 5 December 2016 or the order dated 16 December 2016 was given to the husband or Cotor, thus “depriving them of the opportunity to intervene.”

The imposition of ‘gagging orders’ by the orders dated 5 December 2016 and 20 December 2016.

The fact that the ‘gagging orders’ were expressed to be “until further order” rather than until a specified date. This was compounded by the fact (and we have been taken to the relevant correspondence) that, although the parties reached agreement on 5 January 2017 that the ‘gagging orders’ should be discharged, it was not until 21 February 2017 that Mr Kerman was told that the relevant order had been sealed on 7 February 2017.

The fact that the order dated 5 December 2016, in contrast to what was included in the order dated 16 December 2016, contained no ‘undertaking in damages’ in favour of Mr Kerman.

The refusal of Haddon-Cave J to give Mr Kerman permission to appeal and to stay the orders against him pending appeal.

With the exception of two matters, which although of important substance do not affect the outcome, there is, in my judgment, and with all respect to Mr Shepherd, nothing in any of these complaints.

Mr Shepherd opened his submissions very high. He suggested that Haddon-Cave J permitted procedures to be adopted that were “inappropriate and disproportionate and which should not be permitted to stand as a precedent.” Of Haddon-Cave J’s handling of the substantive financial remedy proceedings he went so far as to assert that “all proper judicial restraint seems to have been abandoned.” There is nothing at all in any of these complaints. These attacks on Haddon-Cave J were utterly unwarranted and should never have been made.

Mr Shepherd also submitted that to dismiss Mr Kerman’s appeal would be to “sanction the adopting of procedures in the Family Division that go far beyond anything that the High Court and public policy has considered permissible to date.” As I shall proceed to demonstrate, that is simply not so.

Mr Shepherd was, however, on much firmer ground when he asked rhetorically, “Whether the Family Court is to be permitted to adopt different trial and post trial procedures to those permitted by other divisions of the High Court.” As a matter of generality, the answer to this is, and must be, an emphatic NO!

It is the best part of sixty years since Vaisey J explained in In re Hastings (No 3) [1959] Ch 368 that “there is now only one court – the High Court of Justice.” It is now eleven years since I observed in A v A [2007] EWHC 99 (Fam), [2007] 2 FLR 467, paras 19, 21 (though, of course, at the time I was a mere puisne), that “the [Family Division cannot] simply ride roughshod over established principle” and that “the relevant legal principles which have to be applied are precisely the same in this division as in the other two divisions.” In Richardson v Richardson [2011] EWCA Civ 79, [2011] 2 FLR 244, para 53, we said that, “The Family Division is part of the High Court. It is not some legal Alsatia where the common law and equity do not apply.” And in Prest v Petrodel Resources Ltd and others [2013] UKSC 34, [2013] 2 AC 415, para 37, Lord Sumption JSC observed that “Courts exercising family jurisdiction do not occupy a desert island in which general legal concepts are suspended or mean something different.”

It is time to give this canard its final quietus. Let it be said and understood, once and for all: the legal principles – whether principles of the common law or principles of equity – which have to be applied in the Family Division (and, for that matter, also, of course, in the Family Court) are precisely the same as in the Chancery Division, the Queen’s Bench Division and the County Court.

I return to the specifics of grounds (2), (3) and (4). I shall take them in turn.

Mr Shepherd characterises as “extraordinary” the wife’s “failure” to apply for a preservation order before seeking to obtain evidence from Mr Kerman, and criticises the fact that no explanation for this has been offered. He submits that Mr Kerman should not have been brought in until all other means had been exhausted.

I can understand Mr Shepherd’s concerns. The calling of a solicitor to give evidence in circumstances such as this, especially if coupled with the making of an ‘anti-tipping-off’ order, is pregnant with potential embarrassment for the solicitor and difficulties for the client: see the highly pertinent observations of Hughes J, as he then was, in Re H (Abduction: Whereabouts Order to Solicitors) [2000] 1 FLR 766, 769-770, 773. As Hughes J recognised, such orders may have the effect of inhibiting frank discussion between solicitor and client and, even worse, of destroying the confidence the client has in the solicitor’s independence.

The point, I emphasise, extends beyond solicitors and cases involving legal professional privilege to other professionals – accountants, actuaries, bankers and doctors, for example – whose relationship with a client, customer or patient is founded on mutual trust and confidence. Judges must be alert, in considering whether to make such orders in relation to a professional person, to the risk of potential damage to the professional relationship, just as they must be alert to identify whatever possibilities there may be for obtaining the necessary information from an alternative source.

In the present case, in my judgment, Haddon-Cave J was justified in proceeding as he did:

I can well understand why the wife’s advisers wanted to obtain the information in the event supplied by Mr Kerman before they embarked upon attempts to obtain freezing orders, so that they had a better understanding of where – indeed, in which jurisdiction – the relevant assets were located, and so that the relief sought, whether in this or in foreign jurisdictions, could be more specifically focused and targeted.

Mr Kerman was an obvious potential source of the needed information.

Mr Kerman was no longer on record in the financial remedy proceedings.

So far as concerns section 31G of the 1984 Act and FPR Part 24, Mr Shepherd took two points. The first was that, by 5 December 2016, there were no longer any “proceedings” on foot, as that expression is used both in the statute and in the rules. With all respect to Mr Shepherd, this is a thoroughly bad point. In the first place, although the final hearing of the proceedings had concluded on 5 December 2016, judgment was still awaited. Secondly, and even more to the point, as my Lady observed during the course of argument, the final order in the financial remedy proceedings contained the usual ‘clean break’ provision, the effect of which was that the “proceedings” remained on foot until there was – and there never has been – “full and complete compliance” with that order. Mr Shepherd’s other complaint was that the application for the witness summons was not “supported by evidence” as required by FPR 21.2(2)(b). There is nothing in this. By the time he came to make the orders under challenge, Haddon-Cave J was steeped in the evidence. There was no need for him require any further evidence, let alone further written evidence, in support of the application.

In relation to the various complaints relied upon in support of the allegation of “ambush”, it suffices to make four points:

The shortness of the notice given to Mr Kerman of the order of 5 December 2016 had the proper effect of reducing the period of embarrassment to which he would be exposed were he to be contacted by his former clients: cf Re H.

The witness summons was in the statutory form and identified that Mr Kerman was being called to give evidence “in respect of” what was identified as “Claim no. FD13D05340”, a claim with which he was, of course, very familiar, having at one time been, though no longer, acting in the proceedings for the husband.

So long as the witness summons is in the relevant statutory form, it is not a requirement, nor has it ever been the practice, to give the recipient of a witness summons (whether in the criminal, civil or family courts) details of the issues on which he is to give evidence.

If more time than had been allowed was required, whether by Mr Kerman or by his counsel, the remedy was to seek more time and, if sufficient time was not allowed, to make an immediate application to the Court of Appeal. That was not done.

The fact that no notice was given either to the husband or to Cotor is hardly surprising, for there was every reason to fear that, if alerted to what was going on, further attempts would be made by them to move or secrete assets. As Mr Hodge Malek QC, on behalf of the wife, put it to us, and who can possibly disagree,

We were taken to Mostyn J’s judgment in L v K (Freezing Orders: Principles and Safeguards) [2013] EWHC 1735 (Fam), [2014] Fam 35, where, at para 35, he quoted what Lord Hoffmann had said in National Commercial Bank Jamaica Ltd v Olint Corp Ltd (Practice Note) [2009] UKPC 16, [2009] 1 WLR 1405, para 13:

We said precisely the same more recently in this court in In re A (A Child) [2016] EWCA Civ 572, [2016] 4 WLR 111, para 61:

With all respect to Mr Shepherd this was a very plain and obvious case for proceeding without notice. I add, lest it be thought I have overlooked the point, that Mr Shepherd referred in this context to the decision of this court in In re Creehouse Ltd [1983] 1 WLR 77. The case is not authority for the proposition propounded by Mr Shepherd and does not stand in the way of the course adopted by Haddon-Cave J.

Nor, in my judgment, is there, except in one important respect, any more substance in relation to the complaints about the ‘gagging orders’. ‘Anti-tipping-off’ orders are a well-recognised feature of practice in the family, as in the civil, courts: see, for example, Re H (Abduction: Whereabouts Order to Solicitors) [2000] 1 FLR 766, Re HM (Vulnerable Adult: Abduction) [2010] EWHC 870 (Fam), [2010] 2 FLR 1057, para 37, and Re M (Children) (Wardship: Jurisdiction and Powers) [2015] EWHC 1433, [2016] 1 FLR 1055, paras 36, 39-49. The present was a case plainly calling for such an order. As Mr Malek submitted, had the husband been told that Mr Kerman had been summoned to give evidence, there was a risk that he (the husband) would have moved the assets again. Moreover, the order protected Mr Kerman from the embarrassment he might very well otherwise have found himself in, given his on-going duties to his former clients: see Re H, 770, 773.

I emphasise, however, and this is very important, that an ‘anti-tipping-off’ order is, of its nature, short-lived and temporary. It should be granted for a specified period – not expressed, as in the present case, as being “until further order” – and it must, in any event, be discharged as soon as it has served its purpose. In relation to the first point, which was raised by Mr Kerman’s counsel before Haddon-Cave J, it follows that the order dated 5 December 2016 was defective, though in my judgment this does not entitle Mr Kerman to any relief. In relation to the second point, the delay after 5 January 2017 was most unfortunate, but there is no warrant, in my judgment, for any criticism of the wife’s solicitors. Given the general practice in the office of the Clerk of the Rules, they were entitled to assume, as they said in their letter to Mr Kerman’s solicitor of 21 February 2017, that the court would have provided him with a copy of the sealed order when it was produced. And it is a fact that, although contacting Haddon-Cave J’s clerk, neither Mr Kerman nor his solicitor made any direct enquiries of the Clerk of the Rules as to what was going on.

In relation to the complaint that the order dated 5 December 2016 contained no undertaking in damages, there are, in my judgment, two answers:

Insofar as the order authorised the issue of a witness summons, there could be no question of an undertaking in damages being required or even appropriate. A witness summons is not an equitable remedy, and the undertaking in damages is a creature of equity, invented by Knight Bruce VC in the 1840s (see Re W (Ex Parte Orders) [2000] 2 FLR 927, 946-7) as the appropriate quid pro quo for the grant of equitable injunctive type relief.

Insofar as the order contained an ‘anti-tipping-off’ order, and this was the real gravamen of Mr Shepherd’s complaint, we were taken to what Mostyn J said in L v K (Freezing Orders: Principles and Safeguards) [2013] EWHC 1735 (Fam), [2014] Fam 35, para 45. I respectfully agree with every word of that, but neither principle nor practice indicates any requirement for an undertaking in damages merely because the court is granting an ‘anti-tipping-off’ order.

In relation to the final complaint, the refusal of Haddon-Cave J to give Mr Kerman permission to appeal and to stay the orders against him pending appeal, I need say only this. If the matter was pressing, so as to admit of no delay, the remedy was to make an immediate application to the Court of Appeal. That was not done.

I return to the first ground of appeal, relating to legal professional privilege.

The law relating to legal professional privilege is well-settled by the authorities: see, in particular, Three Rivers District Council and others v Governor and Company of the Bank of England (No 6) [2004] UKHL 48, [2005] 1 AC 610. The overarching principle is that confidential communications between client and solicitor for the purpose of obtaining legal advice – what the client tells the solicitor and what the solicitor advises his client – are privileged from discovery or disclosure. Legal professional privilege, once established, is absolute and permanent. It confers on the client, as the person entitled to the privilege, the right to decline to disclose or allow the disclosure of the confidential communications in question. It is long established that it is the duty of the solicitor to defend the client’s privilege.

Legal professional privilege attaches to “legal advice” given by the solicitor to the client, so the question is whether the communication or document was made confidentially for the purpose of “legal advice”. This is not confined to telling the client the law, but includes “advice as to what should prudently and sensibly done in the relevant legal context”: see Lord Taylor CJ in Balabel v Air India [1988] Ch 317, 330. But where the solicitor is acting not as the client’s legal adviser but as the client’s “man of business”, there will be no legal professional privilege. As Lord Scott of Foscote said in Three Rivers District Council and others v Governor and Company of the Bank of England (No 6) [2004] UKHL 48, [2005] 1 AC 610, para 38:

It is long established that there is an exception – what for shorthand I will label the ‘fraud exception’ – where legal professional privilege does not apply: see The Queen v Cox and Railton (1884) 14 QBD 153.

Before Haddon-Cave J the controversy centred on two issues. One was whether, in relation to the matters on which he was being questioned, Mr Kerman had been acting qua legal adviser or qua man of business. The other was whether the ‘fraud exception’ applied. Before us, Mr Shepherd challenged Haddon-Cave J’s findings on both issues.

In relation to the first, Haddon-Cave J seems to have come to the conclusion, though without deciding, that in relation to both transactions Mr Kerman had been acting as a “man of business.” He said (Z v Z, paras 16-18):

In relation to the ‘fraud exception’ point, Haddon-Cave J set out (Z v Z, para 19) certain “facts” he had found in the financial remedies judgment. He went on (Z v Z, paras 20-21):

There is, in fact, another point, canvassed before Haddon-Cave J though not perhaps with the emphasis it deserved, which, in my judgment, is determinative of the issue in relation to privilege.

It is clear from the transcript that Mr Dyer’s questioning of Mr Kerman was confined to two factual topics. The first was Mr Kerman’s involvement in the insurance arrangements for the art collection. The second was Mr Kerman’s knowledge of Cotor’s banking arrangements and of the transfer of Cotor’s funds from Switzerland to Liechtenstein. Importantly, Mr Kerman was not asked about his dealings with his clients, his instructions from them, or his communications with them, let alone about any advice he may have given them. Thus, as Mr Dyer put it to Haddon-Cave J in relation to the art collection, “We are not going to go into that sort of detail. Our questions are primarily going to be focused on: “Did you deal with arranging the insurance? Who were the insurance brokers? On the policy, where is the art said to be located, and where is the art now?””

As Mr Dyer pertinently pointed out to Haddon-Cave J, if these questions, or the questions about the Cotor portfolio, had been put to the husband, he would not have been able to rely on legal advice privilege as a reason for refusing to answer; he would have been ordered to answer. Why then, he said, should Mr Kerman be able to rely on a privilege which would not available to his client – and, one might add, a privilege which, it is elementary, is the privilege of the client, not the solicitor.

Before us, Mr Malek made precisely the same point: “Mr Kerman was not asked to reveal any legal advice or even instructions which went to the provision of legal advice.” He submitted that, “The documentation and information sought from Mr Kerman relate to communications with third parties. In the context of legal advice privilege (litigation privilege was not asserted), only communications with the client are privileged. Hence there is no conceivable privilege to protect here.”

To this point, Mr Shepherd had, at the end of the day, no effective answer. Indeed, he had to concede, rightly in my judgment, that communications between a solicitor and a third party are not privileged.

The point is clearly established by Three Rivers District Council and Others v Governor and Company of the Bank of England (No 5) [2003] EWCA Civ 474, [2003] QB 1556, para 21, Longmore LJ, giving the judgment of the court, said:

The most recent summary is to be found in Director of the Serious Fraud Office v Eurasian Natural Resources Corpn Ltd [2017] EWHC 1017 (QB), [2017] 1 WLR 4205, paras 65, 69, 75, where Andrews J said this:

I add that in C v C (Privilege) [2006] EWHC 336 (Fam), [2008] 1 FLR 115, para 33, I said:

It follows, in my judgment, that this is why the appeal on this point fails.

In relation to the ‘fraud exception’, Mr Shepherd’s fundamental complaint is that Haddon-Cave J applied the wrong test. He submits that there is a conflict between the decisions of this court in Barclays Bank Plc and Others v Eustice and Others [1995] 1 WLR 1238, where, as we have seen, Schiemann LJ treated the relevant criterion as being “iniquity”, and Gamlen Chemical Co (UK) Ltd v Rochem Ltd and Others (No 2) (1980) 124 Sol Jo 276, Court of Appeal (Civil Division) Transcript No 777 of 1979, where Goff LJ treated the test as being “dishonesty”:

There is no need for us to decide any of these points, and it is better that we do not. I confine myself to two observations.

The first relates to the decision in Gamlen. It is clear reading the Transcript as a whole that the entire argument proceeded on the assumption that what had to be established was fraud or dishonesty, just as it is clear, having regard to the structure of the judgment, that the crucial passage in Goff LJ’s judgment upon which Mr Shepherd relies was obiter.

The second observation relates to Eustice. Even if the test is correctly dishonesty and not merely iniquity, it does not follow that the actual decision in Eustice was wrong. In the course of an illuminating discussion, the authors of Thanki (ed), The Law of Privilege, ed 3, para 4.48, fn 116, say this:

Accordingly, for all these reasons, Mr Kerman’s appeal must, in my judgment, be dismissed.

I agree.

I also agree.