JSC BTA Bank v Ablyazov & Ors

On 16 February 2012 the Court held that Mr. Ablyazov, the First Defendant, had acted in contempt of court; see [2012] EWHC 237 Comm. On the same day the First Defendant, who had failed to attend court despite having confirmed that he would attend court when judgment was given on the contempt application, was sentenced to 22 months imprisonment for his contempt. Also on the same day the Claimant, anxious to ensure that the Tipstaff be given as much information as possible as to where to find the First Defendant, applied to the court, ex parte on very short notice, for an order that Addleshaw Goddard LLP (“AG”), who acted for the First Defendant, provide to the Claimant and the Tipstaff all contact details which they had for the First Defendant. The Court acceded to that application and made the requested order, relying upon the authority of JSC BTA Bank v Solodchenko [2012] 1 AER 735. AG complied with that order.

Some days later, on 22 February 2012, AG informed Hogan Lovells LLP, the solicitors acting for the Claimant, that AG was in contact with the First Defendant on a daily basis by way of a conference call using a dial in number provided to the First Defendant by AG (“the Conference Call Facility”). AG had also set up an email account which could be accessed by the First Defendant and to which AG sent documents for the First Defendant’s consideration (“the Email Facility”). AG said: “This has been necessary so that we can take instructions and provide to our client, on a secure and privileged basis, the legal advice to which he is entitled.”

On 23 February 2012 the Claimant issued an application for an order that

(i)

[AG] shall as soon as reasonably practicable and in any event on [the day after the Order is granted] provide to the Claimant’s solicitors and the Tipstaff orally and thereafter in writing all historic and current contact details (including, without limitation, postal and email addresses and all telephone numbers and Skype account details, the Contact Details) which they hold for the First Defendant and which were not notified to the Claimant and Tipstaff pursuant to the Order of Mr. Justice Teare dated 16 February 2012.

(ii)

[AG] shall, until further order of the Court, as soon as reasonably practicable and in any event within two hours of being made aware of the same, provide to the Claimant’s solicitors all further Contact Details which they hold for the First Defendant which have not been notified to the Claimant and Tipstaff pursuant to the Order of Mr. Justice Teare dated 16 February 2012 or the order contained in paragraph (i) above.

On 29 February 2012 the court ordered the First Defendant to surrender to the Tipstaff. He has not done so.

In his Third Witness Statement dated 27 April 2012 Richard Leedham, a partner in AG, said that if the Court were to conclude that the Conference Call Facility or the Email Facility did constitute a contact detail which should be disclosed to the Claimant the First Defendant had stated that he would cease to use each facility for fear that the Claimant would use it to trace his whereabouts or listen to and monitor the confidential and privileged communications between the First Defendant and AG. The result of the order would therefore be that all communications between AG and the First Defendant would cease thereby prejudicing his fundamental right to obtain confidential and privileged legal advice.

The Claimant accepts that it wishes to obtain information regarding the Conference Call Facility and Email Facility so that it can seek to track down the First Defendant’s location. The Claimant hopes, once it is provided with the relevant email address, to obtain a Norwich Pharmacal order against the email service provider which will require production of the internet protocol address being used by the First Defendant. That can be used to pinpoint the location of the First Defendant. A similar order against the provider of the Conference Call Facility might produce the telephone number used to dial into the facility and hence the location of the First Defendant. The Claimant then hopes to be able to obtain a court order in the place where the First Defendant is found which will bring about the First Defendant’s return to this jurisdiction. His return is sought so that the coercive effect of the court’s contempt order can be brought to bear on him. The Claimant is anxious that the First Defendant complies with the Freezing Order and Receivership Order which have been made against him in this action. The Claimant has no intention to listen to or monitor the communications between the First Defendant and AG.

Mr. Stephen Smith QC has submitted, on behalf of the Claimant, that the court has jurisdiction to make the order sought and that the court should make the order sought in the exercise of its discretion essentially for the reasons given by Henderson J. in JSC BTA Bank v Solodchenko [2012] 1 AER 735. Mr. Tim Dutton QC has submitted, on behalf of AG, that the court has no jurisdiction to make the order sought and that, if the court has such jurisdiction, the order ought not to be made. Mr. Dutton’s submission depends, in essence, upon the fundamental or absolute nature of the right of any person, whether he is a contemnor or not, to confidential and privileged legal advice. In particular, if the effect of the order is to prevent the First Defendant from having access to such advice the court either has no jurisdiction to interfere with such access or, if it has, its discretion should be exercised so as to ensure that such access is not interfered with. In response Mr. Smith says that if the First Defendant’s access to advice is interfered with that will not be because of the order but because of the First Defendant’s own decision to stop communicating with AG rather than run the risk of the Claimant knowing where he is and taking steps to ensure that he is brought back to this jurisdiction.

When I made the initial order for the disclosure of contact details on 16 February 2012 I followed the decision and reasoning of Henderson J. in JSC BTA Bank v Solodchenko [2012] 1 AER 735. However, that decision was made ex parte and without hearing any submissions on behalf of AG. I have now heard such submissions and must consider the matter afresh. Further, the facts before the court are different from those which were before the court on 16 February 2012. Today, there is evidence from AG that AG and the First Defendant have set up a Conference Call Facility and an Email Facility expressly for the purpose of giving and receiving confidential and privileged legal advice. The contact details associated with those facilities are now sought. There is no evidence that any such facilities existed on 16 February 2012, notwithstanding that AG disclosed a mobile telephone number and six email addresses on 17 February 2012.

In JSC BTA Bank v Solodchenko [2012] 1 AER 735 Henderson J. held at paragraphs 24-26 that the court has jurisdiction to make the order sought derived from section 37 of the Senior Courts Act 1981. That section provides that the court may grant an injunction where it is “just and convenient to do so”. Such jurisdiction comprehends power to make all such ancillary orders as appear to the court to be just and convenient to ensure that the injunction is effective to achieve its purpose. In so holding Henderson J. followed the decision of the Court of Appeal in AJ Bekhor v Bilton [1981] QB 923 at p.940 per Ackner LJ and at p.949 per Griffiths LJ and in Maclaine Watson v Department of Trade and Industry [1989] Ch.286 at p303 per Kerr LJ. Henderson J. further held, at paragraph 37, that the court had jurisdiction to make the order pursuant to its jurisdiction to give directions to officers of the court. He said that the court should only do so in appropriate circumstances and so as to further the interests of justice.

Mr. Dutton submitted that properly analysed the decision in AJ Bekhor v Bilton established that the court only had jurisdiction to make an order ancillary to the making of an injunction where it was “necessary” to do so in order to make the injunction effective. He was correct to observe that the adjective necessary was used by Ackner and Griffiths LJJ. However, in The President of the State of Equatorial Guinea v The Royal Bank of Scotland as Privy Council No 5 of 2005, in a judgment delivered by Lord Bingham and Lord Hoffmann on 27 February 2006, it was said, in the context of the court’s jurisdiction to grant Norwich Pharmacal relief, at paragraph 16:

“Whether it is said that it must be just and convenient in the interests of justice to grant relief, or that relief should only be granted if it is necessary in the interests of justice to grant it, makes little or no difference of substance.”

In the light of that observation I am not persuaded that I should seek to draw a distinction between, on the one hand, an order being necessary to make an injunction effective and, on the other hand, it being just and convenient to make the order to ensure the effectiveness of the injunction. Henderson J. used the latter test. I consider that he was right to do so since that is the phrase used in section 37 of the Senior Courts Act 1981.

Mr. Dutton made a further, and formidable, submission. He said that whilst the court may have jurisdiction to make ancillary orders for the disclosure of information to ensure the effectiveness of an injunction the court does not have an unrestricted jurisdiction to make orders which may impinge upon the right to confidential and privileged legal advice. There were two strands to this submission.

There is logic in both parts of this argument. However, it is impossible to predict all the circumstances in which an order of the type sought in the present case may arise. For that reason it is, I think, permissible and preferable to hold that the court has jurisdiction to make an order of the type sought pursuant to section 37 of the SCA 1981 but that in deciding whether the order is “just and convenient” in any particular case, or whether the court should, in the exercise of its discretion, make the order sought the court must necessarily take into account both the absolute nature of the right to confidential and privileged legal advice and the prior right to have access to such advice. It may be that taking such matters into account will necessarily mean that the order sought will be refused where it requires disclosure of information protected by legal professional privilege or where its effect is to deny a person access to legal advice. But I do not consider that that renders the court’s discretion illusory. Rather, it shows that the court must carefully consider all the circumstances of the case in order to decide whether the order is just and convenient and if so whether the order should be made.

I therefore respectfully agree with Henderson J. that the court has jurisdiction to make the order sought. That jurisdiction is to be found in section 37 of the SCA 1981. It is unnecessary to determine the scope of the court’s jurisdiction to make the order sought pursuant to the court’s power to give directions to solicitors as officers of the court since it has not been suggested that such power could be exercised where it was not appropriate to make the order pursuant to section 37 of the SCA 1981.

The case for making the order sought is that the contact details held by AG, if disclosed by AG to the Claimant, will or may enable the Claimant (a) to identify where the First Defendant is, (b) to obtain an order from the local courts designed to bring the First Defendant back to this jurisdiction and (c) thereby enforce the orders previously made by the court, in particular, the surrender order, the committal order, the receivership order and the freezing order. By reason of being in hiding the First Defendant is no longer co-operating with the receivers. The Claimant also fears, on the basis of evidence put before the Court, that the First Defendant is dealing with his assets in breach of the freezing order. These are good reasons for making the order sought notwithstanding (a) that the First Defendant has denied that he is dealing with his assets in breach of the freezing order, (b) that he has given an explanation of the evidence relied upon by the Claimant to suggest that he is so dealing with his assets and (c) that it is uncertain whether the Claimant will be able to bring about the return of the First Defendant to this jurisdiction. Until the Claimant knows where the First Defendant is it can hardly be expected to be able to adduce evidence of foreign law showing the procedures available to bring about the return of the First Defendant.

Mr. Dutton’s response to that case echoes his arguments on jurisdiction. His first submission is that the lines of communication between the First Defendant and AG are used solely for the purpose of giving and receiving legal advice and cannot be disclosed because they are protected by legal professional privilege. Mr. Smith has submitted that the lines of communication are not privileged and therefore may be disclosed without breaching the First Defendant’s right to confidential and privileged legal advice.

Re Cathcart ex p Campbell (1869-70) LR 5 Ch. App. 703 involved the examination of a witness under s.216 of the Bankruptcy Act 1861. The witness was a solicitor who was asked to disclose the location of the bankrupt’s father, one of his clients. He refused to do so because the location of his client came into his knowledge in his professional capacity. This was held not to be sufficient to justify the witness’ refusal to answer because the location of the client may simply have been a collateral fact and not in the nature of a privileged or confidential communication. However, James LJ said, at p.705:

“If, indeed, the gentleman’s residence had been concealed; if he was in hiding for some reason or other, and the solicitor had said, “I only know my client’s residence because he has communicated it to me confidentially, as his solicitor, for the purpose of being advised by me, and he has not communicated it to the rest of the world”, then the client’s residence would have been a matter of professional confidence; but the mere statement by the solicitor, that he knows the residence only in consequence of his professional employment, is not sufficient.”

That observation illustrates that whether or not information provided by a client to his solicitor is protected by legal professional privilege will depend upon the circumstances in which it is communicated by the client to his solicitor. James LJ was of the opinion that if the information was provided in confidence to the solicitor and not to the rest of the world then the information would be protected.

In R v Manchester Crown Court ex p. Rogers [1999] 1 WLR 832 a person had left the scene of a crime in a taxi and had been taken to a solicitor’s office. The police sought production of documents from the solicitor which recorded the time of the applicant Rogers’ arrival at the office in order to establish whether the applicant Rogers was or was not the person who had been taken by taxi to the solicitor’s office.

Lord Bingham CJ said, at p.839 C-F:

“It is in my judgment important to remind oneself of the well-established purpose of legal professional privilege, which is to enable a client to make full disclosure to his legal adviser for the purposes of seeking legal advice without apprehension that anything said by him in seeking advice or to him in giving it may thereafter be subject to disclosure against his will….In this case we must consider the function and nature of the documents with which we are concerned. The record of time on an attendance note, on a time sheet or fee record is not in my judgment in any sense a communication. It records nothing which passes between the solicitor and the client and it has nothing to do with obtaining legal advice. It is the same sort of record as might arise if a call were made on a dentist or bank manager. A record of appointment made does involve a communication between the client and the solicitors’ office but is not in my judgment, without more, to be regarded as made in connection with legal advice. So to hold would extend the scope of legal privilege far beyond its proper sphere, in my view ………….Production is sought of nothing relating to legal advice or the subject matter of legal advice. Any such reference in for example an attendance note can be covered up, blacked out or obliterated.”

In The Queen on the application of Miller Gardner Solicitors v Minshull Street Crown Court [2002] EWHC 3077 Admin the police wished to establish the ownership of a motor car in the boot of which were found a machine gun and sawn off shotgun. The police had evidence that the previous owner had rung a mobile phone number to arrange the sale of the car. Analysis of telephone records showed that the phone was registered to one ZH at an address which was the home address of NH and his brother AH. Someone using the telephone had telephoned Miller Gardner and the police sought permission to search the premises of the solicitors for material such as attendance notes which would have indicated which, if either, of the brothers had provided that mobile number as his contact number. Fulford J., with whom Rose LJ agreed, referred to R v Manchester Crown Court ex parte Rogers and quoted part of the passage from the judgment of Lord Bingham which I have quoted in this judgment. Fulford J said, at paragraphs 19 and 20:

“19…………As Lord Bingham stated during the course of his judgment, it is necessary to consider the function and nature of the documents. As a result although documents may be located at a solicitor’s office, they do not attract legal professional privilege for that reason alone.

20.

That decision provides strong support for the proposition that the provision of an individual’s name, address and contact number cannot, without more, be regarded as being made in connection with legal advice. It records nothing which passes between the solicitor and client in relation to the obtaining of or giving of legal advice. Taking down the name and telephone number is a formality that occurs before the legal advice is sought or given. As my Lord observed during argument, providing these details does no more than create the channel through which advice may later flow: see in this regard the case of Studdy v Sanders and others [1823] 2 D and R 347.”

Fulford J. concluded that neither the identity of the person contacting the solicitor nor the telephone number were information subject to legal professional privilege.

Mr. Smith relied upon both of these later decisions. However, I am not persuaded that they are analogous to the facts of the case before me.

The function and nature of the Conference Call Facility and of the Email Facility set up by AG is to enable the First Defendant to seek and receive legal advice. The number and address have been provided by AG to the First Defendant in confidence. In my judgment the connection between the telephone number and the email address and the seeking and receiving of legal advice in the present case is clear and manifest. By contrast the function and nature of the record of the applicant’s time of arrival in R v Manchester Crown Court ex p. Rogers was to record his time of arrival. It was not to enable him to seek and receive legal advice though that probably was the purpose of his arrival at the solicitor’s office. The time of his arrival was not information provided by the applicant to the solicitor in confidence.

In The Queen on the application of Miller Gardner Solicitors v Minshull Street Crown Court the name and telephone number of the caller were taken down as a formality “to create the channel through which advice may later flow.” That might be thought to be helpful to Mr. Smith’s argument but it is not apparent that the name and telephone number were provided to the solicitor in confidence in the same way as the telephone number and email address were provided by AG to the First Defendant in the present case.

The case of Studdy v Sanders [1832] 2 D and R 347 was referred to in The Queen on the application of Miller Gardner Solicitors v Minshull Street Crown Court but it also is not analogous to the present case. In that case the clerk of a solicitor was called to give oral evidence that the defendant had been the defendant in an earlier case. There was an objection that his knowledge came from a confidential communication by the defendant to the solicitor and so the clerk was not able to answer the question. This objection ultimately failed because the information in question was “easily cognizable to the witness and to many other persons without any confidence on the subject being reposed in him.” By contrast the lines of communication set up by AG have been provided to the First Defendant in confidence.

In The Law of Privilege 2^nd ed (ed. by B. Thanki QC) the following statement of principle is proffered at p.73, citing Re Cathcart ex p Campbell:

“It is suggested that confidentiality is the touchstone and that privilege applies to facts known to a lawyer for the purposes of giving legal assistance or advice……...”

That suggested statement of principle appears to me to be supported by the passage from the judgment of James LJ in Re Cathcart ex p Campbell which I have quoted. The importance of confidentiality is also illustrated by Studdy v Sanders. Further, the giving of information in confidence for the purposes of seeking and receiving legal advice appears to me to amount to the additional requirement said to be necessary by Lord Bingham in R v Manchester Crown Court ex p. Rogers before information may be regarded as privileged from disclosure (“a communication …is not ….without more to be regarded as made in connection with legal advice”)

I have therefore concluded that the telephone number and email address in the present case are protected from disclosure by legal professional privilege. That conclusion is supported by the observation of James LJ in Re Cathcart ex p Campbell and is not inconsistent with the decision and reasoning in R v Manchester Crown Court ex p. Rogers. That conclusion is a powerful reason for further concluding that it is not just and convenient to make the order sought or, if it is, that the order sought should not be made in the exercise of the court’s discretion.

If my conclusion is mistaken Mr. Dutton has his further argument. He submits that a necessary prior right to the right to seek and receive legal advice is the right of access to a solicitor. Mr. Dutton submits that the First Defendant will be deprived of that right if AG are ordered to disclose the lines of communication between the First Defendant and AG because he will be compelled to cease to use them. I agree that there must be such a prior right.

Mr. Smith has three responses to Mr. Dutton’s submission:

I accept that the First Defendant has shown a remarkable determination to defend the claims brought against him. It is matched only by the Claimant’s determination to pursue its claims against him. However, whilst it is possible to imagine other methods of communication perhaps involving third parties, paragraph 2 of the order sought by the Claimant will require any new contact details to be disclosed to the Claimant. It therefore seems to me that the submission made by Mr. Dutton must be dealt with now rather than avoiding it in the hope that the First Defendant will establish other lines of communication with AG.

I accept that if the court makes the order sought the First Defendant will be faced with a decision: whether to continue using the lines of communication established with AG and risk his location being detected by the Claimant or to cease to use those lines of communication and thereby deprive himself of access to legal advice. However, it seems to me unrealistic to say that if the First Defendant chose the latter course the court’s order would not be and remain an effective cause of the First Defendant being deprived of access to AG. As Henderson J. said in JSC BTA Bank v Solodchenko [2012] 1 AER 735 at paragraph 19:

“……I can think of few things more likely to inhibit the exercise by a client of his fundamental legal right to seek legal advice than an order requiring his solicitor to disclose to an adverse party contact details which were supplied to the solicitor in strict confidence and for the sole purpose of enabling the client to communicate with the solicitor.”

I accept that the court should, in the language of Gross LJ, do and be seen to be doing all it can to ensure the efficacy of the court’s orders (see JSC BTA Bank v Ablyazov [2012] 2 AER 575 at paragraph 48). I am mindful also of Henderson J.’s observation in JSC BTA Bank v Solodchenko (see [2012] 1 AER 735 at paragraph 39 that:

“It is in the highest degree unsatisfactory that [Mr. Shalabayev] can still be at large, as a fugitive from justice, while he has solicitors on the record acting for him, and intervening in legal proceedings as and when it suits his purposes. Such a procedure is liable to bring the administration of justice into disrepute, and to give the impression that British justice is an a la carte menu from which he can order at choice without ever having to pay the bill.”

Indeed, I followed that observation when making the ex parte order on 16 February 2012. Mr. Dutton criticised that observation. He said that Henderson J. failed to have in mind that having solicitors on the record for a contemnor is to be welcomed rather than criticised. In an arresting phrase Mr. Dutton said that the court must not use the fact of a relationship between the contemnor and his solicitor as a lever for bringing the contemnor to justice. I do not accept that Henderson J. was criticising Mr. Shalabayev for having solicitors on the record. Henderson J. had clearly in mind the very strong public interest in people having free and unfettered access to legal advice; see paragraphs 16-18 of his judgment. But he also had in mind that the sight of a contemnor intervening in proceedings as and when it suited him risked bringing the administration of justice into disrepute. I respectfully agree that there is such a risk.

The First Defendant is a contemnor who has gone into hiding in order to frustrate the court’s orders. His is in an unattractive position and not deserving of sympathy. On the contrary if orders can be made which make it more likely that he will obey such orders ought to be made. But, as Mr. Dutton said, if ever anyone needed legal advice it is the First Defendant. He is currently exercising his right to appeal the court’s decision to commit him for contempt. That appeal is due to be heard, I am told, in July of this year. He is also exercising his right to defend himself against the very substantial claims being brought against him by the Claimant, three of which are due to be tried in November of this year. His conduct is circumscribed by extensive freezing and receivership orders. As Henderson J. said in JSC BTA Bank v Solodchenko [2012] 1 AER 735 at paragraph 18 there is no such concept in this jurisdiction of an outlaw. A contemnor is as much entitled to the right of access to legal advice as a law abiding citizen. Ensuring that he has such right ought not to be regarded as bringing the administration of justice into disrepute.

Having taken into account all the matters urged upon me I am not persuaded that it would be just and convenient to make the order sought, or if it is, that the court should make the order sought in the exercise of its discretion. I do not consider it appropriate to make an order the foreseeable effect of which will be to deprive the First Defendant of his right of access to legal advice from AG when he has such need of it. When making the order in this case ex parte on 16 February 2012 I was not concerned with a case where lines of communication had been deliberately established by AG for the sole purpose of enabling the First Defendant to seek and receive legal advice. Henderson J. was, it seems, dealing with such a case (see paragraphs 12, 19 and 39 of his judgment) but there is at least one distinction between that case and the present. Mr. Shalabayev had not appealed against the committal order and whatever advice he had needed had been given; see paragraph 39.

By not acceding to the Claimant’s application the court is foregoing an opportunity to make an order designed to make it more likely that the First Defendant will obey the court’s orders. However, whilst there is a public interest in enforcing the court’s orders there is also a public interest in ensuring that those who are subject to the court’s jurisdiction have access to legal advice. Although those two public interests exist, as Mr. Dutton suggested, in parallel there is, on the facts of the present case, a clear tension between them. I have to take both into account. I have done so and have concluded that, if a balance has to be struck, it lies in favour of ensuring that the First Defendant, notwithstanding that he has gone into hiding in order to frustrate the court’s orders, should have access to AG for the purposes of seeking and receiving legal advice.

The Claimant’s application must be dismissed. It is not just and convenient to make the order sought because the Conference Call Facility and Email Facility are protected by legal professional privilege. Further, it is not just and convenient to make the order sought because the foreseeable consequence of the order sought will be to deprive the First Defendant of his right of access to AG for the purposes of seeking and obtaining confidential and privileged legal advice.