Background
Another related set of proceedings concerned a witness summons compelling Farkhad’s former personal attorney, Mr Anthony (Andy) Kerman, of Kerman & Co LLP, to appear and give evidence.” Mr Kerman was found to be unable to claim legal advice privilege to avoid giving evidence and documents as to the transfer of assets immediately before the trial in December 2016.
The High Court judgment
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.
Mr Kerman attended court in answer to the witness summons on 15 December 2016. He sought, unsuccessfully, to rely on legal advice privilege to avoid giving any answers:
4. … He was accompanied by counsel, Mr Warshaw QC. S [Mr Kerman] entered the witness box and was sworn. Mr Dyer QC, W’s [Tatiana] Counsel, then commenced asking S questions. He first asked S regarding his current position in relation to the respondents and whether he was retained by them. S explained that, whilst he did not have individual engagement letters from H, P Ltd and the second respondent, C Ltd, he was retained by them “in general terms” and had acted for H for many years. Mr Dyer QC then commenced asking S questions about S’s role in arranging the insurance for the modern art collection. Mr Warshaw QC objected to further questioning on the grounds that it invaded legal professional privilege. I then heard legal argument from Mr Warshaw QC and Mr Dyer QC on the question of legal professional privilege and adjourned the matter at 4 pm until the next day. Overnight, Mr Warshaw QC also applied to set aside the witness summons against S under FPR r 2.3(4).
5 On 16 December 2016, at 11 am, I ruled against Mr Warshaw QC’s objection on the grounds of legal professional privilege and objection to the witness summons, with written reasons to follow. I also refused Mr Warshaw QC’s subsequent application for permission to appeal and for a stay of my decision.
6 Mr Dyer QC then recommenced his questioning of S regarding the modern art collection. S answered Mr Dyer QC’s questions on this topic. S revealed that H had moved the modern art collection from a repository in central Europe to a new repository in another European country in November, ie shortly before the trial.
7 Mr Dyer QC then commenced asking S questions about P Ltd’s assets in a portfolio of US$890,065,115. Mr Warshaw QC again objected to this line of questioning on the grounds of legal professional privilege. I heard further legal argument from Mr Warshaw QC and Mr Dyer QC. I ruled against Mr Warshaw QC on this further objection and refused his further application for permission to appeal and a stay. Mr Dyer QC then recommenced questioning S on P Ltd’s assets and S answered his questions. S revealed that some US$600m in P Ltd’s portfolio had been transferred in November from the central European country into a new trust vehicle in the other European country in another name.
8 In the light of S’s evidence, Mr Dyer QC applied for a further order requiring S to produce documents regarding the modern art collection and P Ltd’s portfolio assets. He submitted that S’s revelations demonstrated that H had taken further deliberate steps shortly before the trial to make enforcement of any monetary award by the court in favour of W even more difficult. This was a case, he submitted, of “iniquity on iniquity”. I ruled in favour of Mr Dyer QC and granted the order duces tecum against S, returnable on 20 December 2016.
Mr Justice Haddon-Cave found that:
…it is clear in my view, that the fraud or “iniquity” exception applies in this case. [Farkhad]’s conduct has been seriously iniquitous. He has displayed a cavalier attitude to these proceedings and a naked determination to hinder or prevent the enforcement of [Tatiana]’s claim. There was ample evidence of this prior to my first ruling on 16th December… The picture was subsequently compounded by [Mr Kerman]’s subsequent revelations of the recent steps which [Farkhad] has taken to hide the Modern Art Collection and [Cotor]’s portfolio in [Liechtenstein]. In my judgment, [Farkhad]’s conduct is such that it is plain that legal professional privilege should not attach to his communications with [Mr Kerman] regarding the Modern Art Collection and [Cotor]’ portfolio of financial assets.
Unsuccessful appeals
Mr Kerman appealed to the English Court of Appeal, raising 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.”
Mr Kerman’s appeal failed. In relation to the apparent issues regarding legal professional privilege, the Court found that Mr Kerman had only been questioned on communications between him and third parties:
“To this point, Mr Shepherd [counsel for Mr Kerman] 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.”
Source: Kerman v Akhmedova [2018] EWCA Civ 307
The Court of Appeal commented on the coverage to the case, and noted expressly clear that Mr Kerman’s appeal had no relationship to Farkhad:
14 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.
15 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.
Source: Kerman v Akhmedova [2018] EWCA Civ 307
Mr Kerman was declined leave to appeal the judgment to the Supreme Court of the United Kingdom.