Actively concealed electronic devices: Akhmedova v Akhmedov & Ors [2020] EWHC 3005 (Fam) and [2020] EWHC 3006 (Fam)

Background

On 28 October 2020, Gwynneth Knowles J (“the judge”) heard a without notice application by Tatiana Akhmedova (“W”) for a search order against her son, Temur Akhmedov. The application formed part of the long-running proceedings brought by W to enforce the financial remedy order made by Haddon-Cave J (as he then was) in December 2016, under which Farkhad Akhmedov (“H”) was ordered to pay W over £453 million. W alleged that Temur had assisted H’s schemes of evasion of English court orders.

On 17 July 2020, W obtained a worldwide freezing order and ancillary disclosure orders against Temur at a without notice hearing, which was continued at the inter partes hearing on 23 July 2020. On that date, the judge also made an order requiring Temur to deliver up and provide access to his electronic devices and cloud storage accounts, and for those to be forensically examined by Aon, an independent IT expert.

No devices were delivered up by Temur. He said that all his electronic devices, including the only desktop computer he admitted to owning, had been lost in transit on their way from France to London when he had sent them in an attempt to comply with the forensic examination order. (A police investigation in France was ongoing.) Temur had also failed to provide access to his cloud storage accounts. The only data delivered to Aon was a mobile phone image which was held by the third party company that had originally produced the image.

W had become aware in October 2020 that Temur was likely to have further electronic devices in his flat, as a result of material provided by Temur’s solicitors. Those further devices had not been disclosed by Temur or delivered up in accordance with the forensic examination order. W’s representatives had serious concerns that those devices contained critical evidence on the key issues in the proceedings, and needed to be disclosed for the just resolution of the proceedings. Indeed, in the past Temur had admitted to destroying documents and devices.

W’s application was made without notice because it was thought that the giving of notice would be likely to frustrate its purpose. W submitted that there was good reason for that fear, namely Temur’s failure to comply with the forensic examination order and to give up his devices, his admitted systematic destruction of documents which went to the critical issues in the case, and the apparent concealment of electronic devices from his own legal team.

Search order: [2020] EWHC 3005 (Fam)

The judge was satisfied that she had jurisdiction to make a search order, pursuant to FPR 20.2(1)(h). There are four requirements that need to be met before such an order is made:

(1) There must be an extremely strong prima facie case

The judge considered that W had an extremely strong prima facie case:

• The judge had accepted at the without notice hearing for the worldwide freezing order on 17 July 2020 that W had a good arguable case in respect of her claims against Temur.
• Although W did not have documentary evidence to show the total amount received by Temur from H, that was, in part, because of the secrecy achieved via a web of offshore structures, and because Temur had failed to give disclosure.
• In circumstances where Temur had failed to give proper disclosure of his wealth, the court may be invited to draw adverse inferences.
• There was expert evidence that Temur became the legal owner of a property in Moscow in June 2018, which appeared to undermine his defence that he had never become the beneficial owner of that property. There was therefore an extremely strong prima facie case that H’s transfer of the Moscow property to Temur engaged s423 of the Insolvency Act 1986.

(2) The potential or actual damage must be very serious for the applicant

The judge considered that this requirement was satisfied because:

• Temur had failed to disclose a single contemporaneous document since 1 March 2016. He had disclosed no documents from his own records apart from two discrete emails which he believed were helpful to his case. He had also destroyed critical documents going to key issues in the proceedings. He had made specific admissions in respect of several key categories of documents.
• As far as the forensic examination order was concerned, ‘there is an apparent failure to comply with that order at each and every turn’ [25]. For example, Temur had failed to provide a list of all the electronic platforms he had used since 1 January 2013, and had failed to provide the information required to access those platforms.
• Aon had concluded that between 7 and 14 August 2020, Temur had deleted an account relating to STE Capital.
• Temur had failed to deliver up his electronic devices as required, and claimed his PC, laptop, mobile phone and Apple watch were lost in transit between France and England.
• There appeared to have been active concealment by Temur of electronic devices in his flat. A valuation report of that flat prepared for the purpose of a loan facility, for which photos had been taken in August 2020, appeared to show at least one desktop computer, three computer screens, three keyboards, a printer and a laptop. Temur appeared not to have disclosed the existence of these devices to his own (previous) solicitors, who had expressly stated on 31 July 2020: ‘Our client repeats that he has no further electronic devices other than those already sent to Aon’.

There was therefore clear evidence that the damage caused to W would be very serious. Potential prejudice to W could ‘only realistically be avoided by the grant of the search order, which will allow the wife to preserve crucial evidence which would otherwise be destroyed or concealed’ [39].

(3) There must be clear evidence that the respondent has in his possession incriminating documents or things, and that there is a real possibility that the respondent might destroy such material before any inter partes application could be made

The judge was satisfied that this requirement was met:

• Temur had admitted that he had had communications with Liechtenstein lawyers, who were inextricably linked to the Liechtenstein trusts, and it seemed that this material would inevitably be incriminating because it would relate to the improper transfer of monetary assets into Liechtenstein. W submitted that it was likely that Temur was also in possession of documents relating to the Moscow property, and it appeared likely that he had documents relating to W’s claim against Borderedge (of which he was a 50% owner).
• These documents were likely to be stored on the electronic devices in Temur’s flat. This appeared to be ‘the only plausible explanation for why he has failed to disclose the existence of these devices, and has failed to deliver them up to Aon as required by the forensic examination order’ [45].
• Temur himself said he had destroyed the entirety of the relevant electronic documents.

(4) The harm likely to be caused by the execution of the order to Temur and his business affairs must not be excessive or out of proportion to the legitimate object of the order

The order the judge was invited to make provided a number of protections to minimise harm:

• The search would be conducted in a manner which minimised any threat to health presented by Covid-19.
• At least two members of the search party would be female, since the property was believed to be occupied by Temur’s former partner and his daughter.
• The search was limited to electronic devices and so would be executed quickly.
• Temur would only be deprived of his devices for a short period of time, and they would be returned to him.
• The data collection process would be non-destructive, and all information and data obtained by Aon would be kept confidential.
• User generated material would be sent to Temur’s solicitors and to the supervising solicitor, to be held pending the court’s further order. The material could not be accessed by W’s legal representatives.

Any harm was therefore likely to be very small, and had to be weighed against the legitimate object of the order.

The judge was therefore ‘entirely satisfied’ that the search order should be made, since it was ‘both proportionate and reasonable to do so to give effect to this court’s previous orders, and any less intrusive order, such as an imaging order, has already been tried by this court without success’ [53].

Return date: [2020] EWHC 3006 (Fam)

The return date was 4 November 2020. The search order had been executed on 29 October 2020, and the judge was entirely satisfied that it had been properly and conscientiously carried out.

The search order had resulted in the seizure of 58 electronic devices, 47 of which appeared to belong to Temur. They appeared to have been ‘actively concealed’ from W, the court, and Temur’s former solicitors [1]. A spreadsheet provided to the judge indicated that over 80,000 documents had been discovered from just four devices. There were other devices, and the judge did not know the volume of documents that would be discovered.

Temur invited the judge to adjourn the return date for consideration of the propriety of granting a search order to the trial, which was listed to commence on 30 November 2020. He submitted that it was only fair that he had a proper opportunity to deal with the matters raised by the grant of the search order, and that he did not intentionally breach any order. He argued that the existence and extent of any breach would turn on Aon’s analysis of the devices.

W opposed an adjournment, and sought her costs. The judge acknowledged W’s position, but thought that the priority should be for both parties to prepare for trial and to grapple with the material unearthed. The judge therefore adjourned consideration of the appropriateness of the grant of the search order until the trial date.

W’s application for indemnity costs, relating to the costs occasioned by the search order application and the costs of the execution of the search order, in addition to the costs of the disclosure process, was also adjourned. However, the judge was clear that the issue of costs remained live, and that those costs were ring-fenced from any other trial costs.

In the meantime, the documents found on the seized electronic devices would be reviewed by Brown Rudnick LLP, the supervising solicitor’s firm. The judge said that the documents would be the subject of an extensive examination, and would no doubt reveal if there were matters of relevance to the trial. If they did, ‘the inference will be irresistible that Temur has not been entirely honest with this court in saying that he had no further electronic devices of relevance’ [9].

Henrietta Boyle, Barrister at 1 Hare Court