Background
The Bourlakovas (widow Loudmila and daughter Veronica of deceased Russian businessman Oleg Bourlakov) engaged private investigators CT Group and Marengo, through their solicitors Mishcon de Reya (MDR), to conduct covert investigations into the Applicants—Semen Anufriev (who managed Oleg’s family office) and Nikolai and Vera Kazakova (Oleg’s sister and brother-in-law). The investigations began in February 2020, after the present litigation commenced, to obtain evidence in connection with a dispute over assets worth over US$3 billion.
The underlying dispute concerns competing claims to Oleg’s business interests. The Kazakovs assert that since 1988, Oleg was in partnership with Nikolai; the Bourlakovas contend this partnership was confected in 2018 to reduce assets available to Loudmila following their marriage breakdown. A separate dispute concerns assets transferred to Loudmila in 2014: the Kazakovs argue these were held for safekeeping (making Loudmila a nominee); Loudmila asserts the transfer was outright. A third dispute involves the 2018 control of the company Edelweiss, with the Bourlakovas alleging wrongful seizure and document forgery. Trial is scheduled to commence October 2027.
The Applicants moved for disclosure of communications between the Bourlakovas, MDR, and the investigators, asserting that the “iniquity exception” to legal professional privilege (LPP) prevented privilege from attaching. They alleged the Bourlakovas obtained their confidential and privileged information “on an industrial scale” through unlawful investigations, including covert recordings installed at the family home in Monaco from 2018 to 2019. The Bourlakovas disputed that any such iniquity existed.
The Court’s Holding
Justice Richards established a three-part test for the iniquity exception: (1) communications that would otherwise benefit from LPP; (2) iniquity established to the requisite standard; and (3) the requisite connection between the iniquity and the communications. Critically, the Court held that fraud and dishonesty are not necessary ingredients of “iniquity.” Rather, iniquity encompasses “fraud or other equivalent underhand conduct which is in breach of a duty of good faith or contrary to public policy or the interests of justice.”
However, iniquity alone is insufficient to defeat privilege. The Court adopted the “ordinary run” test from earlier authorities: to defeat LPP in communications with lawyers, the iniquity must either (i) put the relationship between lawyer and client outside the normal scope of professional engagement, or (ii) involve an abuse of a relationship that falls within the ordinary course of professional engagement. This means that a client instructing a lawyer to present a false case—while iniquitous in a general sense—does not engage the exception if it remains within the normal scope of legal practice.
The Court also held that a client’s subjective beliefs about the legality of investigations are relevant in two respects: they may shed light on whether iniquity exists at all (given that iniquity invites consideration of mental state), and they may illuminate whether the relationship with counsel was in the “ordinary run.” Where a client believed inquiries to be lawful, that belief may be relevant to whether the relationship was taken outside the normal scope—though if iniquity is established, it becomes more difficult to argue that subjective beliefs preserve the ordinary course. To apply the exception at an interlocutory stage, the court must find on a balance of probabilities that iniquity exists, though the Court acknowledged the exceptional difficulties of making factual findings without cross-examination.
Key Takeaways
- The iniquity exception to legal professional privilege does not require criminal conduct or dishonesty in the traditional sense; “equivalent underhand conduct” in breach of a duty of good faith suffices.
- Iniquity must take the client-lawyer relationship outside the “ordinary run” of professional engagement to defeat privilege; mere iniquity is not enough.
- A client’s subjective belief about the lawfulness of investigative activities is relevant both to whether iniquity exists and to whether the relationship remains within ordinary scope.
- At the interlocutory stage, the iniquity must be established on a balance of probabilities, despite the practical difficulties of determining contested factual and mental-state issues without cross-examination.
- Documents are only “part of” the iniquity if they report on, reveal, or are prepared in furtherance of iniquitous conduct—not merely because they would not exist but for the iniquity.
Why It Matters
This judgment significantly clarifies the scope of the iniquity exception under English law, moving beyond a narrow fraud-based formulation to encompass broader conduct that breaches duties of good faith or offends public policy. The decision preserves privilege for much conduct within the “ordinary run” of legal practice—even arguable misconduct—while denying privilege only when conduct takes the relationship outside that normal scope. This distinction protects legitimate litigation preparation while preventing clients from using lawyers as conduits for or concealers of serious wrongdoing.
The judgment also addresses practical tensions in modern litigation: where clients engage private investigators to develop evidence and those investigations may involve accessing confidential or privileged information belonging to opponents, the Court must navigate whether such investigations themselves constitute iniquity, and whether communications directing or reporting on such investigations lose the shield of privilege. Justice Richards’ approach—requiring that subjective beliefs about lawfulness be considered alongside objective assessments of what was actually done—provides a framework for courts to assess proportionality and client intent without either rubber-stamping all investigative tactics or assuming dishonesty where genuine legal uncertainty exists. The case will proceed to trial in 2027 to determine the underlying merits of the competing claims to Oleg’s estate.