Daimler Ag (Formerly Known As Mercedes Benz Ag) v. Leiduck, Herbert Heinz Horst and Another

HCA 4089/1994

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.4089 OF 1994

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BETWEEN

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REASONS FOR DECISION

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1.On 5 February 2013, the second day of this trial, I dismissed the Defendants’ application by Summons dated 30 January 2013 to strike out the Expert Report of Mr Andrei Dontsov (“Mr Dontsov”) dated 20 December 2012 on the ground that “Mr Dontsov is not a suitable person to be an expert witness for the Plaintiff” and further gave leave to the Plaintiff to adduce and rely on Mr Dontsov’s Supplemental Expert Report dated 1 February 2013.  I now give my reasons.

The issue for expert evidence and how it arises

2.On 29 April 1994, the Plaintiff applied for and obtained a Mareva injunction (“Injunction”) against both Defendants in this action upon the usual cross undertaking as to damages (“Undertaking”). 

3.The Injunction was subsequently discharged and the action discontinued as against the 2^nd Defendant (“IRC”) on 17 May 1994 and 22 August 1994 respectively as the matter relied upon by the Plaintiff to attach IRC with liability as a constructive trustee of its money was wrong.  As for the 1^st Defendant (“Mr Leiduck”), the service of the Writ of Summons herein on him in Monaco was finally[1] set aside and the Injunction against him discharged on 26 July 1995 for want of jurisdiction over by Hong Kong Courts.

4.By a Summons issued on 23 July 2007, in enforcement of the Undertaking, the Defendants apply for an inquiry as to the damages suffered by them by reason of the Injunction and for payment of the sum(s) found due upon such inquiry.

5.Insofar as it is material for present purposes, it is the Defendants’ case that the Injunction ruined IRC.  IRC claims damages for loss of the value of its business.  Alternatively, Mr Leiduck, holding 99,998 out of the 100,000 shares of and in IRC, claims to have lost the opportunity to sell his IRC shares.  Among various potential buyers identified is one Stern-Stroy Limited (“Stern-Stroy”), a Russian company.  More particularly, the evidence of Mr Leiduck’s son, Mr Helge Leiduck (“Mr Leiduck Jr”) is that he started to negotiate with Stern-Stroy’s representatives in November 1993; that Stern-Stroy had by February/March 1994 agreed in principle to purchase 70% of the shares of and in IRC at US$20 million and to bring the investment in IRC up to US$40 million; and that Stern-Stroy backed out of the transaction due to the Injunction.

6.In support, Mr Leiduck Jr has produced what appear to be (1) Stern-Stroy’s letter dated 25 February 1994 confirming its interest in purchasing all of Mr Leiduck’s shares in IRC at US$40 million; (2) a memorandum of a meeting between Mr Leiduck Jr and Stern-Stroy’s representatives on 16 March 1994 in Sofia, Bulgaria recording, inter alios, an agreement by Stern-Stroy to buy the IRC shares through a Cayman Islands company and to negotiate the detailed terms; and (3) Stern-Stroy’s letter dated 1 July 1994 withdrawing from the purchase for the reason that the value of IRC had become negligible and its reputation damaged beyond repair due to the Injunction against both Mr Leiduck and IRC.

7.One Ms Mitsie Johnson who was Mr Leiduck Jr’s personal assistant in 1993 and 1994 and one Dr Olga Salman who claims to work for Stern-Stroy from September 1992 to January 1995 would testify as to the existence of Stern-Stroy and the negotiations between Mr Leiduck Jr and Stern-Stroy for the sale and purchase of IRC shares in 1993 and 1994.

8.The Plaintiff takes the position that this is a bogus claim, disputing the existence of Stern-Stroy as at 25 February 1994 and 1 July 1994 and the authenticity of the letters bearing those dates.  It is the Plaintiff’s case that Stern-Stroy was not formed until December 2002.

9.By an Order dated 30 November 2012, Mr Justice L Chan gave the parties leave to adduce expert evidence on “Russian company law and on the Russian company registration system in relation to the issue as to the date on which [Stern-Stroy] with the Individual Taxpayer Identification Number 7725214235 was first established in Moscow, and whether it was an existing company in Moscow as at 25 February 1994 and 1 July 1994” (“Issue”). 

10.His Lordship further directed the filing and mutual exchange of expert reports on the Issue within 21 days, to be followed by a without prejudice joint meeting of the experts within 7 days thereafter and a signed joint expert report within 14 days from the joint meeting identifying (1) the issue(s) on which the experts have reached a common opinion and the common opinion in respect of each such issue; (2) the issue(s) on which the experts have failed to reach a common opinion and the competing views on each such issue and the reasons for the opposing views.

Facts and circumstances giving rise to Defendants’ application

11.In anticipation of expert evidence direction, on 16 January 2012, Mr Jeremy David Levy (“Mr Levy”) of Messrs Robertsons, the Defendants’ solicitors, telephoned a Mr Eric Michailov (“Mr Michailov”), a partner in the Moscow Office of White & Case LLP (“W&C Moscow”) with a view to obtaining expert evidence in relation to the issue of the existence of Stern-Stroy.  This was followed up by an email from Mr Levy to Mr Michailov, a printout of which was produced with the substantive contents (consisting of 5 lines) redacted.  A Ms Ekaterina Palagina (“Ms Palagina”), an associate in W&C Moscow, responded by an email of the same date, a printout of which was also produced with the substantive contents (consisting of 7 lines) redacted.  On the next day, Mr Levy sought clarification from Ms Palagina by email, a printout of which was produced with the substantive contents (consisting of 13 lines) redacted.  Ms Palagina reverted on the same day by 2 emails, one setting out in blue her answers to the questions raised on Mr Levy’s email and the other enclosing an attachment.  Printouts of both emails were also produced, with the questions asked by Mr Levy and the answers given by Ms Palagina (adding up to about 1½ pages) redacted and without the attachment.

12.At the end of each of the said emails emanating from Robertsons was this confidentiality notice:

“Information in this message is confidential and may be legally privileged. It is intended solely for the person to whom it is addressed. If you are not the intended recipient, please notify the sender, and please delete the message from your system immediately.”

13.Likewise, each of the said emails despatched by W&C Moscow was indorsed with the following note:

“This email message is confidential. It is intended only for the individual(s) or entity named above and others who have been specifically authorized to receive it, and may be privileged or otherwise protected by attorney work product immunity or other legal rules. If you have received it by mistake, please do not read, copy or use it, or disclose its contents to others. Please notify the sender that you have received this email by mistake by replying to the email, and then delete the email and any copies if it. Thank you.”

14.The Defendants did not retain W&C Moscow to give expert evidence on the Issue.  The Expert Report dated 20 December 2012 filed on behalf of the Defendants is by one Mr Karl-Heinz Klenke (“Mr Klenke”).  However, the Defendants assert privilege and confidence, which they do not waive, in respect of the said communications between Robertsons and the W&C Moscow as they were conducted by Robertsons on behalf of the Defendants for the purpose of seeking Russian law advice in preparation for these proceedings.

15.Mr Dontsov is a partner of W&C Moscow.  After receiving his Expert Report on 24 December 2012, by Robertsons’ letters dated 31 December 2012 to Messrs Baker & McKenzie (“B&M”), the Plaintiff’s solicitors, and W&C Moscow, the Defendants demanded for the withdrawal of Mr Dontsov as the Plaintiff’s expert witness on the ground that Robertsons had consulted with W&C Moscow with regard to the Issue through a series of privileged and confidential communications, which put W&C Moscow in a position of conflict in then acting as the Plaintiff’s expert witness.  Robertsons’ letter of 31 December 2012 to W&C Moscow stressed that:

“all information between our firm and yourselves relating to the issue of the existence of Stern-Stroy are strictly confidential and subject to privilege, all our clients’ rights are expressly reserved should you attempt to reveal or pass on information contained in such communications to Messrs Baker & McKenzie or anyone else on behalf of the Plaintiff”.

16.In their reply dated 16 January 2013 (which was copied to B&M), W&C Moscow stated:

“In January 2012 Robertsons asked White & Case solely to: (i) retrieve publicly available information about the Russian company, Stern-Stroy Limited, having registered number 7725214235, from the public electronic data base corresponding to Russia’s unified state register of legal entities and (ii) describe to Mr. Levy the contents of that information. Mr. Levy specifically declined to name his client or the purpose of the query referred to above, and nor did we receive any other background from Mr Levy. White & Case was not formally or informally engaged by Robertsons to perform this work, and was asked to obtain this information as a professional courtesy (with no engagement or fee). White & Case’s response to Robertson was made on that basis only, and essentially as a favour.

To be clear, neither Mr Dontsov nor White & Case received any confidential information from Robertsons that would preclude Mr Dontsov from acting as an expert witness for the Plaintiff in relation to the case.  None of the information provided by Robertsons to White & Case could possibly lead to any conflict of interest or in any way affect the independence of Mr. Dontsov as expert witness for the Plaintiff and his duties to the Court in such capacity.  In any event, the content of the Communications was not relevant to the Expert Report of Mr. Dontsov dated 20 December 2012 and was not used in the preparation of that report.  Mr Dontsov was not privy to and has not read the content of the Communications.  White & Case undertakes not to provide to Mr Dontsov and Mr Dontsov undertakes not to read the content of the Communications for the purposes of preparing any supplemental expert report or his evidence at the upcoming trial.”

17.Apart from disagreeing with W&C Moscow’s assessment of that firm and Mr Dontsov’s position, the Defendants also take issue with W&C Moscow’s summary of Robertson’s “instructions” to be partial and misleading and do not accept that Mr Dontsov has not read the communications between Robertsons and W&C Moscow as the latter’s letter of 16 January 2013 was signed by Mr Dontsov himself.

18.Further correspondence followed, including a letter dated 18 January 2013 from Robertsons to White & Case LLP’s head office in New York for the attention of its chairman.  But it is unnecessary for present purpose to set out these subsequent exchanges.

19.In the meantime, neither party had taken any steps to comply with the directions for a joint expert meeting or joint expert report. 

20.On 21 January 2013, this action came on before Mr Justice L Chan for a second pre-trial review.  Despite the proximity of the trial, the parties were then still embroiled in various interlocutory issues.  Insofar as it is relevant to the present application, by paragraph 45 of the Skeleton Submissions lodged on 17 January 2013, the Plaintiff proposed a revised direction for the parties’ respective experts to each prepare a written supplemental report in response to the other’s report and for such supplemental reports to be mutually exchanged and filed with the Court by 25 January 2013.  The reason put forward was that it would not be fruitful for the experts to meet or try to issue a joint report with the trial only 2 weeks away as there is virtually nothing in common between Mr Klenke and Mr Dontsov. 

21.However, no such or other direction on expert evidence was obtained.  According to Mr John Yan SC (and with him Ms Sara Tong), Counsel for the Plaintiff, the further preparation of expert evidence got overlooked in the midst of other matters all requiring the Court’s urgent attention within a very short hearing.

22.Notwithstanding, on 2 February 2013 (Saturday), the Plaintiff served Mr Dontsov’s said Supplemental Report, to which the Defendants object as a step taken by the Plaintiff very late without prior notice to the Defendants and without prior leave of the Court.

Generally no property in an expert witness subject to protection of legal professional privilege and confidence

23.Before I go into the specific grounds on which the Defendants sought to exclude Mr Dontsov from giving evidence for the Plaintiff, as in the case of a witness as to fact, the general rule is that there is no property in an expert witness regarding the facts he has observed and his own independent opinion on them.  The safeguard against an expert witness giving evidence for one side after having advised the other lies in such expert’s inability to exploit or testify as to communications, arising in the course of his being instructed by one party, which are protected by privilege and/or confidence.

24.The question whether an expert witness can, after having been consulted by and given his opinion to one side, thereafter be consulted by and give evidence for the other side arose in Harmony Shipping Co SA v Saudi Europe Line Ltd [1979] 1 WLR 1380.  In that case, the authenticity of one or other of what purported to be carbon copies of a letter was in question.  A handwriting expert, who had had a consultation with the plaintiffs’ solicitors, was later approached by the solicitors for the defendants.  After giving the defendants’ solicitors an opinion, the expert realised that they concerned the same matter for which he had already been consulted by the plaintiffs.  He declined further instructions from the defendants' solicitors but was served with a subpoena ad testificandum.  The plaintiffs applied, but failed, to have the subpoena set aside and the expert excluded from giving evidence for the defendants.

25.After stating the well-established principle that there is no property in a witness of fact because the Court has to ascertain the truth by the best evidence available, Lord Denning MR (with whom Waller LJ and Cumming-Bruce LJ[2] agreed) analysed the position of an expert witness at 1385C-H:

“The question in this case is whether or not that principle applies to expert witnesses. They may have been told the substance of a party's case. They may have been given a great deal of confidential information on it. They may have given advice to the party. Does the rule apply to such a case?

Many of the communications between the solicitor and the expert witness will be privileged. They are protected by legal professional privilege. They cannot be communicated to the court except with the consent of the party concerned. That means that a great deal of the communications between the expert witness and the lawyer cannot be given in evidence to the court. If questions were asked about it, then it would be the duty of the judge to protect the witness (and he would) by disallowing any questions which infringed the rule about legal professional privilege or the rule protecting information given in confidence — unless, of course, it was one of those rare cases which come before the courts from time to time where in spite of privilege or confidence the court does order a witness to give further evidence.

Subject to that qualification, it seems to me that an expert witness falls into the same position as a witness of fact.  The court is entitled, in order to ascertain the truth, to have the actual facts which he has observed adduced before it and to have his independent opinion on those facts. … In this particular case the court is entitled to have before it the documents in question and it is entitled to have the independent opinion of the expert witness on those documents and on those facts — excluding, as I have said, any of the other communications which passed when the expert witness was being instructed or employed by the other side.  Subject to that exception, it seems to me (and I would agree with the judge upon this) that the expert witness is in the same position when he is speaking as to the facts he has observed and is giving his own independent opinion on them, no matter by which side he is instructed.”

26.As Lord Denning further explained at 1386F-G, the public policy consideration against the monopoly of an expert witness by one party is obvious:

“If an expert could have his hands tied by being instructed by one side, it would be very easy for a rich client to consult each of the acknowledged experts in the field.  Each expert might give an opinion adverse to the rich man — yet the rich man could say to each, “Your mouth is closed and you cannot give evidence in court against me.” We were told that in the Admiralty courts, where there are a very limited number of experts, one side may consult every single one of them.  Does that mean that the other side is debarred from getting the help of any expert evidence because all the experts have been taken up by the other side?  The answer is clearly No.”

27.Waller LJ added at 1387B-C:

“As Lord Denning M.R. has said, the general principle must be that no party has any property in a witness; and the argument before us has partly involved a discussion as to whether there is a difference between a witness of fact and an expert. In my view, there is no difference between those two kinds of witnesses as a matter of general rule. Were it otherwise, as Lord Denning M.R. has indicated, in a sphere of a small number of specialists it might be possible for one party to buy up all the possible experts, and clearly such a situation is not right. …

The safeguard against an expert witness giving evidence on more than one side is the existence of professional privilege, …”

28.Harmony Shipping was applied in R v King (1983) 77 Crim App R 1 to compel the production by a handwriting expert of the documents provided to him by the defendant’s solicitors and upon which he based his opinion, including an incriminating forgery manufactured for the purpose of the defence.

29.However, the proper protection of a party’s privilege and/or confidence may, in appropriate circumstances, prevent an expert who has given his opinion to that party, from thereafter assisting the other party.

30.In this regard, Harmony Shipping and R v King were both distinguished by May LJ in R v Davies [2002] EWCA Crim 85, §§24-28 on the ground that the expert’s opinion was expressed by reference to documents which, though provided to him by a party’s solicitors, were material for which that party could not claim privilege.  In Harmony Shipping, the handwriting expert formed his view on the subject documents (which were not privileged or confidential) through an examination of the same.  Such view did not depend on any privileged or confidential information that the plaintiffs’ solicitors had provided to him. He would only give evidence on what he himself had observed from such non-privileged documents.  See 1387G-1388B per Waller LJ.  In R v King, it was expressly conceded that if the forged document had been in the possession of the defendant, no privilege would have attached to it and accordingly no greater privilege could attach to the document because it passed to the expert through the hands of his solicitor (p 4).

31.Where the opinion of an expert is based on privileged/ confidential material provided to him by one side in privileged/ confidential circumstances or where it would be difficult for the expert to separate in his mind the privileged/confidential matters from those which are not, then the expert is not free to give evidence for the other side.

32.In R v R [1995] 1 Crim App R 183, an expert opinion on the DNA properties of the defendant’s blood based on tests carried out by her on a blood sample provided by the defendant to his general practitioner at the request of his solicitors for the purposes of his defence in criminal proceedings was held by the English Court of Appeal to be inadmissible against the defendant upon the application of the prosecution because the blood sample was “subject to legal privilege” under s 10(1)(c) of the Police and Criminal Evidence Act 1984 and the expert could not have given her evidence without reference to it.  It would have been different if the blood sample examined and tested by the expert had been obtained in non-privileged circumstances, e.g. by the police lawfully when the defendant was in custody.

33.In R v Davies, the defendant’s solicitors instructed a consultant psychiatrist to examine and report on the defendant who was charged with murder, with a view to substantiating a defence of diminished responsibility. The psychiatrist was provided with a proof of evidence prepared by the defendant’s solicitors on his instructions.  She also examined the defendant on one occasion for about 1½ hours.  The defendant had told her himself at such interview that he had been drinking steadily throughout the morning in question and he had also consumed a variety of drugs.  She initially concluded that there was no evidence of psychiatric illness at the time of the alleged offence.  Subsequently, having heard the evidence of the consultant clinical neuropsychologist for the defendant, she accepted that the defendant did suffer from abnormality of mind at the time of the killing due to brain damage from either disease or injury but maintained that it did not substantially diminish his responsibility for it.  The contribution of abnormality of mind was in her opinion outweighed by intoxication with drugs and alcohol.  The English Court of Appeal set aside the murder conviction on the ground that the trial judge wrongly admitted the psychiatrist’s evidence on the application of the prosecution.  The defendant’s solicitors’ instructions to the psychiatrist and what the defendant said to her when she interviewed him were both privileged communications.  The psychiatrist may also have observed in the course of the interview facts about the defendant which did not depend on him consciously communicating with her but the occasion itself was privileged.   Her opinion was based, at least to a material extent, on such privileged communications as she would have to quote the same in order to substantiate her conclusion.  Her opinion would remain inextricably dependent on privileged material even insofar as it may also have been in part based on mere observation.

34.To sum up, the mere fact that an expert has been consulted, and has in the course of such consultation been provided with privileged/confidential information, by one party who has decided not to call him would not prevent the expert from subsequently giving an opinion to and testifying for the opposite party on the same subject-matter, provided that the expert’s opinion is not based, or inseparably dependent, on the privileged/confidential material provided to him by the party who approached him first so that he can (and does) give evidence without having to refer to or deploy any such privileged/confidential material.

Defendants’ grounds for excluding Mr Donstov

35.The Defendants maintain that, in the course of their communications in January 2012, W&C Moscow had received from Robertsons information that is subject to legal professional and litigation privileges as well as an obligation of confidence.  They assert, through Counsel, that in compiling his 2 reports, Mr Dontsov did have access to, and had taken into account, the privileged and confidential communications between Robertsons and W&C Moscow.

36.However, Mr Horace Wong SC (and with him Mr Clark Wang), Counsel for the Defendants, do not argue the application to exclude Mr Dontsov on the basis that Mr Dontsov has actually deployed any privileged/confidential material of the Defendants because the Defendants cannot demonstrate any breach of privilege or confidence without waiving privilege or confidence, which they are not prepared to do. 

37.Instead, in support of the challenge to Mr Dontsov acting as expert for the Plaintiff, the Defendants:

(1)     firstly, complain that Mr Dontsov clearly lacks impartiality and therefore cannot be trusted to properly discharge his duty as an expert witness to the Court; and

(2)     secondly, rely on Prince Jefri Bolkiah v KPMG [1999] AC 222 (HL).

Lack of impartiality

38.An expert witness has a duty of impartiality and independence to the Court that overrides any duty to the party who engages him.  The role of an expert witness was restated by Cresswell J in National Justice Compania Naviera SA v Prudential Assurance Co Ltd [1993] 2 Lloyd’s Rep 68 at 81-82:

“The duties and responsibilities of expert witnesses in civil cases include the following:

1. Expert evidence presented to the Court should be, and should be seen to be, the independent product of the expert uninfluenced as to form or content by the exigencies of the litigation …

2. An expert witness should provide independent assistance to the Court by way of objective unbiased opinion in relation to matters within his expertise … An expert witness in the High Court should never assume the role of an advocate.

3. An expert witness should state the facts or assumption upon which his opinion is based. He should not omit to consider material facts which could detract from his concluded opinion …

4. An expert witness should make it clear when a particular question or issues fall outside his expertise …

5. If an expert’s opinion is not properly researched because he considers that insufficient data is available, then this must be stated with an indication that the opinion is no more than a provisional one … In cases where an expert witness who has prepared a report could not assert that the report contained the truth, the whole truth and nothing but the truth without some qualification, that qualification should be stated in the report …

6. If, after exchange of reports, an expert witness changes his view on a material matter having read the other side’s expert’s report or for any other reason, such change of view should be communicated (through legal representatives) to the other side without delay and when appropriate to the Court.

…”

Cresswell J’s statement was cited with approval by the English Court of Appeal in Stanton v Callaghan [2000] 1 QB 75 at 107F-108 A, per Otton LJ.

39.Under Order 38, rule 37C of the Rules of the High Court (Cap 4A), expert evidence (whether written or oral) is not admissible in evidence in this Court unless the expert declares that:

(1)  he has read the code of conduct set out in Appendix D to those rules and agrees to be bound by it;

(2)  he understands his duty to the Court; and

(3)  he has complied with and will continue to comply with that duty.

40.Paragraphs 2 to 4 of the code of conduct for expert witnesses relevantly reaffirm that:

“2. An expert witness has an overriding duty to help the Court impartially and independently on matters relevant to the expert’s area of expertise.

3. An expert witness’ paramount duty is to the Court and not to the person from whom the expert has received instructions or by whom he is paid.

4. An expert witness is not an advocate for a party.”

41.With regard to the particular scenario where an expert witness has a conflict of interest, the English Court of Appeal gave the following guidance in Toth v Jarman [2006] 4 All ER 1276:

“[100]  We start with the point of principle.  Does the presence of a conflict of interest automatically disqualify an expert?  In our judgment, the answer to that question is no: the key question is whether the expert’s opinion is independent.  It is now well-established that the expert’s expression of opinion must be independent of the parties and the pressures of the litigation.  Authority for this can be found in paragraphs 1 and 2 of the guidance which Cresswell J gave in National Justice Compania Naviera SA Prudential Assurance Co Ltd (“the Ikarian Reefer”) [1993] 2 Lloyd’s Rep. 68 as summarised on pages 938-9 of Civil Procedure (2006):

“1. Expert evidence presented to the court should be, and should be seen to be, the independent product of the expert uninfluenced as to the form or content by the exigencies of litigation (Whitehouse v Jordan [1981] 1 W.L.R. 246, HL, at 256, perLordWilberforce).

2.  An expert witness should provide independent assistance to the court by way of objective unbiased opinion in relation to matters within his expertise (see Pollivitte Ltd v Commercial Union Assurance Company Plc (1987) 1 Lloyds Rep. 379 at 386, per Garland J., and Re J (1990) F.C.R. 193, per Cazalet J.  An expert witness in the High Court should never assume the role of an advocate.  …”

[101] Moreover, CPR 35.3 sets out the overriding duty of an expert witness. His duty is to assist the court in relation to matters which fall within his expertise. The need for the expert to give an independent opinion flows also from this duty, which is stated to override any duty which the expert may owe to his client:

“(1) It is the duty of an expert to help the court on the matters within his expertise.

(2) This duty overrides any obligation to the person form whom he has received instructions or by whom he is paid.”

[102] However, while the expression of an independent opinion is a necessary quality of expert evidence, it does not always follow that it is sufficient condition in itself. Where an expert has a material or significant conflict of interest, the court is likely to decline to act on his evidence, or indeed to give permission for his evidence to be adduced. This means it is important that a party who wishes to call an expert with a potential conflict of interest should disclose details of that conflict at as early a stage in the proceedings as possible.”

42.Mr Wong SC relies on these authorities in making the Defendants’ first objection.  On this note, I now turn to the reason why the Defendants take the view that Mr Dontsov is not impartial. 

43.According to the Defendants, Mr Dontsov’s conduct demonstrates that he has taken a stance against the Defendants because he has disregarded the following repeated clear warnings given and/or claims made on behalf of the Defendants of privilege (both legal professional privilege and litigation privilege) and confidentiality:

(1)     the confidentiality notice appearing at the end of every email of Robertsons; and

(2)     Robertsons’ letter dated 31 December 2012 to W&C Moscow, which expressly warned the latter not to release to B&M or anyone acting for the Plaintiff the communications that had passed between Robertsons and W&C Moscow.

44.Mr Dontsov is said to have ignored these warnings by reading the communications between Robertsons and W&C Moscow in January 2012 (which the Defendants say is contrary to the assertion in W&C Moscow’s said letter of 16 January 2013 that he has not done so) and by giving, in the same letter (which was copied by him to the Plaintiff’s solicitors), a summary of the nature and scope of such communications, in a “partial and misleading” manner according to the Defendants. 

45.Mr Wong SC also urges me to take a serious view of such conduct, having regard to the fact that Mr Dontsov is a partner in a law firm who should know (and does know) that his firm had communications with Robertsons who was acting on behalf of a client in circumstances that would give rise to a privileged relationship.

46.I have no difficulty with the proposition that the fact as to how W&C Moscow had actually answered Robertsons’ queries in January 2012 is confidential and privileged. Mr Dontsov has not disclosed the same. 

47.Applying the authorities discussed in paragraphs 23 to 34 above, Mr Dontsov cannot be criticised for working out afresh and giving the same answers in response to the same queries raised by B&M on behalf of the Plaintiff unless those answers should depend on privileged/confidential information belonging to the Defendants and provided by them through Robertsons to W&C Moscow in their communications in January 2012. 

48.Further, unless W&C Moscow had indeed received privileged/confidential information belonging to the Defendants from Robertsons in the course of their communications in January 2012 and Mr Dontsov has indeed disclosed and/or misused such information in acting as expert witness for the Plaintiff, the conduct complained of on his part cannot be objectionable either.  This is so because, as submitted by Mr Yan SC, in the absence of the passing of privileged/confidential information to W&C Moscow, or misuse thereof by Mr Dontsov, then all that Mr Dontsov was trying to do was to clarify with all concerned that he has no conflict of interest contrary to the suggestion of the Defendants and to defend his professional reputation which has been put into question by the Defendants.  In those circumstances, he cannot be said to have disrespected the Defendants’ privilege or confidence, or to have thereby taken a stance against the Defendants as such, in any event, not in relation to the Issue.  

49.Thus, to my mind, the matter still boils down to the questions whether privileged/confidential information had been provided by Robertsons to W&C Moscow in the course of their communications in January 2012 and, if so, whether Mr Dontsov has disclosed or misused such information in acting as expert witness for the Plaintiff. 

50.In this regard, to attach privilege or confidentiality to a piece of information imparted in a communication by a solicitor with a third party on behalf of his client, that information must itself be information for which privilege can be claimed by the solicitor’s client against others or which has the essential quality of being confidential.  The third party cannot be restrained from receiving the same information from another client or obtaining it from public avenues or from using the information so received or obtained for such other client, merely because he has been given it first by the earlier client.  I do not understand Mr Wong SC to be arguing otherwise in oral submission.  If he does so argue, I have to disagree with him. 

51.I am mindful of the stance taken by the Defendants and fully appreciate the difficulty they face in establishing the validity of such position.  See paragraphs 35 and 36 above.

52.However, I am afraid the Court is not bound to take the party or their representatives’ words, at least not where there is credible objective evidence before the Court which throws light on the matter.  For the avoidance of doubt and misunderstanding, I say so, not because I harbour any question about the integrity of Robertsons (in particular Mr Levy) or Mr Wong SC, but because whether a communication attracts privilege or an obligation of confidence is a matter on which sound and reasonable persons may legitimately come to different views and is therefore subject to argument.

53.Notwithstanding Mr Wong SC’s invitation, I do not feel able to draw any inference one way or the other as to the nature of the communications from the emails themselves with all the substantive contents redacted.  Nor do I find the confidentiality notice of any real assistance as it is accepted that it appears in every email that is sent from Robertsons.

54.In my opinion, in the particular circumstances of this case, the most objective and reliable guide for resolving the existence or otherwise of communication of privileged/confidential information and of a breach of privilege/confidence are: (1) the nature of the issue on which expert evidence is directed to be adduced and (2) the contents of the expert evidence objected to.

55.Dealing first with the nature of the Issue (set out in paragraph 9 above), what it raises are the general questions of Russian law and practice in relation to the registration of companies and how reliably the system of registration established pursuant to such law and practice operated in reality at the material time and the particular questions of what information about Stern-Stroy is available through such company registration system and whether one can conclude from such information when Stern-Stroy came into existence.  I do not see these to be questions on which an expert would require contribution of, or is likely to receive, instruction or information from the party retaining him for which that party can claim privilege or confidence.

56.My view on the nature of the Issue and what it requires of the experts is reinforced by an examination of Mr Dontsov’s 2 reports and supporting exhibits, which I have undertaken with some care ahead of his oral evidence in Court in order to resolve the Defendants’ application.  

57.In order not to prolong this judgment unnecessarily, with regard to Mr Dontsov’s Expert Report dated 20 December 2012, it is sufficient for me to set out the material substantive headings and sub-headings which, I believe, are self-explanatory and self-evident:

(1)  General Information on the Registration System of Legal Entities in Russia:

(A)   The system before year 2002; and

(B)   The system since year 2002 and up to now;     

(2)  Public Inquiries and Searches;

(3)  Review of Obtained Information and Documents; and

(4)  Opinion.

Mr Dontsov sets out and produces what he considers to be the relevant Russian laws, regulations, decrees and orders and the material documents and records he has obtained from inquiries and searches made in the public domain and then offers his interpretation and understanding of the above to the Court.  I simply cannot discern any matter in the contents or exhibits under these headings and sub-headings that could have been derived from instruction or information of a privileged or confidential nature, whether from the Defendants or otherwise.

58.The same applies to Mr Dontsov’s Supplemental Expert Report dated 1 February 2013, which disputes and argues against various points made in Mr Klenke’s Expert Report dated 20 December 2012.  Again, Mr Dontsov does so with reference to what he considers to be (1) the relevant Russian laws, regulations, decrees and orders and (2) the material public documents and records of Stern-Stroy and to what he believes to be the proper view of such legal and documentary material.

59.For these reasons, I am not persuaded that information for which the Defendants can claim privilege or confidence had been imparted by Robertsons to W&C Moscow in January 2012 or that Mr Dontsov has disclosed or misused any privileged or confidential information of the Defendants in acting as the Plaintiff’s expert witness. That being the case, I am also not convinced that Mr Dontsov has taken a stance against the Defendants or compromised his impartiality.  I am therefore not with the Defendants on the first ground of their challenge to Mr Dontsov as expert witness on the Issue for the Plaintiff.

Prince Jefri Bolkiah v KPMG

60.In Prince Jefri, in 1996, the defendants, a firm of chartered accountants, were retained by the plaintiff (who was then the chairman of an investment agency holding and managing the general reserve fund and the external assets of the Government of Brunei) to provide him with forensic accounting services and litigation support in a litigation relating to his financial affairs.  In the course of such retainer, the defendants performed many tasks usually undertaken by solicitors and were given access to highly confidential information concerning the extent and location of the plaintiff's assets.  The litigation was settled in March 1998. In June 1998, the Government of Brunei started to investigate into the activities of the agency during the period when the plaintiff had been its chairman.  The agency retained the defendants to investigate the whereabouts of certain assets which were suggested to have been misappropriated by the plaintiff for his own benefit.  The defendants took steps to protect the plaintiff's confidentiality by ensuring that the personnel who had been on the team assisting with the plaintiff's litigation were not on the team working on the agency's investigation, and by attempting to create an information barrier within its forensic accounting department so as to prevent the flow of information between the two teams.  The plaintiff commenced an action for breach of confidence against the defendants and sought an interlocutory injunction restraining them from acting for the agency.

61.The issue arising, as framed by Lord Millett (who gave the leading judgment and with whom their Lordships agreed) at 228A-B, was whether and, if so, in what circumstances a firm of accountants which has provided litigation support services to a former client and in consequence has in its possession information which is confidential to him can undertake work for another client with an adverse interest.

62.The House of Lords granted the injunction holding, as summarised in the the headnote, the following: (1) that where it was established that solicitors, or accountants providing litigation services such as those provided by the defendants, were in possession of information confidential to a former client which might be relevant to a matter in which they were instructed by a subsequent client the Court should intervene to prevent the information from coming into the hands of anyone with an adverse interest unless it was satisfied that there was no real risk of disclosure; (2) that since it had been established that the defendants were in possession of confidential information the burden was on them to show that there was no risk that the information would come into the possession of those acting for the other party; (3) that although there was no rule of law that "Chinese walls" or other similar arrangements were insufficient to eliminate the risk, unless special measures were taken, information moved within a firm and the Court would restrain the defendants from acting for a new client unless it was satisfied on clear and convincing evidence that effective measures had been taken to ensure that no disclosure would occur; (4) that in order to be effective arrangements had to be an established part of the organisational structure of the firm and the ad hoc arrangements made by the defendants were inadequate in the circumstances to prevent the risk of inadvertent disclosure; and (5) that, accordingly, the defendants had not discharged the burden of showing there was no real risk that information confidential to the plaintiff might unwittingly or inadvertently come into the possession of those working on the agencyinvestigation (at 226F-G, 227G-H, 234C-H, 235D-F, 237A).

63.With regard to the first holding, it was conceded by the defendants in Prince Jefri that an accountant who provides litigation support services of the kind that they had provided to the plaintiff must be treated for present purposes in the same way as a solicitor (at 234D).

64.Lord Millett started the discussion on the law by referring to the English Court of Appeal decision in Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831 as supporting two propositions:

(1)  that there is no absolute rule of law in England that a solicitor may not act in litigation against a former client; and

(2)  that the solicitor may be restrained from acting if such a restriction is necessary to avoid a significant risk of the disclosure or misuse of confidential information belonging to the former client.

See 233H-234D.

65.His Lordship further affirmed, at 234E-235F, as the basis of the Court’s jurisdiction to intervene on behalf of a former client the protection of confidential information belonging to the former client imparted during the subsistence of the solicitor-client relationship and which survives the termination of such relationship.  Accordingly, it is incumbent upon a party who seeks to restrain his former solicitor from acting in a matter for another client to establish (1) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented; and (2) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own.

66.Mr Wong SC argues that Prince Jefri applies because as a result of the communications between Robertsons and W&C Moscow in January 2012, W&C Moscow (of which Mr Dontsov is a partner) stood in a solicitor-client relationship, and now stands in a solicitor-former client relationship, with the Defendants, despite the fact that W&C Moscow were approached as potential expert witness on the issue as to when Stern-Stroy came into existence, in anticipation of direction for expert evidence.

67.According to Mr Wong SC, W&C Moscow are in the same position as a firm of solicitors (or accountants providing litigation support services to a client in litigation as in Prince Jefri) because it is a firm of lawyers approached to advise and, if required, to give evidence on an issue of law, though foreign law.

68.With respect, I cannot agree.  Without going into the question whether W&C Moscow were or can be regarded as having been engaged by the Defendants in the circumstances described in the first paragraph quoted in paragraph 16 above, they were in the first place sought out by Robertsons in the character of potential expert witness for the Defendants.  As such, as submitted by Mr Yan SC’s submissions, they assumed a role entirely different from that of solicitors for the Defendant.  See paragraphs 38 to 40 above.  That W&C Moscow should happen to be a firm of lawyers and that the issue on which their assistance was sought should happen to be a question of law are irrelevant and cannot change their duties and responsibilities as (potential) expert witness.  I cannot see any principled distinction between an expert qualified in the law giving evidence on a foreign legal issue and an expert from any other speciality giving evidence on a non-legal matter.

69.I find support for this analysis from Meat Corporation of Namibia Ltd v Dawn Meats (UK) Ltd [2011] EWHC 474 (Ch) which concerns an application by the claimant to restrain a “meat industry expert”, a Mrs Burt-Thwaites, from acting or continuing to act for the defendant because she was in possession of confidential and privileged information relating to the claimant, as a result of the claimant having tried to retain her first, which fact was not contested by the defendant or the expert herself.

70.The claimant also sought to apply Prince Jefri.  Mann J distinguished that decision at §31:

“As I have indicated, it is not contested that Mrs Burt-Thwaites was given some privileged and confidential information. However I do not think that the application of the strict test in, and the strict requirements in, Prince Jefri should be imposed simply because of that fact alone. The facts of Prince Jefri were striking. First, the accountants had acted like solicitors. Second, unlike the present case, they were engaged to provide services, and they obtained their information in that context. Third, the information was capable of being very damaging to Prince Jefri. Fourth, the accountants were essentially in the same position as solicitors in relation to that information. In those circumstances what the House of Lords was protecting was a quasi-solicitor/client relationship and all the disclosure that went with it. It is that relationship which is so serious and significant as to attract the disabilities identified in Prince Jefri and to require the heavy burden which the Committee held to apply.”

The first and fourth points are particularly pertinent.  As noted above, in Prince Jefri, the defendants conceded that they should be treated in the same way as a solicitor (at 234D).

71.Apart from the different role taken on by W&C Moscow as potential expert witness for the Defendants, it must also be appreciated that, in Prince Jefri, the Court intervened by restraining the defendant firm of accountants from acting for the agency to protect confidential information belonging to the plaintiff imparted during the subsistence of a quasi solicitor-client relationship and which survived the termination of such relationship.  Each case turns on its own facts.  Even if I had agreed with Mr Wong SC’s submissions that W&C Moscow should be treated in the same way as if they were solicitors for the Defendants, for the reasons explained in paragraphs 53 to 58 above, I am not satisfied that the Defendants have discharged the burden on them (which I do recognise is not a heavy one per Lord Millett at 235E) that W&C Moscow are in possession of information which is confidential to the Defendants.

72.I therefore also reject the second ground upon which the Defendants seek to exclude Mr Dontsov as the Plaintiff’s expert witness.

Mr Dontsov’s Supplemental Report dated 1 February 2013

73.This can be dealt with shortly.  I declined to refuse the Plaintiff leave to adduce and rely on Mr Dontsov’s Supplemental Report for the following reasons:

(1)  I have already described what it contains in paragraph 58 above.  I imagine that had the directions for a joint expert meeting and joint expert report been complied with, Mr Dontsov would have contributed the same opinion in such meeting and report.  Further, even if Mr Dontsov had not prepared the second report, I would expect him to be asked in chief and/or in cross-examination as to what he thinks of various aspects of Mr Klenke’s Expert Report dated 20 December 2012, in response to which he would most probably answer along the lines set out in the Supplemental Report.  The service of Mr Dontsov’s Supplemental Expert Report therefore actually serves to give the Defendants (as well as the Court) a little bit more notice of how Mr Dontsov would deal with Mr Klenke’s Expert Report.  

(2)  Any prejudice that the Defendants may have suffered in consequence of not being informed that Mr Dontsov was preparing a supplemental report and of not instructing Mr Klenke to do the same simultaneously can be remedied by Mr Klenke being given sufficient time to undertake a similar exercise.  On 5 February 2013, I gave leave to the Defendants to file and serve a supplemental report by Mr Klenke in response to Mr Dontsov’s 2 reports on or before 22 February 2013, which time was subsequently further extended in the course of this trial upon the Defendants’ application.

Mr John M Y Yan SC and Ms Sara Tong, instructed by Messrs Baker & McKenzie, for the Plaintiff

Mr Horace Wong SC and Mr Clark Wang, instructed by Messrs Robertsons, for the Defendants