A London firm and a solicitor will be able to defend themselves against conspiracy allegations after a High Court judge found the iniquity exception means legal professional privilege does not apply.

The case in East-West United Bank S.A. v Vladimir Gusinski & Ors centres on claims by a Luxembourg-incorporated bank that businessman Vladimir Gusinski, GSC Solicitors LLP, and solicitor and consultant Barry Samuels conspired to avoid paying the bank after it provided a $75m credit facility in 2013.

The bank alleges that Gusinski and his companies, including the New Media Group, avoided repaying the debt by misleading the Swiss courts and an arbitral tribunal by moving funds within the companies. GSC acted for the respondent companies, and Samuels had day-to-day conduct, in arbitration over the dispute. Both the firm and Samuels took instructions from Gusinski. The bank alleges Gusinski ‘conspired…to “use both lawful and unlawful means to delay and ultimately avoid payment”.’

Gusinski denied the allegations against him. GSC and Samuels also denied the allegations but argued that their response was constrained by privilege.

Deputy Master Scher found there is a ‘prima facie case’ for allowing the iniquity exception and that the alleged conduct ‘falls within the category of wrongdoing’.

He said if GSC and Samuels were not involved in the alleged scheme, it would mean they and the arbitral tribunal were misled by Gusinski. ‘That would be an abuse of the normal solicitor/client relationship, and an indicator (indeed, a “hallmark”) of the kind of iniquity which negates legal professional privilege,’ the judge said. 

It appeared ‘more likely than not on the balance of probabilities’ that Gusinski misled the arbitral tribunal and that funds which could have been seized by the bank were diverted to other companies.

The firm and Samuels will now be able to fully defend themselves in the High Court against allegations that they were part of the alleged conspiracy. According to the judgment, both GSC and Samuels can use ‘documents and communications brought into existence as part of or in furtherance of the alleged decision by Mr Gusinski to avoid the New Media Group repaying the sums owed'.

 

Clare Stanley KC and James Walmsley, instructed by Distinction Law, appeared for East-West United Bank. Andrew George KC, instructed by Clyde & Co LLP, appeared for the GSC Solicitors and Samuels. Gusinski has been barred from defending the claim  after failing to comply with an unless order made on 7 March 2023.