Ras Al Khaimah Investment Authority v Farhad Azima
| Jurisdiction | England & Wales |
| Judge | Andrew Lenon |
| Judgment Date | 22 May 2020 |
| Neutral Citation | [2020] EWHC 1327 (Ch) |
| Date | 22 May 2020 |
| Docket Number | Case No. HC-2016-002798 |
| Court | Chancery Division |
[2020] EWHC 1327 (Ch)
Andrew Lenon Q.C. (sitting as a Deputy Judge of the Chancery Division)
Case No. HC-2016-002798
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES BUSINESS LIST (ChD)
Royal Courts of Justice
Rolls Building, Fetter Lane, London EC4A 1NL
Hugh Tomlinson Q.C. and Edward Craven (instructed by Stewarts Law LLP) for the Claimant
Tim Lord Q.C. and Hugo Leith (instructed by Burlingtons LLP) for the Defendant
APPROVED JUDGMENT
Hearing dates: 22 nd–24 th January, 27 th–31 st January, 3 rd–5 th February, 12 th–14 th February 2020
Date: 22 May 2020
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Contents
| Introduction | 3 |
| Factual background | 5 |
| The witnesses | 13 |
| Documentary evidence | 15 |
| The HeavyLift Investment Misrepresentation Claim | 16 |
| (1) Was the quantification in 2008 of HeavyLift's contribution to the joint venture fair and honest? | 17 |
| (2) What was the content of the representations to RAKIA in 2013 to 2015? | 24 |
| (3) Which party made the representations? | 32 |
| (4) Was the HeavyLift Investment Representation false? | 34 |
| (5) Was Mr Azima aware that the HeavyLift Investment Representation was false? | 35 |
| (6) Did RAKIA rely on the HeavyLift Investment Representation? | 36 |
| (7) Loss | 39 |
| Conclusion on the HeavyLift Misrepresentation Claim | 39 |
| The Good Faith Misrepresentation Claim | 39 |
| (1) Does Clause 3.2 of the Settlement Agreement constitute a representation? | 40 |
| (2) Has RAKIA proved the alleged wrongful conduct of Mr Azima? | 41 |
| (a) Did Mr Azima falsely represent to RAKIA that he had introduced the prospective purchasers of the Hotel to RAKIA? | 42 |
| (b) Was the Referral Agreement a sham? | 47 |
| (c) Was the payment of $500,000 made by Mr Azima to Dr Massaad a bribe? | 53 |
| (d) Did Mr Azima wrongfully fail to disclose to RAKIA an intended interest in the Hotel? | 58 |
| (e) Did Mr Azima orchestrate a malicious campaign to damage the reputation, standing and internal stability of the Government of RAK? | 61 |
| (f) Did Mr Azima make representations relating to the Proposed ISR JV? | 65 |
| (3) Was the Good Faith Representation false? | 77 |
| (4) Did RAKIA rely on the Good Faith Representation? | 79 |
| (5) Loss | 79 |
| The Unlawful Means Conspiracy Claim | 80 |
| Mr Azima's Hacking Claim | 80 |
| The Facts | 86 |
| (1) Mr Page and the Project Update | 86 |
| (2) The April and July 2015 emails | 91 |
| (3) The spear-phishing emails | 94 |
| (4) The View from the Window document | 96 |
| (5) The Settlement Agreement | 99 |
| (6) The engagement of Digitalis | 101 |
| (7) The July 2016 meeting | 102 |
| (8) The Massaad websites, the blogging websites and the BitTorrents | 105 |
| (9) RAKIA's alleged discovery of the hacked material | 106 |
| (10) RAKIA's deployment of the hacked data | 117 |
| (11) The inability of RAKIA's IT expert to download data | 120 |
| (12) “Deliberately withheld documents” | 120 |
| (13) Mr Page's “track record” | 121 |
| (14) Allegations against Mr Gerrard | 122 |
| (15) RAKIA's conduct of other litigation | 122 |
| Conclusions on the hacking claim | 124 |
| Overall conclusion | 127 |
Introduction
The Claimant, the Ras Al Khaimah Investment Authority (“RAKIA”), is the investment authority of Ras Al Khaimah (“RAK”), one of the seven Emirates making up the United Arab Emirates (“the UAE”). The Defendant, Farhad Azima, is a US businessman based in Kansas City, Missouri who has been involved in the aviation industry for many years.
RAKIA was represented at the trial by Hugh Tomlinson Q.C. and Edward Craven. Mr Azima was represented by Tim Lord Q.C. and Hugo Leith.
Between 2007 and 2016, Mr Azima became involved in various actual and proposed commercial joint ventures with RAKIA and other RAK entities. They included a joint venture between his company HeavyLift International Airlines FZC (“HeavyLift”) and RAK Airways for the establishment of a pilot training academy in RAK, the intended sale of a luxury hotel in Georgia owned by one of RAKIA's subsidiaries and a proposed joint venture involving the provision to RAK of aerial intelligence, surveillance and reconnaissance services.
On 2 March 2016 Mr Azima and HeavyLift entered into a settlement agreement with RAKIA in respect of claims made by Mr Azima and HeavyLift against RAKIA in connection with the pilot training academy joint venture (“the Settlement Agreement”). Pursuant to the Settlement Agreement RAKIA paid Mr Azima the sum of $2.6 million.
RAKIA advances three claims against Mr Azima in these proceedings. The first is that Mr Azima fraudulently misrepresented the amount of HeavyLift's investment in the training academy joint venture and that this misrepresentation induced RAKIA to enter into the Settlement Agreement and pay Mr Azima $2.6 million (“the HeavyLift Investment Misrepresentation Claim”). RAKIA is claiming part of this sum by way of damages under this head.
RAKIA's second claim is a further claim for fraudulent misrepresentation inducing the Settlement Agreement. It is based on a provision in the Settlement Agreement by which Mr Azima warranted and confirmed that he had at all times acted in good faith and with the utmost professional integrity towards RAKIA, RAK Airways and any other RAK entity and would continue to do so. RAKIA alleges that this provision (“the Good Faith Clause”) constituted a representation which Mr Azima knew was false because of his wrongful conduct in connection with various episodes occurring between 2011 and 2015 (the “Good Faith Misrepresentation Claim”).
RAKIA is claiming by way of damages for the Good Faith Misrepresentation Claim the whole of the sum of $2.6 million which it paid to Mr Azima under the Settlement Agreement.
RAKIA's third claim is for $1,562,500 by way of damages for an unlawful means conspiracy arising in connection with the intended sale of the luxury hotel in Georgia in 2011 – 2012.
A fourth pleaded claim, for damages for breach of warranty based on the Good Faith Clause in the Settlement Agreement, was not pursued by RAKIA in its closing submissions, RAKIA recognising that, even if breach of warranty were proved, it would only have a claim for nominal damages.
Mr Azima challenges RAKIA's three remaining claims on two main grounds. First, he contends that the claims should be struck out or dismissed on the ground that, in bringing the claims, RAKIA is relying on confidential emails that RAKIA obtained through its unlawful hacking of his email accounts. Mr Azima has brought a counterclaim for damages resulting from what he alleges was RAKIA's hacking of his emails. That counterclaim has been stayed pending the trial of RAKIA's claims against Mr Azima.
Second, Mr Azima denies the claims made against him on their merits. He denies making the alleged representations, denies fraud and denies any reliance by RAKIA on the representations. He contends that the litigation is politically motivated, the culmination of a targeted attack on him, pursued because of his refusal to take RAKIA's side in a bitter fight with Dr Khater Massaad, a former senior government official who RAKIA alleges was guilty of large scale embezzlement.
RAKIA does not dispute that, in bringing the claims, it is relying on hacked emails but it contends that it came across the hacked material innocently on publicly accessible websites where it had been put by anonymous hackers. It contends that, in any event, the hacking allegations provide no defence to RAKIA's claims in this action and that, even if the Court found that the RAKIA was responsible for the hacking, the public interest in the Court reaching the correct decision on the basis of all the available evidence should prevail.
Factual background
(1) Dr Massaad
Dr Massaad was from 2005 until 2012 RAKIA's chief executive officer. Dr Massaad was one of the most senior public officials in RAK and was entrusted with the management and control of RAK's national and international investments. As RAKIA's chief executive officer Dr Massaad had effective control over all of RAKIA's affairs, operations, assets and funds and he was directly involved in certain of the transactions which have given rise to RAKIA's claims in these proceedings. Dr Massaad and Mr Azima were friends.
RAKIA claims that in around late 2012 it discovered that Dr Massaad had perpetrated systematic and wide-ranging frauds against RAKIA and other RAK entities. Subsequent investigations undertaken by the Government of RAK are said to have established that between around 2005 and 2012 Dr Massaad and his associates engaged in an unlawful conspiracy to misappropriate monies and otherwise cause losses exceeding $2 billion. Dr Massaad fled the UAE in 2012 and was subsequently tried and convicted in absentia of an array of fraud, bribery and embezzlement offences.
In 2015 and 2016, Mr Azima acted as Dr Massaad's representative in without prejudice settlement discussions with RAKIA concerning the return of misappropriated assets. Those discussions ultimately came to nothing and no agreement was reached between RAKIA and Dr Massaad.
(2) The Training Academy Joint Venture
Mr Azima first met Dr Massaad in around 2006 or 2007 in order to discuss the expansion of RAK's aviation activities. Mr Azima was introduced to RAK Airways. Dr Massaad and Mr Azima had a shared interested in aviation and they became...
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