Ras Al Khaimah Investment Authority v Farhad Azima
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison,Lady Justice Asplin,Lord Justice Males |
| Judgment Date | 12 March 2021 |
| Neutral Citation | [2021] EWCA Civ 349 |
| Date | 12 March 2021 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2020/1271 |
[2021] EWCA Civ 349
Lord Justice Lewison
Lady Justice Asplin
and
Lord Justice Males
Case No: A3/2020/1271
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE,
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
Mr Andrew Lenon QC (sitting as a Deputy Judge of the High Court)
Business List (ChD), [2020] EWHC 1327 (Ch) and [2020] EWHC 1686 (Ch)
Royal Courts of Justice
Strand, London, WC2A 2LL
Hugh Tomlinson QC AND Edward Craven (instructed by Stewarts Law) for the Respondent
Tim Lord QC, Thomas Plewman QC AND Hugo Leith (instructed by Burlingtons) for the Appellant
Hearing dates: 2 nd – 4 th March 2021
Approved Judgment
Lord Justice Lewison, Lady Justice Asplin and
Introduction
RAKIA is the state investment entity of the Emirate of Ras Al Khaimah (“RAK”), one of the emirates making up the United Arab Emirates. Mr Azima is a businessman who had dealt with it in the past. He is based in the USA. RAKIA launched proceedings against Mr Azima accusing him of fraudulent misrepresentation and conspiracy. We begin by giving a thumbnail sketch of the shape of the trial.
Mr Azima had been involved in the aviation industry for many years and was a friend of RAKIA's former chief executive officer, Dr Massaad. In 2007, RAKIA and HeavyLift International Airlines FZC (‘HeavyLift’), a company then owned and controlled by Mr Azima, had set up a pilot training academy in RAK as a joint venture. It was not a success and ceased operations in 2010, giving rise to a claim for compensation by HeavyLift. RAKIA also had a Georgian subsidiary which owned a hotel in Tbilisi which it wished to sell. Mr Azima received two payments of $400,000 and $1,162,500 in October 2011 and January 2012 which he said were commission under a referral agreement for introducing potential buyers of the hotel. On the day that he received the latter payment, he had made a payment of $500,000 to Dr Massaad. RAKIA alleged that the referral agreement was a sham and that the payment to Dr Massaad was a bribe. In 2012 RAKIA began investigating the activities of Dr Massaad. He left the UAE and was subsequently convicted in his absence of offences of fraud, bribery and embezzlement. RAKIA alleged that Dr Massaad and Mr Azima had been involved in a plan to organise a media and public relations campaign intended to damage RAKIA's reputation. In 2016 Mr Azima and HeavyLift entered into a settlement agreement with RAKIA in respect of their claims in connection with the pilot training academy joint venture. Pursuant to the settlement agreement RAKIA paid Mr Azima the sum of $2.6 million. Clause 3.1 of the settlement agreement provided that it was “in full and final settlement of all claims, in any jurisdiction, whether or not presently known to them or to the law that [Mr Azima] or [HeavyLift] or any of its owners [had or might] have against [RAKIA] … or any other RAK entity”. Under clause 3.2 Mr Azima and HeavyLift warranted and confirmed that they had “at all times acted in good faith and with the utmost professional integrity and [would] continue in the future to act in good faith and with the utmost professional integrity towards [RAKIA] … and any other RAK entity.” The same clause also stated that the payment made to HeavyLift pursuant to the settlement agreement was made in reliance on that express warranty and confirmation. The agreement provided for English law and jurisdiction.
RAKIA alleged that Mr Azima had induced it to enter into the settlement agreement by fraudulently misrepresenting that HeavyLift had invested $2.6 million in the training academy joint venture. RAKIA also alleged that clause 3.2 of that agreement was a representation by Mr Azima of his good faith which he knew to be false and which had induced the settlement agreement. Thirdly, RAKIA claimed $1,562,500 by way of damages for an unlawful means conspiracy arising in connection with the intended sale of the hotel in Georgia. Mr Azima denied making the alleged representations, denied fraud and denied any reliance by RAKIA on the representations. He contended that the litigation was politically motivated, and part of RAKIA's campaign to recover alleged losses of $2 billion from Dr Massaad.
In addition, he contended that the claims should be dismissed or struck out on the basis that in bringing the claims, RAKIA had relied upon confidential emails which it had obtained by its unlawful hacking of his email accounts. Mr Azima counterclaimed in relation to the hacking. He advanced his counterclaim under a number of legal heads: an actionable breach of the Data Protection Act 1998; a breach of statutory duty under the Computer Misuse Act 1990; breach of US Federal Law; breach of confidence; misuse of private information; invasion of privacy; and conspiracy to injure by unlawful means. His pleaded losses included the cost of purchase of new devices; loss of business consequent upon the publication of the material on-line; and damage to his reputation. The counterclaim was stayed pending determination of RAKIA's claims against Mr Azima.
Following a four-week trial Mr Andrew Lenon QC, sitting as a deputy judge of the Chancery Division, found that Mr Azima:
i) Had induced RAKIA to enter into the settlement agreement by means of a fraudulent misrepresentation;
ii) Had manufactured a sham referral agreement intended to conceal his dishonest misappropriation of funds;
iii) Had been guilty of bribery by making payments to Dr Massaad;
iv) Had falsely represented that he had acted in good faith vis-à-vis RAKIA;
v) Had engaged in an unlawful means conspiracy in connection with the intended sale of the hotel in Tbilisi, Georgia;
vi) Had not proved his hacking allegation and dismissed the counterclaim.
His judgment is at [2020] EWHC 1327 (Ch).
The shape of this appeal
RAKIA's case at trial was based in large part on confidential e-mails and other material that had been obtained through the hacking of Mr Azima's email accounts. It was common ground that hacking had taken place. Mr Azima contended that RAKIA was responsible for or involved in the hacking; in consequence of which the evidence obtained through hacking should be excluded; and its claim should be struck out (even after trial). RAKIA, on the other hand, maintained that it had come across the material innocently on the internet where it had been placed by anonymous hackers. The judge rejected RAKIA's account of how it had come by this material; but nevertheless held that Mr Azima had not proved his allegation on the balance of probabilities. The counterclaim therefore failed.
On this appeal Mr Azima raises a number of grounds. The main focus of those grounds (Grounds 1 to 4) is an attack on the judge's findings in relation to the responsibility for the hacking. There is barely any quarrel with the judge's substantive findings in relation to the underlying factual basis of RAKIA's underlying claims. Ground 5 asserts that if the judge had found that RAKIA was responsible for the hacking, he ought to have struck out the claim as an abuse of process. In consequence Ground 6 asserts that the counterclaim was wrongly dismissed. Grounds 7 to 9 (as originally formulated) make further criticisms of the judge's findings of fact in relation to the underlying claims.
In support of his appeal Mr Azima also applies for permission to adduce fresh evidence. These applications are the subject of grounds 6A, 6B and 8A. This new evidence when taken with the evidence before the judge is said to be sufficient to prove that RAKIA obtained Mr Azima's personal data by hacking his email accounts and that the information, which had been obtained by unlawful means, was used as the basis for RAKIA's claims against him. This court should make that finding of fact. The consequence of that, once more, is that the action should be struck out as an abuse of process. In the alternative it is argued that the issue whether RAKIA was responsible for the hacking should be remitted for a retrial; and since the judge's decision that Mr Azima had not proved his hacking allegation was fundamental to at least some of his conclusions on RAKIA's substantive claims, they, too, should be remitted for a retrial.
The factual background in more detail
Mr Azima was involved in numerous actual and proposed commercial joint ventures with RAKIA and other entities connected with RAK between 2007 and 2016. He met Dr Massaad, (RAKIA's chief executive officer between 2005 and 2012) in or around 2006 or 2007. Dr Massaad introduced him to the Ruler of RAK, Sheikh Saud, and to the management of RAK Airways. This led to the creation of a joint venture in relation to the RAK pilot training academy of which Mr Azima and Dr Massaad were the directors. It ceased operation in 2010.
Further, in 2011, RAKIA decided to sell a luxury hotel in Tbilisi, Georgia owned by its Georgian subsidiary, Ras Al Khaimah Investment Authority Georgia LLC. Mr Azima received two payments in connection with an attempt to sell the hotel. They were of $400,000 and $1,162,500; received on 25 October 2011 and 18 January 2012 respectively. He contended that he was entitled to those payments under a referral agreement with RAKIA as commission for introducing three Iranians who were potential purchasers for the hotel. On the same day as Mr Azima received the second payment, he transferred $500,000 to Dr Massaad. He contended that the payment was in return for a share in an aircraft owned by Dr Massaad. It was RAKIA's...
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