Ras Al Khaimah Investment Authority v Farhad Azima
| Jurisdiction | England & Wales |
| Judge | Mr Justice Michael Green |
| Judgment Date | 27 May 2022 |
| Neutral Citation | [2022] EWHC 1295 (Ch) |
| Docket Number | Case No: HC-2016-002798 |
| Court | Chancery Division |
[2022] EWHC 1295 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
ON REMITTAL FROM THE COURT OF APPEAL – [2021] EWCA CIV 349
(LEWISON, ASPLIN AND MALES LJJ)
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
THE HONOURABLE Mr Justice Michael Green
Case No: HC-2016-002798
and
Thomas Plewman QC, Hugo Leith, Frederick Wilmot-Smith and Sophie Bird (instructed by Burlingtons Legal LLP) for the Counterclaimant
Hugh Tomlinson QC and Edward Craven (instructed by Stewarts Law LLP) for the Defendant to the Counterclaim
Laura Newton and Robert Harris (instructed by Enyo Law LLP) for the Second and Third Additional Defendants to the Counterclaim
Antony White QC and Ben Silverstone (instructed by Kingsley Napley LLP) for the Fourth Additional Defendant to the Counterclaim
Hearing dates: 11 and 12 April 2022
Approved Judgment
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.
THE HONOURABLE Mr Justice Michael Green
This judgment was handed down remotely by circulation to the parties' representatives by email, release to BAILII, the National Archive and other websites. The date and time for hand-down is deemed to be 10.30am on 27 May 2022
I am the assigned judge to hear a retrial ordered by the Court of Appeal of the counterclaim brought by the Defendant, Mr Farhad Azima, against the original Claimant, the Ras Al Khaimah Investment Authority ( RAKIA). RAKIA is the sovereign wealth fund of the Emirate of Ras Al Khaimah ( RAK), part of the United Arab Emirates. Mr Azima is a businessman, involved in the aviation industry, and has had various dealings with RAKIA over the years. He was also a friend of RAKIA's former chief executive officer, Dr Khater Massaad.
RAKIA sued Mr Azima for fraudulent misrepresentation and conspiracy. As well as denying RAKIA's claims, Mr Azima alleged by way of defence and counterclaim that his email accounts had been unlawfully hacked by RAKIA and his data used against him in the case and that as a result the claims should be dismissed or struck out as an abuse of process. The counterclaim alleging hacking and claiming consequential losses was stayed pending determination of RAKIA's claims, although the hacking allegations had to be tried as part of Mr Azima's defence.
The trial was heard by Mr Andrew Lenon QC, sitting as a deputy judge of the Chancery Division. He found in favour of RAKIA on its claims as to fraudulent misrepresentation and conspiracy and against Mr Azima on his hacking claim. The learned deputy judge therefore dismissed the counterclaim. The judgment is at [2020] EWHC 1327 (Ch).
The Court of Appeal dismissed Mr Azima's appeal against RAKIA's claims but, based on new evidence in relation to the hacking claim, allowed the appeal on the counterclaim and remitted the counterclaim to be tried by a different judge of the Chancery Division. [146] of the Court of Appeal's judgment at [2021] EWCA Civ 349 states:
“We should also make it clear that neither the parties nor the judge who hears the remitted issues will be bound by any of the findings of fact made by the judge on the hacking claim. But his findings of fact on RAKIA's substantive claims stand.”
I have already heard a number of applications in this case. On 16 July 2021 I gave permission to Mr Azima to join four additional Defendants to the counterclaim. They are: Mr Stuart Page, a private investigator, with whom Mr Azima has since settled and he is no longer a party; Mr Neil Gerrard, a retired solicitor and former partner of Dechert LLP, which is itself an additional Defendant; and Mr James Buchanan who was authorised to undertake various activities on behalf of RAKIA and employed by other companies in RAK. The additional Defendants are alleged to have been involved in some way with the hacking of Mr Azima's data on behalf of RAKIA. 1
On 15 and 17 March 2022 I heard applications on behalf of both Mr Azima and RAKIA to strike out parts of each other's statements of case and an application by Mr Azima for RAKIA to answer his requests for further information. I delivered an ex tempore judgment dismissing all three applications – see [2022] EWHC 790 (Ch).
At this hearing, which is part of the CMC begun in March 2022, I heard two distinct matters:
(1) Applications by all the Defendants to the counterclaim for Mr Azima to provide security for their costs of defending the counterclaim;
(2) Certain disputed issues concerning the draft List of Issues for Disclosure ( LOID).
This is my judgment on those two matters.
SECURITY FOR COSTS
The Defendants have each issued their own applications for security for costs: RAKIA on 8 December 2021; Mr Gerrard and Dechert on 25 January 2022; and Mr Buchanan on 9 February 2022. All three applications are made pursuant to the condition in CPR 25.13(2)(a) that Mr Azima is resident out of the jurisdiction but not resident in a State bound by the 2005 Hague Convention. There is no dispute that this condition is satisfied, as Mr Azima accepts that he is resident in Missouri, USA. Mr Azima however contests whether the court should exercise its discretion under CPR 25.13(1)(a) to order security and also the quantum of the security being sought.
(a) Legal Principles
The discretion to order security, once one or more of the conditions in CPR 25.13(2) have been satisfied, is broadly described in CPR 25.13(1)(a) as whether “ having regard to all the circumstances of the case, that it is just to make such an order.” Mr Plewman QC on behalf of Mr Azima sought to limit the discretion to a consideration of the additional burden of enforcement in Mr Azima's place of residence, namely Missouri; whereas Mr Tomlinson QC, Ms Newton and Mr White QC for the applicants submitted that there is a more expansive discretion once they were through the gateway of Mr Azima being resident out of the jurisdiction in a non-Hague Convention State.
All parties referred to the helpful summary of the relevant principles by Hamblen LJ (as he then was) in Danilina v Chernukhin [2019] 1 WLR 758. In [51] he said:
“(1) For jurisdiction under CPR 25.13(2)(a) to be established it is necessary to satisfy two conditions, namely that the claimant is resident (i) out of the jurisdiction and (ii) in a non-Convention state.
(2) Once these jurisdictional conditions are satisfied the court has a discretion to make an order for security of costs under CPR 25.13(1) if “it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order”.
(3) In order for the court to be so satisfied the court has to ensure that its discretion is being exercised in a non-discriminatory manner for the purposes of Articles 6 and 14 of the ECHR – see the Bestfort case [2017] CP Rep 9, paras 50–51.
(4) This requires “objectively justified grounds relating to obstacles to or the burden of enforcement in the context of the particular foreign claimant or country concerned” – see Nasser's case [2002] 1 WLR 1868, para 61 and the Bestfort case at para 51.
(5) Such grounds exist where there is a real risk of “substantial obstacles to enforcement” or of an additional burden in terms of cost or delay – see the Bestfort case at para 77.
(6) The order for security should generally be tailored to cater for the relevant risk – see Nasser's case at para 64.
(7) Where the risk is of non-enforcement, security should usually be ordered by reference to the costs of the proceedings – see, for example, the orders in De Beer's case [2003] 1 WLR 38 and the Bestfort case.
(8) Where the risk is limited to additional costs or delay, security should usually be ordered by reference to that extra burden of enforcement – see, for example, the order in Nasser's case.”
Hamblen LJ went on to explain the relevant risks and how the particular risk found to exist determines the amount of the security. At [52] he said that:
“(1) The relevant risks are of (i) non-enforcement and/or (ii) additional burdens of enforcement. A real risk of either will suffice to meet the “threshold” test.
(2) Some of the authorities refer to difficulties of enforcement. Mere difficulty of enforcement in itself is not enough (save in so far as it results in additional costs and therefore an extra burden of enforcement). The relevant risk is non-enforcement, not difficulty in enforcement and this is the risk to which the test of “substantial obstacles” is directed. The obstacles need to be sufficiently substantial to amount to a real risk of non-enforcement. Difficulties may, however, be evidence of the “substantial obstacles” required for there to be a real risk of non-enforcement.”
Then at [57]:
“In principle, security should be tailored so as to provide protection against the relevant risk. On the judge's findings the relevant risk is that of non-enforcement of any costs order obtained. The purpose of ordering security in such circumstances is to secure the defendant against the risk of non-recovery of those costs. Since that is the risk against which the applicant is entitled to protection, I agree with the appellants that the starting point should be that the defendant is entitled to security for the entirety of his costs.”
And at [64] Hamblen LJ emphasised that:
“In my judgment, once it has been established that there are “substantial obstacles” sufficient to create a real risk of non-enforcement, the starting point is that the...
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