Ras Al Khaimah Investment Authority v Farhad Azima
| Jurisdiction | England & Wales |
| Judge | Sir Julian Flaux C,Lord Justice Birss,Lord Justice Newey |
| Judgment Date | 15 May 2023 |
| Neutral Citation | [2023] EWCA Civ 507 |
| Docket Number | Case No: CA-2022-002292; 002294 & 002314 |
| Court | Court of Appeal (Civil Division) |
[2023] EWCA Civ 507
Sir Julian Flaux
CHANCELLOR OF THE HIGH COURT
Lord Justice Newey
and
Lord Justice Birss
Case No: CA-2022-002292; 002294 & 002314
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
MICHAEL GREEN J
Royal Courts of Justice
Strand, London, WC2A 2LL
Fionn Pilbrow KC and Aarushi Sahore (instructed by Charles Fussell LLP) for the Second Additional Defendant to the Counterclaim/First Appellant
Roger Masefield KC, Craig Morrison and Robert Harris (instructed by Enyo Law LLP) for the Third Additional Defendant to the Counterclaim/Second Appellant
Antony White KC and Ben Silverstone (instructed by Kingsley Napley LLP) for the Fourth Additional Defendant/to the Counterclaim/Third Appellant
Thomas Plewman KC, Hugo Leith and Frederick Wilmot-Smith (instructed by Burlingtons Legal LLP) for the Counterclaimant/Respondent
Hearing dates: 7 to 9 March 2023
APPROVED JUDGMENT
Introduction
The Second, Third and Fourth Additional Defendants to the Counterclaim (to whom I will refer as “Mr Gerrard”, “Dechert” and “Mr Buchanan” individually and “the Additional Defendants” collectively) appeal with the permission of the judge against the Order of Michael Green J dated 7 November 2022 whereby he granted the Defendant and Counterclaimant (whom I will refer to as “Mr Azima”) permission to bring the so-called set-aside counterclaim and to amend his statement of case. By this proposed counterclaim, Mr Azima alleges that the Ras Al Khaimah Investment Authority (to which I will refer as “RAKIA”) procured various judgments and Orders of the English courts by fraud. The judge rejected the Additional Defendants' submissions that the proposed counterclaim was an abuse of process.
It is well-established that a decision as to whether an action is an abuse is not a question of discretion but an evaluative assessment to which there can only be one answer: see per David Richards LJ (as he then was) in Harbour Castle Limited v David Wilson Homes Ltd [2019] EWCA Civ 505 at [6]. However, because the assessment is fact-sensitive and involves taking account of and giving appropriate weight to all relevant factors, the circumstances in which the Court of Appeal will interfere with that assessment are limited. As David Richards LJ continued at [7]:
“Because the assessment is fact-sensitive and involves taking account of and giving appropriate weight to all relevant factors, an appeal court will not interfere with the judge's assessment unless the judge has taken account of irrelevant factors, ignored relevant factors, applied a wrong principle, come to a decision that was not properly open to the judge or was, in the view of the appeal court, plainly wrong: see Stuart v Goldberg Linde [ [2008] EWCA Civ 2; [2008] 1 WLR 823] per Sir Anthony Clarke MR at [81]–[82] and Sedley LJ at [76].”
Following a trial in the Business List before Mr Andrew Lenon QC (sitting as a Deputy Judge of the High Court and to whom I will refer as “the deputy judge”), by a judgment dated 22 May 2020 ( [2020] EWHC 1327 (Ch)), the deputy judge upheld RAKIA's claims against Mr Azima in deceit and conspiracy, finding that he had acted fraudulently and dishonestly. The deputy judge dismissed Mr Azima's so-called hacking defence and a related counterclaim by which he alleged that RAKIA had been responsible for hacking Mr Azima's data and thereby obtained documents which it relied upon in support of its case at trial and that RAKIA and its witnesses had lied to the Court to conceal the fact of the hacking.
Mr Azima appealed against the judgment of the deputy judge, contending that RAKIA and its witnesses were responsible for the hacking and had engaged in a massive deception of the Court, so that the judgment had been procured by fraud and the entire case should be remitted to the High Court. By its judgment ( [2021] EWCA Civ 349), the Court of Appeal (Lewison, Asplin and Males LJJ) refused to make that order and decided that the part of the judgment relating to Mr Azima's counterclaim for damages for the hacking should be remitted to the High Court for retrial before a different judge. However, it held that the balance of the judgment relating to RAKIA's claim against Mr Azima should be upheld, since the hacked documents showed him to be a fraudster and were documents he would have been obliged to disclose during the course of the proceedings and to allow the judgment on RAKIA's claims to be set aside would be to allow Mr Azima to profit from his fraudulent misconduct. At [128] of its judgment the Court of Appeal held that: “irrespective of the outcome of the counter claim the judgment in RAKIA's favour on its claims must stand.”
Mr Azima sought permission to appeal from the Supreme Court principally on the basis that the Court of Appeal had been wrong to hold, before the counterclaim was retried, that the remedies available to him did not include overturning the judgment in favour of RAKIA. Some months after the application for permission was lodged, he sought to adduce fresh evidence before the Supreme Court which was said to show that RAKIA was responsible for the hacking. However, on 28 April 2022, the Supreme Court refused permission to appeal on the ground that the application did not raise an arguable point of law.
In the meantime the hacking counterclaim had been remitted to the High Court and allocated to Michael Green J. On 16 July 2021 he gave Mr Azima permission to join four Additional Defendants to the Counterclaim:
(1) Mr Stuart Page, a private investigator who has since admitted his involvement in the hacking on behalf of RAKIA and that he gave false evidence at the first trial. Mr Azima has settled with Mr Page who has provided an affidavit supporting Mr Azima's case.
(2) Mr Neil Gerrard, a retired solicitor and former partner of Dechert. Following an adverse judgment against him of Waksman J in unrelated proceedings, he is now represented separately from Dechert.
(3) Dechert, who, until their replacement by Stewarts Law LLP, were solicitors for RAKIA in the original proceedings which led to the trial before the deputy judge.
(4) Mr James Buchanan, who was employed by companies in Ras Al Khaimah and who was authorised to undertake certain activities on behalf of RAKIA.
Mr Azima now wishes to bring an additional counterclaim, the set-aside counterclaim, in which his cause of action is to have the judgment of the deputy judge set aside in its entirety on the grounds that it was procured by fraud. He contends that he has discovered yet more evidence which shows that a pervasive fraud was perpetrated on the Court by or on behalf of RAKIA and that he therefore satisfies the test for granting permission to amend to bring that counterclaim, namely that there is a real prospect of satisfying the conditions necessary to have the judgment set aside.
On 16 June 2022, RAKIA made an open offer to Mr Azima to settle the hacking counterclaim for US$1 million plus the costs of that counterclaim, which was rejected. On 22 June 2022, RAKIA wrote to the Court saying it had withdrawn instructions from its solicitors, Stewarts Law LLP, and that it did not intend to take any further part in the proceedings. However, Mr Azima's application for permission to bring the set-aside counterclaim was strongly opposed by the three Additional Defendants to the Counterclaim still in the proceedings, Mr Gerrard, Dechert and Mr Buchanan, Nonetheless, the judge allowed the application and gave Mr Azima permission to pursue the set-aside counterclaim.
The original proceedings
RAKIA is the sovereign wealth fund of Ras Al Khaimah. Mr Azima is a US-based businessman principally involved in the aviation industry, who had various dealings with RAKIA between 2007 and 2016. In the original proceedings, RAKIA advanced claims against Mr Azima for fraudulent misrepresentation and unlawful means conspiracy. In summary, there were three claims:
(1) That he fraudulently misrepresented that he had invested $2.6 million in a joint venture with RAKIA via his company HeavyLift International Airlines FZC, thereby inducing RAKIA to refund him that amount pursuant to a Settlement Agreement made in March 2016, whereas he had in truth invested a much smaller amount (“the Investment Representation”).
(2) That he also fraudulently misrepresented and warranted, by clause 3.2 of the Settlement Agreement, that he had always acted in good faith in his dealings with RAKIA and other Ras Al Khaimah entities. This was false for several reasons, including the misconduct in relation to the HeavyLift joint venture and separate misconduct in relation to the sale of a hotel owned by a subsidiary of RAKIA in Georgia. In relation to the latter transaction, RAKIA alleged that Mr Azima had received unauthorised payments totalling $1,562,500 from RAKIA, that he had sought to acquire an interest in the hotel himself, worth $6 million, without full disclosure to RAKIA and that he had bribed RAKIA's then CEO, Dr Massaad, into waving through the transaction by paying him $500,000 (“the Good Faith Representation”).
(3) The claim for unlawful means conspiracy was in connection with the intended sale of the hotel in 2011/2012 and the payment of a total of $1,562,000 to Mr Azima by way of commission for introducing buyers. RAKIA's case was that Mr Azima did not introduce the buyers and that the payments were made pursuant to a sham referral agreement.
Mr Azima defended the claims on the merits but also argued, by his...
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