Author: Syedur Rahman
19 March 2021
4 min read
Syedur Rahman of Rahman Ravelli details a case that raises issues around evidence gathering.
The Court of Appeal, in its judgment in the case of Ras Al Khaimah Investment Authority v Azima, upheld findings of dishonesty against a businessman, despite the evidence against him being obtained through unlawful hacking.
It was decided that the claims against him would not be struck out, despite the way the evidence against him had been acquired. The decision was made as the court concluded that without the said documentation, Mr Azima would continue to benefit from his fraudulent behaviour, and Ras Al Khaimah Investment Authority (RAKIA) would have been unable to prove its claims.
This article considers the ruling and the issue of ethics regarding evidence gathering.
Mr Azima and the former chief executive officer of RAKIA, known as M, were friends. Mr Azima had been involved with the aviation industry for a number of years and had a company called HeavyLift International Airlines FZC (HeavyLift). In 2007, Heavy Lift and RAKIA decided to open a pilot training academy as a joint venture. The venture ceased operations in 2010 and HeavyLift brought a claim for compensation. Separately, RAKIA had a Georgian subsidiary that owned a hotel, which it wanted to sell. Mr Azima received two payments totalling $1,562,500 in October 2011 and January 2012. He contended that these were commission payments under a referral agreement for introducing potential buyers for the hotel. However, on the day that he received the second payment, he transferred $500,000 to M.
RAKIA alleged that the referral agreement was a sham and that the payment to M was a bribe. RAKIA commenced an investigation and M was convicted in his absence of offences of fraud, bribery and embezzlement. RAKIA also alleged that Mr Azima and M had planned to organise a media campaign intending to damage RAKIA’s reputation.
In 2016, a settlement agreement was entered into between Mr Azima, HeavyLift and RAKIA regarding the compensation claims. Under that agreement $2.6m was paid by RAKIA to Mr Azima. Clause 3.1 stated 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".
Clause 3.2 stated that 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 made clear that the payment made to HeavyLift according to the settlement agreement was made in reliance on that express warranty and confirmation.
RAKIA claimed that they were induced into entering the settlement agreement based on fraudulent misrepresentations that HeavyLift had invested £2.6m into the joint venture – a falsehood that RAKIA said breached clause 3.2 of the agreement, to act in good faith. RAKIA claimed $1,562,500 by way of damages for unlawful conspiracy regarding the sale of the hotel.
Mr Azima argued that RAKIA’s claims were politically motivated. He claimed that the claims should be dismissed or struck out on the basis that RAKIA had relied on confidential emails, obtained by RAKIA’s unlawful hacking of his email accounts. Mr Azima counterclaimed in relation to the hacking under a number of heads of action and under UK and US legislation.
In 2020, Mr Andrew Lenon QC, sitting in the Chancery Division of the High Court, found that Mr Azima:
It was agreed between the parties that the hacking had occurred. Mr Azima contended that RAKIA was responsible. But RAKIA contended it “had come across the material innocently on the internet where it had been placed by anonymous hackers”. The judge rejected RAKIA’s suggestion but held that Mr Azima had not, on the balance of probabilities, proved his allegation. The counterclaim was, therefore, dismissed.
Mr Azima appealed on a number of grounds. One was that if the judge had decided that RAKIA was responsible for the hacking, then he ought to have struck out the claim as an abuse of process and, as such, his counterclaim was wrongly dismissed.
An application for permission to adduce fresh evidence was made in support of Mr Azima’s appeal. It was suggested that this fresh evidence would prove that RAKIA was responsible for the hacking.
He claimed that, as a result:
The appeal and the application were allowed in part. When striking out the appeal, the judge held that “even if the judge had found that RAKiA had been involved in the hacking… it would have been wholly disproportionate to have struck out its claim, thereby leaving Mr Azima with the benefit of his funds.”
Under CPR r32.1, the court has a power to “exclude evidence that would otherwise be admissible”, but this is not a duty. Indeed, there is no authority for the striking out of a claim solely because of the manner in which the evidence was obtained, let alone one in which the unlawfully obtained evidence had demonstrated fraud on the defendant's part.
The question for many may be whether this was in some way unethical or unfair. The court made clear that there is an important difference between a claim which was itself fraudulent or fraudulently exaggerated on the one hand, and a claim which, although well-founded, is supported by collateral lies. So it seems that intention, and whether ‘the wrongdoing’ itself is used by a party to get something to which it is not entitled, form the key to determining whether or not evidence should be excluded.
For such wrongdoing, the court could also express that disapproval in other ways, such as by costs penalties or the refusal of interest on damages.
Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, civil recovery, cryptocurrency and high-stakes commercial disputes.