Ras Al Khaimah Investment Authority v Farhad Azima

Factual and Procedural Background

This opinion concerns an application by the Appellant for permission to bring an additional counterclaim against the original Claimant, Company A, and to amend his statement of case. The dispute arises from prior litigation between Company A, a sovereign wealth fund of a foreign Emirate, and the Appellant, a US-based businessman with aviation industry dealings with Company A from 2007 to 2016. Company A sued the Appellant for fraudulent misrepresentation and conspiracy related to a Settlement Agreement and commission payments. The Appellant denied these claims and counterclaimed that Company A unlawfully hacked his email accounts, using the information against him in the claim.

The trial was heard by Judge Lenon, who found in favor of Company A on its claims and dismissed the Appellant's counterclaim. The Appellant was granted permission to appeal, and the Court of Appeal dismissed his appeal on Company A's claims but allowed the appeal on the counterclaim based on new evidence regarding Company A's responsibility for the hacking. The counterclaim was remitted for retrial before a different judge, with the condition that the original judgment and factual findings on Company A's claims must stand.

The Appellant sought permission to appeal to the Supreme Court, which was refused. Subsequently, the Appellant wishes to bring an additional counterclaim to set aside the original judgment on the grounds that it was procured by fraud, based on further new evidence alleging pervasive fraud by Company A and its witnesses. Company A has withdrawn from the proceedings, but four Additional Defendants, including individuals and a law firm connected to Company A, oppose the application.

The judge has previously dealt with various applications and set directions for the conduct of the proceedings. The current application is for permission to bring the additional counterclaim and amend pleadings accordingly.

Legal Issues Presented

1. Whether the Appellant should be granted permission to bring an additional counterclaim to set aside the original judgment on the grounds that it was procured by fraud, based on new evidence.
2. Whether the court has jurisdiction to allow the additional counterclaim given the terms of the Court of Appeal's remittal order.
3. Whether permitting the additional counterclaim would amount to an abuse of process, including issues of re-litigation and collateral attack on prior judgments.
4. Whether the Appellant has a real prospect of satisfying the stringent legal conditions (Fraud Condition and Materiality Condition) required to set aside a judgment for fraud.

Arguments of the Parties

Appellant's Arguments

• The Appellant argues that he has obtained substantial new evidence demonstrating that Company A and its witnesses perpetrated a pervasive fraud on the court at the original trial, including deliberate fabrication of evidence and concealment of hacking activities.
• He submits that the new evidence shows "conscious and deliberate dishonesty" sufficient to satisfy the Fraud Condition and that the fraudulent conduct was material to the original judgment, satisfying the Materiality Condition.
• The Appellant contends that the High Court retains jurisdiction to hear the additional counterclaim despite the Court of Appeal's remittal order and that the application is a proper procedural route rather than an abuse of process.
• He emphasizes that there was no unequivocal election to pursue only the appeal route and that the new evidence was not available at the time of the appeal, justifying the additional counterclaim.
• He argues that the finality principle does not bar the claim where fresh, significant evidence of fraud emerges, and that the fraud principle ("fraud unravels all") outweighs finality in this context.
• The Appellant submits that the new evidence undermines the credibility of Company A's key witnesses and would have materially affected the original findings, including reliance on representations and conspiracy claims.

Additional Defendants' Arguments

• The Additional Defendants contend that the application is an abuse of process as it seeks to re-litigate issues already decided against the Appellant by the Court of Appeal and the Supreme Court, constituting a collateral attack on those judgments.
• They argue that the judge's jurisdiction is limited by the Court of Appeal's remittal order and that the Appellant must apply to the Court of Appeal under CPR 52.30 to reopen the appeal if he wishes to challenge the original judgment.
• They submit that the Appellant made an election to pursue the appeal route rather than fresh proceedings, barring him from this procedural route.
• They challenge whether the Appellant can satisfy the Materiality Condition, asserting that the new evidence does not go beyond assumptions already made by the Court of Appeal and would not have materially changed the outcome.
• They rely on precedent emphasizing the finality of litigation and the limited circumstances in which judgments can be set aside for fraud.
• The Additional Defendants note that Company A has withdrawn from the proceedings and does not oppose the application, but they vigorously oppose it on the grounds above.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by outlining the stringent legal framework for setting aside a judgment on the grounds of fraud, emphasizing the Fraud Condition (conscious and deliberate dishonesty) and the Materiality Condition (the fraud must have been an operative cause of the judgment). The court accepted that the Appellant has a real prospect of satisfying the Fraud Condition based on the newly discovered evidence, including admissions of false testimony and documentary evidence indicating a pervasive fraud involving Company A and its witnesses.

The court then addressed the jurisdictional challenge, concluding that the High Court retains inherent jurisdiction to hear applications to set aside judgments procured by fraud and that the Court of Appeal's remittal order does not oust this jurisdiction. The Appellant’s choice to bring the claim within existing proceedings was appropriate, and the court rejected the submission that the Appellant must apply to the Court of Appeal to reopen the appeal under CPR 52.30.

Regarding abuse of process, the court applied a broad, merits-based approach focusing on whether the Appellant is misusing the court’s process by raising issues that could have been raised earlier. The court distinguished the present case from precedent where abuse was found, noting the significant new evidence unavailable previously and the absence of an unequivocal election by the Appellant to pursue only the appeal route. The court found that permitting the additional counterclaim would not constitute abusive re-litigation or a collateral attack on prior judgments.

On the Materiality Condition, the court accepted that if the pervasive fraud alleged is proven, it would have materially impacted the original judgment. The new evidence undermines the credibility of key witnesses relied upon in the original trial and would have influenced findings regarding reliance on representations and conspiracy. The court rejected the argument that the new evidence was merely within the scope of assumptions made by the Court of Appeal and found that the Appellant has a real prospect of satisfying the Materiality Condition.

In conclusion, the court granted permission for the Appellant to bring the additional counterclaim to set aside the original judgment and related orders on grounds of fraud, leaving other consequential procedural matters to be resolved subsequently.

Holding and Implications

The court’s final decision is to GRANT PERMISSION to the Appellant to bring an additional counterclaim against Company A to set aside the original judgment, the Court of Appeal Judgment, and their respective orders on the basis that they were procured by fraud.

The direct effect of this decision is that the Appellant may proceed with the additional counterclaim alleging pervasive fraud, supported by new evidence, for trial before the designated High Court judge. The judgment does not disturb the substantive claims previously decided in favor of Company A but allows the fraud allegation to be explored in relation to setting aside those judgments.

No new precedent is established beyond the application of existing principles to the facts of this case. Further procedural directions and potential amendments to pleadings will be addressed in due course.