Ras Al Khaimah Investment Authority v Azima

Relevant evidence in civil proceedings is generally admissible irrespective of how it was obtained. The court retains a discretionary power to exclude it, balancing the proper determination of the case against the public interest in observance of the law.

Striking out a well-founded claim after trial because supporting evidence was unlawfully obtained would be justified only in a very exceptional case. The court must distinguish fraud affecting the claim itself from collateral misconduct which does not affect the claimant’s substantive entitlement.

Fresh evidence capable of showing that a judgment on a counterclaim may have been procured by a party’s deliberate dishonesty can justify a trial of the fraud issue within the existing proceedings.

The respondent investment authority successfully sued the appellant for fraudulent misrepresentation and unlawful means conspiracy. The appellant’s counterclaim alleged that the respondent had unlawfully hacked his email accounts and used the resulting material to formulate its claims.

The deputy High Court judge rejected the respondent’s account of how it discovered the hacked material but held that responsibility for the hacking had not been proved. He dismissed the counterclaim and entered judgment on the substantive claims: [2020] EWHC 1327 (Ch).

The appellant challenged the factual findings, sought exclusion of the hacked evidence or striking out of the claims, and applied to adduce fresh evidence linking the hacking to contractors allegedly engaged on the respondent’s behalf. The central issues were the consequences of any unlawful acquisition of relevant evidence and whether the hacking counterclaim required retrial.

1. The appeal was allowed in part. The judgment dismissing the hacking counterclaim was set aside and that counterclaim was remitted to a different judge of the Chancery Division for a further trial. The judgment for the respondent on its substantive claims remained in force.

2. Relevant evidence in civil proceedings is generally admissible even when unlawfully obtained. CPR Part 32.1 confers a power, rather than a duty, to exclude otherwise admissible evidence. Exercise of that power requires attention to the competing public interests in determining the case correctly and promoting observance of the law. Here the hacked documents revealed serious fraud, would ordinarily have been subject to disclosure, and could not properly have been withheld from the trial court. Their exclusion would have allowed the appellant to retain the benefit of his fraud.

3. Even on the assumption that the respondent procured the hacking and witnesses lied about the source of the documents, striking out the substantive claims after trial would have been wholly disproportionate. Under Rule 3.4(2), post-trial striking out is a last resort reserved for very exceptional cases. A well-founded claim supported by collateral lies differs materially from a fraudulent or fraudulently exaggerated claim. Costs or refusal of interest may provide proportionate responses to unlawful evidence gathering.

4. The trial judge was entitled to infer reliance on the fraudulent misrepresentation. A principal may obtain relief where a representation is made to an agent who relies upon it when recommending the transaction, even though the representation is not repeated to the principal. The express statement in the settlement agreement that payment was made in reliance on the warranty reinforced the inference.

5. The finding that the referral agreement was a sham was procedurally fair. Although an honesty challenge should preferably be put expressly, the controlling question is whether the witness had fair notice of the challenge and a proper opportunity to answer it. The pleadings, trial materials and cross-examination supplied that opportunity.

6. The proposed evidence concerning the hotel transaction failed the requirements governing ordinary fresh evidence and was refused. By contrast, the new hacking evidence was capable of showing deliberate dishonesty causative of the dismissal of the counterclaim. The disputed evidence required re-evaluation at trial; it did not permit the Court of Appeal to make its own finding that the respondent procured the hacking.

• Court of Appeal (Civil Division): By [2021] EWCA Civ 349, allowed the appeal against dismissal of the hacking counterclaim, admitted fresh evidence concerning that claim and remitted it for retrial. It otherwise preserved the judgment on the respondent’s substantive claims.
• High Court, Chancery Division: By [2020] EWHC 1327 (Ch), upheld the fraudulent misrepresentation and unlawful means conspiracy claims and dismissed the hacking counterclaim. A further decision was given at [2020] EWHC 1686 (Ch).