Ras Al Khaimah Investment Authority v Farhad Azima

Permission to bring an additional counterclaim to set aside a judgment for fraud depends on a real prospect of proving both conscious and deliberate dishonesty and materiality. The applicant bears the burden on both conditions. Materiality may be established where the alleged fraud was an operative cause of the decision, including where coordinated dishonesty materially affects witness credibility. A prior allegation of fraud, an earlier appeal, or a remittal does not automatically bar a fresh claim based on significant new evidence. The court retains jurisdiction to hear such a claim and must balance finality against the public interest that fraud should unravel.

Mr Farhad Azima sought permission under Civil Procedure Rules 1998 rules 20.4(2)(b) and 17.1(2)(b) to bring an additional counterclaim against RAKIA. He alleged that the original judgment in RAKIA’s favour had been procured by pervasive fraud involving unlawful hacking, fabricated evidence and concealment of documents.

The original judgment, [2020] EWHC 1327 (Ch), found for RAKIA. The Court of Appeal, [2021] EWCA Civ 349, dismissed the appeal on RAKIA’s substantive claims but remitted the hacking counterclaim. The Supreme Court refused permission to appeal. The issue was whether the proposed claim had a real prospect of success and was barred by jurisdictional limits, election, re-litigation or collateral-attack abuse.

1. An action to set aside an earlier judgment for fraud is a cause of action, not merely a procedural application. The applicant must show a real prospect of establishing both the Fraud Condition and the Materiality Condition, and bears the burden on both.
2. The Fraud Condition requires conscious and deliberate dishonesty relating to relevant evidence, conduct, statements or concealment. The Materiality Condition requires the alleged fraud to have been an operative cause of the impugned judgment. At this stage, the court assumed the pleaded allegations could be proved.
3. The fact that fraud had been alleged at the original trial and on appeal did not preclude the claim. The proposed claim relied on substantial new evidence, including admissions, invoices and Project Update Reports, which had not previously been tested. The case was distinguishable from Koshy, where there had been an election between procedural routes and no fresh evidence.
4. The High Court retained jurisdiction to hear a claim to set aside the First Judgment and the Court of Appeal judgment and orders for fraud. Consolidation with the remitted counterclaim was permissible for sound case-management reasons. The appellate order did not remove the High Court’s jurisdiction in all circumstances to consider a later, properly founded fraud claim.
5. Evidence of coordinated dishonesty by witnesses could materially affect their credibility on the substantive misrepresentation and conspiracy claims, not merely the collateral hacking issue. Mr Azima therefore had a real prospect of establishing materiality. The objections on jurisdiction, re-litigation and collateral attack were rejected, and permission was granted under rule 20.4(2)(b). The amendment application under rule 17.1(2)(b) was left for later determination.

1. Court of Appeal: [2021] EWCA Civ 349 dismissed the appeal on RAKIA’s substantive claims, remitted the hacking counterclaim, and declared that the substantive claims should not be struck out merely because RAKIA was responsible for hacking.
2. Supreme Court: permission to appeal was refused on 28 April 2022 because the application did not raise an arguable point of law.
3. High Court (Chancery Division): on remittal, permission was granted to bring the proposed additional counterclaim for fraud.