Rasal Khaimah Investment Authority v Farhad Azima & Ors

A prior appellate order preserving a judgment despite alleged collateral dishonesty does not impose an absolute bar on a later claim to set aside that judgment for fraud. The question is whether genuinely new evidence has a real prospect of establishing both conscious and deliberate dishonesty and materiality.

Materiality is satisfied where the new evidence could have been an operative cause of the impugned decision, or would have entirely changed the first court’s approach. A claim meeting that stringent threshold represents a material change of circumstances and is not abusive merely because fraud was previously alleged. Finality remains important, but a properly arguable fraud claim is a recognised exception, especially where the proposed defendant was not previously vexed by the litigation.

RAKIA had obtained judgment against Mr Azima for deceit and unlawful means conspiracy. A later appeal remitted only Mr Azima’s hacking counterclaim for retrial, declaring that RAKIA’s substantive claims would not be struck out even if RAKIA were proved responsible for the hacking.

Following disclosure of further material, including Project Update Reports said previously to have been destroyed, Mr Azima sought permission to add a counterclaim to set aside the original judgment as procured by fraud. Michael Green J granted permission: [2022] EWHC 2727 (Ch). Mr Gerrard, Dechert and Mr Buchanan appealed, contending that the proposed counterclaim was an abusive re-litigation and collateral attack on the earlier Court of Appeal order.

The central issue was whether the earlier appellate decision precluded a set-aside claim founded on the later evidence of alleged pervasive fraud.

1. Appeal dismissed unanimously. The judge was right to permit the proposed set-aside counterclaim. His evaluative conclusion that it was not an abuse of process was not merely open to him; it was correct.

2. The earlier Court of Appeal’s order, made in proceedings reported at [2021] EWCA Civ 349, did not absolutely prohibit a future claim to set aside the deputy judge’s judgment for fraud. It addressed assumed dishonesty concerning the hacking as collateral to RAKIA’s substantive claims. It did not contemplate later evidence capable of establishing coordinated and pervasive dishonesty by witnesses whose credibility bore on those claims.

3. The proposed claim had a real prospect of satisfying the Fraud Condition and the Materiality Condition stated in Royal Bank of Scotland plc v Highland Financial Partners LP, [2013] EWCA Civ 328. The unchallenged finding that the evidence had a real prospect of being material meant that it was, for present purposes, decisive or qualitatively different new evidence. The appellants could not recast that issue as an absence of material change of circumstances.

4. A fraud claim seeking to set aside a first-instance judgment and consequential appellate orders was properly determined at first instance. Contested and fact-heavy allegations of fraud required pleadings and a factual re-evaluation. The set-aside counterclaim was therefore an effective alternative remedy to reopening the appeal under Civil Procedure Rules 1998, CPR 52.30.

5. Finality in litigation remained relevant, but fraud is a recognised exception. Since the Additional Defendants were not parties to the original proceedings or the proposed set-aside claim, there was no double vexation. In those circumstances, only a very rare or exceptional case would justify an abuse finding. Koshy was distinguishable: it involved a clear agreement not to pursue another route and no new material evidence.

• Court of Appeal (Civil Division): The appeals by the Additional Defendants were dismissed. The court upheld permission for the fraud-based set-aside counterclaim: [2023] EWCA Civ 507.
• High Court, Chancery Division: Michael Green J granted Mr Azima permission to amend and bring the set-aside counterclaim, rejecting the abuse-of-process objection: [2022] EWHC 2727 (Ch).