Ends justifying the means? The admissibility of illegally obtained evidence10 May 2021

Background

Mr Azima and Ras Al Khaimah Investment Authority (“RAKIA”) had entered into a settlement agreement in relation to a failed joint venture pursuant to which RAKIA paid sums to Mr Azima and his company. RAKIA subsequently contended that Mr Azima had induced the settlement through fraudulent misrepresentation, and further, that he had been involved in paying bribes to RAKIA’s former CEO. However, Mr Azima argued that RAKIA’s claims should be struck out on the basis that RAKIA had relied on evidence obtained by unlawful hacking of his email accounts. Mr Azima also counterclaimed in relation to the hacking.

The High Court found that Mr Azima had not proved the hacking allegation, had induced RAKIA to enter into the settlement by fraudulent misrepresentation and was guilty of bribery. Mr Azima appealed.

Admissibility of Evidence

RAKIA’s case was largely based on evidence obtained from the hacking, which Mr Azima contended was a result of his opening or clicking on links in targeted “phishing emails” he had received. He argued that RAKIA had been involved in the hacking, so this evidence should be excluded and the claim against him struck out as an abuse of process.

However, even if RAKIA had been found responsible for the hacking (which it had not), the Court of Appeal disagreed that the evidence should be excluded, noting that evidence in civil cases is generally admissible under English law if it is relevant to the matters in issue. Save in cases of evidence procured by torture, the court is not concerned with how the evidence was obtained³. While the court has discretionary power under the Civil Procedure Rules to exclude evidence which would otherwise be admissible, in exercising that power it is necessary to balance the achieving of justice in a particular case and promotion of the observance of law. If illegally obtained evidence is not excluded, the court can always express its disapproval in other ways, such as by imposing punitive costs consequences, or by refusing interest on damages².

The Court also made clear that Mr Azima would have been required to disclose the hacked materials to RAKIA in the course of the proceedings in any event, and that they revealed serious fraud on his part. This would have been a serious bar to any equitable relief in Mr Azima’s favour. If Mr Azima had applied for the return of the hacked documents prior to trial he would not have succeeded, and there was no reason to take a different approach once the hacked documents had been deployed at trial.

Striking Out After Trial

As to the strike out application, the court noted that while there is power to strike out after trial, cases where that power has been exercised are few and far between, notably where the underlying claim had been fraudulently brought or exaggerated. However, in this case, Mr Azima wanted the claim to be struck out solely because of how the evidence was obtained, even though the underlying claim was genuine, well-founded and demonstrative of fraud. The hacking made no difference to the merits of RAKIA’s claim and so it would have been wholly disproportionate to strike it out, leaving Mr Azima with the benefit of his fraud.

Adducing Fresh Evidence

Finally, the Court of Appeal considered whether Mr Azima could adduce fresh evidence in relation to his unsuccessful counterclaim for hacking. The fresh evidence consisted of a tip-off, received after the trial, which led Mr Azima to conclude that he had been one of several victims of a broader “hack-for-hire” operation. Mr Azima argued that this proved that RAKIA was involved in the hacking, and so the first instance judgment on the counterclaim had been obtained fraudulently, on the basis of RAKIA’s defence that it was not involved.

Although, in normal circumstances, the appellate courts will only permit new evidence where it could not have been obtained with reasonable diligence for use at trial, where it is alleged that a judgment has been procured by fraud, such normal restrictions will not normally apply. The Court of Appeal therefore accepted that a re-evaluation of the evidence was required, and decided to remit the counterclaim, rather than require Mr Azima to bring a fresh action to set aside the judgment on the counterclaim for fraud. The hacking saga will continue for now – RAKIA may not be completely “off the hook”.

Comment

While this case demonstrates that evidence obtained illegally will generally be found to be admissible in civil proceedings, a party engaging in such activities may still face serious consequences, particularly in relation to costs. Although the court will usually not allow the substantive merits of a claim to be barred by wrongfully obtained evidence, this case is certainly no green light to illegal activities.

Watson Farley & Williams LLP has considerable experience in litigating claims in English courts and is well placed to assist where fraud is an element of either a claim or a defence, having recently obtained a landmark judgment in the enforcement of adjudication decisions in cases of fraud.

This article was authored by London Partner Rebecca Williams and Associates Simon Jennings and Luke Denton.