Court of Appeal finds evidence should not have been excluded even if it was obtained by hacking

The Court of Appeal has dismissed an appeal against a judge's decision upholding a claim where the claimant had relied on evidence obtained through the unlawful hacking of the defendant's computer. The court found that, even if the claimant was responsible for the hacking (which had not yet been established) and its case would have failed without the unlawfully obtained evidence, the evidence should not have been excluded or the claim struck out: Ras Al Khaimah Investment Authority v Azima [2021] EWCA Civ 349.

This underlines the traditional approach of the English courts to unlawfully obtained evidence, which is generally to admit it if it is relevant to the issues in the case. The decision suggests that this will particularly be the case where the evidence would have fallen within the opponent's disclosure obligations in any event. It was also significant that refusing to admit the evidence - or striking out the claim as an abuse of process - would leave the defendant with the benefit of their fraud. The court described that element of public policy as "at least as strong, if not stronger, than disapproval of the means by which relevant evidence is gathered".

Of course, that does not mean that parties should have no regard for how evidence is obtained. The court may, in an appropriate case, exercise its discretion to exclude the evidence, or express its disapproval of the relevant party's conduct in other ways (eg by costs penalties or refusing to award interest on damages awarded). And such conduct may lead to other civil or criminal proceedings being brought.

Background

The claimant (RAKIA, the state investment entity of Ras Al Khaimah, in the UAE) brought claims against the defendant (Mr Azima) alleging that Mr Azima had induced it to enter into a settlement agreement by fraudulent misrepresentations, and also sought damages for an alleged unlawful means conspiracy. Mr Azima denied the claims and contended that the litigation was politically motivated.

Mr Azima contended that the claims against him should be dismissed or struck out on the basis that, in bringing the claims, RAKIA had relied upon confidential emails which it had obtained by hacking his email accounts. Mr Azima counterclaimed in relation to the hacking, advancing various claims including for breach of the Data Protection Act 1998, breach of confidence, misuse of private information and conspiracy to injure by unlawful means.

The High Court found in favour of RAKIA on its claims, and dismissed Mr Azima's counterclaim. The trial judge concluded that it was "not impossible" that RAKIA had been responsible for the hacking, but that Mr Azima had not established that on the balance of probabilities.

Mr Azima appealed on a number of grounds, including that the trial judge should have found as a fact that RAKIA had obtained the confidential emails by hacking, and therefore should have struck out the action as an abuse of process. He also appealed the judge's findings in relation to the counterclaim, and sought to adduce new evidence on that claim.

Decision

The Court of Appeal dismissed the appeal in respect of the claims against Mr Azima, with Lewison, Asplin and Males LJJ giving a single judgment. The court allowed the application to adduce new evidence on the counterclaim and remitted that claim to be heard by the Chancery Division.

This blog post focuses on the appeal in the claims against Mr Azima, and in particular the court's consideration of whether, if RAKIA was responsible for the hacking, the evidence obtained through hacking ought to have been excluded, or RAKIA's claims struck out.

In considering this question, the court assumed that: RAKIA was responsible for the unlawful hacking; its case would have failed without the documents obtained as a result of the hacking; and at least some of its witnesses gave dishonest evidence as to how RAKIA obtained the hacked material.

Excluding the evidence

The court noted that, apart from in cases of evidence procured by torture (as to which see this post), the general rule of English law is that evidence is admissible if it is relevant to the matters in issue. If so, the court is not concerned with how the evidence was obtained. While CPR 32.1 gives the court power to exclude evidence that would otherwise be admissible, that is a power rather than a duty.

In the present case, it was relevant that the materials obtained through hacking were documents which were within Mr Azima's control for the purposes of disclosure, and so those materials ought to have been available to RAKIA by the time of trial in any event. It was also relevant that the materials revealed serious fraud on the part of Mr Azima, which would have been a very serious bar to any application to return the documents under the court's equitable jurisdiction to retrain a breach of confidence (as in Istil Group Inc v Zahoor [2003] EWHC 165 (Ch)).

Accordingly, the Court of Appeal found that, if Mr Azima had applied before trial for an order requiring the return of the hacked materials, he would not have succeeded. There was no reason to apply a different approach after the evidence had been deployed at trial, and the judge's conclusion that he would not necessarily have excluded the evidence (if he had found that RAKIA was responsible for the hacking) was entirely correct.

Striking out after trial

CPR 3.4(2) provides that "the court may strike out a statement of case if it appears to the court … (b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings". The Supreme Court's decision in Summers v Fairclough Homes Ltd [2012] UKSC 26 (considered here) establishes that the court may exercise this power even after trial, but the power will be exercised very rarely - only if the party's abuse of process is such that it has forfeited the right to have its claim determined.

The Court of Appeal in the present case emphasised that the cases about striking out after trial were cases in which the underlying substantive claim had been brought fraudulently. The court had not been referred to any case where a genuine claim was struck out solely because the evidence in support of it was unlawfully obtained. That was an important distinction, in the court's judgment.

In the present case, the court said, RAKIA's alleged unlawful conduct was not central to its underlying claims against Mr Azima. That was also the case in so far as RAKIA's witnesses might be found to have given dishonest evidence, as they did not go to the merits of the underlying claims. It was also important to note that striking out RAKIA's claim would leave Mr Azima with the benefit of his fraud. That element of public policy was, the court said "at least as strong, if not stronger, than disapproval of the means by which relevant evidence is gathered".

Accordingly, even if the judge had found that RAKIA was responsible for the hacking, it would have been wholly disproportionate to strike out the claim and leave Mr Azima with the benefit of his frauds.

Note: The Supreme Court has refused permission to appeal against this decision.