‘In the event that the intelligence sourced by Black Cube is used and the Client or any of its related parties obtains pecuniary or monetary worth – whether in a form of money, shares, properties or other forms of value – compensation, awards, damages and/or any other remedy from any of the Counterparties or any other relevant party, by way of settlement, negotiations, enforcement, tribunal decision or in any other way, then Black Cube would be paid an additional Success Fee of 4% of the total amount or value received by the Client or any of its related parties.’
‘27. My observations can be summarised as follows, including by reference to the witness statement of X himself: (i) X was induced to meet on a false premise or basis. He was told that [‘Mr Ortelli’] represented a client with a substantial dispute and they wanted to interview him with a view to engaging his services. This was a lie. It is similar to the lie told by [Black Cube] to Justice Newbould in the Catalyst case (potential arbitral client). I doubt I am alone in regarding the word ‘pretext’ as somewhat euphemistic. (ii) There were three meetings. The first was conducted virtually with X in England for about one hour. The next two were held abroad in person on a single day: over lunch in a business environment and then dinner with alcoholic drinks in a restaurant, totalling about 5.5 hours. A local private investigation firm was retained by [Black Cube] to assist with this process. Further email communication between [‘Mr Ortelli’] and X followed the meetings. (iii) Through these three meetings, spaced apart as they were, X was skilfully and tenaciously steered by [‘Mr Ortelli’] into discussing various aspects of the litigation and settlement strategy of his clients, including by reference to the WFOs. This involved persistent questioning designed to elicit insights into Mr Sklarov’s business model or practices, his de facto control of corporate entities involved in this alleged fraud, the perceived legitimacy or otherwise of such practices, and the merits of the claim and his defence to such claim. (iv) On numerous occasions, [‘Mr Ortelli’] interrupts X so as to sharpen the focus of an answer or bring the subject back on track. Sometimes this is done by offering a selective or salacious recap of what he pretends to understand X has just told him (e.g. references to “Ponzi” and “Madoff”); other times by insisting on greater clarity where X has said something potentially ambiguous. On other occasions, X is left to speak freely because he is divulging what is being targeted and harvested by [‘Mr Ortelli’]. This may not amount to “baiting” as occurred with Justice Newbould. However, it has all the hallmarks of persistent leading, channelling and swarming of questions designed to pressure the interviewee into privileged and confidential territory. (v) At no point did [‘Mr Ortelli’] express any reservation or inhibition about X delving into confidential or potentially privileged territory. On the contrary, the line of questioning was designed to encourage X to do so whilst thinking he was in a safe environment. It is hard to imagine (a genuine intermediary of) a genuine prospective client behaving in this way or feeling comfortable with someone else’s solicitor speaking so freely and candidly about such sensitive matters in pending litigation – at any rate without saying something to sign-post their discomfort or break the momentum of candour. (vi) It is clear that [‘Mr Ortelli’] was very well briefed about the issues in these proceedings and nuances about the case. This is what enabled such close and careful interrogation of X. The preparation for that exercise must have been extensive, far exceeding the 4-5 hours estimated as judicial pre-reading for the present hearing. It is likely to have involved access to privileged and confidential information belonging to the claimants: see paragraph 17(iii) above. This degree of insight on the part of an interviewer is far removed from a situation in which (a genuine intermediary of) a genuine prospective client meets with a solicitor in good faith in order to evaluate their expertise and suitability for a specific dispute. The two scenarios are incomparable. (vii) The spacing apart of the meetings may have formed part of [Black Cube’s] use of its professed expertise in “psychological and behavioural pattern-identification”. It appears to have allowed [‘Mr Ortelli’] a better opportunity to build a “personal and/or professional” relationship with X, as promised by the terms of the [Black Cube] Retainer. This no doubt increased trust and candour, something [‘Mr Ortelli’] needed in order to extract sensitive information from X. (viii) X has explained in his witness statement why he engaged as he did during these meetings, e.g. out of courtesy or cultural sensitivity and an eagerness to impress. I prefer to say nothing about his interpretation given the potential disciplinary investigation he is now facing. He comments about the effect of alcohol at dinner, as someone who rarely drinks; but there is no evidence suggesting that his drink was spiked. (ix) X was lulled into a false sense of confidence and security, as evidenced by how he started to share personal information about his non-professional life and family members. He was the victim of a contrived rapport and false sense of confidence that encouraged an excess of candour. He was deceived and played for a fool by a skilful and well-prepared interrogator armed with insider knowledge. (x) X did all of this as a newly-promoted partner in the hope of winning a major client, and potentially building on that professional success down the line. Despite the deception and manipulation practised upon him by [‘Mr Ortelli’], X is responsible for any breach of client confidentiality.’ (i) X was induced to meet on a false premise or basis. He was told that [‘Mr Ortelli’] represented a client with a substantial dispute and they wanted to interview him with a view to engaging his services. This was a lie. It is similar to the lie told by [Black Cube] to Justice Newbould in the Catalyst case (potential arbitral client). I doubt I am alone in regarding the word ‘pretext’ as somewhat euphemistic. (ii) There were three meetings. The first was conducted virtually with X in England for about one hour. The next two were held abroad in person on a single day: over lunch in a business environment and then dinner with alcoholic drinks in a restaurant, totalling about 5.5 hours. A local private investigation firm was retained by [Black Cube] to assist with this process. Further email communication between [‘Mr Ortelli’] and X followed the meetings. (iii) Through these three meetings, spaced apart as they were, X was skilfully and tenaciously steered by [‘Mr Ortelli’] into discussing various aspects of the litigation and settlement strategy of his clients, including by reference to the WFOs. This involved persistent questioning designed to elicit insights into Mr Sklarov’s business model or practices, his de facto control of corporate entities involved in this alleged fraud, the perceived legitimacy or otherwise of such practices, and the merits of the claim and his defence to such claim. (iv) On numerous occasions, [‘Mr Ortelli’] interrupts X so as to sharpen the focus of an answer or bring the subject back on track. Sometimes this is done by offering a selective or salacious recap of what he pretends to understand X has just told him (e.g. references to “Ponzi” and “Madoff”); other times by insisting on greater clarity where X has said something potentially ambiguous. On other occasions, X is left to speak freely because he is divulging what is being targeted and harvested by [‘Mr Ortelli’]. This may not amount to “baiting” as occurred with Justice Newbould. However, it has all the hallmarks of persistent leading, channelling and swarming of questions designed to pressure the interviewee into privileged and confidential territory. (v) At no point did [‘Mr Ortelli’] express any reservation or inhibition about X delving into confidential or potentially privileged territory. On the contrary, the line of questioning was designed to encourage X to do so whilst thinking he was in a safe environment. It is hard to imagine (a genuine intermediary of) a genuine prospective client behaving in this way or feeling comfortable with someone else’s solicitor speaking so freely and candidly about such sensitive matters in pending litigation – at any rate without saying something to sign-post their discomfort or break the momentum of candour. (vi) It is clear that [‘Mr Ortelli’] was very well briefed about the issues in these proceedings and nuances about the case. This is what enabled such close and careful interrogation of X. The preparation for that exercise must have been extensive, far exceeding the 4-5 hours estimated as judicial pre-reading for the present hearing. It is likely to have involved access to privileged and confidential information belonging to the claimants: see paragraph 17(iii) above. This degree of insight on the part of an interviewer is far removed from a situation in which (a genuine intermediary of) a genuine prospective client meets with a solicitor in good faith in order to evaluate their expertise and suitability for a specific dispute. The two scenarios are incomparable. (vii) The spacing apart of the meetings may have formed part of [Black Cube’s] use of its professed expertise in “psychological and behavioural pattern-identification”. It appears to have allowed [‘Mr Ortelli’] a better opportunity to build a “personal and/or professional” relationship with X, as promised by the terms of the [Black Cube] Retainer. This no doubt increased trust and candour, something [‘Mr Ortelli’] needed in order to extract sensitive information from X. (viii) X has explained in his witness statement why he engaged as he did during these meetings, e.g. out of courtesy or cultural sensitivity and an eagerness to impress. I prefer to say nothing about his interpretation given the potential disciplinary investigation he is now facing. He comments about the effect of alcohol at dinner, as someone who rarely drinks; but there is no evidence suggesting that his drink was spiked. (ix) X was lulled into a false sense of confidence and security, as evidenced by how he started to share personal information about his non-professional life and family members. He was the victim of a contrived rapport and false sense of confidence that encouraged an excess of candour. He was deceived and played for a fool by a skilful and well-prepared interrogator armed with insider knowledge. (x) X did all of this as a newly-promoted partner in the hope of winning a major client, and potentially building on that professional success down the line. Despite the deception and manipulation practised upon him by [‘Mr Ortelli’], X is responsible for any breach of client confidentiality.’
‘(1) Does the claimants’ unethical behaviour involve or constitute an abuse of process? (2) What is the evidential status of the illicit information? (3) Depending on the answer to (2) above, is the claimants’ possession of illicit knowledge likely to obstruct the just disposal of these proceedings or otherwise create a substantial risk of an unfair trial? (4) If (1) or (3) above is shown, what is the appropriate and proportionate response of the Court? (5) In light of (4) above, are the claimants entitled to pursue their summary judgment application and, if so, should they be granted summary judgment or a conditional order?’
‘44. ... there are two broad categories or species of abuse of process: one which is concerned solely with the quality of behaviour and another which is concerned with the impact of that behaviour on the future course of a case and the integrity of its determination: see Raja v van Hoogstraten[2006] EWHC 1315 (Ch) at [31]-[32] (defendant’s complicity in the murder of the claimant).’
‘60. As regards the accrued position, I am satisfied to the requisite standard that the claimants engaged in abusive conduct by seeking or attempting to obtain confidential information from their adversary’s litigation solicitor as occurred. This is so irrespective of the precise evidential status of any material obtained by such unethical process, including whether privilege in any information is on proper analysis precluded by the iniquity principle. 61. Put bluntly, this is something that should not happen and it cannot be countenanced by the Court. The use of unethical methods to target an adversary’s solicitor in the hope of extracting sensitive information or insights from them is anathema to the norms and values of civil litigation. It is cheating the system with a view to undermining the level playing field which the Court strives to maintain between opposing parties. It offends justice.’
‘83. I am satisfied that this constitutes an appropriate and proportionate response to the claimants’ accrued abuse of process in circumstances where: (i) the summary judgment application was otherwise well made and might have succeeded based on the material I have seen, at any rate as regards proof of dishonest misrepresentations intended to induce the claimants; (ii) taking this approach deprives the claimants of any specific findings in their favour beyond and above those already made in an interlocutory context by Calver J and my own observations in paragraph 12 above; (iii) this may not be the only response of the Court in light of the potential prospective impact of the claimants’ abuse of process depending on the future outcome of Issue (3); and (iv) the claimants will be liable to pay the costs of the present hearing, which seems [sic.] likely to be awarded on the indemnity basis (see below).’ (i) the summary judgment application was otherwise well made and might have succeeded based on the material I have seen, at any rate as regards proof of dishonest misrepresentations intended to induce the claimants; (ii) taking this approach deprives the claimants of any specific findings in their favour beyond and above those already made in an interlocutory context by Calver J and my own observations in paragraph 12 above; (iii) this may not be the only response of the Court in light of the potential prospective impact of the claimants’ abuse of process depending on the future outcome of Issue (3); and (iv) the claimants will be liable to pay the costs of the present hearing, which seems [sic.] likely to be awarded on the indemnity basis (see below).’
‘This is a case about abuse of the process of the High Court. It concerns the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people. The circumstances in which abuse of process can arise are very varied; those which give rise to the instant appeal must surely be unique. It would, in my view, be most unwise if this House were to use this occasion to say anything that might be taken as limiting to fixed categories the kinds of circumstances in which the court has a duty (I disavow the word discretion) to exercise this salutary power.’
‘54. ... But where a litigant's conduct puts the fairness of the trial in jeopardy, where it is such that any judgment in favour of the litigant would have to be regarded as unsafe, or where it amounts to such an abuse of the process of the court as to render further proceedings unsatisfactory and to prevent the court from doing justice, the court is entitled - indeed, I would hold bound - to refuse to allow that litigant to take further part in the proceedings and (where appropriate) to determine the proceedings against him. The reason, as it seems to me, is that it is no part of the court's function to proceed to trial if to do so would give rise to a substantial risk of injustice. The function of the court is to do justice between the parties; not to allow its process to be used as a means of achieving injustice. A litigant who has demonstrated that he is determined to pursue proceedings with the object of preventing a fair trial has forfeited his right to take part in a trial. His object is inimical to the process which he purports to invoke.’
‘74. This was, therefore, a flagrant and continuing affront to the court. Striking out is not a disproportionate remedy for such an abuse, even when the petitioners lose so much of the fruits of their labour. 75. Even if the judge were correct in his analysis that all effect of the 1994 agreement could be excised from the petition and a prima facie case could be made out of what remained, I am quite clear that, if the CPR are to receive a correct start, then this court must make the clear statement that deception of this scale and magnitude will result in a party's forfeiting his right to continue to be heard.’
‘55. Further, in this context, a fair trial is a trial which is conducted without an undue expenditure of time and money; and with a proper regard to the demands of other litigants upon the finite resources of the court. The court does not do justice to the other parties to the proceedings in question if it allows its process to be abused so that the real point in issue becomes subordinated to an investigation into the effect which the admittedly fraudulent conduct of one party in connection with the process of litigation has had on the fairness of the trial itself. That, as it seems to me, is what happened in the present case. The trial was "hijacked" by the need to investigate what documents were false and what documents had been destroyed. The need to do that arose from the facts (i) that the petitioners had sought to rely on documents which Nigel Tobias had forged with the object of frustrating a fair trial and (ii) that, as the judge found, Nigel Tobias was unwilling to make a frank disclosure of the extent of his fraudulent conduct, but persisted in his attempts to deceive. The result was that the petitioners' case occupied far more of the court's time than was necessary for the purpose of deciding the real points in issue on the petition. That was unfair to the Blackledge respondents; and it was unfair to other litigants who needed to have their disputes tried by the court.’
‘57. The principled juridical basis for the exception is that it is a necessary ingredient of legal professional privilege that the communication should be confidential; and that the iniquity exception applies where and because the iniquity deprives the communication of the necessary quality of confidence: see the authorities considered in JSC BTA Bank v Ablyazov[2014] EWHC 2788 (Comm) , [2014] 2 CLC 263 at [76]-[92]. It is therefore an exception in the sense of something which prevents the privilege arising in the first place, not an exception in the sense of a disapplication of existing privilege. 58. Communications between a lawyer and client, or with third parties, are confidential if they take place in the usual course of the professional engagement of such a lawyer, notwithstanding that the engagement may concern an iniquity. This is why the iniquity exception does not apply to what Glidewell LJ referred to as the “ordinary run of cases” in R v Snaresbrook Crown Court, Ex p Director of Public Prosecutions[1988] QB 532 , 537-538. Such privilege is not prevented from attaching merely because the solicitor is engaged to conduct litigation by putting forward an account of events which the client knows to be untrue, and which therefore involves a deliberate strategy to mislead the other party and the court, and to commit perjury, as is clear from that case and R v Central Criminal Court, Ex p Francis & Francis[1989] AC 346 . Accordingly the touchstone in distinguishing such cases from those where the exception applies is whether the iniquity puts the conduct outside the normal scope of such professional engagement or is an abuse of the relationship which falls within the ordinary course of such engagement. This was the conclusion reached from the analysis of the authorities at para 93 in Ablyazov, cited with approval and applied by this court in Candey Ltd v Bosheh[2022] EWCA Civ 1103 ,[2022] 4 WLR 84 , paras 70-71 and 82-83. This was common ground on the current appeal.’
‘48. It is in the public interest that there should be a power to strike out a statement of case for abuse of process, both under the inherent jurisdiction of the court and under the CPR, but the court accepts the submission that in deciding whether or not to exercise the power the court must examine the circumstances of the case scrupulously in order to ensure that to strike out the claim is a proportionate means of achieving the aim of controlling the process of the court and deciding cases justly. 49. ... The draconian step of striking a claim out is always a last resort, a fortiori where to do so would deprive the claimant of a substantive right to which the court had held that he was entitled after a fair trial. It is very difficult indeed to think of circumstances in which such a conclusion would be proportionate. Such circumstances might, however, include a case where there had been a massive attempt to deceive the court but the award of damages would be very small. ... 61. The test in every case must be what is just and proportionate. It seems to us that it will only be in the very exceptional case that it will be just and proportionate for the court to strike out an action after a trial. ...’
‘62. Three other points are worthy of note. First, as we have said, the hacked materials ought to have been disclosed by Mr Azima anyway (except to the extent that they were legitimately covered by legal professional privilege). Second, to strike out RAKIA’s claim would leave Mr Azima with the benefit of his fraud. That element of public policy in civil cases is at least as strong, if not stronger, than disapproval of the means by which relevant evidence is gathered. Third, there are other ways in which the court may express its disapproval of the conduct of a party found to have procured relevant evidence by unlawful means: notably by penalties in costs or, perhaps, the refusal of interest on damages awarded.’
‘106. It seems to me that, in a case of this kind, where bad faith by the Claimants has been established, the court must be astute to ensure the Claimants are deprived of any advantages they may have derived from their serious breaches of their duty to the court. 107. I accept that [counsel] is entitled to ask me to consider as against that principle, the fact that the Defendants have admitted fraud and that a remedy against them in damages will be impossible if they have dissipated their assets. I accept also that there is evidence before the court that there is a good arguable case against the Defendants and evidence that they may indeed dissipate their assets before judgment. But this evidence cannot outweigh the necessity to demonstrate to the Claimants (and other applicants for without notice interim orders) the gravity of their duty of disclosure and the consequences of ignoring them. 108. I accept also that the rules I have described must not be used as an instrument of injustice. I do not, however, think it would be unjust to deprive the Claimants of the relief that they have obtained in flagrant breach of their obligations of absolute good faith. ...’