In a decision on 21 July 2026, the Court of Appeal (“CoA”) considered the question of whether obtaining or seeking to obtain an opponent’s confidential and privileged information (so-called “privilege hunting”) in order to gain an advantage in litigation, amounted to an abuse of process and if so, what the appropriate response of the court should be.
The parties
The first claimant, Mr Salinas Pliego is a Mexican businessman and the founder of Grupo Salinas, a Mexican conglomerate group. The second claimant is an entity ultimately owned by Mr Salinas.
The fourth defendant (“Mr Sklarov”) is a Ukrainian individual. The first, fifth and sixth defendants (Astor Asset Management 3 Ltd (“Astor 3”), Cornelius Vanderbilt Capital Management Ltd and Astor Capital Fund Ltd respectively) are Quebec, Belize and Bahamian companies associated with Mr Sklarov. The appeal did not concern the second and third defendants.
Background
The claimants’ claim they were deceived into entering into a Stock Lending Agreement (“SLA”). The claimants allege that the defendants used misleading names, falsely representing that they were a legitimate financial institution connected with the Astor family. The consequence was that in exchange for a $115m loan, the claimants transferred shares worth around $415m pursuant to the SLA.
The defendants deny the claims, maintaining that their actions were permissible under the terms of the SLA and that they are under no obligation to return the shares or to account for any equivalent value.
Proceedings were commenced in August 2024 and included claims for conspiracy, deceit, breach of trust and contract, knowing receipt, dishonest assistance and proprietary claims. A worldwide freezing order was obtained by the claimants against Astor 3 and Mr Sklarov. Additional freezing orders were subsequently made against other defendants. An application to discharge the freezing injunctions was dismissed in October 2024.
In the course of the proceedings, an interesting point arose regarding evidence obtained by a private investigation company (“Black Cube”) engaged by a company associated with the claimants. Black Cube had targeted the defendants’ solicitor, posing as a potential client to induce the solicitor to reveal confidential information about the proceedings. The meetings were secretly recorded.
The claimants subsequently sought to deploy that evidence in support of their application for summary judgment. The defendants applied to strike out the claim, on the ground that the Black Cube’s “privilege hunting” operation constituted an abuse of process.
The High Court decision
At first instance, Deputy High Court Judge Stephen Houseman KC posed the question: “[w]hat should the Court do when someone with an apparently strong and substantial, perhaps unanswerable, claim in fraud seeks summary judgment in light of illicit knowledge obtained by unethical means?”
He held the Black Cube operation - a sophisticated scheme to obtain confidential and privileged information to assist the claimants - was an abuse of process. He found that the conduct and quality of the behaviour in question was abusive, regardless of the impact on the proceedings. However, he declined to strike out the claim on the basis it would be disproportionate to do so at that stage. Instead, the claimants’ summary judgment application was struck out. The Court deferred to another hearing whether the claimants were entitled to make use of the relevant material at trial.
The claimants appealed the High Court decision. They submitted that the summary judgment application should not have been struck out without consideration of the impact of the behaviour on the proceedings, and the degree to which the claimants would be entitled to rely on the material obtained. The claimants’ asserted the information was not confidential and privileged, on the basis the ‘iniquity exception’ applied (i.e. that there is no confidence in iniquity and therefore no privilege arises).
The defendants cross-appealed on the basis the claim should have been struck out completely.
The Court of Appeal (CoA) decision
The issues to be decided by the CoA were summarised as followed:
- Was the claimants’ conduct an abuse of the process of the court?
- If so, was the Deputy Judge wrong in concluding that striking out the summary judgment application was the appropriate and proportionate response to the abuse?
- If so, what was the appropriate and proportionate response?
Abuse of process
The CoA had no doubt that seeking to obtain privileged information by deception, in order to obtain an advantage in litigation, was an abuse of process noting: “[s]ome things are so obvious that they do not need much analysis.”
The CoA did not find the High Court’s division of categories of abuse into those that are concerned solely with the quality of the behaviour itself, versus the impact of the behaviour on the proceedings, to be helpful. The CoA found that the conduct had “[u]ndoubtedly” had a “very serious impact” on the proceedings.
It was not relevant that some information might ultimately be held to fall within the ‘iniquity exception’. While the question of whether the exception applied was still yet to be decided, even if it did apply, the claimants could not have known that when they sanctioned the Black Cube operation.
Was the Deputy Judge wrong to strike out the summary judgment application?
The CoA went on to consider the appropriate response following the finding of abuse of process.
It identified three principles:
- the objective is not to punish the abusive party, but rather to protect the court’s process and wider administration of justice;
- the protection of the court’s process includes an element of deterrence, so that others are not tempted to replicate the behaviour;
- the response should be proportionate to the conduct, but in some cases the abuse may be so severe that a party should be treated as having forfeited the right to their claim or defence.
In the light of those principles, the CoA had no doubt that the Deputy Judge was justified in striking out the summary judgment application: to have allowed it to proceed would have rewarded the abusive conduct.
What was the appropriate and proportionate response to the abusive conduct?
The CoA also considered whether the Deputy Judge was wrong to find that striking out the summary judgment application should be the court’s sole response.
The defendants’ submitted that court’s default response to such abuse should be that the entire claim should be struck out. The CoA found that there was “no principled reason why ‘privilege hunting’ should attract this particularly draconian response as a default rule when other equally culpable forms of abuse do not” noting that the “response to abuse should be proportionate in that it should not over react to the misconduct in question, but must nevertheless properly reflect the gravity of that misconduct.”
However, the CoA found that striking out the summary judgment application was an insufficient response to the abuse of process, commenting that “it did not properly reflect the gravity of the claimants’ conduct and depended on the happenstance that the claimants had applied for summary judgment”.
The CoA considered it material that the claimants appeared to have a strong case on the merits, noting that there was a public policy consideration that fraud should be exposed. Striking out a claim completely was to be a measure of last resort; therefore, the CoA considered whether there was another response which reflected the seriousness of the misconduct.
Ultimately, the CoA found that the discharge of the freezing orders was a more appropriate and proportionate response to the abuse. It was certain that Black Cube’s first approach had occurred prior to the judgment on an application to discharge the freezing orders having been handed down. If the judge had known of the Black Cube operation, he would not have continued the freezing orders since “[a] party in the course of committing a serious abuse of the process of the court could not have expected to benefit from a discretionary remedy such as a freezing order.”
Accordingly, the CoA dismissed the claimants’ appeal and discharged the freezing orders. However, the claim was not struck out, and will continue to trial.
Comment
This case highlights the careful balancing exercise a court will undertake when determining the appropriate response to abusive conduct. While it will be a high bar for a court to determine that a whole claim should be struck out, this decision demonstrates that courts will impose serious sanctions when faced with abusive conduct in order to protect the integrity of the court’s process. In this case, that included discharging freezing orders - despite evidence of risk of dissipation.
This case also raises important considerations for practitioners. In its postscript to the judgment the CoA observed that a: “‘privilege hunting’ operation such as occurred in this case should have no place in litigation in the courts of England and Wales. Such litigation may be hard fought, but it must be fought fairly in accordance with the substantive and procedural rules which are designed to ensure a just result. … Solicitors in other cases who are presented by clients with the fruits of such ‘privilege hunting’ operations will need to consider carefully, not only their professional responsibilities, but also the possibility that by making use of such material they may be encouraging, or assisting their clients to benefit from, the commission of criminal offences.”
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