CL-2024-000450 - [2025] EWHC 2968 (Comm)

The claimants allege that they were deceived into concluding a Stock Loan Agreement dated 28 July 2021 (“SLA”) with the first defendant (“Astor 3”); and the first claimant (“Mr Salinas”) was likewise deceived into transferring a substantial number of shares in a Mexican company (“Elektra Shares”) to two appointed custodians, the second and third defendants, as collateral for the loan by Astor 3 to the second claimant (“RBS”). This financing structure is said to have been used by Mr Sklarov as part of a fraudulent scheme to expropriate the Elektra Shares, using some of the sale proceeds to finance the loan to RBS. This is the deceit claim.

The claimants also seek damages for breach of the SLA by Astor 3 through its transfer and disposal of the Elektra Shares to or via the fifth defendant (“Vanderbilt”). This is the contract claim.

Other pleaded claims include conspiracy, breach of trust or fiduciary duty, dishonest assistance and knowing receipt. They are not the subject of the claimants’ application for summary judgment.

It defines NEM as “the Client” in the introductory section or recital.

It comprises 23 numbered clauses spanning six pages, plus a 2-page Annex headed “Annex 1 - Primary objectives of the project”.

The primary objectives involve supporting “the Client’s legal efforts to obtain compensation for the damages caused by and to recover Elektra stock value caused by the alleged fraud suffered by the Client” (my emphasis). This reflects and augments the wording of clause 4 (“Objectives”). Both clause 4 and Annex 1 refer to such scope of work as “the project”.

Annex 1 identifies three individuals by name, as well as Mr Sklarov, as persons of interest for the investigation to be conducted by BC. One of those individuals is a foreign lawyer alleged to have facilitated the fraudulent scheme. Another is a person who was targeted and interviewed by BC. None of these identified persons are legal professionals with any involvement in these proceedings, past or present.

It is signed on behalf of BC by its sole director and founder, Dr. Avi Yanus. By the end of the hearing he had made four witness statements. His third statement was shown to me and admitted on the second sitting day pursuant to an application made by the claimants on my pre-reading day (31 October). His fourth statement was shown to me on the final morning of the hearing and sought to be admitted pursuant to a further application notice issued by the claimants during the second sitting day (4 November). I deal with this supplemental evidence separately below.

It is signed on behalf of NEM by Gabriel Roqueñi. He is understood to be a senior executive within the Elektra corporate group of which Mr Salinas is founder and principal. Mr Roqueñi has not provided any evidence in these proceedings. The claimants have not identified who communicated with BC or what information was given to BC in order to assist it with this project: see paragraph 19 below.

Clauses 1 to 3 are headed “General”. Clauses 1 and 2 describe BC’s capabilities and reputation. This includes impressive expertise of its personnel involving “a select group of veterans of elite units in the Israeli intelligence community, combined with financial and legal experts”. Clause 3 is redacted.

Clauses 5 to 7 are headed “The Research Processes”. They deal with how BC is to provide services pursuant to the agreed scope of work and in furtherance of the primary objectives. Clause 6 states that NEM will provide “all the relevant information that could support the evidence-gathering operations” with three categories identified as illustrations. The third category is “[a]ny documentation that the Client deems relevant to the purpose of the investigation” (my emphasis).

Clauses 8 to 12 are headed “Human Intelligence (Humint) approach”. These five provisions outline techniques used by BC with “unique expertise in social engineering, psychological and behavioural pattern-identification, and web capabilities” (clause 10).

Clauses 8 & 9 provide as follows:

“8.

Building on the research described above, [BC] will identify and select optimal subjects (hereafter the “Humint Targets”) to approach in order to extract the intelligence.

9.

[BC] will then find the best access points to the Humint Targets and create elaborate, personalized cover stories for each subject selected by the team and approved by the Client.” (my emphasis)

Clauses 11 & 12 describe methods used by “field agents” and “operatives” to extract human intelligence from targeted individuals, i.e. to build “personal and/or professional relationships with each of them to extract relevant information and evidence” (clause 12).

Clauses 16 to 22 are headed “Schedule and Fees”. These seven clauses occupy about one and a third pages of the BC Retainer, equating to roughly a third of the text comprising the 20 substantive terms found in clauses 4 to 23. Clauses 16 to 22 are redacted in their entirety. The claimants’ solicitors have refused to disclose any details about the structure or size of the fee paid to BC.

Clause 23 makes provision for the addition of VAT “according to English law”. Although there is no express choice of governing law in the BC Retainer, I was invited to proceed on the basis that its meaning is as appears on its face to an English lawyer.

Immediately above the signature space for the Client there is a statement of agreement to BC’s Terms and Conditions. I was not shown them. I assume they contain a choice of English law. I proceed on the basis that they do not impact anything I have to decide by reference to the contents of the BC Retainer.

NEM is not a claimant. It has suffered no loss or “damages” at the hands of any of the defendants or anyone else. It has no role or stake in any “legal efforts” to obtain compensation or recover stock value. Nor has it any independent means of deeming what documentation is “relevant” to the project. As noted above, there is no evidence from Mr Roqueñi or anyone else on behalf of NEM as to who communicated with or provided information to BC. Mr Salinas has not provided any evidence.

Clause 9 appears to require that BC’s selection of any so-called ‘Humint Target’ or “subject” must be “approved by the Client”. It is hard to see how NEM had any independent competence to give such approval in light of my observations above. Approval of this kind would have been needed from someone acting on behalf of the claimants with knowledge of this litigation in all likelihood, at any rate for targeting a person not identified by name in Annex 1.

It is difficult to see how BC could “extract” any “intelligence” from a legal representative of an adversary or suspected wrongdoer without being given meaningful insight into the nature and nuances of the particular legal dispute, here comprising the “primary objectives” as defined in the BC Retainer. In order for BC to do its job effectively and earn its reward by questioning this type of human target it would in all likelihood be made privy to privileged and confidential information belonging to the claimants in this matter.

In his first witness statement dated 5 March 2025, Dr Yanus stated (at paragraph 12) that BC was “left to conduct the investigation” and “did not exchange any emails or WhatsApp messages with the Client until the investigation was complete”. This evidence was clarified by his third witness statement prepared in light of the Astor Defendants’ contention that the claimants intended or expected BC to go ‘privilege hunting’ by targeting X or someone in his position, as occurred.

The clarification offered by Dr Yanus in paragraph 6 of his third witness statement left open the possibility that someone not acting on behalf of NEM itself was involved in the decision to approach X or informed about it at the time. Dr Yanus ignored the approval requirement in clause 9 (quoted above) in each of his first three statements. He gives no explanation as to how he or his team chose to target X in order to extract intelligence pursuant to the terms of the BC Retainer.

I am not prepared to admit Dr Yanus’ fourth witness statement in evidence. It was served far too late and does not respond to any new evidence. It is not appropriate to drip feed clarificatory evidence of this kind during a hearing, especially not a purported clarification of a belated clarification of witness evidence served for a hearing. Come what may, I do not regard the purported explanation (in paragraph 6) as to why BC identified the relevant solicitor as one of their “Humint Targets” as remotely credible. This looks like an attempt to insulate or distance the claimants from the decision to target X.

Most telling in all of this is the absence of any explanation as to how the decision was made to target X. By way of contrast and as noted above, the other person targeted by BC was identified by name in Annex 1 to the BC Retainer, as was a foreign lawyer engaged by Mr Sklarov.

So far as relevant, the claimants’ own witness evidence contains no denial of their involvement in the decision to target X - despite being challenged on this aspect. The invocation of privilege in respect of a meeting at which BC was given some information or instruction is not dispositive, as the claimants’ knowledge and conduct must have extended beyond this - including details found in Annex 1 to the BC Retainer; cf. paragraph 12 of Dr Yanus’ second witness statement.

The claimants’ own witness evidence in support of summary judgment appears to acknowledge that an “instruction” was given to BC regarding the targeting of X in this way: see paragraph 33 below. This does not sit comfortably with the evidence given by Dr Yanus.

I readily infer that (at least) the identity of X was provided to BC by someone on behalf of the claimants or easily identified from some inter partes correspondence provided to BC pursuant to clause 6 of the BC Retainer. Whether or not a specific instruction was given to BC to target X doesn’t ultimately matter; but it appears likely that there was some form of instruction or approval of his selection as a target by BC, as required by clause 9 of the BC Retainer.

This evidential episode does not reflect well on the claimants. The Court is left with the distinct impression that they are choosing to hide details which show the extent of their own role in targeting their adversary’s litigation solicitor in order to extract sensitive intelligence from him to assist them in these proceedings, as then occurred.

A “bonus structure” of this kind was agreed between BC and a company engaged by The Catalyst Capital Group Inc. as part of ‘Project Maple Tree’ undertaken by BC in Canada during 2017. This and other aspects of BC’s activities are recorded in a judgment of C. Boswell J dated 11 January 2021 dealing with an assertion of litigation privilege in respect of BC’s retention and performance of those particular services: see The Catalyst Capital Group Inc. & others v. West Face Capital Inc., BC Strategy Ltd., BC Strategy UK Ltd. & others¸ 2021 ONSC 7957.

On that occasion, BC’s project involved a so-called “pretext investigation” which targeted Justice Frank Newbould KC, a recently-retired Superior Court Justice who had given judgment adverse to BC’s ultimate client (Catalyst) in hard-fought litigation with a rival private equity business based in Toronto. Meetings were arranged on a false pretext during which the retired judge was “baited by the operative in an effort to elicit anti-Jewish sentiments” albeit without success. BC lied to Justice Newbould, took him to dinner and bought him drinks, doing their best to dupe him into making remarks against Jews or Catalyst, whilst secretly recording him: see [53], [89], [367]. BC’s base fee on that occasion was US$1.5m, but could have risen to US$11m through the agreed bonus structure: see [379].

It is noteworthy that the principal and founding partner of Catalyst (Mr Glassman) denied any knowledge of BC’s plan to conduct a pretext investigation on Justice Newbould: see [90]. Such disavowal found no favour in circumstances where Catalyst was prepared to pay BC such a high fee by reference to the fruits of its covert operation. This involved looking through to the substance of the transaction: it is the commercial stakeholder (i.e. litigant) who is buying information and they share responsibility for how it is done: see [378]-[379].

Further details of BC’s fee on that occasion are summarised in a later judgment of McEwen J dated 2 December 2021: see The Catalyst Capital Group Inc. v. West Face Capital Inc. & others, 2021 ONSC 7957 at [28]. This included a US$75,000 “per item” bonus if BC’s operatives could obtain evidence that Justice Newbould was biased against Catalyst/Glassman or held anti-semitic views, for example. BC’s conduct was described as “an affront to justice” even though it yielded none of the material being sought.

The Court has no way of knowing whether or how the team involved in targeting X, including BCO himself, were separately rewarded for their work on this project. A personal bonus or bonus-sharing scheme is not hard to imagine, but its existence or terms are not material.

The wholesale redaction of clauses 16 to 22 of the BC Retainer and the claimants’ refusal to reveal how much BC was paid, by or through whom or for what precisely, provides essential context to evaluate their bare denial that they intended or expected BC to engage in conduct of the kind they did pursuant to the BC Retainer. The claimants have refused to identify the process by which BC chose to target X.

X was induced to meet on a false premise or basis. He was told that BCO 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 BC to Justice Newbould in the Catalyst case (potential arbitral client). I doubt I am alone in regarding the word ‘pretext’ as somewhat euphemistic.

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 BC to assist with this process. Further email communication between BCO and X followed the meetings.

Through these three meetings, spaced apart as they were, X was skilfully and tenaciously steered by BCO 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.

On numerous occasions, BCO 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 BCO. 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.

At no point did BCO 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.

It is clear that BCO 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.

The spacing apart of the meetings may have formed part of BC’s use of its professed expertise in “psychological and behavioural pattern-identification”. It appears to have allowed BCO a better opportunity to build a “personal and/or professional” relationship with X, as promised by the terms of the BC Retainer. This no doubt increased trust and candour, something BCO needed in order to extract sensitive information from X.

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.

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 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 BCO, X is responsible for any breach of client confidentiality.

For the reasons given in paragraph 27 above, it is wholly unrealistic to suppose that X would have revealed what he did to (a genuine intermediary of) a genuine potential client in meetings convened to explore his professional experience and capabilities. BCO’s conduct of those meetings in bad faith bears no resemblance to the genuine scenario sought to be replicated or imitated through this covert operation.

BC was paid an undisclosed sum in order to use professed expertise to “extract the intelligence” by use of an “elaborate, personalized” cover story, to quote from their own retainer. It is hard to see what value BC would be adding, or why BCO conducted the covert interrogation in the manner that he did, if it just replicated a normal and honest situation.

The fact that X himself does not speculate about this hypothetical counterfactual in his witness statement does not preclude me from reaching my own conclusion based on the material I have seen and heard. I am satisfied that the way in which the meetings were conducted were designed to encourage or pressure him into revealing matters that were confidential to his clients and should never have found their way into the hands of a litigation adversary.

I accordingly reject the contention at paragraph 157(3) of the claimants’ skeleton argument that X “would have provided the same information to a genuine potential new client”. The so-called ‘causation issue’ raised as a primary answer by the claimants must also fail; cf. paragraphs 208-212 of their skeleton argument.

There is no attempt by Mr Ford to hive off the illicit information; on the contrary, it is stitched into the main narrative and analysis where curated extracts from the meeting transcripts are quoted. It is tempting to surmise that these selected snippets are the kind of ‘hits’ or ‘units’ that BC was financially incentivised to elicit from someone like X pursuant to clauses 16 to 22 of the BC Retainer, but that is not material to my conclusion.

Mr Ford refers to BC as one of the “private investigation teams” of the claimants themselves (paragraph 23). He was not concerned with privity or corporate personality or other legal technicalities when describing them in this way. I take his description to represent the reality of the arrangement, consistent with my findings set out above.

Paragraph 52 of this witness statement states: “I wish to comment upon the covert recording featuring [X]. As Dr Yanus describes, this instruction was given on behalf of the Claimants direct; that is, not by or with the knowledge of [their solicitors]…” (my emphasis). This is the “instruction” I allude to in paragraph 19(vi) above.

Mr Ford’s treatment of the information acquired by BC on behalf of the claimants, both from X and from the other human target, fills 13 pages of his witness statement. This includes his analysis as to its evidential status, including his own analysis as to the application of the iniquity principle (paragraphs 53 to 55).