Private investigation firm sued by client for breach of contract and negligence

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This case is one of a growing number of instances where clients or subjects of private investigators have made claims against private investigation firms in relation to the way information was collected.

FACTUAL BACKGROUND

The private intelligence agency Black Cube was recently the subject of a complaint lodged in the Commercial Court in London by one of its former clients, concerning its conduct and its investigative techniques.

Black Cube is no stranger to controversy and attention. In the past, he has worked for a number of high-profile individuals and companies, including Harvey Weinstein. However, this recent assertion serves to underscore that the previously shady world of investigations is increasingly coming into the spotlight and open to scrutiny.

The former client in question is Catalyst Capital Group Inc. (Catalyst), a Canadian private investment company. Catalyst is currently being sued by competitor West Face Capital Inc. (West face) in business related to a bid for a telecommunications company in 2014. West Face won the bid, but Catalyst appealed the decision, hiring Black Cube to gather information while the appeal was pending. .

Reports suggest that Catalyst hired Black Cube to obtain material to discredit both West Face and the Canadian judge who made the original decision. For these services, Catalyst agreed to pay a base fee of $1.5 million and a maximum of $11 million under a bonus system.

Techniques used by Black Cube reportedly included an employee posing as a businessman and inviting the judge to dinner, where the judge was interrogated for making racial remarks that would portray him in a negative light. The conversation was secretly recorded. Similar tactics were reportedly used against current and former West Face employees.

Upon learning of Black Cube’s involvement, West Face filed a counterclaim against Catalyst, alleging that the information collected by Black Cube was defamatory. Recent news articles commenting on a ruling on this counterclaim note that the judge described Black Cube’s investigative techniques as ‘fool West Face or the Canadian judge‘.

Catalyst has since filed a lawsuit against Black Cube in the London Commercial Court, claiming that West Face’s counterclaim arises from Black Cube’s negligence and breach of contract.

KEY LEGAL POINTS

Catalyst claims that Black Cube breached its obligation to ensure that all information collected was legal and admissible in Canadian court, and failed to ensure that its methods of investigation were ‘beyond reproach‘, and ‘would not expose claimants to claims from any of the persons or entities investigated by Black Cube‘.

Catalyst asked the court for compensation for all legal costs and damages it is obligated to pay in connection with West Face’s counterclaim, and for Black Cube to reimburse the costs it received from Catalyst.

REMARK

For clients of private investigators, the case highlights the need to be aware of how material and information is collected. If any information is obtained improperly or unlawfully, the material could be deemed inadmissible in court, but could also result in more serious consequences, such as exposure to civil action or even possible criminal charges. In this case, the sum sought by West Face from Catalyst as a result of Black Cube’s activities would be C$450 million (over £260 million).

For private investigative firms themselves, the case is another cautionary tale about the need to carefully consider and scrutinize the techniques used to obtain information, and determine whether they are appropriate given the landscape. legal and potential reputational risks. Private investigators must know if their activities expose them and their clients to legal action, and must be aware that one day these actions may be reviewed by a court… and by the court of public opinion.

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