Ehrentreu v IG Index Ltd (Rev 1)

The appellant appeals, with the permission of Lewison LJ, against the Order of Supperstone J dated 24 November 2015 dismissing the appellant’s counterclaim for breach of contract and breach of statutory duty. The appeal is limited to a challenge to the judge’s findings in relation to causation and mitigation in the breach of contract claim. There is no appeal against the judge’s findings that the respondent was not in breach of statutory duty.

The respondent is a spread-betting company regulated at the material times by the Financial Services Authority (“FSA”). The appellant had been a customer since 2001. The relationship between the parties was governed by a Customer Agreement in writing which took effect on 15 December 2007. Over the years the appellant had placed a number of substantial spread bets on the movement of the market. One such bet placed in the summer of 2008, on the movement of the share price of Royal Bank of Scotland (“RBS”), went disastrously wrong and by 14 October 2008, when the respondent closed out the bet, his account was over £1.2 million in debit.

The nature of spread betting and the risks it involves were helpfully explained by Rix LJ in Spreadex v Battu [2005] EWCA Civ 855 at [2] to [6] which the judge cited at [6] of his judgment. It is not necessary to repeat the citation here.

The terms of the Customer Agreement which are relevant for the purposes of this appeal provided as follows:

From time to time we may require you to provide deposits and margin which may only be provided in the form of cleared funds in our bank account…

In making any calculation of the deposit or margin that we require from you under this Term 14, we may, at our absolute discretion, have regard to your overall position with us including any of your net unrealised losses (i.e. losses on open positions).

In August 2008 the appellant placed two spread bets on the RBS share price going up over the quarter expiring on 16 September 2008. On 9 September 2008, he informed the respondent that he wanted to roll over those bets until the end of the next quarter. The existing “up” bets were closed and a new equivalent “up” bet expiring on 16 December 2008 was opened.

On 15 September 2008, the respondent made a margin call on the appellant for £197,195. Thereafter, margin calls with changing margin requirements were made on the appellant on a daily basis. A list of the calls and amounts between 15 September and 14 October 2008 is set out at [55] of the judgment. From that list it emerges that, whereas the margin call as at 19 September 2008 was £676,202, it then dropped to between £211,000 and £352,000 in the period until 29 September 2008 (reflecting that in that period the share price rallied). It was only on 30 September 2008 that it went back to over £600,000 and it then fluctuated at around that level until rising steeply to £877,680 on 7 October and £1,290,905 on 8 October 2008.

During that period, there were frequent communications between Mr Helal of the respondent and the appellant, the detail of which is set out at [33] to [54] of the judgment. During the course of those communications, Mr Helal pressed the appellant to pay funds to satisfy the margin calls and on a number of occasions the appellant indicated that funds would be forthcoming, but they did not appear. The appellant’s evidence was that as at about 9/10 October 2008, he thought that he would find the funds to pay the calls by refinancing property in the United Kingdom and he hoped that the RBS share price would recover.

In a conversation on 13 October 2008, the appellant told Mr Helal that he was proposing to refinance property to release equity of £1.2 million and asked him not to close the appellant’s position. As recorded in [49] of the judgment, the appellant said:

On 14 October 2008, the respondent closed the appellant’s position, leaving his account in debit in the sum of £1,270,350.75. On 30 April 2009, the parties entered into a settlement agreement for the payment of that debt, by which the appellant was to pay £125,000 straightaway and then £15,000 a month in instalments. The appellant made payments totalling £200,000 but then defaulted and, on 4 January 2011, the respondent commenced proceedings for the outstanding balance of £1,070,350.75. The appellant filed a Defence and Counterclaim denying liability. The basis of both his defence and the counterclaim was that the respondent was in breach of Term 16(4) of the Customer Agreement in not closing the appellant’s bet sooner and in breach of statutory duty, namely the FSA Conduct of Business Rules (“COBS”).

On 20 July 2011, Master Fontaine gave summary judgment for the respondent on most of the claim and gave the appellant permission to defend the balance. On appeal, on 29 June 2012, Macduff J gave summary judgment for the respondent on the whole claim. On 22 February 2013, the Court of Appeal dismissed the appellant’s appeal from that decision, holding that any right of set-off was excluded by the settlement agreement (see [40] and [47] of the judgment of Lewison LJ at [2013] EWCA Civ 95). However, the Court of Appeal held that the settlement agreement did not preclude the appellant’s cross-claim which could be pursued as a separate counterclaim (see [41]-[42] and [48] of Lewison LJ’s judgment). It was the trial of that counterclaim which was heard by Supperstone J.

Before considering the relevant parts of the judge’s judgment which are the subject of the present appeal, it is of some importance to look at the relevant regulatory regime imposed by the FSA pursuant to its Conduct of Business Rules.

Prior to 1 November 2007, COB 7.10.5R imposed a requirement on firms such as the respondent in these terms:

In Spreadex v Sekhon [2008] EWHC 1136 (Ch) before Morgan J, it was common ground that one of the purposes of COB 7.10.5R was to protect the customer against himself and that it was incompatible with the imposition of that duty that he could agree to give up the benefit of that duty. It is to be noted that, although the judge awarded the customer damages for breach of that statutory duty, he only did so for a limited period until, as he held, the claimant had reasonably re-categorised the customer as an intermediate rather than a private customer (so that COB 7.10 ceased to apply to him) and he held that the customer had been 85% contributorily negligent in relation to his losses.

However, with effect from 1 November 2007, COB 7.10 was deleted by the FSA. The detail of how that came about is set out by the judge at [89] to [93] of the judgment, which is not challenged on this appeal. In summary, the reasoning of the FSA, after consultation, was that the deletion would not have a material impact on consumer protection, because the margin requirements related to execution-only and non-advised transactions with consumers who were relatively sophisticated and it was market practice to close margin accounts in deficit in a shorter period than five days. High level MiFID requirements being introduced at that time did not include margin requirements.

Accordingly, with effect from 1 November 2007, COBS 2.1.1R came into force, which provides:

Like the judge I regard section 5 of the Financial Services and Markets Act 2000 as of some assistance in considering the purpose of COBS 2.1.1R. That provides:

The judge held at [99] that the respondent was not in breach of its statutory duty under COBS 2.1.1R to act in the appellant’s best interests by not closing out his bets in the relevant period between 15 September and 14 October 2008. He said that in reaching that conclusion he had regard to:

In relation to the breach of contract claim, the judge considered whether the respondent had engaged in a conscious exercise of discretion under Term 16(5) of the Customer Agreement to keep the appellant’s bets open. He concluded that he was not satisfied, on the evidence, that the respondent had ever exercised its discretion under Term 16(5), from which it followed that the respondent was obliged to close out the appellant’s positions under Term 16(4) and (5) and failed to do so ([82]-[83] of the judgment). The judge went on to find at [106] that that contractual obligation first arose on 24 September 2008, five business days after 16 September 2008 (when the margin call made the previous day fell to be paid).

In dealing with the question whether the breach of contract was the cause of the appellant’s loss, the judge dealt first with the submission by Mr Alan Gourgey QC, then appearing for the appellant, that the purpose and scope of COBS 2.1.1R when engaged by the need to exercise discretion under Term 16(5), was to ensure that the client's exposure to contingent liabilities from his open spread bets is monitored and managed in his best interests and having regard to his financial circumstances. On that basis, Mr Gourgey QC submitted that there was a direct causal link between the failure to close the bet and the loss arising at a later date. As the judge said at [113], the problem with that submission was that, as he had already held COBS 2.1.lR could not be interpreted by reference to former COB 7.10.5R. Accordingly, the purpose of COB 7.10, margin requirements, was immaterial.

He went on to deal (at [114]-[118] of the judgment) with the appellant’s alternative submission that, applying Galoo v Bright Grahame Murray [1994] 1 WLR 1360, regard was to be had to the obligation breached. Mr Gourgey QC submitted that the obligation in Term 16(4) to close down bets was for the benefit of the appellant, otherwise there was no need for the obligation and the respondent’s submission that it was not its breach of that obligation which caused the loss, because it was always open to the respondent to close down the appellant’s bets, would emasculate the obligation. The judge rejected that submission and accepted the respondent’s submission that the breach of contract was merely the opportunity for the loss, not its cause, and that it was the defendant’s decision to continue with his bets which was the cause of his loss.

The judge then dealt (at [119]–[124] of the judgment) with the respondent’s alternative case that, since it was the appellant’s positive decision to keep his bets open when he could have closed them down at any time had he wanted to which caused his loss, he had wholly failed to mitigate that loss. The judge rejected Mr Gourgey QC’s submission that it was not unreasonable for the appellant to take the view that the RBS share price might go up and thus to keep his bets open. The judge’s view was that the appellant could have avoided his loss by taking reasonable steps, namely the closing down of his position. He concluded that the appellant had wholly failed to mitigate his loss for the same reasons as had led him to the conclusion he had reached on causation.

The appellant pursues two principal grounds of appeal:

That the judge failed to appreciate the purpose and scope of the respondent’s obligation under Term 16(4) which was, at least in part, to protect the appellant from running the risks involved in keeping his bets open and that on that basis, the judge should have concluded that the respondent’s breach of contract was at least an effective cause of the loss;

That the judge’s conclusion that the appellant had wholly failed to mitigate his loss was vitiated for the same reasons and in any event, the judge failed to identify what steps a reasonable man in the position of the appellant ought to have taken and when.

There was also a cross-appeal by the respondent seeking to argue that the counterclaim was a denial of liability which was inconsistent with the settlement agreement and the judgment of Macduff J based on the settlement agreement. We did not hear any submissions in relation to the cross-appeal and it is unnecessary to say any more about it.

On behalf of the appellant, Mr Michael Wilkinson who now appears for him, emphasised the words in Term 16(4): “we are (except as provided in term 16(5)) obliged to close out such bets”, submitting that this imposed a clear obligation that, unless the respondent vetted the appellant’s position under Term 16(5) in accordance with what was in his best interests, the respondent had to close down his position. He submitted that the use of the word “obliged” was a clear indication that the provision was at least in part for the benefit of the appellant. The judge had not made any finding as to the purpose of the provision, so it would be dangerous to draw any inference, as the respondent invited the Court to do, that the judge was concluding that the provision was not intended to be for the benefit of the customer. His submission was that the judge should have made a finding that the provision was for the benefit of the customer, but did not, and that had he done so, his conclusion on causation would have been different.

Mr Wilkinson sought to buttress his submission that Term 16(4) was for the benefit of the appellant by pointing to the similarity in the wording of the provision to old COB 7.10.5R, which imposed a statutory duty on the spread-betting company, one of the purposes of which was to protect the customer against himself, as Morgan J found in Spreadex v Sekhon at [164]. He also submitted that the respondent was in a much better position to assess and monitor the state of the market and the movement of the share price than the appellant, that the respondent was, in effect, more of a moving force.

The duty to protect the appellant from himself was thus to prevent him from running risks which the respondent had agreed to protect him from, in a situation where the respondent had not vetted the appellant’s position under Term 16(5). Mr Wilkinson submitted that there was no conflict between that contractual duty and the statutory duty under COBS 2.1.1R because the contractual duty went further than the narrower statutory duty. Accordingly, there would be no inconsistency between a finding (as the judge found) that there was no breach of statutory duty and a finding that there was a breach of the wider contractual duty for which the appellant contended. In all these circumstances, the losses the appellant suffered were the inevitable consequence of the respondent not closing down his position on 24 September 2008, in breach of contract.

However, Mr Wilkinson accepted that, if the Court did not accept his submissions that one of the purposes of Term 16(4) was for the benefit of the customer, to protect the appellant against himself, the appeal against the judge’s conclusion on causation must fail.

In relation to the judge’s alternative basis for dismissing the counterclaim, failure to mitigate, Mr Wilkinson criticised the judge for not having analysed and decided what a reasonable person in the position of the appellant would have done in the circumstances. As for the respondent’s reliance before this Court on the principles articulated in the Supreme Court in Bunge SA v Nidera BV [2015] UKSC 43; [2015] 2 Lloyd’s Rep 469, Mr Wilkinson submitted that this was just another way of trying to apply the inappropriate approach in Galoo. Furthermore, he submitted that, as Lord Sumption JSC recognised in Bunge at [13], cases of anticipatory repudiatory breach such as that case give rise to their own peculiar difficulties and often prevent a straightforward application of ordinary contractual principles when measuring losses. The distinction which Mr Wilkinson drew between that case and the present was that in Bunge the party in breach bore no responsibility for the other party continuing to speculate by not re-entering the market, whereas here the respondent did assume responsibility for risks associated with the continuing speculation, having undertaken to be liable to prevent ongoing speculation.

On behalf of the respondent, Mr David Mayall submitted that, contrary to the appellant’s submissions, the judge did not find that the obligation to close out in Term 16(4) was imposed for the benefit of the appellant, even in part. He submitted that, on the contrary, it was implicit in the judge’s approach that he was rejecting any suggestion that the provision was inserted for the benefit of the customer. Had he been concluding that it was inserted for the benefit of and to protect the customer, given that he found that the respondent was in breach, it is difficult to see how he could have reached the conclusion he did on causation and a conclusion that it was inserted for the benefit of the customer and that the respondent was in breach, would have been inconsistent with his finding that there was no breach of the statutory duty to act in the client’s best interests.

Mr Mayall emphasised, by reference to the cases of Reeves v Commissioner of Metropolitan Police [2000] 1 AC 360 and Calvert v William Hill Credit Ltd [2008] EWHC 454 (Ch) (with which I deal in more detail below), that a finding of a duty owed to a person of full understanding to protect him from causing harm to himself was very rare indeed in the law of tort and that there was no reported case of the imposition of such a duty in contract.

Unless the appellant could establish that Term 16(4) was that very rare case of a contractual duty to protect the appellant from himself, the judge’s findings on causation were unassailable. They were essentially findings of fact applying common sense. They also accorded with the view of His Honour Judge Mackie QC (sitting as a High Court Judge) in IG Index v Leung Cheun [2011] EWHC 2212 (QB), albeit obiter, considering the same provisions in the respondent’s Customer Agreement at [46] (cited by the judge with approval at [108] of his judgment in the present case):

Mr Mayall submitted that the judge had been correct to conclude that the appellant could derive no assistance from the former COB 7.10. The margin requirements had a dual purpose, to protect the customer and to protect the firm and in a sense the sector generally, but they were deleted by the FSA with effect from 1 November 2007 on the basis that sophisticated customers did not require such protection. Hence the new COBS 2.1.1R, that the firm must act in accordance with the best interests of the client of which the judge found, for the reasons set out at [99] of the judgment, that the respondent was not in breach. Mr Mayall emphasised that the relationship was execution only and non-advisory and that there was no question of the appellant not understanding what he was doing. He had been spread betting on a large scale for a number of years.

In relation to the appellant’s other ground of appeal which seeks to challenge the judge’s alternative basis for dismissing the counterclaim, that the appellant had failed to mitigate his loss, Mr Mayall submitted that mitigation and causation were two sides of the same coin. He relied on the statement of principle by Lord Toulson JSC in Bunge SA v Nidera BV at [81]:

Mr Mayall relied upon the principle derived from cases like The Elena D’Amico [1980] 1 Lloyd’s Rep 75, considered by Lord Toulson in Bunge at [78] to [80]:

Mr Mayall submitted that, in the present case, the equivalent of the choice whether or not to re-enter the market is the choice by the appellant not to leave the market. The judge rightly found that the appellant deliberately made the choice not to leave the market. That was his speculation and he, not the respondent, is responsible for the consequences, on the hypothesis that the respondent was not under a duty to protect the appellant from himself. This analysis did not depend, as Mr Wilkinson was suggesting, on whether the breach of contract was anticipatory or actual. The point was that either way the breach was only the opportunity for the loss, it was the appellant’s free choice to leave his bets open which was the cause of the loss.

Despite Mr Wilkinson’s submissions to the contrary, I am quite satisfied that Mr Mayall is correct that the judge was proceeding on the basis that Term 16(4) was not a provision for the benefit of the customer. Whilst that may not be expressly stated in terms, it seems to me that it is necessarily implicit in the judge’s reasoning in [115] to [117] of the judgment, which is only explicable on the basis that the provision was not for the benefit of the customer. Furthermore, given that the judge concluded that there was a breach of Term 16(4), had he been deciding that the provision was the benefit of the customer, that analysis would be irreconcilable with his other conclusion (not the subject of any appeal) that there was no breach by the respondent of the statutory duty under COBS 2.1.1R to act in the best interests of the client. Despite Mr Wilkinson’s’s attempt to avoid this irreconcilability by arguing that the contractual duty is wider than the narrower statutory duty (an argument which I do not accept), it seems to me that a breach of the wider contractual duty for which he contends would inevitably mean that the respondent had failed to act in the best interests of the appellant and was in breach of the statutory duty, contrary to the judge’s conclusion that there was no breach of COBS 2.1.1R.

In any event, even if Mr Wilkinson were right that the judge had not decided the point, in my judgment, on its true construction, Term 16(4) is not a provision for the benefit of the customer. The use of the words “You acknowledge that” at the beginning of the provision seem to me to be more naturally conveying that the customer acknowledges that what follows is a provision essentially for the protection of the respondent rather than the customer. This is borne out by the use of the same words at the beginning of Term 16(6), an acknowledgment that if a decision is made to leave open bets under Term 16(5) this may lead to the customer incurring further losses, clearly intended to foreclose any complaint by the customer about such losses in the future.

As already noted, Mr Wilkinson placed considerable reliance on the use of the words in Term 16(4): “we are….obliged to close out such Bets” in support of his case that the provision imposed an obligation on the respondent to close out the appellant’s position which was, at least in part, for the benefit of the appellant. I consider that, in their context and, in particular the juxtaposition with: “You acknowledge that”, these words do not have that effect. Rather the meaning of “we are obliged” is “we will have to do it”, thus making it clear to the customer that, subject to the application of Term 16(5), this is what will happen, in order to ensure that the customer has no cause for complaint if his positions are closed down. The provision ensures certainty and, in that sense can be said to be intended to protect the respondent and its customers generally, but it is not intended to protect the individual customer against his own gambling addiction or considered choices.

To the extent that Mr Wilkinson sought to maintain an argument that Term 16(4) had the same meaning and purpose as former COB 7.10.5R, that argument is unsustainable. The Customer Agreement came into effect in December 2007 after COB 7.10 had been replaced by COBS 2.1.1R and, just as the judge held, the new provision cannot be interpreted by reference to the purpose of the provision it replaced, so COB 7.10 is immaterial to the construction and purpose of Term 16(4).

The conclusion that Term 16(4) does not impose an obligation on the respondent to act for the benefit of the customer and protect him from himself is borne out by the authorities which consider duties to another party to protect him against deliberately causing harm to himself. Reeves v Commissioner of Metropolitan Police [2000] 1 AC 360 was a case where the police were held by the judge at first instance to be in breach of a duty of care in tort owed to a prisoner in their custody to take reasonable steps to prevent his suicide. There was no appeal against that finding, but one of the issues on appeal concerned causation, in relation to which it was argued on behalf of the police that deliberately inflicting damage on oneself broke the chain of causation. The majority of the House of Lords rejected that argument, holding that the suicide was not a supervening event breaking the chain of causation, because it was the very thing the duty of care was imposed to guard against.

Lord Hoffmann stated the relevant principle in response to this argument in these terms at 368:

That case, obviously, was concerned with physical harm, personal injury or death, not economic loss. In Calvert v William Hill Credit Ltd [2008] EWHC 454 (Ch) the issue arose whether a bookmaker was under a general duty of care to protect a gambling addict from the consequences of his own compulsive problems. At the outset of his judgment Briggs J (as he then was) said that the case raised for the first time in an English court whether a bookmaker could be under a duty of care in such circumstances. Having cited the principle enunciated by Lord Hoffmann in Reeves, the judge said at [2]:

The judge held that the bookmaker was not under the wide general duty of care for which the gambler contended, but he found that the bookmaker was in breach of a narrower duty because it had assumed responsibility to implement a so-called “self-exclusion agreement” not to accept telephone bets from the gambler for a six month period, but had failed to implement the agreement, leading to the gambler incurring substantial losses. However, he went on to hold that the claim failed entirely as a matter of causation. Having said that causation is a matter of common sense he said at [196]:

The gambler appealed to the Court of Appeal, but only on that issue of causation, not on the issue whether there was a wider general duty of care. The Court of Appeal dismissed the appeal but the judgment of the Court (Sir Anthony May P, Lloyd and Etherton LJJ) made it clear that it was only considering the narrower duty found by the judge so the case was not analogous with Reeves. At [48] the Court said:

In Spreadex v Sekhon [2008] EWHC 1136 (Ch), to which I have already referred, Morgan J found that COB 7.10.5R imposed a statutory duty to prevent the customer from over-exposing himself to contingent liabilities, scarcely surprising since COB 7.10.2G said in terms that that was one of the purposes of margin requirements: see [114] and [120] of the judgment. However, that case is of no assistance to the appellant here, given the deletion by the FSA of the provisions for margin requirements, not re-enacted in COBS 2.1.1R (of which in any event the judge held the respondent was not in breach) and also given that the deleted provisions cannot be used to interpret the Customer Agreement.

So far as the law of tort is concerned, Reeves and Calvert demonstrate that the existence of a duty of care to protect the other party from deliberately inflicting economic harm on himself is, in the words of Briggs J, “truly exceptional”. As I have said, Mr Mayall submitted that the position was even more exceptional in the context of the law of contract: there is simply no reported case in which one party has been held to be under a contractual duty to protect a customer in the position of someone like the appellant against himself. Certainly Mr Wilkinson did not refer the Court to any such case.

In my judgment, it would require very clear express words in the contract, spelling out such a duty, before the Court could conclude that such an exceptional duty arose. Term 16(4) on any view does not contain such express words and is simply not a provision intended to protect spread betting addicts against themselves. That conclusion is scarcely surprising since the existence of such a duty would be inconsistent with the purpose of the Customer Agreement, which is to facilitate spread betting.

Accordingly, Term 16(4) was not inserted for the benefit of the customer and did not have as its purpose or as one of its purposes the protection of the customer against himself. In the light of that finding, as Mr Wilkinson accepted, the appeal must fail, since he is unable to show that any aspect of the judge’s reasoning on causation was vitiated. Furthermore, the findings on causation at [112] to [118] of the judgment were ultimately findings of fact and Mr Wilkinson was unable to point to any of those findings which it was not open to the judge to make on the evidence. Furthermore, I agree with Mr Mayall that, given that the FSA has decided that it is not necessary to protect the customer in these circumstances and the judge found that the respondent was not in breach of the client’s best interests rule in COBS 2.1.1R, it would be impossible to conclude that the judge was wrong in making the factual findings he did.

In the circumstances, the judge was entitled to conclude, applying the principle stated by Glidewell LJ in Galoo v Bright Grahame Murray [1994] 1 WLR 1360 at 1374, that the breach of Term 16(4) by the respondent was the opportunity for the appellant’s loss, not its cause, and that it was the decision by the appellant to continue with his bets open after 24 September 2008 which was the cause of his loss.

Given that conclusion, it is strictly unnecessary to deal with the appellant’s other ground of appeal, which seeks to challenge the judge’s alternative reason for dismissing the counterclaim, that the appellant had failed to mitigate his loss. However, since the point was argued on both sides I will deal with it briefly.

In my judgment, the short answer to this aspect of the appeal is that the submission by Mr Wilkinson that the judge did not analyse and decide what a reasonable person in the position of the appellant would have done in the circumstances, is simply wrong. The judge began by setting out at [119] and [120] the applicable legal principles as set out in Chitty on Contracts (now set out at paragraphs 26-079 and 26-081 of the 32^nd edition). Although the judge then deals with the point succinctly, at [121] to [123], he does consider that a reasonable person in the position of the appellant would have closed out his position.

There was no error in the judge concluding at [124] that the appellant had wholly failed to mitigate his loss for the same reasons as he had concluded that it was the appellant’s decision to continue to leave his bets open which was the cause of his loss. As Lord Toulson JSC said in Bunge, the duty to mitigate is an aspect of the principle of causation that the party in breach will not be held to have caused loss the other party could have avoided or, as Mr Mayall put it, causation and mitigation are two sides of the same coin.

In the circumstances, it is not necessary to consider in detail the debate between the parties as to the extent to which the approach of the Supreme Court in Bunge (which does not seem to have been cited to the judge) assists in determining whether the appellant failed to mitigate his loss or caused his own loss. Mr Wilkinson is obviously right that the facts of Bunge were very different from the present case, concerned as it was with anticipatory repudiatory breach of a contract for the sale of goods. Nonetheless, it seems to me that Mr Mayall is right that the factual differences and the nature of the breach should not affect the analysis and that there is a helpful analogy between the principle derived from cases like The Elena D’Amico considered by Lord Toulson and the position of the appellant in the present case. As Lord Toulson says at [80], in those cases the decision whether or not to enter a substitute market is the free choice of the innocent party separate from the breach and the speculation which way the market goes is that of the innocent party, for which the contract breaker is not responsible.

The answer to the distinction between that case and the present which Mr Wilkinson seeks to draw, as referred to at [27] above is that, contrary to his submissions and as we have found, the respondent had not assumed responsibility for the risks of continuing speculation by the appellant. It follows that, by parity of reasoning with Lord Toulson’s analysis in Bunge, in the present case the decision of the appellant to remain in the relevant “market” and leave his bets open was a deliberate choice on his part, independent of any breach by the respondent of Term 16(4). Whether analysed in terms of causation or failure to mitigate, it was that decision, not the breach, which caused his loss.

For the reasons I have given, I consider that this appeal should be dismissed.

I agree.

I also agree.