Sinclair Investment Holdings SA v Cushnie & Ors

This is an application for summary judgment against the First Defendant (“Mr. Cushnie”) for £2,350,000 (plus interest) as damages for fraud or conspiracy to defraud or equitable compensation for dishonest assistance. Other claims against Mr. Cushnie in these proceedings and the claims against the other Defendants to these proceedings are not the subject of this application.

The claim arises out of the collapse of the Versailles Group of Companies. Versailles Group Plc (“VGPLC”), originally owned by Mr. Cushnie (through a company of which he was a director and principal shareholder), was floated on the stock exchange, first on the Alternative Investment Market, and then in 1997 on the Official List. Mr. Cushnie was Chief Executive Officer and retained a substantial shareholding. VGPLC had a wholly owned subsidiary, Versailles Trade Finance Limited (“VTF”). VGPLC and VTF had common management and had some common directors, the principal individuals being Mr. Cushnie and Mr Clough.

VTF had for many years been engaged in a type of factoring described as Accelerated Payment Trading, under which manufacturers who had already agreed to supply goods to customers would sell the goods to VTF at a discounted price. VTF would sell the goods to the customer at their full face value and, on delivery to the customer, pay the manufacturer 80% of the discounted price. When VTF received payment from the customer, it would pay the manufacturer the remaining 20% of the discounted price less an interest charge on the 80% which it had already paid to the manufacturer.

The Accelerated Payment Trading carried on by VTF was funded by wealthy individuals or companies controlled by those individuals (“the Traders”) who advanced funds on the promise of an estimated return derived from the profits in the order of 15% per annum, and latterly by additional funding from three clearing banks. When the group collapsed, the Traders were owed over £23 million and the Banks were owed over £70 million.

Originally, the Traders advanced their funds to a company incorporated in England, but in early 1996 the operations involving the Traders were moved off-shore to a company incorporated in the British Virgin Islands, now called TPL. TPL was associated with VGPLC and VTF but was not owned by either of them. Mr. Cushnie was listed as a director from 9 March 1996 to 15 January 1998, although he says that was in “error”.

According to the Claimant, it was one of the Traders. It transferred four sums totalling £2,350,000 to TPL (£1,250,000 on 16 May 1996, £500,000 on 27 September 1996, £400,000 on 18 October 1996 and £200,000 on 7 February 1997), of which at least the first and the last are evidenced by a document in standard form prepared by TPL in the form of a letter from the Claimant to TPL countersigned on behalf of TPL. Following the final payment of £200,000 on 7 February 1997, the Claimant says a further document of this type was prepared covering all of the sums totalling £2,350,000 advanced to TPL which superseded the earlier agreements. This was countersigned on behalf of TPL by Mr. Cushnie (“the Agreement”). The Agreement (like the earlier agreements) stated that the Claimant’s funds had been provided for the purpose of buying and selling goods for the Claimant but that:

“If any of the money provided by [the Claimant] is not currently used in the purchase of goods it shall be deposited by [TPL] in trust for [the Claimant] in a money bank account or such other account as [the Claimant] shall from time to time discuss” (para. 2).

TPL apparently entered into a number of management agreements with VTF under which VTF took responsibility for managing TPL’s business. VTF was entitled to open accounts in TPL’s name, but it was not entitled to use the funds advanced to TPL by the Traders for its own purposes.

Although TPL paid out profits of the anticipated order to Traders, it now appears no goods were bought or sold on behalf of the Claimant (or indeed, apart from one occasion, for any of the Traders), and in accordance with the Agreement the money should have been deposited in a bank account in trust for the Claimant. It appears that the money was transferred very shortly after it was received by TPL to VTF (or occasionally other companies associated with Mr. Cushnie or Mr. Clough) and used by VTF (together with the funds advanced by the Banks) to carry out a process known as “cross-firing”, whereby VTF would make payments to non-trading companies which would simply return those payments to VTF, so as to make it appear that VTF’s turnover and profits from Accelerated Payments Trading were far greater than was actually the case, and as a result artificially enhancing the share price. In the period running up to the collapse of VGPLC, companies and individuals associated with Mr. Cushnie sold millions of shares in VGPLC making very substantial profits.

Following an investigation by the DTI, VGPLC was suspended by the London Stock Exchange, and the three Banks who had advanced funds put VGPLC into administrative receivership. The true position of those companies and of TPL, which in fact held no assets, either goods or money, representing funds advanced by the Traders, then became apparent. TPL was subsequently put into liquidation by the Order of the High Court of the British Virgin Islands.

Mr. Cushnie and Mr. Clough were eventually charged with two counts of conspiracy to defraud, one relating to VTF’s cross-firing operations and the other relating to the funds transferred to TPL by the Traders. Mr. Clough pleaded guilty to both charges. Mr. Cushnie accepted that cross-firing operations occurred but denied any knowledge of them. He was acquitted on that charge, but on 25 May 2004 he was convicted on the charge relating to the Traders funds and was sentenced to six years in prison. His application for leave to appeal against conviction and sentence was dismissed on 8 April 2005. A Compensation Order was subsequently made against him in the sum of just over £10 million. If he pays that amount (and he has until 22 April 2007 to do so, in default of which he will serve a further term of 3 years in prison), the Claimant would recover £1,115,185.

This Application was issued on 24 June 2004 on the basis of the conviction in the criminal proceedings. It was then agreed between the parties that it should be deferred until the resolution of the appeal. Following the failure of Mr. Cushnie’s appeal, the Application was restored, but was then subject to further adjournments, first at Mr. Cushnie’s request to enable him to represent himself, then because the Prison Service was unable to facilitate Mr. Cushnie’s attendance at Court, and then to accommodate a request from Mr. Cushnie that the hearing should be after a certain date when he could attend on license. The Application has now finally come before the Court for determination, less than 2 months away from the trial which, irrespective of the outcome of this Application, will proceed against both Mr. Cushnie (on other claims not the subject of this Application) and the other Defendants.

The matter has been argued before me, and if I am satisfied that the Claimant is entitled to summary judgment, it seems to me right that I should grant it notwithstanding the imminence of the trial which will proceed in any event.

I turn then to the question of whether the Claimant is entitled to summary judgment on these claims on the grounds that “the Defendant has no real prospect of successfully defending [these] claim[s]” (CPR24.2 (a) (i)). It is common ground that the test to be applied is the test in Swain v Hillman [2001] 1All ER 91, whether the Defendant has a realistic, as opposed to a fanciful, prospect of success. I also bear in mind that the question is the Defendant’s prospects at trial, and if there is any realistic prospect that the evidence for the Defendant might be strengthened between now and trial that must be taken into account, as emphasised by Ms. Prevezer QC, representing Mr. Cushnie on this application.

On liability, there are two points taken on behalf of Mr. Cushnie in opposition to the claim for summary judgment:

Locus Standi

Mr. Cushnie accepts that the 4 payments were made by a “Sinclair” entity (or entities) and that they were made as Traders. He says he believes that they were made by an Isle of Man company bearing the Sinclair name. In that connection, he refers to the fact that the Compensation Order made in the confiscation proceedings referred to Sinclair Holding Investments SA, which Mr. Cushnie says is a different name to the Claimant in this action and with an address in the Isle of Man, and that this accords with his understanding that the Sinclair entity which invested the money was an Isle of Man company. He says the Serious Fraud Office had available all the documents relating to Sinclair’s investment and “obviously concluded that it was made by a company other than that which is taking action against me, ie a company with a different name and one with an Isle of Man address” (pp.11-12 of his unsigned statement).

The Schedule to the Confiscation Order does indeed refer to Sinclair Holding Investments SA (some of TPL’s correspondence was also addressed to Sinclair Holding Investments). On the face of it, it appears to be an obvious typographical error, and that is confirmed by a letter dated 22 December 2005 from Helen Garlick, Assistant Director of the Serious Fraud Office (LH19 p.3).

Moreover, the evidence is that there never was an Isle of Man company called “Sinclair Holding Investments”. There was only one Isle of Man company with “Sinclair” in its name, Sinclair Investments. It had a different address, and was dissolved on 3 September 1996 before the last two payments were made (LH19 p1-2).

Lord Brennan QC, leading Counsel for the Claimant, also emphasised that in the criminal proceedings in support of the count of conspiracy to defraud Traders, the prosecution chose to call as one of their witnesses, Mr. Herzberg as Company Secretary of the Claimant. Leading Counsel for Mr. Cushnie did not challenge the evidence that Sinclair Investment Holdings SA was one of the Traders and had invested £2.35 million. Indeed the cross-examination was conducted on the basis that it was one of the Traders and had invested its money. Nor was it challenged in the compensation proceedings.

In any event, the Claimant has produced its bank statements for an account with Barclays Bank in Douglas, Isle of Man in its name, in which the relevant payments (in dollars) to TPL appear. Those bank statements were exhibited to Mr. Hemmings’ 14^th witness statement dated 14 July 2005 (LH14a pp5-7). Also exhibited to that witness statement were bank account statements for Versailles Traders Limited (now TPL) obtained from the SFO materials which record payments as received by CHAPS transfer from “Sinclair Inv Holdi” corresponding to the payments out of the account in the Claimant’s name in the Isle of Man (“Sinclair Inv Holdi” obviously being an abbreviation for Sinclair Investment Holdings).

In his 17^th witness statement dated 28 September 2005, Mr. Hemmings produced further copies of the bank statements of its bank account with Barclays in the Isle of Man, which he said had been certified by Barclays, and which bore the stamp of Barclays Private Client International Limited, with the date (27 July 2005) and sort code. They were accompanied by a coversheet on Barclays letterhead signed by a Mr. Dino Mazzone.

Despite this evidence, Mr. Cushnie who had now instructed solicitors to act on his behalf, caused them to write directly to Barclays in the Isle of Man on 4 October 2005, saying their Client was “concerned to verify whether or not the bank statements were certified by your Bank, or whether the statements may have been falsified by the Claimant company”. They asked for confirmation that an authorised representative of the Bank did certify the statement, that the enclosed copies were genuine copies of the bank statements in relation to an account held at the Bank, and that the holder of the account was Sinclair Investment Holdings SA, a company incorporated in the British Virgin Islands under company number 91150. Barclays not surprisingly declined to provide the information directly to a third party without the customer’s consent, which had to be given by letter signed in accordance with the bank mandate.

There then followed protracted correspondence between Mr. Cushnie’s solicitors and the Claimant’s lawyer. Eventually, Mr. Hemmings says the Claimant wrote to Barclays on 29 November 2005 authorising them to confirm directly to Mr. Cushnie’s solicitors the information requested. An unsigned copy of that letter, addressed to Mr. Mazzone, is exhibited to Mr Hemmings’ 21^st witness statement.

In the absence of any response from Barclays, on 19 January 2006, the day before this hearing, a representative of the Claimant contacted a Mr. Jones at Barclays by telephone and fax, and Mr. Jones then tried to contact Mr. O’Sullivan of Mr. Cushnie’s solicitors in the course of the day, leaving messages and the number of his direct line, but his calls were not returned by Mr. O’Sullivan. This appears from Mr. Cole’s letter of 20 January 2006, the day of the hearing, which was produced in Court. In his letter, Mr. Cole at Barclays refers to the request of the Claimant’s representative that he “contact Mr. Bernard O’Sullivan at Byrne & Partners to confirm that certified copy statement documentation for the account at Sinclair Investment Holdings SA sent to their offices in July was indeed certified by my colleague Dino Mazzone and where [sic] indeed correct”. Mr. Cole went on to say that the copy statements showed the four transactions or payments to Versailles Trade (now TPL) as set out below from Sinclair Investment Holdings SA “as they are indeed the account holder”, and then gave the details of the transactions as they appear in the bank statements.

Ms. Prevezer on behalf of Mr. Cushnie criticises the late production of this letter and says that Mr. Cushnie and his advisers have had no time to consider it properly. Be that as it may, the letter has now been received, and it is quite clear. Those were indeed copies of the bank statements for the account, and they were correct in showing the four payments made to TPL by the Claimant, which is “indeed the account holder”. Following receipt of that letter, in my judgment there can no longer be any conceivable basis (if there ever was any) for maintaining the suggestion that the bank statements might have been falsified by the Claimant.

Ms. Prevezer QC sought to make other points on the letter. For example, she said it was very peculiar that the Bank had tried to contact Mr. Cushnie’s solicitors directly by telephone. But Mr. Cushnie’s solicitors had been pressing all along for the Bank to provide the information to them directly and not via the Claimant, and the Claimant’s letter of 29 November 2005 authorised the Bank to do so. When nothing had been heard from Barclays by the day before the hearing, the Claimant asked Mr. Jones to contact Byrne & Partners as a matter of urgency. Hence Mr. Cole’s two telephone calls to Mr. O’Sullivan, apparently not returned.

Ms. Prevezer QC also says the letter refers to a fax from the Claimant which has not been disclosed. It is not necessary to see the fax to understand the letter. She says there is no reference to the account number out of which the payments were made. The reference to “the copy statements” at the beginning of the fourth paragraph of the letter is clearly a reference to the copy statements sent to the Claimant in July and certified by Mr. Jones’ colleague, Mr Mazzone, referred to in the previous paragraph of the letter, and when it refers to the account holder as being Sinclair Investment Holdings SA, it is plainly referring to that account.

Ms. Prevezer QC says the letter does not provide confirmation in terms that the copy bank statements provided at the end of July were indeed true copies of the redacted ledger. But in substance it does, and it specifically confirms that the copy statements are correct in showing the four payments to Versailles Trade from Sinclair Investment Holdings SA which is “indeed the account holder”. Ms. Prevezer QC also says the Bank mandate has not been produced, but that does not appear to have been part of the information requested by Byrne & Partners. (The Bank wanted the Claimant’s consent to disclosure provided in a letter signed in accordance with the Bank mandate, but that is a different matter). Ms. Prevezer QC also says the letter does not confirm Sinclair Investment Holdings SA was a British Virgin Islands company. Perhaps not, but the letter confirmed the crucial point that the payments had indeed been made by Sinclair Investment Holdings SA from this account to Versailles Traders (now TPL), and that the account was indeed in the name of Sinclair Investment Holdings SA, the Claimant company.

Moreover, profits or interest on the investment was also paid by TPL to the Claimant company as appears from a fund transfer advice exhibited to Mr. Hemmings’ latest witness statement (LH27 p16), yet further evidence (if it were needed) that it was the Claimant Company who made this investment. The fact that it is a different account is no doubt because the payment is in sterling, whereas the account from which the Claimant made the payments was a US Dollar account, but it is an account at the same branch in the name of Sinclair Investment Holdings.

In the light of all that material, the suggestion that these payments were made by someone other than the Claimant company seems to me to be completely fanciful. In my judgment, Mr. Cushnie has no realistic prospect of success on this issue.

Authenticity of the Agreement

I turn now to the second point, the suggestion that the Agreement prepared on or about 9 April 1997 covering the total payments in the sum of £2.35 million was a forgery.

Mr. Cushnie says it is a forgery. He also says (and he is supported in this by evidence from Tiffany Weaire) that it was not in accordance with TPL's practice, which was to sign a Traders Agreement with a Trader when he made his first investment, but not for subsequent investments when a letter would simply be sent acknowledging the further investment, still less would there be a subsequent agreement covering all the investments made.

There are a number of copies of this document in evidence. The Claimant produced a copy of what it says is its counterpart of the Agreement (Pleadings Bundle, Tab 13 pp17-18). It has apparently lost the original. It has also produced a copy of what it says is TPL’s counterpart which Mr. Hemmings was given by Mr. Akers of Grant Thornton, one of the liquidators of TPL, in Mr Akers’ offices on 7 October 2003. When Mr. Akers gave him this copy, Mr. Hemmings scribbled a note on it to say that he had seen the original.

Mr. Cushnie’s lawyers have now obtained a copy of the original TPL counterpart and have had it examined by a forensic expert, Dr. Giles. Dr. Giles confirms that it is indeed Mr. Cushnie’s signature on the second page. But she also says that the second page is identical to the second page of the copy of the earlier agreement for the payment of £200,000 exhibited by the Claimant, which she says must be a copy of the second page of the original TPL counterpart of the Agreement dated 9 April 1997. The 2^nd page of the original TPL Counterpart is also different from the second page of the copy which Mr. Hemmings says he obtained from Mr Akers in October 2003 on which he noted that he had seen the original. Dr. Giles also says that the two pages comprising the original TPL counterpart were not attached to each other and it would be a simple matter to place a signature page from another agreement behind the first page.

Mr. Hemmings has also now produced a further copy of the TPL counterpart of the Agreement which he obtained from Mr Akers in July 2005, on which Mr. Akers certified that it was a true copy of the original. It appears to be the same as the original now produced by Mr. Cushnie’s lawyers.

Mr. Hemmings does not know why the second page of the original TPL counterpart of the Agreement appears to be different from the second page of the exhibited copy he received in October 2003 and on which he noted that he had seen the original. He thinks it may be that in the process of copying these agreements many times over the years for the purposes of this litigation, he or someone else may have inadvertently replaced the back page of one Trader Agreement with the back page of another which looked very similar.

This allegation of forgery was made in the proceedings for the winding up of TPL in the British Virgin Islands. Those proceedings were strenuously opposed by Mr. Cushnie through his company, Marrlist Ltd, the fourth Defendant in these proceedings. Mr. Cushnie/Marrlist suggested that the document was a forgery and sought an order for its examination. The application was dismissed by the Court and leave to appeal was refused.

In the course of the BVI proceedings, an affidavit was sworn by Fiona Marsh, an expert in document examination who was trained by and worked for the Metropolitan Police for eight years (LH14A pp12-13). On 23 May 2000 she examined two documents:

Ms Marsh confirmed they were both original documents bearing original signatures, and there was no evidence of any additions or alterations of any kind.

In the exhibits there is also an earlier letter of Ms. Weaire dated 8 April 1997 addressed to Mr. Hill at “Sinclair Holding Investments” enclosing “two copies of the new Trader Agreement”. She asked him to sign and return them, whereupon she would “arrange for the Agreements to be countersigned and a copy returned to you for your records” (LH14A p4). It appears that two counterparts were sent by TPL to the Claimant under cover of Ms. Weaire’s letter of 8 April 1997. As requested, the Claimant signed and returned them to TPL for countersignature, and TPL then returned one of them to the Claimant under cover of Ms. Weaire’s letter of 11 April 1997.

At all events, it is quite clear from this material that in May 2000 there was at least one original of the Agreement for £2.35 million in existence, bearing original signatures, which was seen and examined by Ms. Marsh, who found no evidence of alterations or additions of any kind, whatever may or may not have happened to the originals or copies thereafter.

Even if there were doubt about the existence of the Agreement for £2.35 million of 9 April 1997, the only effect would be to revive the earlier Agreements which were to be superseded by it. As Lord Brennan QC emphasised, there is no evidence suggesting that the first agreement for £1,250,000 signed by Brian Smith is a forgery. Indeed, it is Mr. Cushnie’s own case that the TPL’s practice was to enter into an agreement with the Trader when he made the first investment (here £1,250,000) and subsequent investments were simply acknowledged by letter.

Ms. Prevezer QC says that that is not the Claimant’s pleaded case, which she says is based on 9 April 1997 Agreement, not the earlier agreements. She also says that any doubt about the authenticity of the Agreement of 9 April 1997 must inevitably bring into question the authenticity of earlier agreements.

It is true that the Claimant pleaded and relied upon the Agreement of 9 April 1997. But it also pleaded that the Agreement replaced the earlier agreements, and that “the Agreement recorded the basis upon which it had been commonly understood and accepted, on the dates when Sinclair provided sums to TPL, that such sums were to be provided” (paras 16 & 17 of Re-Re-Amended Particulars of Claim). That was and remains its case because the Agreement was entered into. If, however, there is anything in Mr. Cushnie’s suggestion that the Agreement of 9 April 1997 was not authentic, all that would do is revive the earlier agreements which (on this hypothesis) would not have been superseded by the Agreement. The Claimant has pleaded both the earlier agreements and the fact that they were superseded by the Agreement of 9 April 1997. On this hypothesis, the allegation in the pleading that the agreement replaced the earlier agreements would fall away, leaving the earlier agreements pleaded. That is the obvious effect of challenging the authenticity of the Agreement of 9 April 1997 on the Claimant’s pleaded case. If Mr. Cushnie is to succeed on this ground, he must challenge not only the authenticity of the Agreement of 9 April 1997, but also the earlier agreements which it was to replace.

Moreover, to challenge the authenticity of the earlier agreements, he must advance some credible evidence that they are not authentic. It is not enough to make the broad assertion that if there is a doubt about the authenticity of the Agreement of 9 April 1997, there must also be doubt about the authenticity of the earlier agreements as well. As Lord Brennan QC rightly emphasises, there is simply no evidence challenging the authenticity of the first agreement, whether from Mr. Smith who signed it or anyone else.

In any event the Trader Agreements were in standard form. As I have already stated, it is not disputed that one or more Sinclair entities did make these payments to TPL, and made them as a Trader, and it is quite clear, as I have already held, that it was in fact the Claimant who made them.

In my judgment, there is no realistic prospect of Mr. Cushnie successfully defending the claims on this ground either, and accordingly I find the Claimant is entitled to summary judgment on liability. I turn now to consider the question of damages.

Ms. Prevezer QC on behalf of Mr. Cushnie says there is in any event a real dispute on quantum. She points to the Claimant’s own evidence that it received substantial payments of profits or interest on the investment before the collapse of the Versailles Group, which she says must be taken into account in computing the Claimant’s loss. In her Skeleton Argument, she also took a point on the Compensation Order under which the Claimant will receive £1,054,065 from Mr. Cushnie prior to 22 April 2007 if he complies with it.

As regards the point on profits or interest, Lord Brennan QC submitted that no credit fell to be given for these sums in computing the Claimant’s loss, because that is what the Claimant would and should have received (as well as repayment of its capital) had this been an honest contract as it was supposed to be and not, as it turned out, a complete fraud.

As regards the point on the compensation order, Lord Brennan QC submitted there was no difficulty. If Mr. Cushnie paid the sums due under the compensation order, the Claimant would give credit for the amount received in any recoveries under the judgment in these proceedings. If, on the other hand, the Claimant recovered under its judgment in these proceedings first, that would pro tanto reduce the amount Mr. Cushnie was liable to pay under the compensation order, having discharged it in another way. Ms. Prevezer QC did not address any further argument to me in her oral submissions on that point.

In her oral submissions, Ms. Prevezer QC concentrated on the profits/interest point. She says it is trite law that damages for fraud fall to be assessed “not as if the agreement worked”, but “as if the Claimant had never been involved” in it, and that credit must be given for the profits or interest received in computing the Claimant’s loss.

In my judgment that is plainly right (although for present purposes it is sufficient to say that it is at least arguable). Even for fraud, damages are assessed on the tortious basis, to put the Claimant in the position he would have been in if he had never entered into the contract or transaction; not the position he would have been in if the contract had been performed which is the contractual measure of damages. Here, if the Claimant had not been defrauded, it would not have entered into the contract, and would not have received the profits/interest under it, so it must give credit for those sums in computing its loss.

In his reply, Lord Brennan QC concentrated on the claims in conspiracy to defraud and constructive trust. I understood him to argue that even if the position on damages for fraud was as I have indicated above, the position would be different in conspiracy to defraud or dishonest assistance. I would myself be surprised if the position was any different in conspiracy to defraud. I can see that different principles might apply in assessing compensation in equity for the dishonest assistance. However, none of the authorities cited in the Claimant’s Skeleton Argument go directly to this point. Moreover, in the passage quoted in paragraph 39 of the Claimant’s Skeleton from the judgement of Mance Jin Grupo Torras v Al-Sabah (which was addressing the question of causation, not quantification of the loss), Mance J. draws attention to the similarity with conspiracy. If the Claimant is right that it does not have to give credit for the sums received in the dishonest assistance claim, it may recover over twice the amount it would recover in a claim for damages for fraud or conspiracy to defraud, which seems somewhat surprising. Moreover, if the Claimant’s money had been held on trust for it in a bank account, it presumably would not have received the profits or returns of the order which it in fact received.

The Claimant may ultimately prove to be right about this, but I am not sufficiently satisfied of that to be able to dispose of this issue on this application for summary judgment. In my judgment, this is an issue which ought to be determined at trial.

In his reply, Lord Brennan QC invited me, if I was against him on this point, to award summary judgment for the amount of the capital less the profits or interest paid, leaving the remainder of the damages to be assessed at trial. He told me his clients had calculated they have received £1,252,630.93 by way of profit or interest. Deducting that amount from the £2,350,000 paid gave a figure of £1,097,369. He invited me to award summary judgment in that amount together with interest at the statutory rate of 8% amounting to £415,137 (to April 2005) to give a total sum of £1,512,506.

I raised the question of whether I had power to do that (leaving aside the Court’s power to order an interim payment which is how this is usually dealt with in my experience). No authority was cited to me to suggest that I did have such a power. Since the hearing, I have researched the position and found some guidance on this, not in the current CPR but in the old Supreme Court Practice, 1999 Edition in the commentary on RSC Order 14 where it is stated at para 14/4/2:

“where unliquidated damages are claimed but there is a triable issue as to the quantum of damages, the Court has no power to give judgment for part of the damages or to give conditional leave to defend in respect of part of the damages, unless the Court is satisfied that such part of the damages can be clearly identified and quantified and that such ascertained part of the damages is undisputedly due”, citing Associated Bulk Carriers Limited v Koch Shipping Inc [1978] 2 All ER 254, CA.

The commentary goes on to refer to the power to order an interim payment. Elsewhere the commentary recommends the practice of coupling an application for an interim payment with the application for summary judgment to avoid this very difficulty “of giving summary judgment for an indefinable part of unliquidated damages even though the Court is certain that some substantial sum is due” (paras.14/1/3 and 29/10/3). The CPR commentary on interim payments also says (para 25.7.27) that “depending on the circumstances, an application for summary judgment and for an interim payment order may conveniently be made and dealt with together”, also referring to Associated Bulk Carriers Limited. No application for an interim payment has been made in this case.

The thrust of the submissions of Lord Brennan QC on behalf of the Claimant was indeed that the sum of £1,097,369 was undisputedly due, and that summary judgment could and should be awarded for that amount (with interest). However, Ms. Prevezer QC pointed out, that figure is not in evidence. The only material in the evidence on this which has been brought to my attention is the cross-examination of Mr. Herzberg in the criminal proceedings where he said the Claimant had received “about half” of the original £2.35 million back by way of interest payments. That would be £1,175,000. However the answer he gave was clearly approximate, as is indeed confirmed by the figures that Lord Brennan QC gave me on instructions, £1,252,630.93 which is over £75,000 more. Moreover, the figure Lord Brennan QC gave me was not in evidence; it is simply what he had been told by his clients. I had not seen the calculation or the documents on which it is based, and neither Mr. Cushnie nor his lawyers have had an opportunity to consider and respond to it. There can be little doubt that a substantial sum is due to the Claimant after allowing for profits/interest payments, but on the evidence before the Court, it was not clear precisely how much.

Since writing this Judgment, I have just received by fax calculations from the Claimant with supporting documents. I do not think I should take this material into account without first hearing from Ms. Prevezer QC, Counsel for Mr. Cushnie. Accordingly, I shall hear further argument from the parties on this new material before finalising my decision on this point.