Alta Trading UK Limited (Formerly Known as Arcadia Petroleum Limited) & Ors v Peter Miles Bosworth & Ors

INTRODUCTION

This judgment relates to an application by the Claimants to strike out certain allegations of dishonesty made by the active Defendants in an Inquiry into damages, and applications by the Defendants for permission to amend their statements of case in the Inquiry.

Following a ten-week trial, I handed down judgment on 22 January 2025, dismissing the Claimants’ claims that the Defendants had committed a substantial and sustained fraud in connection with 144 crude oil purchase and sale transactions between April 2007 and May 2013 relating to oil originating in West Africa (Alta Trading UK (formerly known as Arcadia Petroleum Limited) v Bosworth [2025] EWHC 91 (Comm) (“the 22 January judgment”)). In the same judgment I upheld certain counterclaims made by the First Defendant (“D1”) and the Second Defendant (“D2”).

At the hearing of consequential matters on 10 February 2025, I made an order directing that the Claimants’ undertakings in damages, in connection with a worldwide freezing order which had been in place since February 2015, be enforced and that there be an Inquiry into damages (“the Inquiry”), to be heard at a 2-week trial not before March 2026. Damages are sought by D1, D2 and the Fifth Defendant (“D5”). For convenience I shall from now on refer to those three parties as “the Defendants”.

The Claimants applied to strike out allegations made by the Defendants, in D1/D2’s Particulars of Loss and Damage in the Inquiry (“D1/2Particulars”) and in D5’s Inquiry Points of Claim (“D5 Points of Claim”), that the Claimants had obtained and maintained the worldwide freezing order dishonestly. Following a hearing on 27 June 2025, I handed down judgment on 18 July 2025 ([2025] EWHC 1837 (Comm)) (“the 18 July judgment”) concluding that the dishonesty allegations may at least be relevant to certain matters concerning causation which the Defendants sought to advance, and that the strike-out application must be adjourned in order to give the Defendants an opportunity properly to plead those matters and the Claimants an opportunity to respond to them.

The Defendants then served draft Amended Replies to the Claimants’ Defences to the Defendants’ claims in the Inquiry. The Claimants opposed the applications for permission to amend and maintained their application to strike-out. The applications were then the subject of further written and oral submissions at a hearing on 7 October 2025. I also heard applications by the Defendants for Further Information in relation to matters relevant to the dishonestly allegations if allowed to remain.

The outcome of the amendment and strike-out applications has a bearing on the scope of the parties’ disclosure and witness evidence in the Inquiry, and a case management conference is listed for 24 October 2025. It has therefore been necessary to produce this judgment in fairly short order, in order not to delay the smooth progress of the Inquiry.

For the reasons given below, I have concluded that the Defendants’ applications to amend should, in the main, be allowed and the strike-out application dismissed. In addition, the Defendants’ applications for Further Information should be allowed in part, as detailed in section (F) below.

BASIS OF THE APPLICATIONS TO AMEND

As indicated in the 18 July judgment, a worldwide freezing order was granted on 12 February 2015 by Teare J, in respect of the Defendants’ assets of up to US$335 million, and remained in place until I discharged it in February 2025.

The D1/D2 Particulars, served on 14 March 2025, seek compensation for loss of the oil trading business they say they would, but for the freezing order and its effects, have established, and which they alleged would have made profits of the order of US$500 million. Alternatively, they claim for lost job opportunities, from which they say they would have earned of the order of US$113 million. D1/D2 also seek compensation for lost investment opportunities and lost investment gains on assets they had to sell; together with injury to reputation, distress and invasion of personal liberty, for which they claim aggravated damages.

As part of the Particulars, D1/D2 allege that allegations which the Claimants made in support of the freezing order were false and were, when made, known to be false (through, in particular, Mr Fredriksen, Mr Trøim, Mr Hannas and/or Mr Adams, all of whose knowledge is said to be attributable to the Claimants).

The D5 Points of Claim, also served on 14 March 2025, seek compensation on two main bases. D5 alleges that, but for the freezing order and its effects on Attock Dubai (in which he had a 50% interest), he would have received substantial sums from Attock Dubai in his capacity as trader/employee, director and ultimate 50% shareholder. Further or alternatively, he alleges that, but for the effect of the freezing order, he would have become a senior employee of Vitol Dubai or another comparable oil company and would have received substantial sums by way of a sign-on bonus, annual salary, annual bonus and share scheme participation. He also claims for lost investment opportunities and lost investment gains on assets he had to sell, together with upset, stress and loss of reputation.

Like D1/D2, D5 alleges in his Points of Claim that allegations that the Claimants made in support of the freezing order were false and were, when made, known by the Claimants to be false.

As part of their Defences to those claims, the Claimants dispute that any losses were caused by the freezing order, as distinct from the fraud claims made against the Defendants in the underlying proceedings: see, e.g., Claimants’ Defence to D1/D2 Particulars §§ 4, 57(2), (4) and (5), 59(3), 65(1), 66 and 81; Claimants’ Defence to D5 Points of Claim §§ 38(1) and (2) and 44(2)). I shall refer to this as the Claimants’ “causation defence”. The Claimants thus rely on the principle established by the High Court of Australia’s judgment in Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; 146 CLR 249 (“Air Express”), and followed in various subsequent English cases.

By their draft Amended Replies, the Defendants seek to contend that, in addition to the causation defence being wrong in point of fact, the Claimants should not be entitled to rely on it in circumstances where the Claimants’ fraud claims in the underlying proceedings were advanced dishonestly. The core of D1/D2’s proposed amended plea is as follows:-

“28A. Further or alternatively, it is denied that the Claimants’ allegations of fraud in the underlying proceedings would (absent the Freezing Order) have prevented the Oil Trading Business from being established, and/or that the Claimants are entitled to rely on those allegations of fraud, for the reasons set out in paragraphs 28B – 28G below.

28B. The Freezing Order caused damage to the commercial standing of Mr Bosworth and Mr Hurley, so as to have a preventive and/or coercive effect that restricted their ability to do business with, and/or obtain finance from, third parties, including banks and potential investors in the Oil Trading Business. The damage to Mr Bosworth and Mr Hurley’s commercial standing caused by the Freezing Order was significant and went beyond any damage caused by the fact of the proceedings. Pending disclosure and evidence, Mr Bosworth and Mr Hurley rely on the facts and matters set out in paras 65 and 67-70 of the First Witness Statement of Christopher Main. In the premises, the Freezing Order caused and/or was an effective cause of the failure to establish the Oil Trading Business.

28C. Further or alternatively, the allegations that were central to the Claimants’ case in the underlying proceedings were also central to the evidence that the Claimants adduced to obtain and maintain the Freezing Order: see the judgment dated 18 July 2025 ([2025] EWHC 1837 (Comm)) at para. 7. It is averred that those allegations were dishonestly made; accordingly, the dishonest allegations by which the Freezing Order was obtained and maintained were central or material to the fraud claim itself. In particular:

a.

Paragraphs 6-12 of the D1/D2 Inquiry Particulars are repeated. The dishonest allegations pleaded in the POC (paragraphs 15.5, 31.1, 31.3 and 40.4) that Mr Bosworth and Mr Hurley beneficially owned and controlled AL were essential to the modus operandi of the alleged fraud, namely that AL was the principal vehicle which Mr Bosworth and Mr Hurley ‘inserted’ into the transaction chains to carry out the fraud. The Claimants’ “essential case” was that AL “was an instrument of fraud used dishonestly to divert profits from Arcadia London”:

b.

Paragraphs 13-20 of the D1/D2 Inquiry Particulars are repeated. The dishonest allegations that Mr Bosworth and Mr Hurley made the misrepresentations pleaded in the POC (paragraphs 54.3, 55, and 61-63) supported the Claimants’ case that Mr Bosworth and Mr Hurley’s activities were carried on secretly (consistently with the Claimants’ fraud case): J.925. The absence of such secrecy fatally undermined the Claimants’ fraud claim. “[F]ar from being established and used secretly and dishonestly, as a “fraudulent entity”, Arcadia Lebanon was openly discussed and used, with the acquiescence of Mr Fredriksen, Mr Trøim and Farahead in general”: J.922.

c.

Paragraphs 21-24 of the D1/D2 Inquiry Particulars are repeated. The dishonest allegation that “Farahead was not aware at the time that GEPVTN had received payments from Arcadia Lebanon”; and that this had come to light only from AL transfer instructions “that have now been identified” was critical to sustaining the fraud case against Mr Bosworth and Mr Hurley. Absent that dishonest allegation, it was implausible that AL would have made payments to GEPVTN at the same time as hiding its existence and activities from FH to conduct a clandestine fraud.

28D. In circumstances where the dishonest allegations were central or material to the Claimants’ fraud claim, it is denied that the Claimants can rely on the allegations of fraud that they made against Mr Bosworth and Mr Hurley to defeat or reduce Mr Bosworth and Mr Hurley’s claims in the Inquiry. In particular:

a.

The Claimants are not entitled to rely on their own wrong (the dishonest allegations) to secure a benefit, in particular where their own wrong was intentional;

b.

Such a principle is a general rule of causation and/or flows from public policy and/or fairness and/or common sense;

c.

In any event, Mr Bosworth and Mr Hurley’s claims are brought pursuant to the Court’s equitable jurisdiction to award compensation. It would be inequitable, unjust and/or contrary to common sense and/or contrary to public policy for the Claimants to be permitted to rely on their own dishonest allegations of fraud to defeat or reduce Mr Bosworth and Mr Hurley’s claims in the Inquiry.

28E. Further or alternatively, when considering the counterfactual, it must be assumed that the Claimants would not have made any dishonest allegations. In circumstances where the Claimants’ dishonest allegations were central or material to the Claimants’ fraud claim, the Claimants are unable to rely on the fact of the fraud claim and/or any reputational issues associated with that fraud claim as causative of the relevant loss and damage.

28F. Further or alternatively, in circumstances where dishonesty is a cause of the relevant loss and damage to Mr Bosworth and Hurley, it is to be treated as the only cause. The Claimants’ dishonesty in obtaining and/or maintaining the Freezing Order was (at least) a cause of Mr Bosworth and Mr Hurley’s failure to establish the Oil Trading Business for the reasons set out in paragraph 50 of the D1/D2 Inquiry Particulars.

28G. Further or alternatively, in circumstances where the Claimants had sought but not obtained the Freezing Order, or in circumstances where the Set-Aside Application had succeeded, it would have become apparent that (i) the Claimants’ allegations of fraud in the underlying proceedings were dishonest and/or unsustainable; (ii) there was no good arguable case of fraud; and/or (iii) the Claimants had failed to comply with their duty of full and frank disclosure. Paragraphs 3-34 of the D1/D2 Inquiry Particulars and paragraphs 6(a)(i) and 28C above are repeated. The Court’s judgment refusing to make the Freezing Order, or setting aside the Freezing Order, would have been publicly available. In the premises, third parties would not have been deterred from working with Mr Bosworth and Mr Hurley (to establish the Oil Trading Business or otherwise).”

D5’s proposed Amended Reply is substantially similar. The core of his proposed amendments is as follows:-

“43.1

The false and dishonest representations made by the Claimants (as pleaded at paragraphs 12, 15, 18, 21, and 25 of D5’s Inquiry PoC) were central and/or material to:

(i)

obtaining and maintaining the Injunction; and

(ii)

the allegations comprising the Claimants’ fraud claims against the Defendants. The false and dishonest allegations comprising the Claimants’ fraud claims against the Defendants were the same as or were substantially overlapping with, the false and dishonest allegations made by the Claimants in order to obtain and maintain the Injunction. Mr Kelbrick will rely on (inter alia) paragraph 7 of Henshaw J’s judgment dated 18 July 2025 ([2025] EWHC 1837) (Comm).”

“48.

It is denied that the Claimants’ allegations of fraud in the underlying proceedings would (absent the Injunction) have prevented Mr Kelbrick from obtaining senior level employment at Vitol Dubai (or joining Vitol’s Board of Directors) or obtaining equivalent employment at an equivalent oil trading company. Further or alternatively, it is denied that the Claimants’ allegations of fraud in the underlying proceedings would (absent the Injunction) have prevented Mr Kelbrick from having had a real and substantial chance of obtaining the same.

49.

In circumstances where the material allegations comprising the Claimants’ fraud claims were dishonestly made, it is denied that the Claimants can rely on the fact that Mr Kelbrick was subject to a “serious fraud claim” and/or the associated reputational effects of such fraud claim (as pleaded in paragraph 38 and its sub-paragraphs). As to this:

49.1

As a matter of law, the Claimants are not permitted to rely on the causative effect of wrongs committed by them (i.e., the dishonest allegations/representations comprising the fraud claim) in order to defeat or reduce Mr Kelbrick’s claims in the Inquiry. For the avoidance of doubt, making dishonest allegations/representations to the Court which were material to the Claimants’ fraud case and/or cause(s) of action was unlawful and/or amounted to a wrong.

49.2

This principle of law is an application of the general rule of the common law that a party may not rely on its own wrong to secure a benefit.

49.3

Further or alternatively, this principle of law flows from public policy and/or fairness and/or common sense and/or equity and/or is consistent with the Court exercising an evaluative judgment when determining causation. Mr Kelbrick’s claims in the Inquiry are brought pursuant to the Court’s equitable jurisdiction. It would be contrary to public policy and/or common sense and/or unfair and/or inequitable for the Claimants to be permitted to rely on the causative effect of wrongs committed by them in order to defeat or reduce Mr Kelbrick’s claims in the Inquiry.

49.4

This principle of law applies with even greater force where the wrong on which the Claimants rely is an intentional or reckless wrong (i.e., as here, with the Claimants’ dishonest allegations/representations comprising the fraud claim).

49.5

Further or alternatively, when assessing the counterfactual, the Court must assume that the Claimants acted lawfully in that counterfactual. In other words, when considering the counterfactual, the Court must remove both the wrongful act (i.e., the Injunction) and any other unlawfulness of the Claimants (i.e., the dishonest making of allegations material to the Claimants’ fraud claim). For this reason, too, the Claimants are wrong as a matter of law and/or unable as a matter of law to seek to rely on the fact that Mr Kelbrick was subject to a “serious fraud claim” and the associated reputational effects of such fraud claim (as pleaded in paragraph 38 and its sub-paragraphs).

49.6

Further or alternatively, in circumstances where dishonesty is a cause of the relevant loss and damage to Mr Kelbrick, it is to be treated as the only cause. The Claimants’ dishonesty in obtaining and maintaining the Injunction was (at least) a cause of Mr Kelbrick’s loss and damage.

49.7

Further or alternatively, in circumstances where the Claimants had sought but not obtained the Injunction, or in circumstances where Mr Kelbrick’s Discharge Application had succeeded, it would have become apparent that:

(i)

the Claimants’ allegations of fraud in the underlying proceedings were dishonest and/or unsustainable; and/or

(ii)

there was no good arguable case of fraud; and/or

(iii)

the Claimants had failed to comply with their duty of full and frank disclosure. The Court’s judgment in refusing to grant the Injunction, or discharging the Injunction, would have been publicly available. In the circumstances, third parties would not have been deterred from employing Mr Kelbrick.”

The Defendants thus rely, at least in part, on the principle that a party is not entitled to rely on his own wrong to secure a benefit, particularly as applied to questions of causation in Coudert Brothers v Normans Bay Ltd. [2004] EWCA Civ 215) (“Coudert Brothers”). In response, the Claimants rely inter alia on Popplewell LJ’s judgment in King Crude Carriers SA & Ors v Ridgebury November LLC & Ors [2024] EWCA Civ 719; [2025] KB 311 (“King Crude Carriers”), in particular his statement at [25] that the ‘no reliance on own wrong principle’ is not a freestanding principle of universal application.

The Claimants alternatively seek a stay of the dishonesty allegations, pursuant to CPR r.3.1(2)(g) and/or the general case management power under CPR r.3.1(2)(p).

LEGAL PRINCIPLES

The principles applicable on an application for permission to amend were conveniently summarised by Nicklin J in Amersi v Leslie [2023] EWHC 1368 (KB) at [140]-[142]:-

Further, the Court must strike a balance between the interests of the applicant and those of other parties and litigants more generally, applying the overriding objective: Invest Bank PSC v El-Husseini [2024] EWHC 1235 (Comm) at [29].

As noted at § 15 of the 18 July judgment the Claimants’ strike-out application is made under CPR rule 3.4(2)(a) and/or (b), pursuant to which the court can strike out part of a statement of case if it discloses no reasonable grounds for the bringing or defending the claim, is an abuse of the court’s process, or is otherwise likely to obstruct the just disposal of the proceedings. As indicated in notes 3.4.1 and 3.4.2 to the White Book (2025 edition):-

“Grounds (a) and (b) cover statements of case which are unreasonably vague, incoherent, vexatious, scurrilous or obviously ill-founded and other cases which do not amount to a legally recognisable claim or defence.”

Statements of case which are suitable for striking out on ground (a) include those which raise an unwinnable case where continuance of the proceedings is without any possible benefit to the respondent and would waste resources on both sides (Harris v Bolt Burdon [2000] C.P. Rep. 70; [2000] C.P.L.R. 9). For the purposes of a r.3.4(2)(a) application, the applicant was usually bound to accept the accuracy of the facts pleaded unless they were contradictory or obviously wrong, MF Tel Sarl v Visa Europe Ltd [2023] EWHC 1336 (Ch) (Master Marsh) (in contrast to the position under CPR r.24.2 where the court is considering the claim or an issue in it and may be required, without conducting a mini-trial, to examine the evidence that is relied upon to prove the claim and consider the evidence that can reasonably be expected to be available at trial, see para.24.2.3).

It has been stated that the court should not grant an application for strike-out under CPR r. 3.4(2)(a) unless the court is certain that the claim is bound to fail: Richards (t/a Colin Richards & Co) v Hughes [2004] EWCA Civ 266, [2004] PNLR 35 at [22] per Peter Gibson LJ, followed by Joanna Smith J in Ashraf v Dominic Lester Solicitors [2023] EWHC 2800 Ch at [76].

Note 3.4.2 to the White Book also states that:-

“it is not appropriate to strike out a claim in an area of developing jurisprudence, since, in such areas, decisions as to novel points of law should be based on actual findings of fact (Farah v British Airways, The Times, 26 January 2000, CA referring to Barrett v Enfield BC [2001] 2 A.C. 550; [1989] 3 W.L.R. 79, HL).”

CPR r.3.1(2)(g) provides that the Court may “stay the whole or part of any proceedings or judgment either generally or until a specified date or event”. The test is “what is required by the interests of justice in the particular case”: Athena Capital Fund v Holy See [2022] 1 WLR 4570 at [48]. But “the usual function of a court is to decide cases and not to decline to do so”, and the Court “will therefore need a powerful reason to depart from its usual course”: Athena Capital at [51].

The general power under CPR r.3.1(2)(p) cannot be used to circumvent specific rules of procedure which capture the settled practice of the Court: New Lottery Co Ltd v Gambling Commission [2025] EWHC 1522 (TCC) at [21]-[26], [30], [38], [41].

A useful starting point is Lord Diplock’s dictum in F Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295, 361:-

“The court has no power to compel an applicant for an interim injunction to furnish an undertaking as to damages. … It retains a discretion not to enforce the undertaking if it considers that the conduct of the defendant in relation to the obtaining or continuing of the injunction or the enforcement of the undertaking makes it inequitable to do so, but if the undertaking is enforced the measure of the damages payable under it is not discretionary. It is assessed on an inquiry into damages at which principles to be applied are fixed and clear. The assessment is made upon the same basis as that upon which damages for breach of contract would be assessed if the undertaking had been a contract between the plaintiff and the defendant that the plaintiff would not prevent the defendant from doing that which he was restrained from doing by the terms of the injunction: see Smith v. Day (1882) 21 Ch.D. 421, per Brett L.J., at p. 427.” (emphasis added)

Generally, at least, a distinction is drawn between losses caused by the injunction and losses caused by the underlying proceedings. This point was considered in some detail by the High Court of Australia in Air Express. Barwick CJ stated:-

“4.

If I were free to do so, I might be inclined to think that there is reason to support the view taken by Jessel M.R. in Smith v. Day (1882) 21 Ch D 421. It seems to me that there is much to be said for taking the view that the opinion of the Master of the Rolls better reflected the responsibility of the court in granting an injunction than the later view expressed in the cases to which my brother refers. After all, the damages recoverable by the successful litigant should be referable to the action of the party who seeks the injunctive order rather than to the action of the court in deciding to grant it. Approach to the court through the application for an injunction should not either be discouraged nor visited with a penalty. The presence of the undertaking does not in any respect lighten the responsibility of the court in making its decision to grant the injunction. The action of the court, if it had the facts and circumstances fairly and properly placed before it, might well be thought not to provide a reason for awarding damages. (at p310)

5.

But it is far too late to re-open the decision reached in the judgment in Griffith v. Blake and the subsequent cases. I treat the relevant law as finally settled in the sense expressed by my brother Aickin. But the adoption of that view makes it the more imperative to maintain the distinction between results which are caused by the grant of an injunction and those which flow from the fact of the litigation itself.”

The Claimants note that Barwick CJ evidently did not contemplate that the actions of the applicant for the injunction, for example impropriety on its part, could affect the approach to compensation on an Inquiry. However, the court was not concerned with, and did not hear argument on, that point (still less the specific issue raised on the present application). Barwick CJ was, moreover, concerned with the question of whether an inquiry should be ordered at all, rather than the assessment of loss on an inquiry.

Gibbs J stated:

“3.

In a number of authorities the court has distinguished between loss which was caused by the injunction and loss which arose from the litigation: see Bingley v. Marshall (1863) 9LTNS 144, at p 145; Gault v. Murray (1892) 21 OR 458, at p 462; Douglass v. Bullen (1913) 12DLR 652, at p 655 and Newman Bros. Ltd. v. Allum, S.O.S. Motors Ltd. (In liq.) (No. 2) (1935) NZLR Suppl 17, at p 18. There is no reason to doubt that it is correct in principle to draw such a distinction if the facts warrant it. If the pendency of the litigation, rather than the making of the order, was the cause of the plaintiff's loss, the terms of the undertaking have no application, since the plaintiff has not sustained loss by reason of the order. Moreover, except in certain cases analogous to malicious prosecution, a defendant is not entitled to recover damages for loss resulting from legal proceedings brought against him - the only liability of the unsuccessful plaintiff is to pay costs. The court should no doubt scrutinize with care an assertion by a plaintiff that loss which has been suffered by a defendant has resulted from the litigation rather than from the making of the interlocutory order, since a plaintiff should not be allowed to evade payment of the price which he has agreed to pay for the grant of the injunction. In the end however the question becomes one of fact: did the making of the order cause the loss? The onus of proof must, in accordance with general principles, lie on the defendant who asserts that he sustained damage by reason of the order.

4.

It was submitted on behalf of the appellant that it is enough that the making of the order should have been a cause of the damage, so that if both the making of the order and the continuance of the litigation are concurrent causes the undertaking will be applicable. However, in almost every case in which an injunction is granted the injunction will play some part in causing the party bound by it to act in accordance with its terms. To order a plaintiff to pay damages where it appears that the party bound by the injunction would have acted as he did even if the injunction had not been granted, would be to give the undertaking an effect obviously not intended. The party seeking to enforce the undertaking must show that the making of the order was a cause without which the damage would not have been suffered.”

Mason J stated:-

“12.

The distinction between damage caused by the injunction and damage which flows from the litigation is, I think, well founded on the language in which the usual undertaking as to damages is expressed. The party seeking damages must show that he has sustained damage "by reason of the Order". The words connote a causal connexion between the damage and the interim injunction.

13.

English law has not adopted a uniform approach to causation. Instead, it has tended to take refuge in the notion that causation is very largely a question of fact. But the many statements to this effect which are to be found in the decided cases do not attempt to deny the fact that the common law has applied a variety of theories and standards of causation, in each instance applying that which is in point of policy the most apt or appropriate to the question which arises for decision.

14.

For this reason little is to be gained in the present case from an examination of the myriad authorities which deal with causation of damage in contract, tort and other situations many of which were pressed upon us in argument. We are better advised to look to the purpose which the undertaking as to damages is designed to serve and to identify that causal connexion or standard of causal connexion which is most appropriate to that purpose. The object of the undertaking is to protect a party, normally the defendant, in respect of such damage as he may sustain by reason of the grant of the interim injunction in the event that it emerges that the plaintiff is not entitled to relief. It is no part of the purpose of the undertaking to protect the defendant against loss or damage which he would have sustained otherwise, as for example, detriment which flows from the commencement of the litigation itself. That is loss or damage which the defendant must bear himself, as he does when no interim injunction is sought or granted. Consequently, it is for the party seeking to enforce the undertaking to show that the damage he has sustained would not have been sustained but for the injunction.”

As indicated in Gibbs J’s judgment, part of the rationale for the rule may be that redress may be available, separately, for loss caused by the pursuit of the proceedings themselves, if the ingredients of the tort of malicious prosecution can be made out.

The Air Express approach has been followed in England, as noted by Beatson LJ in SCF Tankers Ltd (formerly Fiona Trust) v Privalov [2017] EWCA Civ 1877, [2018] 1 WLR 5623:-

“41.

If the court decides to enforce a cross-undertaking, the decision of the High Court of Australia in Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 has been influential in relation to the approach to causation and the burden of proof. Mason J stated at p 325 that it is “for the party seeking to enforce the undertaking to show that the damage he has sustained would not have been sustained but for the injunction”. Although Mason J dissented as to the result, on burden of proof there was no division of view: see Gibbs and Stephen JJ at pp 313 and 320. The approach in the Ansett case has been followed by a number of decisions in this jurisdiction. They include the decision of this court in Energy Venture Partners Ltd v Malabu Oil and Gas Ltd [2015] 1 WLR 2309, a case concerned with whether a cross-undertaking as to damages should be fortified. Referring to the judgment of Gibbs J, in the Ansett case as to what was required to enforce the undertaking itself, Tomlinson LJ stated, at para 54, that “As to causation, it is sufficient for the court to be satisfied that the making of the order or injunction was a cause without which the relevant loss would not have been suffered”.

42.

The person who seeks to do so must show that the loss would not have been suffered “but for” the order; that is, on the facts of this case, that the freezing order and the security undertakings were an effective cause of the Standard Maritime parties’ loss. See also Tharros Shipping Co Ltd v Bias Shipping Ltd (The Griparion) (No 1) [1994] 1 Lloyd's Rep 577, 582 (Waller J), Harley Street Capital Ltd v Tchigirinski [2005] EWHC 2471 (Ch) at [20]–[21], (Mr Michael Briggs QC), Hamblen J at first instance in Energy Venture Partners Ltd v Malibu Oil and Gas Ltd [2012] EWHC 79 (Comm) at [19] and the discussion in Gee, Commercial Injunctions, 6th ed (2016), p 365, para 11.044.

…

45.

I have also concluded that the judge did not err in stating that causation was established. … He stated, at para 48 (see para 26 above), that the order must be an effective cause of the loss. If anything, that was a stricter test than the “but for”, sine qua non test laid down in the authorities to which I have referred. He was entitled to approach and deal with the question of causation in a common-sense way.”

In Al Rawas v Pegasus Energy Ltd [2008] EWHC 617 (QB); [2009] 1 All ER 346, Jack J held that the court is always constrained by the terms of the cross-undertaking, which (on the standard wording) means that damages can only be awarded on a compensatory basis. This meant that exemplary damages were not available even by reason of dishonesty in obtaining the order (see [51]-[54]). In Berkeley Administration Inc v McClelland [1995] ILPr 201, it was alleged in an inquiry under a cross-undertaking (in relation to various injunctions) that the orders had been obtained on the basis of “spurious allegations” and “in the course of a concerted and deliberate campaign by the plaintiffs to prevent or inhibit competition by the defendants” (see [21]). In the Court of Appeal, the view was expressed by Stuart-Smith LJ, at [44], that while it was not necessary in that appeal to decide whether a claim for aggravated or exemplary damages could be brought at all in an inquiry, he was “bound to say that in my opinion Maccorp face formidable difficulties in law in so asserting. It seems to me at the very least that Maccorp have to establish the ingredients of the tort of the abuse of process, which is a separate tort in English law. There must be malice and absence of reasonable and probable cause in bringing the proceedings”.

In Abbey Forwarding v Hone [2014] EWCA Civ 711, [2015] Ch 309, McCombe LJ confirmed the nature of the court’s task in an inquiry:

“In the result, therefore, and perhaps not surprisingly, I reach the conclusion that the law as to the recoverability of loss suffered by reason of a cross-undertaking is as stated by Lord Diplock in his dictum in the Hoffmann-La Roche case, but with this caveat. Logical and sensible adjustments may well be required, simply because the court is not awarding damages for breach of contract. It is compensating for loss for which the defendant should be compensated (to apply the words of the undertaking). Labels such as common law damages and equitable compensation are not, to my mind, useful. The court is compensating for loss caused by the injunction which was wrongly granted. It will usually do so applying the useful rules as to remoteness derived from the law of contract, but because there is in truth no contract there has to be room for exceptions.”

By ‘logical and sensible adjustments’, the court may have had in mind its conclusion that, if appropriate, general damages could be awarded in an inquiry for upset, stress, loss of reputation and other effects caused by the ‘aggravating’ ways in which the claimant had policed the injunction. In that context, the court indicated that the contractual measure (under which such general damages are generally not recoverable) was not to be applied “automatically”, and that it was right as a matter of principle to enable compensation under a cross-undertaking for such losses (see in particular [104]-[106] and [110]). Commentary indicates, however, that the damage must still have been caused by the injunction itself, as opposed to the stigma of the underlying claim in fraud: Civil Fraud (1^st ed.) at [31-038(13)].

Males J in Fiona Trust v Privalov [2016] EWHC 2163 stated that the test is whether the freezing order was an effective cause of the loss in question ([48]). In an earlier decision in the present case, Peter MacDonald Eggers KC (sitting as a Deputy High Court Judge) said: “That is not to say that the injunction must be the sole cause of the loss; the injunction can operate as a concurrent cause of the loss along with the proceedings. If the proceedings and the injunction combine cumulatively to give rise to the loss, in the sense that the loss would not have been caused at all or to the same extent by the proceedings themselves, the respondent will have demonstrated to the requisite standard that the loss would be caused by the injunction.” (Alta Trading UK Ltd (formerly Arcadia Petroleum Ltd) v Bosworth [2021] EWHC 1126 (Comm), [2021] 4 WLR 72 at [42(5)]).

In Dr Reddy's Laboratories (UK) Ltd v Warner-Lambert Co LLC [2021] EWHC 2182 (Ch), [2021] Bus LR 1496, Zacaroli J considered the position where injunctions were held to have been wrongly granted in favour of a patent proprietor against multiple pharmaceutical companies. Each inquiry into damages involved considering the market share the relevant respondent to the injunction would have had but for the injunction wrongly granted against it. However, the judge held, in order fairly to assess that market share it was also necessary to remove the effect of the other wrongly granted injunctions: thus, there should be a single counterfactual across all inquiry claims, in which counterfactual none of the injunctions had been granted.

During the course of his judgment, Zacaroli J noted that a preliminary issue was whether the counterfactual should be that (1) the order was refused by the court, (2) the order was applied for but not pursued before the court and (3) the order was not sought in the first place ([87]). It was argued that, on the various alternatives though to different degrees, all of these would have resulted in knowledge that the patent was invalid. That would particularly be the case on alternative (1), especially if the counterfactual involved the court having refused the injunction because it found no arguable case that the patent was valid. Zacaroli J at [89]-[91] found persuasive the decision of Jagot J in Sigma Pharmaceuticals Pty Ltd v Wyeth [2018] FCA 1556 (Federal Court of Australia) rejecting that approach on the basis that it would effectively remove from the analysis the risk arising not from the injunction but from the existence of the patent and the underlying proceedings. Zacaroli J also found persuasive Jadot J’s decision, in the context of a delay between the injunction being applied for and granted, that the appropriate assumption was that the injunction application was not pursued on the date the order was actually made ([92]-[93]). That was because making the counterfactual depart from the actual at the latest possible moment was the best way of isolating the effects of the order itself as opposed to other matters (ibid.).

Goff & Jones, “The Law of Restitution” (10^th ed.) § 26-4 states:-

“… Litigants are not responsible for the courts’ mistakes unless they have intentionally misled them or have otherwise abused the court process.

As Wilde CJ observed:

“The law allows every person to employ its process for the purpose of trying his rights, without subjecting him to any liability, unless he acts maliciously and without probable cause.”

Unless they have deliberately abused the court process, successful litigants therefore commit no tort when they win a court order that is later held to have been mistaken. This is why a claimant seeking an interim injunction must give a cross-undertaking as to damages as a precondition for the making of the order: otherwise the defendant would be left without a remedy if he suffered loss through compliance with the order and the issue between the parties was then resolved in the defendant’s favour.” (footnotes omitted)

In Coudert Brothers, IML had successfully tendered to invest in a Russian suit manufacturer being offered for sale under the government’s privatisation programme. When it came to executing the sale, IML were advised by Coudert. However, IML’s tender was subsequently held by the Moscow Arbitration Court to be invalid on the basis that it was an offer to invest in the manufacturer for 5 years, whereas the government had only approved a 3 year investment. Secondarily, the Court held that it was invalid because IML had failed to obtain approval for it from the Federal Anti-monopoly Committee. Appeals against this decision failed and IML lost its investment.

IML sued Coudert in negligence for not discovering and properly advising in relation to the 3 year-5 year point, which they argued would have led to the sale agreement being amended to provide for a 3 year investment, and its investment thereby being maintained (see [10]). As explained at [12], Coudert’s defence included the argument that anti-monopoly permission would still have been necessary and that on that independent ground the transaction would still have been declared invalid. Coudert asserted that this broke the chain of causation. IML's response was to assert that if permission was needed, “the fault was Coudert's, and that Coudert could not rely on it as breaking the chain of causation”.

At trial, the judge found Coudert liable in damages to be assessed on the basis of IML’s lost chance of maintaining its investment (see [17]). In doing so, he held that Coudert could not rely on its own further negligence (in failing to advise on the anti-monopoly point) to break the chain of causation or diminish the chance (see [16]). Coudert appealed on various bases, including maintaining its reliance on the anti-monopoly point.

In the Court of Appeal, Waller LJ observed that the anti-monopoly point only arose because the limitation period had expired for a further negligence claim against Coudert in this regard. In any event, he held (at 42]) that the ability to bring such a claim would have no effect on IML’s damages, since “[t]he case would still remain that Coudert failed to provide the chance by amending the agreements, and that chance is still the same chance that they would have failed to provide by not obtaining anti-monopoly permission”. Hence, Coudert was concerned with two wrongs which would each, independently, have led to the same loss being suffered (i.e., in that case, the same chance of IML retaining its investment).

Against this background, Waller LJ stated as follows (having considered the case of Bolitho v City and Hackney Health Authority [1998] AC 232, in which Lord Browne-Wilkinson held that a doctor could not escape liability for negligence by saying that the same damage would have occurred in any event, because they would have committed some other breach of duty thereafter):-

“44.

The question is whether, if IML can establish that Coudert should have provided them with the chance by reference to the 3 to 5 year point, Coudert can say in relation to the assessment of that chance, that it should be reduced by virtue of an “intervening” act of negligence by Coudert, because the “intervening act” gives rise to a separate cause of action in respect of which the limitation period has expired.

…

“46.

In the loss of a chance case, such as the one we are dealing with, the failure to produce the agreements relating to the 3-5 year point has caused a loss of a chance. IML does not need to rely, and indeed does not seek to rely, on the failure to obtain permission, to establish the chain of causation of that loss of a chance. It is Coudert who want to reduce the value of the chance, by asserting they failed to do something which would have lowered the chance. Is there a principle which disallows a defendant from relying on a wrong which he has committed in order to reduce the damages that would otherwise flow from a tort or breach of contract? It seems to me that there should be such a principle, and that is what Lord Brown Wilkinson was recognising. It is quite difficult to say why it should be so, other than that it flows from public policy where it is a principle that a person should not be entitled to rely on their own wrong in order to secure a benefit. It is furthermore not unfair to apply such a principle. Damages would flow from the original act of negligence; why should Coudert be allowed to rely on a further act of negligence to reduce that damage?

Laws LJ stated:-

“[64] First, although I entertained considerable doubts about the matter while the case was being argued, I have reached the clear conclusion that in principle a defendant should not be allowed to rely on a wrong perpetrated by himself in order (in whole or part) to break the chain of causation put forward by the claimant to establish and quantify the damage sustained by him by reason of the defendant's breach of contract or tort. This may be seen (as Waller LJ expresses it: paragraph 46) as an application of the general rule of the common law that a party may not rely on his own wrong to secure a benefit, and I agree that some support is to be found for that approach in the speech of Lord Browne-Wilkinson in Bolitho. But I think it is also consonant with modern ideas of causation now being developed in the cases. Authority supports the proposition that the resolution of causation issues, certainly in the law of tort, is by no means merely a fact-finding exercise; in many instances it is an evaluative judgment, concerned to establish the extent to which a defendant should justly be held responsible for what has befallen the claimant. This seems to me to be vouchsafed in particular by the opinions of Lord Bingham and Lord Hoffmann in Fairchild [2002] 3 WLR 89 at paragraphs 10–12 and 52–54 respectively; to which may be compared, in the context of damages for loss of a chance, the observations of Kirby J in the High Court of Australia in Chappel v Hart [1999] Lloyd's Law Reports: Med 223 at 245, 246, cited by Latham LJ in this court in Gregg v Scott [2002] EWCA Civ 1471’.

Carnwath LJ stated that, like Laws LJ, he preferred to dispose of the anti-monopoly point by reference to principles of causation.

In Beart v Her Majesty’s Prison Service [2005] EWCA Civ 467; [2005] ICR 1206, the Court of Appeal upheld a decision of the Employment Appeal Tribunal (which followed Coudert) that an employer could not rely on a subsequent unfair dismissal to break the chain of causation regarding its liability for earlier disability discrimination. The employer had sought to argue that the cause of the claimant’s lost earnings was her dismissal (not the earlier discrimination), meaning that the damages awarded should be limited to the statutory maximum for unfair dismissal claims. The Appeal Tribunal rejected this argument. Among other things, it held that the result sought by the employer should not be permitted because it would “severely damage the protection given to employees by the Disability Discrimination Act 1995…” (see [25]). In the Court of Appeal, Rix LJ stated at [30]:-

“… the argument that the Prison Service's own act of unfair dismissal can be said to break the chain of causation is very puzzling to me. This is the language of new intervening act, but I do not understand how it is said that the unfair dismissal is an “intervening” act, when it is the act of the tortfeasor itself. Nothing in the submissions began to explain this to me: indeed, we were not shown any authority or learning on the concept of new intervening act. McGregor on Damages, 17th ed, 2003, speaks in this context of the intervening acts of a third party (at paras 6–031ff) and of the claimant (at paras 6–057ff) but not of the tortfeasor. Nor do I understand why the mere act of dismissal, even if it were justified which of course it was not, could do more to wash away the long-lasting effects of the prior discriminatory act than merely to prevent the damages for loss of earnings being measured by a comparison with earnings under the old employment.”

Rix LJ held that he would reject the employer’s argument “even in the absence of the Coudert case” because “[a]ll that has happened is that the employer has committed two discrete wrongs in respect of which statute has provided a cap in respect of one but not the other” (see [34]). In any event, the defendant had accepted that they were bound by Coudert unless they could distinguish it, and Rix LJ held that they could not (see [35]-[39]). At [39], Rix LJ referred to Coudert Bros. as reflecting “a statement of broad principle, derived, as Waller LJ said, from public policy and a concept of fairness, or, as Laws LJ said, to be seen as an application of a general rule of the common law”.

In D Morgan Plc v Mace & Jones (A Firm) [2010] EWHC 3375, Coulson J held at [395]: “if the intervening act was that of the defendant then, as a matter of public policy and common sense, the defendant could not rely on its own intervening negligence to break the chain of causation: see Normans Bay Ltd v Coudert Brothers [2004] EWCA Civ 215.”

Enron Coal Services Ltd v English Welsh & Scottish Railway Ltd [2009] CAT 36 was a competition law claim in which the claimant sought damages for the lost chance to supply an electricity generator with coal as a result of certain infringements of competition law by the defendant (EWS). The Competition Appeal Tribunal held (without hearing any argument on the point) that Coudert was authority for the proposition that “the “but for” world should be purged not only of EWS’s abuse and its consequences, but also any other unlawful conduct on EWS’s part” (see [90]). It clarified that what this meant was that it would “assume, for the purposes of the but for world, that EWS would not have engaged in any other illegal behaviour, including any other violation of competition law” (ibid.).

In Duke of Sussex v MGN Ltd [2023] EWHC 3217 (Ch), the defendant sought to distinguish between losses caused by its unlawful obtaining of the claimant’s private information, versus its subsequent publication of that information. Both constituted deliberate wrongful acts, but (like in Coudert) a claim in relation to the second was statute barred (see [1551]). Fancourt J said:-

“1548 While it is clearly right to seek to deal with each individual cause of action separately, that does not mean that it must be assumed, as a starting point, that loss that was caused by one tort cannot have been caused by a different tort. It is perfectly possible in the law of tort for there to be two or more causes of the same loss. For each individual occasion of UIG, the relevant question is: what losses claimed were sufficiently caused by that occasion of UIG. The starting point is not (which was the effect of MGN's argument) to exclude certain losses if they would have been recoverable as damages for a different wrong.

1549 The underlying UIG wrong is a factual cause of the distress caused to each claimant by the later misuse of their private information. Without the UIG there could have been no publication. Further, in all cases, it is not disputed that the private information unlawfully obtained was obtained by MGN for the purpose of publishing it in its newspapers, if it was of interest. It was certainly perfectly foreseeable that MGN would publish the information that it wrongly obtained; indeed, MGN intended to do so and had control over that matter. It is not suggested by MGN that in any particular case there was such a hiatus between the two wrongs that there was no connection between acquisition of the private information and its publication. The original wrong was therefore an effective cause of the distress that each claimant suffered from publication, even if the unlawful publication was a more immediate cause.

1550.

A second act of wrongdoing by MGN itself, namely publishing the private information, cannot be relied upon by MGN as breaking the chain of causation. That issue arose in a case called Normans Bay Ltd v Coudert Brothers [2004] EWCA Civ 215. The defendant solicitors tried to argue that a second negligent act by them (a claim in respect of which was statute-barred) broke the chain of causation between the first negligent act and the loss that the claimant suffered. The argument was rejected by the Court of Appeal on public policy grounds: a defendant cannot be allowed to rely on their own wrongdoing to secure a benefit in that way…. If that was the right answer in respect of a supervening negligent act, it is even more clearly right in relation to a supervening deliberately wrongful act such as publishing private information that was unlawfully obtained.”

1551 If the claim for the wrong of publication were not statute-barred and both claims were advanced, a claimant would not be able to recover damages twice for the same losses. However, that merely raises the issue of double-counting that Mann J was alert to in dealing with the different causes of action in the Gulati judgment, and does not preclude a conclusion that the UIG caused losses that flowed from subsequent publication.

1552.

The answer to the question of causation cannot therefore be that loss flowing from publication cannot have been caused by the UIG because it were caused by the publication. The relevant questions are whether, first, the post-publication losses claimed, whatever they are, were factually caused by the UIG at all: and, second, whether in law they should be treated as not so caused (i.e. as a matter of public policy).”

1553.

…It is difficult to see why, otherwise, the law should treat distress resulting from publication of private information that was effectively stolen in order to publish it as not having been caused in law by the theft. The information was stolen for the purpose of putting it into the public domain, not for private enjoyment. The fact that there is, in principle, a separate cause of action for the later wrong that also caused the distress made no difference in the Coudert Brothers case.”

The Court of Appeal in King Crude Carriers applied the principle in Mackay v Dick & Stevenson (1881) 6 App Cas 251 to the effect that a party cannot rely on its own breach to claim that a condition precedent has not been met. Popplewell LJ (with whom the other members of the court agreed) observed that the “concept that a person should not be permitted to take advantage of their own wrong” was “a statement of policy” and “not a freestanding principle of universal application” ( [79]). Accordingly, he sought to identify a “juridical” or “legal basis” for applying this principle, put another way “a legal doctrine whose ingredients must be fulfilled and are then applied” (see [79]-[80]). In that case, the justification identified was that it represented the presumed contractual intention of the parties, which was an approach that had long been applied in contract cases (subject to a sufficiently clearly expressed contrary intention) (see [81]-[84]).

Clerk & Lindsell on Torts (24th ed.) states at ¶2-137 that “a defendant cannot rely on his own subsequent negligence so as to break the causal connection between his original act of negligence and the claimant’s loss.”, citing (inter alia)Coudert Brothers. The editors also refer to the comment of Lord Browne-Wilkinson in Bolitho v City and Hackney [1998] A.C. 232 at 240 that: “A defendant cannot escape liability by saying that the damage would have occurred in any event because he would have committed some other breach of duty thereafter.”

McGregor on Damages (22nd ed.) says at ¶9-005:-

“The “but for” test thus requires the court to consider whether the wrongdoer’s act or omission was necessary for the loss that was suffered. The basic question is whether the loss would still have been suffered if the wrongful act had not occurred. That test “directs us to change one thing at a time and see if the outcome changes”, with the only things to be changed to be the removal of the wrongful act and any other unlawfulness of the defendant or third parties that would otherwise occur. The removal of unlawful acts by the defendant or third parties is designed to ensure that a victim is not made worse off by further wrongdoing. Thus the court often asks whether the loss would have been lawfully suffered.”

In a very recent judgment, JSC Commercial Bank PrivatBank v Kolomoisky & Ors [2025] EWHC 1987 (Ch), Trower J stated at [1152]:-

“… as Bryan J explained in Lakatamia [Lakatamia Shipping Limited v Su & Ors [2021] EWHC 1907 (Comm).] at [938], where there are successive torts:

'So far as causation is concerned, as a general principle of tort law, it is no answer for the defendant to say that, but for his wrongdoing which has in fact resulted in loss, the same loss would have been suffered because of some other tort or legal wrong was or would have been committed at a later point in time whether by the defendant or someone else. The principle in [sic] summarised in McGregor on Damages, 21st ed., at paragraph 8-007 as follows:

“the “but for” test is usually applied by asking whether but for the wrongdoing the loss would have been lawfully suffered. This qualification ensures that a victim is not made worse off by further wrongdoing” (original emphasis)”’

It has been held that if a transaction induced by fraud causes loss, then it is to be treated as the only cause. In Barings Plc v Coopers & Lybrand [2002] EWHC 461 (Ch), Evans-Lombe J said at [723]:-

“In [Standard Chartered Bank v Pakistan National Shipping Corp (No.4) [2001] Q.B.167], the Court of Appeal decided that the maker of a fraudulent statement is liable for all losses caused to a representee who is induced by it to enter into a transaction. This is so even if the representee was negligent in doing so. As long as the deceit was a cause of the claimant’s loss, it is to be treated as the only cause. The decision of the Court of Appeal has since been reversed in part by the House of Lords ([2002] 3 W.L.R. 1547), but without affecting that element of the judgment.”

ANALYSIS

The Claimants submit that the ‘own wrong’ principle has no possible application to the present case, for a number of reasons.

First, they submit that, as explained by the Court of Appeal in King Crude Carriers, it is not a free-standing principle of general application, but a concept which applies only in particular circumstances where an identifiable juridical basis for it can be found. Similarly, they submit that the statements quoted earlier in Hoffman-La Roche and Abbey Forwarding show that the assessment of damages under a cross-undertaking is not a free-ranging exercise of discretion, but governed by fixed and clear principles based on the terms of the undertaking, including the requirement for the injunction to have caused the loss.

In my view, however, it is at least well arguable (that being sufficient for present purposes) that the statements of Waller LJ in Coudert Bros., Rix LJ in Beart, Coulson J in D Morgan and Fancourt J in Duke of Sussex indicate that the ‘own wrong’ principle does reflect a principle of public policy of general application: thus capable in principle of applying inter alia in any context where the court is required to consider what loss should in law be regarded as having been caused by a particular event. I note in that context that Laws LJ in Coudert Bros. considered that Waller LJ’s approach “may” be correct and that it found support from statements in Bolitho. That in itself can fairly be regarded as making the point well arguable.

In any event, Laws LJ’s own approach in Coudert Bros., in which Carnwath LJ concurred, was to regard causation issues as not merely a fact-finding exercise but often an “evaluative judgment, concerned to establish the extent to which a defendant should justly be held responsible for what has befallen the claimant”. It is well arguable that an evaluative judgment of that kind would result in a party who has made dishonest allegations, in proceedings in which it obtained a freezing order, being held liable for damage caused by the freezing order even if some or all of that damage would also have resulted from the making of the dishonest allegations in the underlying proceedings.

Secondly, the Claimants submit that the first question remains whether factual causation can be established and, if not, one does not reach the question of whether the Claimants should be permitted to rely on their own further wrong in order to defeat or reduce their liability. Hence, in order for Coudert Bros. to have any application, the wrong being sued for must otherwise (i.e. without the further wrong) have caused the entirety of the relevant loss. In other words, the position must be that both wrongs would each have led to the same loss. For instance, the Claimants say, Coudert Bros. was concerned with two wrongs which would each, independently, have led to the same loss being suffered. It did not matter whether the loss was attributed to one wrong rather than the other, because they would each have led to the same loss (and, had there been no time bar, would both have been actionable by the claimant in order to recover that loss). Elsewhere in their skeleton argument, the Claimants put it this way:-

“In this case, neither the Cs nor the Ds are alleging that the proceedings and the Freezing Order would each have led to the same loss (or lost chance) being suffered. Rather, the Cs rely on the proceedings as a reason why the Ds cannot establish that the Freezing Order would everhave caused the relevant loss, as a matter of factual causation. These cases provide no authority for a claimant to be able to circumvent the requirement to prove factual causation; to the contrary they are very clear that the ‘rule’ in Coudert (if it can be described in this way) is only engaged once it has been established that the loss in question would otherwise (i.e. without the further wrong) have flowed in its entirety from the wrong being sued for.” (§ 46(1), emphasis in original)

However, I do not understand the Defendants’ case on the current Inquiry to seek to circumvent the requirement to prove factual causation. The Defendants each expressly plead a positive case that the freezing order caused (at least in the sense of being an effective cause of) their alleged losses. They then rely on the ‘own wrong’ principle in response to the Claimants’ defence that the losses would in any event have been caused by the allegations made in the underlying proceedings (in addition to disputing that defence on the facts). Thus the Defendants wish to plead that the Claimants are not entitled, in law, to rely on any alleged causative effects of their (allegedly) dishonest allegations in the underlying proceedings in order to displace the causative effect of the freezing order. On that basis, the Defendants’ position is at least arguably the same in principle as that of IML in Coudert Bros..

As part of their oral submissions, the Claimants also appeared to suggest that cases such as Bolitho, Lakatamia, Coudert Bros. and Beart were distinguishable because they all involved a supervening wrong, which occurred after the wrong sued upon had already begun to have a causative effect i.e. had already started a chain of causation. Similarly, they say, in Duke of Sussex the chain of causation began with the wrong sued upon (the gathering of the data), without which none of the later events could have occurred.

I doubt that that submission is correct. It seems to me that the operation of the ‘own wrong’ principle is conceptual rather than temporal. In Coudert, for example, the two breaches began to operate at the same time, when the tender was submitted, and caused loss at the same time, when the tender was found to be invalid. Moreover, even if one were to take a temporal approach, on the facts of the present case the freezing order preceded the filing of the Particulars of Claim. The distinction which the Claimants seek to draw appears to me artificial and arbitrary.

The Claimants make the further point that here, unlike in Coudert Bros., the wrong relied upon (the freezing order) could not independently have caused the loss, because it could not have existed without the underlying litigation. However, the freezing order was clearly a distinct event from the making of the claims in the underlying proceedings, and capable of having independent effects: indeed, that is part of the basis of the Claimants’ own causation defence.

Thirdly, the Claimants suggest that the ‘own wrong’ principle applies only where the ‘wrong’ is actionable. Here, they say, that is not the case, as the Defendants have not pleaded the elements of the tort of malicious prosecution (noting the observations of Stuart-Smith LJ in Berkeley Administration cited earlier). The Claimants make the point that the previous cases summarised above were all concerned with a defendant relying on conduct that had either been held to be, or was assumed to be, a wrong which would have been actionable by the claimant. Enron could be said to be an exception, because it refers to ‘unlawful’ or ‘illegal’ conduct by the defendant. However, there is nothing in the Competition Appeal Tribunal’s decision in that case which would suggest that they were deliberately expanding the ratio in Coudert, which was concerned with two actionable ‘wrongs’ (two acts of negligence against the claimant). The Claimants suggest that the underlying philosophy of the case law is not to penalise a claimant for pursuing one available cause of action rather than another.

Although that is one way of viewing the case law, it is not the only way. On the footing that the underlying principle, at least in the realm of causation, involves either (a) an evaluative judgment, concerned to establish the extent to which a defendant should justly be held responsible for what has befallen the claimant, or (b) a principle of public policy or fairness, it is well arguable that it extends to unlawful conduct whether or not actionable: particularly conduct as serious as making and pursuing in court dishonest allegations of fraud. I also note that (a) the further wrong in Coudert Bros. was not in fact actionable, because it was time barred, and (b) the passages quoted earlier from McGregor on Damages and JSC Commercial Bank use the broad terminology of lawful/unlawfulness rather than actionability.

Finally on the ‘own wrong’ point, it is fair to characterise this as a developing area of law, particularly in the light of (a) the slightly different approaches of the members of the Court of Appeal in Coudert Bros. and (b) the fact that permission to appeal to the Supreme Court has been granted in King v Crude Carriers.

For all those reasons, I consider that the Defendants should have permission to amend on the ‘own wrong’ point, the central expression of which is set out in D1/D2’s draft Amended Reply §§ 28C and D5’s draft Amended Reply §§ 49.1-49.4. I consider the Defendants’ proposed amendments to have realistic prospects of success, and, further, that it would be just in all the circumstances to grant permission for them, even recognising that they will increase the scope of the Inquiry to some extent and hence its cost.

The Defendants wish to advance a related argument to the effect that, in the counterfactual situation, the Claimants should be assumed to have acted lawfully and, thus, not to have made any dishonest allegations (D1/D2’s draft Amended Reply § 28E and D and D5’s draft Amended Reply § 49.5).

To my mind, that is really another way of framing the ‘own wrong’ point, since all it seeks to exclude from the counterfactual is the effect of the (allegedly) dishonest allegations made in the underlying proceedings. The Claimants object that, if used as the relevant counterfactual in assessing the effects of the freezing order, it would allow the Defendants to recover regardless of whether the freezing order had any causative impact. I do not agree. As the Claimants accept in § 46(1) of their skeleton (quoted in § 56 above), if the ‘own wrong’ principle applies then it is necessary to assess the causative effect of the wrong sued upon “without the further wrong”. That is the whole point of the principle. Otherwise in Coudert Bros., for example, the breach sued upon (relating to the licence period) would have been held to have had no causative effect because the tender would have failed anyway due to the anti-monopoly problem. Removing the allegedly dishonest allegations (only) from the counter-factual in my view would (at least arguably) correctly give effect to the requirement for the Defendants to establish loss caused by the freezing order but without the Claimants being able to displace such causation by reliance on the effect of dishonest allegations in the proceedings. These amendments too have realistic prospects of success and should be allowed.

The effect of my grant of permission to amend (and refusal of strike-out) in relation to these points will be that disclosure and evidence will be required in relation to the Defendants’ allegations that the Claimants made allegations dishonestly in the underlying proceedings and the injunction applications. It follows that, in practical terms, less turns on my decision in relation to the remaining bases on which the Defendants seek to amend. I shall therefore address those bases more briefly.

The Defendants wish to contend that, in circumstances where dishonesty is a cause of loss to them, it is to be treated as the only cause (D1/D2’s draft Amended Reply § 28F and D5’s draft Amended Reply § 49.6).

The Claimants submit that that argument has no realistic prospect of success because:-

As explained by the Defendants in submissions, their case on this topic does not depend on third parties having any knowledge of the Claimants’ alleged dishonesty, but merely on the freezing order having in fact been dishonestly obtained (as the Defendants’ existing statements of case allege) and having caused loss. The Defendants further submit that, although damages can be awarded on an inquiry even in the absence of wrongdoing by the applicant for the freezing order, where an injunction is obtained dishonestly then the resulting loss is referable to the applicant’s actions.

I do not find the Defendants’ proposed case under this heading entirely convincing. I am inclined to think that the position in deceit claims reflects a view based on fairness or public policy to the effect that a person deceived by a fraudster should not be denied recovery on the basis that he/she should have been more careful: rather than reflecting some principle of wider application. On the other hand, the Defendants’ point remains fairly arguable and, as explained above, is a pure point of law that should not require any additional disclosure or evidence. Overall, I am narrowly persuaded that it has a realistic prospect of success and should be allowed to proceed.

D1/D2’s draft Amended Reply § 28G would allege that:-

“…in circumstances where the Claimants had sought but not obtained the Freezing Order, or in circumstances where the Set-Aside Application had succeeded, it would have become apparent that (i) the Claimants’ allegations of fraud in the underlying proceedings were dishonest and/or unsustainable; (ii) there was no good arguable case of fraud; and/or (iii) the Claimants had failed to comply with their duty of full and frank disclosure. Paragraphs 3-34 of the D1/D2 Inquiry Particulars and paragraphs 6(a)(i) and 28C above are repeated. The Court’s judgment refusing to make the Freezing Order, or setting aside the Freezing Order, would have been publicly available. In the premises, third parties would not have been deterred from working with Mr Bosworth and Mr Hurley (to establish the Oil Trading Business or otherwise).”

D5’s draft Amended Reply § 49.7 is to similar effect.

The Claimants submit that the circumstances contemplated by these proposed amendments are not a relevant counterfactual according to any of the authorities.

D1/D2, supported by D5, submit as follows:-

Steps (ii) and (iii) in the above reasoning are in my view arguable, and may be regarded as supporting in a general sense the Defendants’ arguments considered in sections (D)(1) and (2) above. However, I do not consider the remainder of this line of argument to have a realistic prospect of success. In my view, it is contradicted rather than supported by the reasoning in Dr Reddy’s and in the Sigma case to which Zacaroli J referred. The gist of the reasoning in those cases is to exclude from the assessment incidental effects which the injunction application process itself might have (e.g. on parties’ or the market’s perception of the underlying dispute or its subject-matter, in those cases, the patents in question), as distinct from the effect of the order itself. I shall therefore not grant permission for these particular proposed amendments.

There are certain other amendments which the Defendants seek to make so as now to rely expressly on the dishonesty allegations in relation to the following issues in the Inquiry: (i) the policing of the freezing order; (ii) variations of the freezing order; and (iii) aggravated damages. In the 18 July judgment I found that those matters (as well as the issue of interest/costs) would not themselves justify the dishonesty allegations being investigated.

These points were not the subject of much, if any, attention in the submissions at the hearing on 7 October 2025. At present I am inclined to think that (i) and (ii) should not be permitted, for the reasons given in §§ 25 and 28 of the 18 July judgment respectively, but that (now that the dishonesty allegations are to be investigated in any event) there is a case for permitting (iii) and for allowing the Defendants to rely on the dishonesty allegations in relation to the issue of interest/costs. However, I shall consider any further submissions the parties may wish to make on these points in the light of the present judgment.

STAY OF PROCEEDINGS

I did not understand the Claimants to pursue their original application for the stay of the dishonesty allegations. In any event, I would not consider it appropriate to do. They are closely intertwined with the issues otherwise arising on the Inquiry and such possible benefits as might arise from a stay are in my view strongly outweighed by the disadvantages.

FURTHER INFORMATION

I deal with these matters in fairly shortly order given the timing constraints. I bear in mind that any request under Part 18 “should be concise and strictly confined to matters which are reasonably necessary and proportionate to enable the….party to prepare his own case or to understand the case he has to meet” (PD18 para. 1.2); that Part 18 “does not exist to facilitate "fishing expeditions"” (Ismailov v Secretary of State for Foreign, Commonwealth and Development Affairs [2025] EWHC 863 (Admin) at [28]); and that the court’s power is subject to “any rule of law to the contrary” (CPR r18.1(2)) and thus cannot be used to compel disclosure of information protected on other grounds, such as privilege (White Book (Vol.1) note §18.1.3).

Specifically as regards privilege, I note the following.

It was noted in Punjab National Bank (International) Ltd v Techtrek India Ltd [2020] EWHC 539 (Ch) at [21] that “there is nothing in CPR rule 22(1) that requires the legal representative when signing a statement of truth on behalf of an incorporated party to identify the source of instructions from which authority to sign came”. It does not follow, though, that the court cannot order a party to do so. Certain observations of Michael Green J in Punjab National Bank (International) Ltd v Techtrek India Ltd [2020] EWHC 539 (Ch) at [21] might suggest that the court should not seek to look behind the “veil of privilege” to see how the legal representative came to be authorised to sign the statement of truth. It is unclear to me how that approach, if rigorously applied, can be squared with the notion that the client is responsible for, and can be made accountable for, the statement of truth. If the client is an individual, then it will be clear who was in substance attesting to the truth of the contents of the statement of case. Thus, if the client knew the statement of case to contain false allegations, they could be the subject of proceedings under CPR 32.14. It would be surprising if, where the client is a company, the party can decline to state which individual(s) believed the facts stated to be true, with the result that individuals who were the source of allegations which they knew to be untrue may escape responsibility altogether. As Males LJ noted in the passage quoted above from Loreley, a witness statement made by a solicitor on instructions has to set out the source of his information and belief, without it ever having been thought that this discloses privileged information. Similar considerations must in my view apply to a statement of truth whereby a solicitor confirms that the client believes its contents to be true.

Requests 1a and d seek further information about § 10(2) of the Claimants’ Defence:-

“It is admitted that Mr Fredriksen authorised this claim in the sense that he agreed and approved of it. However, he is and was not at this time a director of any of the Claimants. He is the settlor of the trust which owns the Fourth Claimant (“Farahead”). No admissions are made otherwise, including in relation to his agreement to or approval of any particular allegations or representations being made in these proceedings. At all material times, Mr Fredriksen relied on an explanation of the POC and its contents by Freshfields (and the firms that replaced them). He did not read the Adams Affidavit or the POC in full or closely. He relied on the Claimants’ legal team, supported at least initially by Mr Adams, to run the legal process and to give advice in relation to the same. He was not aware that any allegations being made by the Claimants at any time were false. To the extent necessary, in relation to Mr Fredriksen’s knowledge, the Claimants will also rely on all of the available evidence in relation to how Mr Fredriksen conducts his business, including that he was not involved in the details relating to the Arcadia Group’s affairs (including AL, in which regard there was also a lack of reporting from D1 and D2) and that he does not use a computer or email.”

Request 1a asks whether, for each of the Claimants’ statements of case, Mr Fredriksen authorised the Claimants’ lawyers to sign the relevant statement of truth. (In fact, some statements of case were signed by Mr Adams, in which case the request will not apply.) The Claimants have, as set out above, averred that Mr Fredriksen “authorised this claim in the sense that he agreed and approved of it”. The request legitimately seeks elucidation of that averment in a manner that is necessary and proportionate, and which does not impinge on legal professional privilege. The same applies to Request 1d, which asks whether Mr Fredriksen “agreed and approved” the contents of each of the Claimants’ statements of case.

Requests 1b and c ask, in substance, whether the legal representatives, when they signed statements of truth, explained the matters set out in CPR PD 22 § 3.7 to Mr Fredriksen. D1/D2 submit that the rebuttable presumption to that effect provided for in PD22 § 3.7 does not apply because it requires an explanation to be given to the client, whereas the Claimants’ solicitors maintain that Mr Fredriksen was not their client (see, e.g., Reed Smith letter of 20 May 2025). Even on that footing, however, I do not consider those requests necessary or proportionate. If it were the case that Mr Fredriksen knew that allegations were being advanced that he knew to be untrue, I find it hard to see how the question of dishonesty would turn on whether or not such explanations were provided.

Requests 2 and 3 ask for details of the pleaded “explanation” provided to Mr Fredriksen by the Claimants’ lawyers. Mr Quest KC made clear during oral argument that it is not the Claimants’ intention in pleading this to make a positive case that Mr Fredriksen's knowledge or lack of knowledge of any relevant fact was based on what he was told or advised by Freshfields. The purpose of including the relevant sentence is to identify, as a matter of narrative, the process by which the injunction was obtained and to indicate the nature of Mr Fredriksen's involvement in that process. The Claimants are, he said, not seeking as part of this pleading to say that Mr Fredriksen believed or did not believe anything because that was what he was told by Freshfields. Mr Quest KC submitted that this should be read as a narrative description of the kind that Waksman J in PCP said did not give rise to a waiver.

If and to the extent that that may amount to ‘rowing back’ or turning the clock back from what the Claimants have pleaded, then in my view the Claimants should be permitted to do so. The Defendants suggested that the Claimants should not be allowed to do so without amending their statements of case. I do not consider that to be necessary: the transcript will make clear that no positive case is advanced of the kind mentioned above. I shall not order the Claimants to answer these two requests.

Request 5 is as follows:-

“5.

The Claimants plead that Mr Fredriksen relied on the Claimants’ legal team to “run the legal process [in the proceedings] and to give advice in relation to the same”. Please confirm when (on the Claimants’ case) the Claimants’ legal team first informed Mr Fredriksen about each of the following allegations. Alternatively, please confirm whether the Claimants allege that Mr Fredriksen was never informed about the following allegations.

a.

The allegation described at paragraph 6 of the Inquiry Particulars;

b.

The allegation described at paragraph 9 of the Inquiry Particulars;

c.

The allegation described at paragraph 13 of the Inquiry Particulars;

d.

The allegation described at paragraph 17 of the Inquiry Particulars;

e.

The allegation described at paragraph 21 of the Inquiry Particulars.”

At one level, this request might be seen as seeking information about the contents of privileged communications (and Mr Quest KC again confirmed that the Claimants seek to advance no positive case in that regard by this plea). However, on another view, particularly focusing on the sentence starting “Alternatively” followed by the subparagraphs, what this request in substance seeks to discover is whether Mr Fredriksen knew that the five identified allegations were being advanced. The Claimants have pleaded that Mr Fredriksen agreed and approved of the claim, but (in § 10(2) quoted above) have sought to make ‘no admissions’ about whether Mr Fredriksen agreed to or approved any particular allegations or representations made in the proceedings. In my view, that squarely raises and puts in issue the question of which allegations Mr Fredriksen was aware of. That is a point of central importance to the dishonesty allegations which I have decided should be allowed to proceed. It does not, in my view, involve disclosure of privileged matter: what is sought (on my reading of this part of the request) goes simply to the factual question of which allegations Mr Fredriksen was aware of. It does not involve disclosure of the contents of legal advice or requests for advice about the truth of or evidence concerning those allegations; and it is not the kind of matter whose disclosure would tend to inhibit candid discussion between lawyers and clients. Even if that is wrong, I would conclude that the Claimants have, by § 10(2) of their Defence, waived privilege by placing in issue Mr Fredriksen’s awareness or lack of awareness of the allegations being made in the proceedings.

I shall therefore allow Request 5 to the extent that it asks whether, and when, Mr Fredriksen was aware that the five identified allegations were being made.

Request 6 seeks details of the support said to have been provided by Mr Adams. Similarly, request 8 seeks details of the assistance said to have been provided by Mr Hannas, as to which § 14(7) of the Claimants’ Defence states:-

“In relation to Mr Hannas, he is not aware that anyone on behalf of the Claimants has ever deliberately misrepresented any fact for the purpose of these proceedings. He himself gave limited assistance to Freshfields and his colleagues in the process of obtaining the Freezing Order and afterwards. He does not recall speaking to anyone other than Freshfields or Mr Francisco at this time. Nor can he recall receiving or reading the Adams Affidavit or the POC at this time…”

In my view, these are intended as mere narrative references to the process which do not seek to advance a positive case about the contents of the communications with Mr Adams or Mr Hannas, and Mr Quest KC confirmed that to be the Claimants’ position. On that basis, I shall not direct the Claimants to answer these requests.

Requests 2 and 3 arise from § 13(3) of the Claimants’ Defence to D5’s Points of Claim:-

“It was nonetheless possible that those inputting into the process of obtaining and maintaining the Injunction might honestly misremember or forget matters, including those which had taken place a number of years previously, or that documents might not have been reviewed at this time which would later become available as a result of disclosure (which did not happen in this case until December 2022 onwards).”

The requests seek identification of the individuals who are said to have had input into the processes of obtaining and maintaining the injunction. In my view, § 13(3) is a general statement as to how, in principle, allegations might be made wrongly but without dishonesty, rather than a positive case that particular allegations had come about in that way. Mr Quest KC confirmed in oral submissions that that is how the statement should be read. It is true that the Claimants’ response to this request included a claim for privilege. However, in substance that is an assertion of privilege in relation to the information sought by the request: it does not follow that the contents of § 13(3) constitutes more than mere narrative. On that basis, I do not consider that I should direct the Claimants to respond to these requests, which may also be seen as ‘fishing’ for additional custodians or individuals through whom the Claimant companies might be said to have made allegations dishonestly.

Request 5 arises from § 13(6) of the Defence:-

“There was accordingly a very significant amount of evidence adduced in support of the Claimants’ application for the Injunction which painted a picture of trading by D1 and D2, including through Arcadia Lebanon and Attock Mauritius (thereby implicating D5), which the Claimants genuinely believed could not be honestly explained and had been concealed from them.”

The request asks which natural persons the Claimants aver had a ‘genuine belief’ in relation to the evidence adduced in support of the Claimants’ application for the injunction. In my view this request is justified. Paragraph 13(6) sets out a clear positive case of genuine belief on the part of the Claimants, which necessarily meant belief on the part of one or more natural persons, and the Defendants are entitled to know who in particular is alleged to have had that belief. I do not accept the Claimants’ submission that this can be construed as mere narrative. I have noted that D5’s Reply asserts at § 13 that the relevance of Defence § 13 as a whole is denied, but it remains a matter in issue which in my view does have potential relevance to the issues for determination.

Requests 6, 7 and 8 relate to Defence § 13(6), quoted above, along with §§ 14(1), (2) and (4):-

“(1)

It is admitted that Mr Fredriksen authorised this claim in the sense that he agreed and approved of it. However, he is and was not at this time a director of any of the Claimants. He is the settlor of the trust which owns the Fourth Claimant (“Farahead”). Further, no admissions are made in relation to his agreement to or approval of any particular allegations or representations being made in these proceedings. It is admitted that the letter from Freshfields dated 18 July 2015 cited Mr Fredriksen as a source of information, in most instances along with others (in particular Mr Trøim and Mr Hannas), for certain statements made in the Adams Affidavit. It is admitted that he was described in the Claimants’ Re-Amended Particulars of Claim dated 15 December 2015 as one of the “Farahead Representatives”.

(2)

Further, in relation to Mr Fredriksen’s knowledge, at all material times he relied on an explanation of the Claimants’ Particulars of Claim (“POC”) POC and its contents by Freshfields (and the firms that replaced them). He did not read the Adams Affidavit or the POC in full or closely. He also relied on the Claimants’ legal team, supported at least initially by Mr Adams, to run the legal process and to give advice in relation to the same. He was not aware that any representations being made by the Claimants at any time were false. To the extent necessary, the Claimants will also rely on all of the available evidence in relation to how Mr Fredriksen conducts his business, including that he was not involved in the details relating to the Arcadia Group’s affairs (including Arcadia Lebanon, in which regard there was also a lack of reporting from D1 and D2) and that he does not use a computer or email.

…

(4)

It is admitted that Mr Hannas held these roles at these times. However, he provided limited assistance to Freshfields and his colleagues in the process of obtaining the Injunction (and also maintaining it). He cannot recall receiving or reading the Adams Affidavit or the POC at this time.”

The requests ask which natural persons the Claimants aver had knowledge, intention and a state of mind/an honest state of mind which is to be attributed to the Claimants in relation to obtaining and maintaining the injunction, and whether the Claimants admit or deny that the knowledge, intention and actions of Mr Fredriksen and Mr Hannas are to be attributed and/or imputed to the Claimants for the purposes of obtaining and maintaining the injunction. In my view, those requests do not seek further information about a matter the Claimants have pleaded, and concern matters which it is for the Defendants to plead and prove, or matters of law. I do not consider it proportionate or necessary to direct the Claimants to answer those requests.