Caselaw Digest
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Eurasian Natural Resources Corporation Limited v Dechert LLP & Anor

[2023] EWHC 3280 (Comm)
ENRC's lawyers messed up badly, giving the SFO secret information that made the investigation way bigger than it should have been. The SFO also helped make the investigation bigger by not stopping the lawyers. The court said both were responsible for the extra costs, and the SFO also had to pay extra because it didn't stop its own investigation and caused additional issues.

Key Facts

  • ENRC brought two actions against Dechert LLP, David Neil Gerrard (Dechert Defendants), and the SFO.
  • Dechert and Gerrard acted for ENRC from April 2011 to March 2013.
  • The SFO was initially not conducting a formal investigation but engaged with Dechert and Gerrard.
  • Damaging articles appeared in the press based on leaked privileged information.
  • ENRC claimed against the defendants for losses due to unnecessary work, costs, and wasted management time.
  • Phase 1 trial established liability; Phase 1A trial focused on causation and quantum.
  • The SFO closed its criminal investigation in August 2023.
  • Dechert paid ENRC a portion of the claimed losses before Phase 1A trial.

Legal Principles

Factual causation requires showing that a wrongful act was a cause of the loss, not necessarily the sole or dominant cause.

Heskell v Continental Express, Ministry of Pensions v Chennell

The 'but for' test is not universally applicable, especially with concurrent or consecutive wrongdoing by multiple actors.

Meadows v Khan, Rahman v Arearose, FCA v Arch Insurance

To establish inducement to breach of contract, a causative connection between the inducement and the breach must exist.

OBG Ltd & ors v Allen & ors, Meretz Investments NV v ACP Ltd

In tort, losses must be reasonably foreseeable; the type of damage must be foreseeable, not necessarily its extent.

Clerk & Lindsell, Wellesley v Withers

A novus actus interveniens breaks the chain of causation; the claimant's conduct must obliterate the defendant's wrongdoing.

Borealis v Geogas Trading Sa

Claimants must mitigate losses; defendants bear the burden of proving failure to mitigate.

Courts can use a 'broad brush' approach to assess quantum when precise assessment is impossible, erring on the side of caution.

Asda Stores Limited & Ors v Mastercard Incorporated & Ors, BritNed Development v ABB

For contribution claims, apportionment should be just and equitable, considering the seriousness of faults and causative relevance.

Downs v. Chappell, Re-Source America v Platt Site, Dubai Aluminium v Salaam

Exemplary damages are awarded for outrageous use of executive power or oppressive, arbitrary, or unconstitutional action.

R (Lumba) v Secretary of State for the Home Department

Outcomes

The SFO's breaches of duty were a cause of ENRC's losses.

The 'but for' test was inapplicable; the SFO's actions, along with Dechert's, created a feedback loop expanding the investigation.

But for the SFO's wrongdoing, the criminal investigation would not have been commenced.

The SFO's decision was influenced by information obtained through improper disclosures, particularly in DC23 and DC24.

ENRC's quantum claims for Unnecessary Work and Costs were partially allowed.

The court adopted a blended methodology, considering both parties' approaches and making adjustments based on the evidence.

ENRC's claim for wasted management time was partially allowed.

The court found that significant disruption occurred due to the unnecessary work, applying a reasonable methodology for calculating the loss.

Liability for Unnecessary Work was apportioned 100% to Dechert and Gerrard; liability for Unnecessary Costs and WMT was apportioned 75% to Dechert and Gerrard, and 25% to the SFO.

Dechert was the primary driver of the wrongdoing, but the SFO's actions were also causative; the SFO's status as a public body was considered.

Exemplary damages were not awarded against the SFO.

While the SFO's actions were serious, they did not meet the high threshold for exemplary damages; the substantial compensatory damages awarded were considered sufficient deterrence.

Mr. Gerrard's application to re-open the Phase 1 trial regarding the March 2013 leak was refused.

The court lacked jurisdiction to alter its sealed judgment; re-opening the trial would be disproportionate and unfair to other parties.

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