On 30 April 2021, Mr Justice Calver handed down judgment dismissing an application by the Fourth Defendant (“D4”) seeking further fortification of US$20m on the Claimants’ cross-undertaking in damages in PJSC National Bank Trust & anor v Boris Mints & ors  EWHC 1089 (Comm).
In June 2019, the Claimants obtained a WFO against D1-D4 (members of the Mints family), which was replaced by undertakings in substantially similar form after the return date hearing (the “Return Date Undertakings”). The Claimants gave the usual cross-undertaking, and following the return date hearing was required to give fortification of US$2m.
D4 made an application seeking an additional US$20m in fortification, on the basis that the WFO/Return Date Undertakings had caused loss to entities in which D4 had an interest, including the EGCA Group, an investment management business. In particular, D4 alleged that after having been notified of the WFO, JP Morgan and Credit Suisse demanded early repayment of loans to some of the entities. The entities themselves are not subject to the WFO/Return Date Undertakings and their ordinary business activities are not restricted.
Three categories of losses were identified: (a) loss to the ECGA Group of fund management revenue and due to lower profitability than forecast (b) losses resulting from a ‘fire sale’ of assets deemed necessary in order to realise funds to repay loans from JP Morgan and Credit Suisse and (c) loss of investment return by the entities due to their being deprived of the net return on the investments that they held within the EGCA Group before the WFO / Return Date Undertakings and which they would have continued to hold if they had not had to redeem them to repay the JP Morgan and Credit Suisse Loans.
The judge held that the chain of causation was too tenuous and remote in respect of losses said to have been suffered by third parties not themselves subject to the WFO / Return Date Undertakings.
D4 also argued that the recall of the JP Morgan and Credit Suisse Loans was rooted in the reputational damage caused to the borrowing entities by reason of their association with the Mints family. The judge rejected this argument: where the alleged reputational loss is that of a third party not subject to the restraint of a freezing injunction, the causative link is even more tenuous and the alleged loss very unlikely to be recoverable.
Further, the judge held that there were various evidential problems with the application, as a result of which he held that there was no good arguable case that the granting of the WFO/Return Date Undertakings is or was a cause without which the losses would not be or have been suffered.
A link to the judgment can be found here.