Barings Plc & Anor v Coopers & Lybrand & Ors

In assessing damages for negligence, the court may award judgment in a foreign currency. The appropriate currency is the one that most truly expresses the claimant’s loss, applying restitution and reasonable foreseeability. The immediate expenditure currency will usually be appropriate unless the claimant proves that its normal operating currency more accurately measures the loss. The burden lies on the claimant. A claimant’s liquidation currency is not automatically its relevant currency.

Where contributory negligence is assessed by distinct periods, earnings and losses should be attributed to the period in which they arose before the applicable percentage reduction is made. Interest will ordinarily follow the currency of the award, subject to exceptional circumstances and evidence justifying another rate.

This was a further judgment in proceedings arising from the collapse of the Barings Group. In an earlier judgment, the court had found that the defendants were negligent in auditing the financial statements of Barings Futures (Singapore) Pte Ltd and had determined liability principles, including contributory-negligence deductions and a cut-off date.

The present hearing concerned quantification. The issues were the credit for profits received by other Barings companies, the treatment of earnings during separate contributory-negligence periods, the currency in which loss and judgment should be expressed, and the appropriate rate of interest.

1. Profits and estoppel. The claimant was estopped per rem judicatam from reopening the agreed £12.46 million figure for profits received by other Barings companies. The issue had been determined in the earlier judgment, and the claimant had not pleaded or pursued a separate claim for the false profits. The court nevertheless observed that, had the matter been raised in time, the relief might have been reduced to avoid double recovery.
2. Contributory negligence. Earnings from commission and interest were to be credited in the period in which they arose. The applicable deductions of 50 per cent, 60 per cent and 80 per cent reflected three distinct periods and were not to be neutralised by carrying earnings from the first period into the second. The calculation was therefore to follow table 1B of the defendants’ appendix 6.
3. Currency of damages. Applying the principles summarised from The Despina R and The Folias, the relevant question was which currency payment would most nearly compensate the claimant, having regard to restitution and reasonable foreseeability. The claimant had to prove that its operating currency was more appropriate than the currency of immediate loss.
4. The loss was suffered in Japanese Yen. The claimant’s dealings, funding, margin payments, accounts and reporting were overwhelmingly in Yen. Its Singapore incorporation, internal accounting currency and liquidation in Singapore did not make Singapore Dollars the currency that most truly expressed the loss. Judgment was therefore to be expressed in Yen.
5. Interest. The normal rule was that interest follows the currency of the award. In the absence of evidence supporting a different rate, the court awarded Yen LIBOR in Singapore plus 1 per cent, subject to either party applying to vary the rate on evidence.