Grosvenor Casinos Ltd. v National Bank of Abu Dhabi

At the pleading stage, causation and loss in deceit or contract should not ordinarily be resolved summarily where they depend on the nature of a continuing commercial venture and the sequence of transactions within it. The court must identify the relevant venture and ask whether the alleged benefit or loss was intrinsic to its obligations and benefits, rather than relying on the but for test alone. Causation is generally a question of fact. The court should exercise particular caution where fraud or lack of good faith is alleged. A claimant need only show a realistic, rather than fanciful, prospect that its pleaded formulation will succeed in order to obtain permission to amend.

The claimant, a casino operator, claimed against its former customer’s bank in contract under the Uniform Rules for Collection and in deceit. It alleged that the bank had falsely or negligently advised that two cheques were paid, causing the claimant to continue a cheque-cashing facility and advance further funds.

The claimant sought permission to re-amend its Particulars of Claim and to rely on expert accounting evidence. The proposed amendments advanced alternative approaches to calculating loss: treating the relevant loss as arising when the later loan was made, or excluding subsequent reinvestment of casino winnings. The central issue was whether either formulation had a realistic prospect of success.

1. Application granted. The claimant was given leave to amend its Particulars of Claim. The application to rely on accountancy evidence was unopposed in consequence.
2. For present purposes, the principles concerning damages for deceit summarised in Smith New Court Ltd v Scrimgeour Vickers [1997] A.C. 254 were of general application. Damage must flow directly from the transaction, and benefits received as a result of it must be credited, although the identification of directly flowing benefits is often difficult.
3. The but for test alone does not determine whether a benefit is to be brought into account. The question is whether the benefit was merely a historical result of the venture or transaction, or formed part of the complex of obligations and benefits intrinsic to it. This approach, stated in Komercni Bank A.S. v Stone and Rolls [2003] 1 Lloyd’s Rep. 383, was accepted for present purposes.
4. The court had to understand the nature of the cheque-cashing facility and obtain a clear factual picture, including the sequence and scale of the winnings and losses and their source. Whether later gambling transactions were the natural consequence of the facility, or independent and collateral transactions, required factual assessment.
5. Causation is a question of fact and may be difficult. The court should exercise great caution in deciding such issues summarily, particularly where the claim involves fraud or lack of good faith. The authorities Galoo Ltd v Bright Graham Murray [1994] 1 W.L.R. 1360 and MAN Nutsfahrzeuge AG v Freightliner Ltd [2004] PNLR 19 supported that caution.
6. The claimant had shown that each proposed formulation had a realistic, rather than fanciful, prospect of success. The judge expressly avoided deciding the merits and granted permission to plead both formulations.