Benyatov v Credit Suisse Securities (Europe) Ltd

On an application for strike out or summary judgment, a claim should proceed where it has a realistic, rather than fanciful, prospect of success, particularly where it raises disputed facts, expert evidence or a developing question of law. The court should avoid deciding novel legal issues on hypothetical facts.

An employer’s implied indemnity may extend beyond liabilities paid to third parties, but its scope should ordinarily be determined after the facts have been found. A general duty to protect an employee from economic loss does not arise, although limited duties may arise where foreseeability, proximity, and fairness, justice and reasonableness are arguable. Duties requiring political intervention in foreign criminal proceedings were not fair, just or reasonable.

The claimant, an investment banker employed by the defendant, claimed more than £46 million after his arrest and conviction in Romania arising from work performed there. He relied on an implied contractual or equitable indemnity, implied duties of trust and confidence and care, contractual variations or collateral contracts arising from a letter and oral assurances, and related losses.

The defendant applied under CPR 3.4(2) and CPR 24.2 to strike out or obtain summary judgment. It also sought a conditional order and security for costs. The central issues were whether the pleaded causes of action had realistic prospects, whether disputed factual and expert issues required a trial, and which alleged losses and post-arrest obligations were legally sustainable.

1. Summary judgment and strike out. The claimant’s burden was to show a realistic prospect of success. The court should not conduct a mini-trial. Claims involving disputed facts, expert evidence, complex inferences, or controversial questions in developing areas of law are generally unsuitable for summary disposal. The defendant’s delay was relevant to the court’s caution, although it was not independently determinative.
2. Indemnity. The parties accepted an implied contractual indemnity for expenses and liabilities reasonably incurred within the scope of employment. The precise limits of that indemnity remained insufficiently settled. The claimant’s argument that losses caused by the risks of performing duties in Romania might fall within the indemnity was not fanciful and should be tested after findings of fact. The failed property transaction was too remote and was struck out.
3. Trust and confidence and contractual discretion. The pleaded claims based on post-arrest conduct sought to extend the implied term of trust and confidence into a new and sensitive area. They were unsustainable on the pleaded facts. The claimant could not recast the same complaints as irrational exercise of contractual discretion where the defendant had to balance competing considerations and no single course was shown to be the only rational option.
4. Contractual variations and tort. The letter of 1 December 2014 and alleged oral assurances did not objectively amount to contractual offers accepted for consideration, although they could remain as history. The pleaded general duty to protect against economic loss went too far. However, a limited pre-arrest duty based on risk assessment and advice was arguable under the three-limb approach in Caparo Industries plc v Dickman [1990] 2 AC 605. The proposed duties to intervene politically in Romania after arrest were not fair, just or reasonable and were struck out.
5. Disposition. The specified parts of the claim were struck out, while the indemnity claim and limited pre-arrest risk-assessment and advice claims survived subject to amendment. The conditional order and application for security for costs were refused.

This was a first-instance decision of the High Court on applications for strike out, summary judgment, a conditional order and security for costs. No appellate decision was stated.