PJSC National Bank Trust & Ors v Mints & Ors

Fortification of a cross-undertaking supporting freezing relief is discretionary. The applicant must show a good arguable case that there is a sufficient risk of loss, that the injunction is an effective cause of the loss, and that the evidence permits an intelligent estimate of its amount. Recoverable loss must flow from the injunction’s preventative or coercive effect. Loss caused by the underlying litigation, an injunction against another person, or an unrestrained third party’s independent reaction is generally too remote. Third-party and projected losses require solid, credible, non-speculative evidence. Reputational loss may in principle be recoverable, but claims by third parties are especially tenuous and any award is likely to be modest. The application for additional fortification was dismissed.

The fourth defendant, Igor Mints, sought an order requiring the claimant banks to provide US$20,000,000 additional fortification of cross-undertakings supporting a worldwide freezing order and return-date undertakings. US$2,000,000 had already been provided.

He relied on alleged losses suffered by companies and funds associated with his investment-management business and a family trust. The losses comprised reduced management revenue and profitability, losses on forced or sub-optimal asset sales to repay loans, and lost investment returns. The central issues were whether the claimed losses presented a sufficient risk, were caused by the freezing relief, and could be quantified by an intelligent estimate.

Disposition. The application for US$20,000,000 additional fortification was dismissed.

1. Legal framework. Compensation under a cross-undertaking is assessed on the basis applicable to contractual damages, including ordinary principles of remoteness, subject to sensible adjustments because the undertaking is not contractual. The court’s starting point was F Hoffmann-La Roche & Co AG v Secretary of State for Trade and Industry [1975] AC 295, as explained in Schlesinger v Bedford (1893) 9 TLR 370 and Abbey Forwarding Ltd v Hone (No. 3) [2015] Ch 309 (CA).
2. Fortification test. Following Energy Venture Partners Ltd v Malabu Oil & Gas Ltd [2015] 1 WLR 2309 and Phoenix Group Foundation v Cochrane [2018] EWHC 2179 (Comm), the court applied three linked criteria: sufficient risk of loss, causation by the injunction, and evidence permitting an intelligent estimate of quantum.
3. Evidence. Mere assertion was insufficient. Elements 1 and 2 of Loss 1, and the alleged losses in Losses 2 and 3, had some evidential foundation. The evidence did not establish third-party redemptions or projected investment loss in Elements 3 and 4 of Loss 1. The unsigned and unverifiable budget, together with the accountant’s report, was not a reliable basis for quantifying Loss 1. The report’s author was neither a witness of fact nor a properly instructed expert under Civil Procedure Rules 1998 Part 35 and had not obtained permission or dispensation.
4. Causation. The applicant had to show that the injunction was an effective cause without which the loss would not have occurred. Applying Harley Street Capital Limited v Tchigirinski [2005] EWHC 2471 (Ch), Air Express v Ansett (1979) 146 CLR 249, Financiera Avenida v Shiblaq and SCF Tankers Ltd v Privalov [2017] EWCA Civ 1877, loss attributable to the underlying litigation or to an independent reaction by an unrestrained third party was outside the undertaking. The reasoning in Tharros Shipping v Bias [1994] 1 Lloyd’s Rep 577 was materially analogous. The evidence did not show that JPM or Credit Suisse recalled the loans because of the preventative or coercive effect of the orders. The claimed reputational link was too tenuous.
5. Quantum and conclusion. Loss 2 was capable of an intelligent estimate but, even if recoverable, was estimated at only US$1,029,605, below the existing US$2,000,000 fortification. The methodology for Loss 3 provided a reasonable basis for estimating lost investment return, but causation still failed. No additional fortification was ordered.

The judgment records that Moulder J granted the worldwide freezing order, Jacobs J continued the relief through the return-date order, and Cockerill J dismissed the discharge application in [2020] EWHC 204 (Comm). Males LJ refused permission to appeal. The present decision is a first-instance determination of the subsequent fortification application.