Tuke v Hood & Anor

Damages for an immediate loss and a later loss of investment opportunity may be awarded cumulatively, provided the calculation avoids double recovery. Where the immediate loss has already taken account of what the claimant received, the later investment-opportunity loss should compare the asset’s value at the transaction date with its later value. A further credit for receipts is then unnecessary.

An investment-opportunity claim, assessed as an alternative measure of loss, does not create a residual claim for compound interest merely because a discount has been applied for uncertainty. Costs remain discretionary under CPR 44.2, and settlement offers must be assessed in all the circumstances. A stay pending appeal is exceptional and requires a balancing of the risks of injustice.

The judgment determined consequential issues following an earlier judgment in claims arising from fraudulent classic-car transactions. The issues concerned the quantification of loss of investment opportunity, credit for sums and cars received, interest, costs, permission to appeal and a stay of execution.

The court had to determine whether the earlier damages calculation double-counted the value of cars transferred at an undervalue, whether receipts should be credited again, whether interest was available alongside the investment-opportunity claim, how settlement offers affected costs, and whether enforcement should be stayed pending a proposed appeal.

1. Investment-opportunity damages. The immediate loss on each sale at an undervalue or overpayment and the subsequent enhancement in value of cars which would have been retained were distinct heads of loss. They could be awarded cumulatively. The investment-opportunity element had, however, to be calculated by comparing the market value at the transaction date with the present value. The previous calculation, which compared present value with benefits received and then added the base claim, involved double counting. The award was therefore reduced to £6,879,480 after the 25% discount.
2. Credit. Cash and cars received were already reflected in the base claim. They did not diminish the later enhancement in value and required no further credit.
3. Interest. Interest was awarded on the purchase and non-investment-car claims. The investment-opportunity claim was an alternative to compound interest, and the 25% discount did not leave a separate residual claim. Interest was awarded at 4.5% compound, having regard to equitable compensation, possible investment returns and borrowing rates.
4. Costs. Mr Tuke was the successful party despite losing some issues. Under CPR 44.2, the settlement offers did not justify reducing his recovery of costs. The offers lacked reliable immediate payment or adequate security, and it was reasonable to continue the litigation. Costs were ordered on the indemnity basis, with £800,000 payable on account and interest on costs at 4%, rising to 8% after three months.
5. Appeal and stay. Permission to appeal was refused. Applying the principles summarised in Otkritie International Investment Management Ltd v Urumov, the proposed appeal had no real prospect of success, the judgment was substantially enforceable independently of the challenged issues, and refusal of a stay would not stifle the appeal. A stay, including a temporary stay, was refused.

First-instance consequential judgment following the court’s earlier judgment handed down in October 2020. The court refused permission to appeal and refused a stay of execution.