BANCA INTESA SANPAOLO SPA & Anor v COMUNE DI VENEZIA

An order excluding the quantification of damages, restitution or indemnity from a trial does not ordinarily exclude issues of causation, reliance or counterfactual conduct. The language must be construed objectively and in context. An entitlement to damages cannot be quantified unless the necessary liability and causation findings have first been made. Case management directions should also be construed coherently and sensibly, avoiding the unnecessary repetition of evidence and hearings.

The Banks and Venice were parties to disputes concerning two interest-rate swaps. Venice alleged, among other things, that the swaps were void and that the Banks were liable in restitution or damages under Italian law. The Banks advanced claims for damages, indemnity and other relief if the swaps were ineffective.

Earlier case management orders directed that liability issues would be tried first, while excluding the quantification of the parties’ damages, restitution, indemnity and interest claims. At the start of the main trial, the parties disputed whether those exclusions also removed causation, counterfactual conduct and contributory negligence from the trial. The issue was the proper construction of the order of 14 July 2021.

1. The causation issues remained within the main trial. On the objective construction of paragraph 5 of the order of 14 July 2021, the exclusion of “the quantification of any restitution or damages” did not extend to causation, including counterfactual questions. The wording concerned the amount of an entitlement, not whether an entitlement existed in the first place.
2. The language of the order assumed that an entitlement to damages had been established at the main trial. A finding that information had been unlawfully withheld would not itself establish an entitlement to damages without a finding that the information would have caused the claimant to act differently.
3. The same interpretation was reinforced by the earlier order. The exclusion concerning the Banks’ quantum issues had not removed causation or counterfactual matters from the main trial. It would have been surprising for materially similar wording concerning Venice’s restitution and damages claims to have a different effect.
4. The construction contended for by Venice would produce an unusual and impractical case-management result. Witnesses could be required to give evidence at a second hearing about matters closely connected with their evidence at the main trial. The suitability of the swaps and any alternative transaction were also matters logically connected with the liability issues.
5. Contributory negligence likewise remained for determination at the main trial. It could not sensibly be separated from findings about the process by which Venice entered into the swaps.
6. The pleaded causation and counterfactual issues were therefore to be resolved at the present trial. The judge reserved any consequential applications for further argument.