Vadim Don Benyatov v Credit Suisse (Securities) Europe Ltd

In a novel negligence case, a duty of care must be developed incrementally and by analogy with established authority. Foreseeability, proximity and whether a duty is fair, just and reasonable remain relevant. Assumption of responsibility may assist the analysis, but it is sufficient rather than necessary and is not a universal test.

An employment contract does not contain a general implied indemnity against every loss caused by doing the job. In particular, an employer is not strictly liable for career-long loss of earnings caused by a third party without fault by the employer. A claimant cannot avoid limitation by artificially defining the duty or confining the pleaded loss when real loss from the same wrongful act accrued earlier.

The claimant was employed by the defendant bank and worked on Romanian privatisation projects. He was arrested, prosecuted and convicted in Romania in connection with that work. The parties proceeded on the basis that the conviction was wrongful, although neither the High Court nor the Court of Appeal made such a finding. The conviction prevented the claimant from continuing his career as a regulated financial professional.

Freedman J dismissed claims for negligence and under implied contractual indemnities in [2022] EWHC 135 (QB), reported at [2022] 4 WLR 54. The negligence appeal concerned the existence of a duty to assess and guard against the risk of conviction, factual findings about alleged warning signs, and limitation. The contractual appeal concerned whether employment contracts contain an indemnity against career-long loss caused by doing the job, either as a matter of law or fact.

1. The appeal was dismissed unanimously. The correct approach to a novel duty of care was the incremental and analogical approach stated in Robinson v Chief Constable of West Yorkshire Police [2018] UKSC 4. The court considers foreseeability, proximity and fairness, justice and reasonableness so far as they arise. Assumption of responsibility may illuminate proximity or fairness, but it is not a necessary foundation for every duty of care. It added nothing here because the employment relationship already supplied proximity and the decisive issue was foreseeability.

2. The judge had applied an objective standard by considering information reasonably available to the bank. His factual findings were open to him. The evidence did not establish that Romania or the transaction was high-risk in the relevant sense, or that the alleged warning signs reached persons within the bank who should have acted. Rihan v Ernst & Young Global Ltd [2020] EWHC 901 (QB) was materially different: its audit duty concerned an ethically acceptable working environment and arose where the loss was foreseeable.

3. The negligence claim was also barred by section 2 of the Limitation Act 1980. The claimant had sustained substantial loss of bonus in 2007 and 2008 from the same alleged wrongdoing. That real loss started time running. The duty could not be artificially confined to loss following conviction, because the objectively formulated harm encompassed the connected arrest, detention, prosecution and conviction.

4. No term was implied by law requiring an employer to indemnify an employee against every loss caused by faithfully performing the job. Established indemnities cover expenses and liabilities incurred to third parties, not unliquidated career-long loss of earnings caused by a third party without employer fault. The broader term would make the employer an insurer and displace the established law of negligence, statutory protection and employer liability.

5. No wider indemnity was implied in fact. Such a term was not necessary, and the factual foundation that the Romanian work was high-risk had not been proved. The proposed unlawful-enterprise indemnity was no wider than the ordinary indemnity for expenses and liabilities. It therefore could not support the claimed loss of earnings.

1. Court of Appeal (Civil Division): The claimant's appeal was dismissed unanimously: [2023] EWCA Civ 140 .
2. High Court, Queen’s Bench Division: Freedman J dismissed the negligence and contractual indemnity claims in [2022] EWHC 135 (QB) , reported at [2022] 4 WLR 54 .