BL-2020-001417 - [2025] EWHC 2487 (Ch)

MRL submits that a percentage of the benefit of the judgment recovered in the Musst v Astra case is an unjust enrichment, that is an incontrovertible benefit to Musst at the expense of Matrix which it is unjust for Musst to retain without paying a percentage of it to MRL as the assignee of MMM. The submission is that just as this is the case in respect of the management fees received by Musst, so too in respect of the performance fees.

The result of the rulings above is that this is a case of benefit by reference not to the provision of services, but to the end-product, namely the receipt of moneys by Musst consequent on the judgment in the Musst v Astra case. In the section on limitation, it has been found that the cause of action did not accrue on the first receipt of the management fees, but incrementally on each receipt of management and performance fees respectively. In respect of the performance fees, the Court did not accept the analysis that Musst received an incontrovertible benefit when there was an entitlement to sue Astra. That only arose on the receipt of the moneys by Musst as a result of judgment in the case of Musst v Astra.

The submission of MRL nonetheless is that it is entitled to a share of payment of the amount of the judgment in the Musst v Astra case without any deductions for the following amounts, namely:

The reasoning of MRL, to which reference will be made in considering the defence of counter-restitution, is that since funding costs are not recoverable between the parties, so they should be borne by Musst as between Matrix and Musst. Likewise, to the extent that the insurance costs are not recoverable between the parties, which is still to be the subject of argument, so too they should be borne by Musst. In the same way, to the extent that any part of the costs of Musst cannot be recovered following an assessment of the costs, so too they must be borne by Musst.

Further, and in any event, there are other items which involve a drain on time and resources which are not recoverable in litigation. The evidence of Ms Galligan in particular at para. 181 of her witness statement copied below is that she and Mr Siddiqi spent a vast amount of time in preparing the case of Musst, in trawling through a vast quantity of documents, in attending interim hearings and in preparing for the trial and the appeal to the Court of Appeal. This must have absorbed a considerable part of their lives over the period of the litigation and for which there is no ability to recover further sums of money.

There has not been identified in the evidence the moneys that have been invested in the case which may have comprised raising security for costs ordered of £180,000 and any part of the costs incurred at least prior to litigation funding. The amounts recovered in the litigation are approximately £3.95 million. At least a half of that sum comprises unrecoverable costs as against Astra. It may be a larger sum. The submissions of MRL are that as between Matrix and Musst, they are at the risk and expense of Musst and not to be shared.

In addition to the denial of liability generally for unjust enrichment, Musst submits the following of particular relevance to the recoveries in the Musst v Astra action at [148] of its written opening:

“Further, in relation to the sums recovered in the previous Astra litigation, and any sums it may recover in the current further Astra claim in relation to Crown II and Crown III, it would not be unjust for Musst to retain these sums, because it not only incurred substantial costs and time in doing so (see below under the fifth issue), but it also took the risk on its own of litigating in order to recover these sums, without any assistance from MRL. Indeed, it would be unjust, it is submitted, to let MRL (or Mr Reeves) to lie in the background, and take the benefit of those proceedings without taking the risk or even offering to do so.”

This point was made in the oral closing at T7/39/20 – T7/40/1 and T7/40/22 – T7/41/11 as follows:

“Well, my Lord, one way of looking at it would beit is -- our decision to take the risk of suing for performance fees was entirely our decision and there isnothing unjust in those circumstances in our beingallowed to keep the fruits of the litigation for which we incurred not only the cost, but the time andthe risk.

…

But, my Lord, it is a point we, as it were,anticipated in our original skeleton. Why is it --given that we have taken all the risk of this litigation to recover the performance fees, why should that not be regarded as, to use the common law Latin, a novus actusinterveniens? We have gone out of our way to get these
performance fees and it's not just without any help, but against, or rather with the opposition of the veryperson who now seeks -- or entity, if I can put it thatway, who now seeks to share in them. We may say,my Lord, the second point is a fifth wheel. If I'm
right on the first point, it's our own decision in anyevent to get these performance fees and we're entitledto keep them because we took all the risk in gettingthem and that breaks the chain of causation.”

It is necessary to revert to the four ingredients referred to in Benedetti at [9], namely:

Mr Knox’s submissions fasten in on two concepts which may be inapposite in this context, albeit that they are very much in the right area. The first is one of injustice. If the Defendant has received an incontrovertible benefit (ingredient number one in Benedetti) and if the benefit has been at the Claimant’s expense (ingredient number two in Benedetti), then the question of whether the enrichment has been unjust is not an open textured question.

This was expressed by Lord Sumption in Swynson Ltd v Lowick Rose LLP [2017] UKSC 32, at paragraph 22 as follows:

“ As with any novel application of the relevant principles, it is necessary to remind oneself at the outset that the law of unjust enrichment is part of the law of obligations. It is not a matter of judicial discretion. As Lord Reed points out in Investment Trust Companies (para 39) it

“does not create a judicial licence to meet the perceived requirements of fairness on a case-by-case basis: legal rights arising from unjust enrichment should be determined by rules of law which are ascertainable and consistently applied.”

English law does not have a universal theory to explain all the cases in which restitution is available. It recognises a number of discrete factual situations in which enrichment is treated as vitiated by some unjust factor. These factual situations are not, however, random illustrations of the Court’s indulgence to litigants. They have the common feature that some legal norm or some legally recognised expectation of the claimant falling short of a legal right has been disrupted or disappointed. Leaving aside cases of illegality, legal compulsion or necessity, which give rise to special considerations irrelevant to the present case, the defendant’s enrichment at the claimant’s expense is unjust because, in the words of Professor Burrows’ Restatement (2012) at Section 3(2)(a), “the claimant’s consent to the defendant’s enrichment was impaired, qualified or absent.” As Lord Reed puts it in Investment Trust Companies (para 42), the purpose of the law of unjust enrichment is to “correct normatively defective transfers of value by restoring the parties to their pre-transfer positions. It reflects an Aristotelian conception of justice as the restoration of a balance or equilibrium which has been disrupted.”

The submission on behalf of Musst appears to be to the effect that bearing in mind matters of causation, it is unfair to make an order of a payment in restitution. That is, in my judgment, an open textured approach to that which is unjust. The case of Musst is that there was an unjust factor, namely a failure of basis, being the absence of an agreement between Musst and Matrix to compensate Matrix for its services.

A further submission of Mr Knox KC was more directly by reference to causation by referring to a novus actus interveniens or breaking the chain of causation: see the quotation above from his oral closing submissions on Day 7 at pp.39-41. Whilst this is closer to the mark, it is necessary to bear in mind that unjust enrichment is not about the disgorgement of gains or compensation of losses, but the reversal of value between claimants and defendants: see Menelaou v Bank of Cyprus UK Ltd [2015] UKSC 66 at [23].

This was explained by Lord Clyde in Banque Financière de la Cite SA v Parc (Battersea) Ltd [1999] 1 AC 221 at 227, citing a maxim of Pomponius:

“My Lords, the basis for the appellants’ claim is to be found in the principle of unjust enrichment, a principle more fully expressed in the Latin formulation, nemo debet locupletari aliena jactura [no-one should be enriched by another’s loss] ... Without attempting any comprehensive analysis, it seems to me that the principle requires at least that the plaintiff should have sustained a loss through the provision of something for the benefit of some other person with no intention of making a gift, that the defendant should have received some form of enrichment, and that the enrichment has come about because of the loss (emphasis added).” (p 237)

This was quoted with approval in the subsequent Supreme Court case of Investment Trust Companies at para. 44. At para. 45, Lord Reed said:

“It should be emphasised that there need not be a loss in the same sense as in the law of damages: restitution is not a compensatory remedy. For that reason, some commentators have preferred to use different terms, referring for example to a subtraction from, or diminution in, the claimant’s wealth, or simply to a transfer of value. But the word “loss” is used in the authorities, and it is perfectly apposite, provided it is understood that it does not bear the same meaning as in the law of damages….”

At para. 52, Lord Reed stated that “the “at the expense of” requirement is not satisfied merely by the direct receipt of a benefit. The claimant must also incur a loss through the provision of the benefit. As Lord Clyde put it in Banque Financière, in the passage cited at para 44 above,“the plaintiff should have sustained a loss through the provision of something for the benefit of some other person”. That requirement will not normally be satisfied where the provision of the benefit was merely an incidental or collateral result of his expenditure.” He then went on to consider what would happen if the benefit was “merely incidental or collateral to the reason why the expenditure was incurred.” In that connection, Lord Reed said that “a “but for” causal connection between the claimant’s being worse off and the defendant’s being better off is not, therefore, sufficient in itself to constitute a transfer of value.” Whilst that was in connection with an incidental or collateral benefit, there is no reason to confine the application of the statement that a “but for” causal connection does not suffice by itself unless the enrichment has come about because of the expense of the claimant.

Mr Adkin KC rightly said that it was important to have a close inspection of the facts in each case because these cases of identifying an unjust enrichment, and in this case whether a benefit was received by Musst at the expense of Matrix (or whether enrichment has come because of the loss) is particularly fact sensitive.

It will be assumed for this purpose that Matrix has proven that it provided a service expecting some remuneration and that it conferred a benefit on Musst in the form of the receipt of management fees. The facts now to be investigated are those relevant to any claim that the receipt of the performance fees through the judgment in the case of Musst v Astra are to be treated as having come about because of the loss, namely the provision of services in 2012.

The following is now to be borne in mind, namely:

Contrast the position of MRL. As a result of the administrators/liquidators not being notified of any claim, there was no action to assist Musst to bring about investments on the part of The Observatory/2B and LGT/Crown respectively. Further, there was no attempt to assist Musst in anything required in order to ascertain whether performance fees had been received by Octave/Astra and/or to assist Musst in making recovery from Astra.

It was worse than that. It became apparent from disclosure in the case of Musst v Astra that Mr Reeves actively assisted Astra in the disclosure process in 2016 by transferring a Dropbox of documents. The inference is that Mr Reeves must have known at that time about the nature of the dispute between Musst and Astra.

Even at a point in time when MRL had acquired their assignment of rights, Mr Reeves actively assisted MRL by volunteering a witness statement in the Musst v Astra action. The date of the witness statement was 12 January 2021. The date of the assignment was on 2 August 2020. As already noted, the statement of Mr Reeves corroborated the case of Mr Mathur and was served on behalf of Astra. It was intended to assist Astra and thereby would harm the case of Musst. Not only that, but also it would, if accepted, have the result that Musst would lose its case against Astra with the result that MRL would not make any recovery in its action against Musst. It was also in conflict with the contractual case in this action (which had been commenced on 4 September 2020). This has all the hallmarks of someone who has suspended truth for his own changing interests from time to time.

It is not necessary to make a finding that there was a collaboration between Mr Reeves and Mr Mathur or to find that Mr Mathur backed the instant action (it was related that that was not the case). It is important to relate that Mr Reeves gave written and oral evidence which was intended to undermine the case of Musst against Astra.

If accepted, this would have led to no share of the performance fee being payable to Musst with a consequence that MRL would receive nothing. The fact that he gave evidence in this case at odds with his evidence in the case of Musst v Astra, and has no or no sensible explanation for this change of account is damaging to his credibility or the veracity of the major points in his statement.

I do not have go so far as to find that he was in cahoots with Mr Mathur, but it does not matter. It suffices to say that Mr Reeves was actively giving evidence which he must have known was intended to contradict the case of Musst and thereby lead to no end-product in respect of moneys received from the performance fees.

The position has been worse still in the following respects, namely:

The recoveries must have been no sooner than 2022, that is to say almost 10 years after the collapse of Matrix. It is very distant in time from the time said to be the introduction of The Observatory/2B and LGT/Crown respectively. It may have been that the moneys were not handed over unconditionally until after the judgment of the Court of Appeal of 13 February 2023. There is so much that was intervening between the services curtailed by the administration of Matrix on 6 November 2012 and the receipt of the performance fees by Musst pursuant to the judgment in the case of Musst v Astra.

In addition to the intervention of time, there has been the intervention by bringing hazardous litigation in order to obtain the judgment. The litigation involved very large expenditure on costs, very substantial risk of failure, very large sums of money to be sacrificed to enable the action to be pursued or continued by the involvement of litigation funders, large sums spent to avoid or reduce the risk of a costs and to avoid or reduce security for costs. It involved exposing Mr Siddiqi and Musst to a claim in defamation which may have been tactical in the sense that it may have been a strategic weapon to make Musst less keen about pursuing Astra. This was an exposure to personal risk of Mr Siddiqi as well as risk to Musst. This too was an intervention between the interrupted activities of Matrix in 2012 and the eventual judgment in the Musst v Astra action.

A yet further intervention were all the steps taken by Mr Reeves/MRL to assist the case of Astra/Mr Mathur and to damage the case of Musst/Mr Siddiqi.

In my judgment, the sum of the parts or indeed some of the parts by themselves were such that they broke any chain of causation between the truncated assistance of Matrix in 2012 and the judgment in Musst v Astra.

In all the circumstances, and applying the causation test from Banque Financiere and Investment Trust Companies, any enrichment of Musst has not come about because of the loss of Matrix, in other words, at the expense of Matrix. So much had intervened (described in detail) that the judgment in 2021 and 2022 and the resisting of the subsequent appeal in 2023 did not come about because of the truncated efforts of Matrix in 2012. It is not sufficient to apply to apply some “but for” causation. The primary contribution to the making of the investments was that of Musst over Matrix, but that was in 2012-2013. From the start of November 2012, Matrix ceased to do anything from the onset of the insolvency.

The facts of this case are so peculiar involving not only hazardous, hard fought, expensive and draining litigation, but also no assistance by the liquidator and Mr Reeves participating in seeking to undermine the very cause of action underlying this action. Mr Reeves cannot be treated as a mere third party: he was apparently the controlling force of MRL, and his potentially destructive written and oral evidence in the Musst v Astra action was immediately following the inception of this action.

A different way of expressing this is that the failure of basis is posited on the failure on the part of Musst to enter into an agreement with Matrix upon making an agreement with Octave. There is an unreality in the fact that Matrix was insolvent and had ceased to provide services. It might have been expected that then Mr Reeves would be liaising with the liquidator or then seeking an assignment of a claim of the liquidator, which evidently he did not do until 2020. The position is in fact worse in that Mr Reeves supported the case of Astra (Mr Mathur) in a way designed to prevent Musst from receiving any share of performance fees, and thereby negating any claim of Matrix or MRL in that regard. It therefore follows that the case of MRL depends upon ignoring the evidence of Mr Reeves in the Matrix v Astra action and imagining that Mr Reeves would have negotiated an agreement which was fundamentally different from the evidence of Mr Reeves in the Musst v Astra.

Further, if MRL had taken the assignment in 2012 or shortly thereafter, and on the counter-factual that there would not have been a failure of basis, then it is to be inferred that there might have been various scenarios which have not taken place. First, it might have been expected that Matrix and/or MRL would have been expected to contribute to the claim against Astra, which did not occur. Second, it might have been expected that there would have been an express term or an implied term of that agreement that Matrix or MRL would not have done anything calculated to prevent Musst from enforcing its rights against Astra, which would have contradicted fundamentally by the support of Mr Reeves/MRL for Astra.

The effect of the above is that the claim for failure of basis is at least confused. One way in which this had been expressed at one point of the submissions of Musst is that it was unfair for there to be a remedy in restitution which would allow for MRL/Mr Reeves to be at one point destructive of the claim of Musst against Astra, and after that claim succeeded, then seeking to enforce the same. There was no pigeonhole for a defence of unfairness such as any form of estoppel. It does not matter because that stage was not reached. I am satisfied that the intervention of Musst having to pursue the action against Astra without any assistance on the part of Matrix or MRL and/or the actions herein described of Mr Reeves/MRL in attempting to prevent Musst from receiving any money from Astra have as their effect that any enrichment of Musst has not come about at the expense of Matrix.

For all these reasons, the claim of MRL to have any share of the performance fees in respect of The Observatory/2B and LGT/Crown must fail.