CL-2015-000047 - [2025] EWHC 2724 (Comm)

BASIS OF THE APPLICATIONS TO AMEND

As indicated in the 18 July judgment, a worldwide freezing order was granted on 12 February 2015 by Teare J, in respect of the Defendants’ assets of up to US$335 million, and remained in place until I discharged it in February 2025.

The D1/D2 Particulars, served on 14 March 2025, seek compensation for loss of the oil trading business they say they would, but for the freezing order and its effects, have established, and which they alleged would have made profits of the order of US$500 million. Alternatively, they claim for lost job opportunities, from which they say they would have earned of the order of US$113 million. D1/D2 also seek compensation for lost investment opportunities and lost investment gains on assets they had to sell; together with injury to reputation, distress and invasion of personal liberty, for which they claim aggravated damages.

As part of the Particulars, D1/D2 allege that allegations which the Claimants made in support of the freezing order were false and were, when made, known to be false (through, in particular, Mr Fredriksen, Mr Trøim, Mr Hannas and/or Mr Adams, all of whose knowledge is said to be attributable to the Claimants).

The D5 Points of Claim, also served on 14 March 2025, seek compensation on two main bases. D5 alleges that, but for the freezing order and its effects on Attock Dubai (in which he had a 50% interest), he would have received substantial sums from Attock Dubai in his capacity as trader/employee, director and ultimate 50% shareholder. Further or alternatively, he alleges that, but for the effect of the freezing order, he would have become a senior employee of Vitol Dubai or another comparable oil company and would have received substantial sums by way of a sign-on bonus, annual salary, annual bonus and share scheme participation. He also claims for lost investment opportunities and lost investment gains on assets he had to sell, together with upset, stress and loss of reputation.

Like D1/D2, D5 alleges in his Points of Claim that allegations that the Claimants made in support of the freezing order were false and were, when made, known by the Claimants to be false.

As part of their Defences to those claims, the Claimants dispute that any losses were caused by the freezing order, as distinct from the fraud claims made against the Defendants in the underlying proceedings: see, e.g., Claimants’ Defence to D1/D2 Particulars §§ 4, 57(2), (4) and (5), 59(3), 65(1), 66 and 81; Claimants’ Defence to D5 Points of Claim §§ 38(1) and (2) and 44(2)). I shall refer to this as the Claimants’ “causation defence”. The Claimants thus rely on the principle established by the High Court of Australia’s judgment in Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; 146 CLR 249 (“Air Express”), and followed in various subsequent English cases.

By their draft Amended Replies, the Defendants seek to contend that, in addition to the causation defence being wrong in point of fact, the Claimants should not be entitled to rely on it in circumstances where the Claimants’ fraud claims in the underlying proceedings were advanced dishonestly. The core of D1/D2’s proposed amended plea is as follows:-

“28A. Further or alternatively, it is denied that the Claimants’ allegations of fraud in the underlying proceedings would (absent the Freezing Order) have prevented the Oil Trading Business from being established, and/or that the Claimants are entitled to rely on those allegations of fraud, for the reasons set out in paragraphs 28B – 28G below.

28B. The Freezing Order caused damage to the commercial standing of Mr Bosworth and Mr Hurley, so as to have a preventive and/or coercive effect that restricted their ability to do business with, and/or obtain finance from, third parties, including banks and potential investors in the Oil Trading Business. The damage to Mr Bosworth and Mr Hurley’s commercial standing caused by the Freezing Order was significant and went beyond any damage caused by the fact of the proceedings. Pending disclosure and evidence, Mr Bosworth and Mr Hurley rely on the facts and matters set out in paras 65 and 67-70 of the First Witness Statement of Christopher Main. In the premises, the Freezing Order caused and/or was an effective cause of the failure to establish the Oil Trading Business.

28C. Further or alternatively, the allegations that were central to the Claimants’ case in the underlying proceedings were also central to the evidence that the Claimants adduced to obtain and maintain the Freezing Order: see the judgment dated 18 July 2025 ([2025] EWHC 1837 (Comm)) at para. 7. It is averred that those allegations were dishonestly made; accordingly, the dishonest allegations by which the Freezing Order was obtained and maintained were central or material to the fraud claim itself. In particular:

a.

Paragraphs 6-12 of the D1/D2 Inquiry Particulars are repeated. The dishonest allegations pleaded in the POC (paragraphs 15.5, 31.1, 31.3 and 40.4) that Mr Bosworth and Mr Hurley beneficially owned and controlled AL were essential to the modus operandi of the alleged fraud, namely that AL was the principal vehicle which Mr Bosworth and Mr Hurley ‘inserted’ into the transaction chains to carry out the fraud. The Claimants’ “essential case” was that AL “was an instrument of fraud used dishonestly to divert profits from Arcadia London”:

b.

Paragraphs 13-20 of the D1/D2 Inquiry Particulars are repeated. The dishonest allegations that Mr Bosworth and Mr Hurley made the misrepresentations pleaded in the POC (paragraphs 54.3, 55, and 61-63) supported the Claimants’ case that Mr Bosworth and Mr Hurley’s activities were carried on secretly (consistently with the Claimants’ fraud case): J.925. The absence of such secrecy fatally undermined the Claimants’ fraud claim. “[F]ar from being established and used secretly and dishonestly, as a “fraudulent entity”, Arcadia Lebanon was openly discussed and used, with the acquiescence of Mr Fredriksen, Mr Trøim and Farahead in general”: J.922.

c.

Paragraphs 21-24 of the D1/D2 Inquiry Particulars are repeated. The dishonest allegation that “Farahead was not aware at the time that GEPVTN had received payments from Arcadia Lebanon”; and that this had come to light only from AL transfer instructions “that have now been identified” was critical to sustaining the fraud case against Mr Bosworth and Mr Hurley. Absent that dishonest allegation, it was implausible that AL would have made payments to GEPVTN at the same time as hiding its existence and activities from FH to conduct a clandestine fraud.

28D. In circumstances where the dishonest allegations were central or material to the Claimants’ fraud claim, it is denied that the Claimants can rely on the allegations of fraud that they made against Mr Bosworth and Mr Hurley to defeat or reduce Mr Bosworth and Mr Hurley’s claims in the Inquiry. In particular:

a.

The Claimants are not entitled to rely on their own wrong (the dishonest allegations) to secure a benefit, in particular where their own wrong was intentional;

b.

Such a principle is a general rule of causation and/or flows from public policy and/or fairness and/or common sense;

c.

In any event, Mr Bosworth and Mr Hurley’s claims are brought pursuant to the Court’s equitable jurisdiction to award compensation. It would be inequitable, unjust and/or contrary to common sense and/or contrary to public policy for the Claimants to be permitted to rely on their own dishonest allegations of fraud to defeat or reduce Mr Bosworth and Mr Hurley’s claims in the Inquiry.

28E. Further or alternatively, when considering the counterfactual, it must be assumed that the Claimants would not have made any dishonest allegations. In circumstances where the Claimants’ dishonest allegations were central or material to the Claimants’ fraud claim, the Claimants are unable to rely on the fact of the fraud claim and/or any reputational issues associated with that fraud claim as causative of the relevant loss and damage.

28F. Further or alternatively, in circumstances where dishonesty is a cause of the relevant loss and damage to Mr Bosworth and Hurley, it is to be treated as the only cause. The Claimants’ dishonesty in obtaining and/or maintaining the Freezing Order was (at least) a cause of Mr Bosworth and Mr Hurley’s failure to establish the Oil Trading Business for the reasons set out in paragraph 50 of the D1/D2 Inquiry Particulars.

28G. Further or alternatively, in circumstances where the Claimants had sought but not obtained the Freezing Order, or in circumstances where the Set-Aside Application had succeeded, it would have become apparent that (i) the Claimants’ allegations of fraud in the underlying proceedings were dishonest and/or unsustainable; (ii) there was no good arguable case of fraud; and/or (iii) the Claimants had failed to comply with their duty of full and frank disclosure. Paragraphs 3-34 of the D1/D2 Inquiry Particulars and paragraphs 6(a)(i) and 28C above are repeated. The Court’s judgment refusing to make the Freezing Order, or setting aside the Freezing Order, would have been publicly available. In the premises, third parties would not have been deterred from working with Mr Bosworth and Mr Hurley (to establish the Oil Trading Business or otherwise).”

D5’s proposed Amended Reply is substantially similar. The core of his proposed amendments is as follows:-

“43.1

The false and dishonest representations made by the Claimants (as pleaded at paragraphs 12, 15, 18, 21, and 25 of D5’s Inquiry PoC) were central and/or material to:

(i)

obtaining and maintaining the Injunction; and

(ii)

the allegations comprising the Claimants’ fraud claims against the Defendants. The false and dishonest allegations comprising the Claimants’ fraud claims against the Defendants were the same as or were substantially overlapping with, the false and dishonest allegations made by the Claimants in order to obtain and maintain the Injunction. Mr Kelbrick will rely on (inter alia) paragraph 7 of Henshaw J’s judgment dated 18 July 2025 ([2025] EWHC 1837) (Comm).”

“48.

It is denied that the Claimants’ allegations of fraud in the underlying proceedings would (absent the Injunction) have prevented Mr Kelbrick from obtaining senior level employment at Vitol Dubai (or joining Vitol’s Board of Directors) or obtaining equivalent employment at an equivalent oil trading company. Further or alternatively, it is denied that the Claimants’ allegations of fraud in the underlying proceedings would (absent the Injunction) have prevented Mr Kelbrick from having had a real and substantial chance of obtaining the same.

49.

In circumstances where the material allegations comprising the Claimants’ fraud claims were dishonestly made, it is denied that the Claimants can rely on the fact that Mr Kelbrick was subject to a “serious fraud claim” and/or the associated reputational effects of such fraud claim (as pleaded in paragraph 38 and its sub-paragraphs). As to this:

49.1

As a matter of law, the Claimants are not permitted to rely on the causative effect of wrongs committed by them (i.e., the dishonest allegations/representations comprising the fraud claim) in order to defeat or reduce Mr Kelbrick’s claims in the Inquiry. For the avoidance of doubt, making dishonest allegations/representations to the Court which were material to the Claimants’ fraud case and/or cause(s) of action was unlawful and/or amounted to a wrong.

49.2

This principle of law is an application of the general rule of the common law that a party may not rely on its own wrong to secure a benefit.

49.3

Further or alternatively, this principle of law flows from public policy and/or fairness and/or common sense and/or equity and/or is consistent with the Court exercising an evaluative judgment when determining causation. Mr Kelbrick’s claims in the Inquiry are brought pursuant to the Court’s equitable jurisdiction. It would be contrary to public policy and/or common sense and/or unfair and/or inequitable for the Claimants to be permitted to rely on the causative effect of wrongs committed by them in order to defeat or reduce Mr Kelbrick’s claims in the Inquiry.

49.4

This principle of law applies with even greater force where the wrong on which the Claimants rely is an intentional or reckless wrong (i.e., as here, with the Claimants’ dishonest allegations/representations comprising the fraud claim).

49.5

Further or alternatively, when assessing the counterfactual, the Court must assume that the Claimants acted lawfully in that counterfactual. In other words, when considering the counterfactual, the Court must remove both the wrongful act (i.e., the Injunction) and any other unlawfulness of the Claimants (i.e., the dishonest making of allegations material to the Claimants’ fraud claim). For this reason, too, the Claimants are wrong as a matter of law and/or unable as a matter of law to seek to rely on the fact that Mr Kelbrick was subject to a “serious fraud claim” and the associated reputational effects of such fraud claim (as pleaded in paragraph 38 and its sub-paragraphs).

49.6

Further or alternatively, in circumstances where dishonesty is a cause of the relevant loss and damage to Mr Kelbrick, it is to be treated as the only cause. The Claimants’ dishonesty in obtaining and maintaining the Injunction was (at least) a cause of Mr Kelbrick’s loss and damage.

49.7

Further or alternatively, in circumstances where the Claimants had sought but not obtained the Injunction, or in circumstances where Mr Kelbrick’s Discharge Application had succeeded, it would have become apparent that:

(i)

the Claimants’ allegations of fraud in the underlying proceedings were dishonest and/or unsustainable; and/or

(ii)

there was no good arguable case of fraud; and/or

(iii)

the Claimants had failed to comply with their duty of full and frank disclosure. The Court’s judgment in refusing to grant the Injunction, or discharging the Injunction, would have been publicly available. In the circumstances, third parties would not have been deterred from employing Mr Kelbrick.”

The Defendants thus rely, at least in part, on the principle that a party is not entitled to rely on his own wrong to secure a benefit, particularly as applied to questions of causation in Coudert Brothers v Normans Bay Ltd. [2004] EWCA Civ 215) (“Coudert Brothers”). In response, the Claimants rely inter alia on Popplewell LJ’s judgment in King Crude Carriers SA & Ors v Ridgebury November LLC & Ors [2024] EWCA Civ 719; [2025] KB 311 (“King Crude Carriers”), in particular his statement at [25] that the ‘no reliance on own wrong principle’ is not a freestanding principle of universal application.

The Claimants alternatively seek a stay of the dishonesty allegations, pursuant to CPR r.3.1(2)(g) and/or the general case management power under CPR r.3.1(2)(p).