CA-2025-000525 - [2025] EWCA Civ 1307

After setting out the procedural history, the legal principles (as to which there was no dispute below or on this appeal, but to which I will return later in this judgment) and the parties’ positions, the Judge addressed the lateness of the application as follows:

“31.

This is a case where… the matters which are the subject of the amendment could and should have been pleaded very much earlier. ENRC has of course always known that a large proportion of the lending relied upon was made not to it but to its subsidiaries. The claim for increased borrowing costs due to the CI was made in the original 2019 Particulars of Claim. Further, although the CI did not end until 2023, the claim in respect of increased borrowings is in fact limited to the years 2013 to 2016. In reality, ENRC and/or its legal team took their eye off the ball in terms of accurately pleading the increased borrowing costs claim once the parties’ attention had turned to the management of the claim generally and in particular the hiving off of quantum to Phase 2. So it is a late amendment, though not a very late one in the sense of one which jeopardises an already fixed trial date.”

The Judge then addressed the relevance of the subsidiaries’ documents, considering separately “whose documents are relevant to the negotiation of the loans themselves” and “whose documents are relevant to the claim for diminution in value”. It is clear from the context that the Judge used the term “relevant” as shorthand for relevant and disclosable by ENRC.

As for the negotiation of the loans, the Judge considered ENRC’s contention that it was not even clear that disclosable documents of the subsidiaries were no longer available, and that it might be found that they still exist if the amendments are allowed and the position is then investigated. The Judge rejected that argument in the following terms:

“50.

However, all of that is far too speculative. What would have been useful is if ENRC had already checked with the subsidiaries and sought documents relating to the loans, for example by way of keywords, and if documents did emerge, then perhaps ENRC could have argued that the absence of a litigation hold did not matter because there were no responsive documents. However, it has not undertaken that exercise and it is somewhat surprising that it has not.

51.

I should add here that in this context ENRC does not argue that it could not have imposed a litigation hold years ago, or could not now seek documents from the subsidiaries, because such documents were not within its control. While ENRC, in the past, has said that it did not have legal control of such documents, Mr Pillow accepted that the position was or may be different in terms of practical control. At any rate, the control argument was not made in the context of the current application.”

The Judge also considered ENRC’s argument that no documents of the subsidiaries would be disclosable in any event because (i) it was the treasury and finance team at ENRC (and then ERG) which conducted negotiations with lenders on behalf of the entities in the wider group; (ii) it was therefore implausible that, even if representatives of subsidiaries in Kazakhstan were sometimes involved in discussions with lenders, anything significant to a material borrowing arrangement would not have been discussed at a treasury level; (iii) substantial amounts of documents from the treasury team were available; (iv) only documents passing between ENRC/ERG and the lender would be relevant: documents internal to subsidiaries were unlikely to be of any probative value. He then recorded the SFO’s contrary contention that there were many kinds of documents relating to the subsidiaries that would be relevant to the borrowing costs, to which experts considering the cause of increases in those costs would wish to have regard. The Judge recognised the force of ENRC’s response, but ultimately rejected its position in the following terms:

“64.

As to that point, ENRC's response is essentially to say that this cannot be right. It may be appropriate if one was to start if the ground up, as it were, so as to work out what a hypothetical lender to any given subsidiary, absent the CI, would have charged it in terms of interest. However, the exercise here is different, because it is to ask what difference the CI made to the actual lenders in terms of their deliberations. I follow that, but without more detail I cannot say for sure that at least some of the documents sought might not be relevant and it is difficult to be sure where we have not yet had a hearing on the disputed items in the DRD [Disclosure Review Document]. So what I am being asked to do now by ENRC is effectively to decide that dispute in advance for the purpose of the amendment application, which does seem rather back to front to me.”

After making the further points that the subsidiaries’ documents might be relevant in considering interest rates charged to comparator companies and in relation to the question of whether borrowing cost increases might have been mitigated, the Judge concluded as follows:

“67.

In my judgment, and at this stage of the proceedings, and without a detailed debate on DRD issues, I do not think it right to conclude that none of the documents which would have been caught by a litigation hold on subsidiaries could be relevant, nor can I say that, even if they were relevant, they would only be marginally so, or that it would be disproportionate, especially given the amounts claimed here, to have regard to them…”

The Judge then considered the potentially different position in relation to the borrowing of ENRC Finance Limited and ENRC NV, accounting for US$35.8 million, given that all of their documents were preserved. The Judge nonetheless concluded that the amendments in relation to the borrowing of those companies still faced the same problems, stating:

“69… [I]f, as ENRC says, they are both mere holding companies, the documents which would be relevant are those of their indirect subsidiaries, which of course takes us back to Kazchrome, SSGPO and the rest.”

As regards the diminution in value claim, the Judge noted that ENRC’s “dollar for dollar” claim was a stark one, and that ENRC does not put its claim in any other way. The Judge nevertheless rejected ENRC’s contention that that “all or nothing” approach removed the need for any disclosure from the subsidiaries as to the diminution in the value of ENRC’s shareholding in those companies, stating:

“73.

Indeed…part of the expert input…concerned what would be required for a proper assessment of the diminution in value claim. In that regard, even though ENRC has no alternative diminution in value or other case for loss, if the court is to be persuaded that the dollar-for-dollar method is not the correct one, I can see that, in order to challenge it, the SFO and the Dechert Defendants’ experts will need to consider the particular activities, standing and attributes of each subsidiary in order to explain why the dollar-for-dollar approach does not work. For that reason, the lack of documentation now at subsidiary level constitutes also a real prejudice to the Dechert Defendants and the SFO, which could have been avoided if the claim in respect of the subsidiaries’ borrowing had been made at the outset. This particular prejudice is not one which exists for the claim in respect of ENRC’s own borrowing, since by definition there is no diminution of value claim there.

74.

I should add that ENRC somewhat downplays the significance of its amendments on the basis that all the court is doing is making a rough and ready assessment as to whether the CI caused increased borrowing costs and that ENRC’s case here is simple. That, I think, underestimates what in fact would be involved in dealing with these very large claims.”

The Judge therefore concluded that there would be real prejudice to the Dechert defendants and the SFO if the amendments to the borrowing costs claim were allowed. As for the countervailing prejudice to ENRC, the Judge stated:

“76.

On the other hand, and by the same token, ENRC will suffer considerable prejudice if the amendment is not allowed because it will be deprived of most of the very substantial increased borrowing costs claimed. However, here it really is the author of its own misfortune, since it could and should have pleaded this claim properly at the outset, namely, around five years ago. That point is given added weight when one recalls that the SFO actually pressed ENRC for further information on the borrowing costs claim in 2019 and 2020, thereby emphasising the need for proper particularisation. There is yet further weight given to the point by the fact that I said on 13 May 2020 that any amendment should be made then and not later. Here, all of the material facts must have been known by ENRC in 2019, just as now.”

In the light of the above, and given that there was no good reason for the amendments being sought as late as they were, the Judge held that it was clear that those relating to increased borrowing costs must be refused. For the same reasons, the Judge also refused those relating to fees and costs incurred by the subsidiaries and compound interest paid by the subsidiaries.