King's / Queen's Bench Division of the High Court

KB-2023-004010 - [2025] EWHC 2689 (KB)

Fecha: 17-Oct-2025

VIII Discussion: causation points

VIII Discussion: causation points

99.

There are particular features which are important:

(1)

Where an injunction was wrongly granted, albeit without fault on the claimant's part, the court will ordinarily order an inquiry as to damages in any case where it appears that loss may have been caused as a result: see Yukong Line at [33].

(2)

If the court lacked jurisdiction to make the injunction, it is difficult to envisage any circumstances in which the court would refuse to order an inquiry as to damages upon some evidence of loss: see Yukong Line at [34].

(3)

So far as evidence of loss is concerned, upon an application for an inquiry, the applicant must adduce some credible evidence that he has suffered loss as the result of the making of the order. The court will not order an inquiry if it appears to be pointless to do so because the intended claim for damage is plainly unsustainable: see Yukong Line at [35].

(4)

At the stage of exercising its discretion whether to order an inquiry, the court does not ordinarily hear protracted argument on whether the suggested loss will be recoverable. If the defendant shows that he has suffered loss which was prima facie or arguably caused by the order, then the evidential burden of any contention that the relevant loss would have been suffered regardless of the making of the order in practice passes to the defendant and an inquiry will be ordered: see Yukong Line at [35].

(5)

The damages may be specific special damages or it may be general damages, albeit that the Court will scrutinise the latter carefully: see the cases cited in PJSC National Bank Trust v Mints [2021] EWHC 1089 (Comm) at [27], especially noting Harley Street CapitalLimited v Tchigirinski at [34]; Al Rawas v Pegasus Energy Limited [2008] EWHC 617 at [35] and [39].

(6)

There is a distinction between an application for fortification of damages and an application for an inquiry as to damages. In the case of fortification of damages, the Court will require evidence to a level of a good arguable case of three elements, namely (i) evidence of the likely amount of any loss which might be suffered as a result of the order, (ii) a good arguable case that the risk of loss requires fortification, and (iii) the making of the interim order is or was a cause without which the relevant loss would not be, or would not have been, suffered: see [2018] EWHC 2179 (Comm) at [14-15] quoting Energy Venture Partners Ltd. v Malibu Oil and Gas Ltd. 2014] EWCA Civ 1295. These pre-conditions are required because of the invasive nature of requiring a party to lock up assets by providing security for the cross-undertaking.

(7)

By contrast, an inquiry as to damages is simply to hold an inquiry in which the issue of causation will be determined at the inquiry, and not the provision of security. In that case, no inquiry will be held if there is no point, and to that end, there must be “some credible evidence that he has suffered loss as the result of the making of the order”: Yukong Line at [35].

(8)

Subject to that, issues of causation are normally for the inquiry as to damages: see Harley Street Capital at [19].

100.

In the instant case, the evidence is that the business of CSM was to list bonds on a recognised stock exchange for investors which they held in a fiduciary capacity. CSM derived income of setup charges for each bond, from annual administration services for each bond issued and from the redemption of each bond at maturity. Without a Stock Exchange Listing, the investors were not prepared to invest.

101.

The proceedings were commenced in October 2023, but the business of CSM continued. On 7 August 2024, QL notified the FSE and the VSE of the WFO. This notification had almost immediate results. On 15 August 2024, the FSE duly published the Management Board’s decision to discontinue trading in bonds and certificates issued by CSM. It notified CSM that trading of three bonds and 11 certificates at the FSE issued directly or indirectly by CSM would be terminated as from the end of September 2024. Termination of trading was published by the FSE. The VSE followed in its decision to suspend trading of CSM bonds; and subsequently, on 29 August 2024, the VSE decided not to list CSM bonds.

102.

This was the lifeblood of the business of CSM, and despite attempts to prevent it, CSM was unable to prevent the Stock Exchanges from acting in this way. The consequence has been the loss of income of the kind described above. Using various assumptions, CSM say that the losses are in excess of €22 million.

103.

In my judgment, for the purpose of ordering an inquiry, the above is “some credible evidence that [CSM] has suffered loss as the result of the making of the order”. It has shown loss suffered which was prima facie or arguably caused by the order such that the matter should properly be investigated in an inquiry.

104.

In respect of the criticisms of Ms Wright, the answers at this stage are as follows. It fails to look at the big picture which is an apparently good business until notification of the WFO, and then the source of income being closed down immediately consequent upon such notification. It is not necessary at this stage to have detailed evidence of the nature of the business. The spreadsheet can be criticised in that its assumptions have not been stress tested, but that is not appropriate at the stage of ordering an inquiry. That is suitable for the inquiry.

105.

It is understandable to say that expert evidence is required in order to present and expand the nature of the evidence about the losses. That evidence can explain “in detail” the expected take up and revenue and the loss of revenue from the delisting of the bonds. If the commercial record of CSM is to be scrutinised, that can be within the inquiry.

106.

Seeking expert evidence is necessary in order to subject the assertions to the forensic analysis required in a hearing: it is not a recognition of deficiencies at this stage. It is not appropriate in this judgment to make an order for expert evidence. There ought to be a directions hearing for the purpose of the inquiry, and that ought to include more detailed evidence about the expert to be required and some outline topics to be covered.

107.

A criticism which is made is that the loss may have arisen from the proceedings themselves and the claim of conspiracy to defraud rather than from the WFO. There is sufficient evidence at this stage to raise a prima facie case that loss has been suffered as a result of the WFO. The points of importance here include the following. First, it is the timing, namely that within a very short time of notification of the WFO, the FSE made its decision to delist and not to accept further business. Second, the refusal to provide the letters sent by QL to the FSE and the VSE mean that a potentially important part of the causation analysis is missing. There is at this stage a potential inference to the effect that this would support the case that it is the WFO which has caused the losses. For the purpose of raising an arguable or a prima facie case, this should be taken into account. Third, there is reason to believe that there might be expert evidence and further factual evidence for the inquiry capable of proving the causal connection between the notification and the delisting.

108.

MGWL seeks to draw a conclusion to contrary effect from correspondence said to indicate that the cause was the nature of the proceedings. It was asked what was the cause of the withdrawal of facilities on the Exchanges. The Court has been asked to draw an inference from the absence of a definitive answer that at highest, Mr Smith and CSM cannot prove that the withdrawal was not due to the action. In my judgment, whilst this raises an argument to this effect, it does not prove that the loss would have been suffered regardless of the granting of the WFO. The matters just mentioned in the preceding paragraph are sufficient to establish at least a prima facie case that the WFO has caused the loss.