KB-2025-001160 - [2025] EWHC 2369 (KB)

It was and is, for present purposes at least, clear that BISL pays its employees and that it paid Mr Wheeler and the departing EMEA GPF employees the relevant sums. In any event, a witness statement from Mr Sutherland (Chief Finance Officer – Europe for Barings Group), dated 9 September 2025, explains that BISL supplies its employees to other companies in the Baring Group which generate revenue by managing investments, namely Barings Asset Management Limited (“BAM”) and Barings (UK) Limited (“BUK”). BISL pays the salary and bonuses of its employees out of its own funds i.e. from its own bank accounts. This is true of the bonus payments on 22 February and 7 March 2024 which are the subject of the Claim.

BISL recharges 100% of its costs to BAM and BUK including salary, bonuses, occupancy costs and professional fees. It does not recharge any of these as a separate item. The costs as a whole are settled on a quarterly basis. The settlement of the recharges which included the costs of the February and March 2024 bonus payments took place in the second quarter of 2024.

In my view, the answer to Mr Oudkerk’s “no loss” point is that BISL has a real prospect of success on an argument that its recharging arrangements with BAM and BUK provided it with collateral benefits which arose independently of the circumstances giving rise to the loss which it claims. The evidence is that these arrangements, for which BISL provides consideration, exist as part of the Barings business model and have no connection with the circumstances of the present case. It is not the case that BAM and BUK, knowing of the loss which BISL had suffered, reimbursed BISL in respect of those losses. Rather, the costs of the bonuses formed part of their overall quarterly settlement of BISL’s costs as a whole, which they paid regardless of Mr Wheeler’s actions. As Lord Sumption JSC said in Swynson Ltd v Lowick Rose LLP [2018] AC 313 at [11]:

“11.

The general rule is that loss which has been avoided is not recoverable as damages, although expense reasonably incurred in avoiding it may be recoverable as costs of mitigation. To this there is an exception for collateral payments (res inter alios acta), which the law treats as not making good the claimant's loss. It is difficult to identify a single principle underlying every case. In spite of what the latin tag might lead one to expect, the critical factor is not the source of the benefit in a third party but its character. Broadly speaking, collateral benefits are those whose receipt arose independently of the circumstances giving rise to the loss. Thus a gift received by the claimant, even if occasioned by his loss, is regarded as independent of the loss because its gratuitous character means that there is no causal relationship between them. The same is true of a benefit received by right from a third party in respect of the loss, but for which the claimant has given a consideration independent of the legal relationship with the defendant from which the loss arose…In cases such as these, as between the claimant and the wrongdoer, the law treats the receipt of the benefit as tantamount to the claimant making good the loss from his own resources, because they are attributable to his premiums, his contributions or his work…” (emphasis added)

Even if I had accepted that Mr Wheeler’s argument was bound to succeed on the basis that the only parties which suffered loss were BAM and BUK, provided there was a cause of action available I would have been likely to give permission to join these companies as claimants rather than to strike out the Claim. Alternatively, if it is the case that only BISL is able to bring a claim for the loss of the remuneration in question because BAM and BUK did not have a contractual relationship with Mr Wheeler and/or he did not owe fiduciary duties to these companies, BISL has tenable arguments under the principle of transferred loss. As Lord Sumption said in the Swynson case:

“14.

The principle of transferred loss is a limited exception to the general rule that a claimant can recover only loss which he has himself suffered. It applies where the known object of a transaction is to benefit a third party or a class of persons to which a third party belongs, and the anticipated effect of a breach of duty will be to cause loss to that third party.”

He went on to say:

“16.

It is, however, important to remember that the principle of transferred loss..is an exception to a fundamental principle of the law of obligations and not an alternative to that principle. All of the modern case law on the subject emphasises that it is driven by legal necessity. It is therefore an essential feature of the principle that the recognition of a right in the contracting party to recover the third party's loss should be necessary to give effect to the object of the transaction and to avoid a “legal black hole”, in which in the anticipated course of events the only party entitled to recover would be different from the only party which could be treated as suffering loss…That is why, as the House of Lords held in this last case, it is not available if the third party has a direct right of action for the same loss, on whatever basis.”

Given that BISL’s arguments on the issue of loss have real prospects of success, and for the reasons given above, I do not accept that Ground 3 establishes any abuse of process on the part of BISL.