“… [T]he Defendant owed Mr Benyatov a duty of care not to expose him to criminal conviction in the performance of his duties for the Defendant. In particular, the Defendant had a continuing duty: 24.1. Generally to take reasonable care to protect him from criminal conviction and the resulting losses by performing the duties enumerated in paragraphs 24.2 to 24.6 below; …”
“Facts and matters giving rise to the implication of the terms referred to in paragraphs 19.1, 19.2 and 19.3 as a matter of fact and/or business efficacy, and giving rise to the duties at paragraph 24 above, include the following: …” 23 sub-paragraphs then follow, mostly setting out factual matters which are said to show that there was a foreseeable risk, against which he could reasonably expect to be protected, of the Claimant being the subject of criminal prosecution and therefore conviction. I need not reproduce them here. The substance of the case appears sufficiently from para. 25.22, which reads: “By sending Mr Benyatov to emerging markets and/or to Romania, which were high risk in relation to political risk, deep issues of corruption and a poorly functioning judiciary, with a concomitant risk of political exposure in dealmaking, particularly in respect of privatisation, and in circumstances where individuals exploited the internal security and police forces and/or the legal system and processes and/or the judiciary to target competitors and political/business adversaries, with the risk that Mr Benyatov might be caught up in such matters, including the risks of being the subject of criminal investigation, criminal charges, prosecution, conviction, arbitrary detention, and/or imprisonment as a consequence of working and acting on behalf of the Defendant in Romania, the Defendant had such duties of care as pleaded at paragraph 24.”
“Adverse press coverage of the Petrom privatisation from May 2006 and the interest of the Romanian secret police in that transaction [emphasis supplied], which it is reasonably to be inferred (the Defendant’s disclosure on this point being inadequate to date) the Defendant knew about given that it was the subject of the adverse coverage and it was involved in the Petrom transaction and/or which should have been known to the Defendant if it had conducted adequate regular assessments of risk.”
“196. … The Bank objected to [the proposed amendment] in that it did not state whether it was alleged that the Bank knew (in this case about the alleged interest of the secret police) and, if so, who, when and how they knew. The Deputy Judge held on25 November 2020 that these were legitimate questions, and it was a condition of permission that these particulars were given: see his judgment at para. 192. 197. When the matter next came before the Deputy Judge, particulars had not been provided, but it was stated on behalf of Mr Benyatov that the amendments provide the best particulars of knowledge available based on the inadequate disclosure provided by the Bank. The Deputy Judge gave permission at para. 28 of his judgment dated8 December 2020 in the following terms, namely: ‘I have no way of assessing whether the disclosure given thus far has been inadequate, but I accept Mr Ciumei’s assurance that these are the best particulars which the Claimant can presently give. I give permission to amend the pleading as requested, subject, however, to an important caveat: I do so on the express understanding (which seems to me clear from the pleading) that at present there is no case of actual knowledge made against the Defendant. If proper grounds for such a serious allegation were to emerge, I would expect a further application to be made to amend to make such allegation expressly. Any such application would of course fall to be considered by the Court on its merits when made.’”
“In consequence of the foregoing breaches of contract and/or duties of care, Mr Benyatov has suffered and continues to suffer loss and damage, in respect of which he is entitled to indemnification and/or damages, including the following”
“(1) An indemnity and/or damages as pleaded at paragraphs 53 to 55 ...; (2) Declarations as pleaded at paragraph 56; (3)-(5) …”
“106. Mr Benyatov in this case does not allege that the Bank owed him a general duty to protect him from economic loss. The duty of care is significantly narrower than that. It is based on, among others, the specific nature of the work that he did; the country in which he was required to work; the foreseeability of the harm that could befall him, including in the form of specific amber and red flags that allegedly came to the Bank’s attention; and the gravity of the consequences if the risks materialised. 107. It is worth noting that the same facts and matters said to give rise to a duty of care are also relied upon in the AMPOC to give rise to the implication of the claim for contractual indemnities. In the claim as pleaded, both as regards the duty to exercise reasonable care and to indemnify for losses, there is a common factual substratum to justify both the scope of the duty to take care and the scope of the duty to indemnify.” 108. It is therefore a fact intensive duty of care and duty to indemnify…”
“154. In a novel case, the question as to whether there is a duty of care is not to be decided subject to these general parameters. It is very fact sensitive in each case. That is recognised by the way in which the matter has been pleaded. Mr Benyatov’s legal team is not saying that there is a blanket duty in each case for an employer to be procuring risk assessments in respect of its employees. It is brought about by features in this case. They include that it is a large multi-national bank which sends its employees around the world to countries of high-risk and/or in connection with high-risk transactions which take place and/or where there are other high-risk features affecting their employees. 155. There may be cases where there is in principle a duty of care to take reasonable care for the safety of the employee and the financial interests which go with that. In each case, it will depend upon a consideration of the precise facts, the foreseeability of the particular harm and whether in all the circumstances, it is fair, just and reasonable to impose a duty. 156. It is for this reason that at the heart of the case is para. 25 of AMPOC in which Mr Benyatov set out the facts and matters giving rise to the duty of care not to expose Mr Benyatov to criminal conviction in the performance of his duties and the resulting losses. This was said to include the facts and matters identified in the 23 sub-paragraphs of para. 25. This is indeed fact sensitive, and it is to the facts that this judgment must now turn.”
“224. The effect is that key features relied on by Mr Benyatov to establish the duty of care have not been established. … . 225. I am not satisfied that any of the evidence gives rise to the alleged duty of care. Having reviewed the entirety of para. [25] of the AMPOC, Mr Benyatov has been unable to prove the basis of the pleaded duty of care. He has failed to prove that in the circumstances of this case it was reasonably foreseeable that Mr Benyatov would be exposed to a conviction in the performance of his duties for the Bank. 226. Among the matters which have been taken into account in reaching the conclusion that the particular duty of care has not been established are the following factors, namely: (1) The facts showing that Romania was not regarded as a high-risk country during the Relevant Period; (2) The facts showing that the EMS transaction was not regarded as a high-risk transaction; (3) The fact that none of the alleged amber or red flags have been established as putting the Bank on notice of some special need for vigilance in the instant case, nor in respect of various of the alleged flags were they escalated by Mr Benyatov to the Bank on the basis that they were treated as worthy of consideration at a higher level; (4) The fact that, contrary to Mr Benyatov’s pleaded case, there was no standard practice in respect of commissioning a political or other detailed risk assessment whether as alleged by Mr Benyatov or at all. Indeed, the evidence is that international companies did not commission such an assessment; (5) There were no circumstances applying specifically to Mr Benyatov including his name, his origin and his experience which made it inappropriate for him to be appointed on the EMS transaction. 227. The case as to the duty of care therefore fails by reference to the facts of the case. If it had been a case with radically different facts, there would arise for consideration whether such a novel duty of care could be found. These questions do not arise in a factual vacuum. In the instant case, the claim as to the particular duty of care must fail. For the purpose of completeness, I shall consider additional arguments of the Bank to seek to negate the duty of care. They do not arise for necessary consideration in view of the conclusion above.”
“245. It follows that major building blocks on which the duty of care is said to exist are not established. The case that Romania was or was perceived to be a ‘high-risk’ country fails. There also fails the case that the EMS transaction or the other privatisations in which Mr Benyatov was involved were ‘high-risk’ transactions or were perceived as such. Nor have any of the warning flags been established. Nor has it been shown that there were any factors specific to Mr Benyatov which needed to be brought into the equation. Absent all of this and having considered the evidence as a whole, in my judgment the conviction and the subsequent losses were not reasonably foreseeable. Further, in circumstances where there was so much business activity in Romania (in the run up to the imminent entry of Romania into the EU) and against the background of successful privatisation work undertaken by the Bank involving Mr Benyatov in the early years of the decade, it was not fair, just and reasonable to create the alleged or a related duty of care in the circumstances of this case. It follows that Mr Benyatov’s case on the duty of care must fail.”
“… [T]he concepts of whether there is (a) a duty of care, and (b) a breach of duty in the circumstances of this case, are intimately connected. The effect may often be that the very points which would negative a duty of care may be the answers to the allegations that there was negligence and/or a breach of duty.”
“I am satisfied, on the basis of the information reasonably available to the Bank at the time of the alleged negligence, that there was no reasonable probability or possibility that Mr Benyatov would be arrested and the subject of a criminal conviction in Romania as a result of working in Romania and/or by reason of the work undertaken in Romania up to 2005-2006.”
“The Judge erred in his approach in law to determining whether there was a duty of care in tort … in that he focussed his analysis on whether there was, in the subjective understanding of the defendant Bank, a reasonable foreseeability of Mr Benyatov being exposed to criminal conviction. This is the wrong test. The Supreme Court has repeatedly emphasised that the correct approach in law requires an analysis of whether in this type of situation the Bank had an implied assumption of responsibility, objectively determined, to its employee, the claimant Mr Benyatov, in respect of the said risk of harm. It is through that lens that the Court should have analysed whether it was appropriate to develop the law incrementally, and in this regard the Court erred … in failing to draw an analogy from the audit duty found in Rihan v Ernst & Young Global Ltd[2020] EWHC 901 (QB) .”
“The Court must consider the information reasonably available to the Bank at the time of the alleged negligence.”
“I think it is correct to regard an assumption of responsibility as a sufficient but not a necessary condition of liability, a first test which, if answered positively, may obviate the need for further enquiry”
“The proposition that there is a Caparo test which applies to all claims in the modern law of negligence, and that in consequence the court will only impose a duty of care where it considers it fair, just and reasonable to do so on the particular facts, is mistaken. As Lord Toulson pointed out in his landmark judgment in Michael v Chief Constable of South Wales Police[2015] UKSC 2 ;[2015] AC 1732 , para 106, that understanding of the case mistakes the whole point of Caparo, which was to repudiate the idea that there is a single test which can be applied in all cases in order to determine whether a duty of care exists, and instead to adopt an approach based, in the manner characteristic of the common law, on precedent, and on the development of the law incrementally and by analogy with established authorities. He makes that point good by an analysis of Caparo in the following paragraphs, and continues, at para. 27: “It is normally only in a novel type of case, where established principles do not provide an answer, that the courts need to go beyond those principles in order to decide whether a duty of care should be recognised. Following Caparo, the characteristic approach of the common law in such situations is to develop incrementally and by analogy with established authority. The drawing of an analogy depends on identifying the legally significant features of the situations with which the earlier authorities were concerned.The courts also have to exercise judgement when deciding whether a duty of care should be recognised in a novel type of case. It is the exercise of judgement in those circumstances that involves consideration of what is ‘fair, just and reasonable’.” (As para. 21 makes clear, Lord Reed was there concerned to scotch a particular heresy about the application of a test of what is “fair, just and reasonable”
“As Lord Reed demonstrates, it is unnecessary in every claim of negligence to resort to the three-stage analysis (foreseeability, proximity and fairness, justice and reasonableness) identified in [Caparo]. There are well-established categories, including (generally) liability for causing physical injury by positive act, where the latter two criteria are at least assumed. The concomitant is that there is, absent an assumption of responsibility, no liability for negligently omitting to prevent damage occurring to a potential victim. … Economic loss also falls outside the established category of liability for physical injury, but an assumption of responsibility for economic loss will, as discussed in [Hedley Byrne], likewise satisfy the latter two Caparo criteria. Outside any established category, the law will proceed incrementally, and all three stages of the Caparo analysis will be material.”
“It has therefore become clear that, although it may require cautious incremental development in order to fit cases to which it does not readily apply, this concept remains the foundation of the liability.”
“The principle thus established is capable of development. Indeed it has undergone considerable development since 1964, for example to cover omissions and the negligent performance of services. But these have been incremental changes within a consistent framework of principle. One area in which the courts have resisted expanding the scope of liability concerns the person or category of persons to whom the duty is owed. The defendant’s voluntary assumption of responsibility remains the foundation of this area of law, as this court recently confirmed after a full review of the later authorities in [NRAM], paras 18-24 (Lord Wilson JSC).”
“The claimant (R) claimed damages for negligence and conspiracy to injure from four UK-based entities that were part of a network of companies providing accountancy and related services to businesses worldwide (EY). In 2013, while a partner in EY's Middle East and North Africa (MENA) entity, R conducted an assurance audit of a Dubai-based client (K). He claimed to have discovered that K was participating in irregular activities which suggested that it was involved in money laundering; that the local regulator (the DMCC) pressured him to cover up his findings; and that the DMCC and K required him to conduct the audit unethically and in a way that amounted to professional misconduct. He asserted that the defendants colluded with the DMCC in that regard, which led to his resigning, publicly disclosing the wrongdoing, and fleeing Dubai out of fear for his safety. He claimed that he was thereafter unable to secure alternative employment and his earning capacity was largely destroyed. He sought damages for economic loss, mainly in the form of loss of earnings. He claimed that the defendants had breached two duties of care: a duty to take reasonable steps to keep him safe by relocating him outside Dubai (the safety duty), and a duty to take reasonable steps to prevent him suffering financial loss by reason of their failure to conduct the audit ethically and without professional misconduct (the audit duty). He also claimed that they had conspired to injure him by driving him out of EY. The issues were whether any such duties existed and, if they did, whether they had been breached; whether there was a conspiracy to injure R; and whether, in terms of any loss, the chain of causation had been broken because R's decision to make public disclosures was unreasonable.”
“The defendants did not owe the safety duty. It would not be legitimate to extend an employer’s duty to safeguard its employees against personal injury to a duty to safeguard them against pure economic losses arising from their need to cease working to avoid a threat to their safety. The duty to provide a safe place and system of work did not extend to protecting purely economic interests. Although an employee who was instructed to work in unsafe conditions might be entitled to resign and claim constructive dismissal, they could not recover the entire cost of a lost career (see paras 476-487 of judgment).”
“The duty is part of the obligation of the employer (or quasi-employer) to provide an acceptable work environment. The physical integrity of the employee is protected against injury by the classic duty of care to take reasonable steps to provide a safe place of work and a safe system of work. By parity of reasoning, I see no reason why, in certain circumstances, the moral and professional integrity of the employee (or quasi-employee) should not be protected by a duty to take reasonable steps to provide an ethically acceptable work environment, free of criminal conduct … and free of professionally unethical conduct.”
“The Judge erred in failing to take into consideration relevant and material evidence as to whether the Bank owed such a duty of care and/or reached conclusions that were not reasonably open to him, in that: A. It was not reasonably open to the Judge to conclude at [216] in relation to the ‘red flags’ relied on by the Claimant as alerting the Bank to the real risk of conviction he faced, that ‘none of the flags have been proven’ or came to be in the knowledge of the Bank so as to require a response from the Bank. This was contradicted by the unanimous expert evidence, incorrect on the face of the ‘red flag’ documents themselves and contrary to the witness evidence, the credibility of which was not in doubt. None of these matters were considered. B. The Judge erred in deciding by reference to a pleading point at [198] and [213] that the Bank did not know about the critical fourth to seventh ‘red flags’. C. The Judge erred at [88]-[89] and [285] in failing to draw adverse inferences from the Bank’s failure to call key witnesses or give any disclosure as to risk assessment undertaken by the Bank (see also [258]-[261]) and, most importantly, to give disclosure or call evidence in relation to the pleaded allegations at paragraph 52.2 of the Amended Particulars of Claim that the Bank failed to respond to ‘red flags’. D. The Judge was wrong to disregard (or failed adequately to take into account) at [168] evidence of the risks of doing business in Romania, which is not referred to in the Judgment, and wrong to conclude that there was only one item of evidence to the contrary at [175].”
“There is a further matter to add. In a case such as this with numerous interactions, it is possible with the advantage of hindsight to pull out a document and seek to say that if only the Bank had reacted, then the arrest and the conviction could have been prevented. That is not sufficient. They have to be real flags, that is to say matters that ought to have been noticed and acted upon at the time. They have to be matters which were, or ought reasonably to have been, in the knowledge of the Bank. They have to be matters which if they had registered at the time ought to have been acted upon in a manner which would have avoided a conviction or reduced the chance of a conviction. In this case, (a) without a specific pleading in advance of the parts of the documents dated 24 and29 November 2006 now relied upon (which themselves were compiled only after the arrest of Mr Benyatov), (b) without proving relevant knowledge on the part of the Bank of any of these matters, and (c) without Mr Benyatov having escalated within the Bank such knowledge as he may have had, none of the fifth to the seventh flags have been established. Indeed, for all the reasons referred to by the Bank and for the reasons set out in this conclusory section, none of the flags have been proven let alone that they were warning signals on which the Bank ought to have acted.”
“CS” (even assuming Frontier Security’s information was correct) could be anyone. At para. 38.2.1 of his skeleton argument Mr Ciumei pointed out that para. 3 of the memorandum shows that Mr Susak and Mr Stava also knew of the allegation; but it does not show that they did so prior to Mr Benyatov’s arrest, and indeed the context suggests that the reference is to conversations consequent on it. He also contended that “it is to be inferred that others in the Bank knew, including Mr Kyriakos-Saad, who was senior to Mr Burkey as head of the fixed income division in Emerging Markets”
“[I]n order to make an allegation of actual knowledge, the documents evidencing the same ought to have been pleaded by no later than the time of the amendment before the Deputy Judge. Failing this, in the light of the above ruling, they should have been pleaded in advance of the time for witness statements and in any event, well in advance of the trial. The consequence is that the Bank did not have the opportunity to meet a case about actual knowledge and in particular to consider whether to call witnesses to deal with the documents referred to below [i.e. the Rao and Burkey memoranda].”
“[T] he Court erred in deciding by reference to a pleading point at [198] and [213] that the Bank did not know about the critical fourth to seventh red flags. The Bank knew in advance that these matters were in issue, since they were pleaded at AMPOC paragraph 52.2 on the basis of an inference of knowledge and matters were canvassed in further detail in witness and expert evidence in advance of trial. The Judge was wrong to find that this issue did not arise until trial at [214]. No objection was made at trial to any questioning on these documents (nor could there have been such an objection). The Judge was wrong to rely on a pleading point when actual knowledge was demonstrated at trial.”
“Comprehensive political risk analyses were more frequently undertaken by companies for high-risk territories such as those emerging from conflict or prolonged political instability, or those with serious issues of organised criminality or a predatory state. Examples from the Relevant Period would include The Democratic Republic of the Congo, Iraq, and Russia. Lower risk territories, where one or more of these factors might be present but to a lesser degree, would be less likely to be the subject of comprehensive political risk analyses. Examples from the Relevant Period would include Nigeria, Pakistan, and Albania. Romania during the Relevant Period would fall under this category of lower risk territories. While a comprehensive political risk analysis would be less likely, due diligence (business intelligence) with possible elements of political risk analysis may have been employed for deals in problematic sectors or those with political dimensions.”
“In that part of the joint report, ‘cases of high risk countries were territories emerging from conflict or prolonged instability or those with serious issues of organised criminality or a predatory state’. Examples at the relevant time included the Democratic Republic of Congo, Iraq and Russia. Lower risk countries where one or more of the above factors might be present, but to a lower degree, included Nigeria, Pakistan, Albania and Romania at the relevant time.”
“In the end the Court prefers the evidence of the majority to the effect that Romania was not a high-risk country or perceived as such at the relevant time.”
“The relevant paragraph was not specifying which countries were ‘high-risk’ or not. The paragraph was concerned with the territories ‘such as those emerging from conflict or prolonged political instability’ for which companies ‘more frequently’ undertook ‘comprehensive political risk analyses’. Although the experts listed Romania as one of the ‘lower’ risk territories, that simply meant lower than a country ‘emerging from conflict or prolonged political instability’, not that it was low risk.”
“The following principles are not in dispute and may be summarised in these propositions: (i) A cause of action in negligence does not arise until the claimant suffers damage as a result of the defendant’s negligent act or omission. (ii) The damage must be ‘real’ as distinct from minimal: Cartledge v Jopling[1963] AC 758 per Lord Reid at 771 and Lord Evershed MR at 773–4. (iii) Actual damage is any detriment, liability or loss capable of assessment in money terms and includes liability which may arise on a contingency: Forsted v Outred[1982] 1WLR 86 per Stephenson LJ at 94, approved by the House of Lords in Nykredit [Nykredit Mortgage Bank Plc v Edward Erdman Group Ltd (no. 2)[1997] 1 WLR 1627 ] per Lord Nicholls (with whom the other members of the appellate committee agreed) at 630F. (iv) The loss must be relevant in the sense that it falls within the measure of damages applicable to the wrong in question: Nykredit at 1630F. (Propositions (i) to (iv) were confirmed by Sir Murray Stuart-Smith in Khan v Falvey [[2002] EWCA Civ 400 ] at paragraphs 11 and 12.) (v) A claimant cannot defeat the statute of limitations by claiming only in respect of damage which occurs within the limitation period if he has suffered damage from the same wrongful act outside that period: Khan v Falvey at paragraph 23, following Knapp v Ecclesiastical Insurance Group Plc [1998] PNLR 172 per Hobhouse LJ at 184 and 187.”
“298. The duty is framed in a way that captures only loss of earnings consequent upon a conviction. The question is then whether that really is the duty, assuming that there was a duty. It was submitted on behalf of Mr Benyatov that the duty situation is limited to not exposing Mr Benyatov to the risk of conviction and loss of career earnings thereafter. It had not been formulated as a duty not to expose Mr Benyatov to the risk of arbitrary arrest, detention and restriction of movement, which would have been more akin to a physical safety duty. It was submitted that ‘there was no real loss in relation to those’ [the quote is from Mr Ciumei’s closing submissions]. In my judgment, there is an artificiality about capturing the duty in the way in which it is pleaded. It was not just a conviction and the subsequent loss of earnings which ensued from the failure to exercise reasonable care. It was an arbitrary process of arrest, imprisonment, house arrest, facing a criminal trial and conviction. The case is in reality predicated upon an abusive process from start to finish. In his opening skeleton (at para. 124), Mr Benyatov referred to the duty of care being one whereby the Bank was obliged to take reasonable steps to identify and avoid certain risk which Mr Benyatov faced in carrying out the EMS project in Romania ‘including in particular the risk of wrongful prosecution and conviction’. The prosecution took place over a period of years. Either a part of that prosecution was the arrest, imprisonment and incarceration in Romania, or it is so closely related to it that it must be a part of the risk for which the Bank must be responsible to exercise reasonable care to identify and avoid. 299. Another way of looking at the matter is that if the duty is to take reasonable care not to expose Mr Benyatov to conviction, that itself is wide enough to embrace the steps which led to conviction including investigation, arrest, imprisonment and incarceration. In my judgment, it is artificial to frame the duty simply by reference to the loss of earnings subsequent to conviction. There is no reason to restrict it to these losses consequent upon conviction and not to include losses suffered in 2007-2008 referred to above. It is right to say that the losses were not total losses of earnings because Mr Benyatov was still remunerated throughout this period, and it is therefore a different extent of loss that ensued after conviction. However, it was nonetheless ‘real’ as distinct from ‘minimal’. His own evidence bears out both that the incarceration was the cause of his losses and that the losses amounted to hundreds of thousands of dollars. 300. It therefore follows that if, contrary to the above, the Court had found that there was a duty of care or a breach of a duty of care, this is a case where Mr Benyatov cannot defeat the statute of limitations by claiming only in respect of damage occurring within the limitation period given that he has suffered damage from the same wrongful act outside that period. By parity of reasoning, a person cannot tailor the duty situation so as to capture losses claimed in time when in fact the duty, if it had existed, would capture losses outside the limitation period. For this reason also, the claim in tort fails.”
“The Judge erred in law in finding at [297]-[300] that the tort claim was time-barred. Mr Benyatov’s loss flowed from his inability to work as a finance professional, which did not take place until after his conviction, and was thus within time.”
“The following terms were implied into the Contract as a matter of law, fact or business efficacy. At all material times, the Defendant owed to Mr Benyatov the following duties: 19.1 To indemnify Mr Benyatov in respect of all losses, costs, expenses and claims he has suffered arising from or in consequence of faithfully, diligently or properly performing his duties on its behalf; and 19.2 To indemnify Mr Benyatov in respect of all losses, costs, expenses and claims he has suffered arising out of any unlawful enterprise upon which he was required to embark without knowledge that it was unlawful. 19.3. The duties pleaded at paragraph 24 below, owed in parallel in contract (but in respect of which no contractual cause of action is advanced).”
“The terms are necessary to give business efficacy to the Contract and/or are so obvious that they go without saying, are consistent with the Contract, and are reasonable and equitable.”
“Facts and matters giving rise to the implication of the terms referred to in paragraphs 19.1, 19.2 and 19.3 of the Amended Particulars of Claim as a matter of law include the following: 26.1. The facts and matters set out in paragraph 25 (including its sub-paragraphs other than sub-paragraphs 25.22 and 25.23) of the Amended Particulars of Claim; and 26.2. The terms are a necessary incident of the relationship between employer and employee and/or principal and agent, as a consequence of reasonableness, fairness and balancing the competing policy considerations.”
“It seems to me that, rather than focus upon the elusive concept of necessity, it is better to recognise that, to some extent at least, the existence and scope of standardised implied terms raise questions of reasonableness, fairness and the balancing of competing policy considerations.”
“More particularly, as to paragraphs 19.1 and 19.2: 13.3.1. It is denied that the Defendant had any or any implied obligation to indemnify the Claimant in respect of losses, costs, expenses or claims incurred by him as a result of, or arising from the acts of third parties or other intervening acts, whether wrongful or otherwise, including, for the avoidance of doubt, the events in Romania complained of by the Claimant. 13.3.2. If and insofar as the Defendant owed the Claimant a duty to indemnify him in respect of expenses and liabilities, or losses, costs and claims, for the avoidance of doubt, such duty is limited to sums paid or payable by the Claimant to third parties, and does not extend to any sums not received by the Claimant, in particular earnings from employment. 13.3.3. The alleged implied terms do not satisfy the tests for the implication of terms in fact or in law. 13.3.4. … .” 13.3.1. It is denied that the Defendant had any or any implied obligation to indemnify the Claimant in respect of losses, costs, expenses or claims incurred by him as a result of, or arising from the acts of third parties or other intervening acts, whether wrongful or otherwise, including, for the avoidance of doubt, the events in Romania complained of by the Claimant. 13.3.2. If and insofar as the Defendant owed the Claimant a duty to indemnify him in respect of expenses and liabilities, or losses, costs and claims, for the avoidance of doubt, such duty is limited to sums paid or payable by the Claimant to third parties, and does not extend to any sums not received by the Claimant, in particular earnings from employment. 13.3.3. The alleged implied terms do not satisfy the tests for the implication of terms in fact or in law. 13.3.4. … .”
“An employer is under an implied duty to indemnify or to reimburse the employee, as the case may be, against all liabilities and losses and in respect of all expenses incurred by the employee either in consequence of obedience to his orders, or incurred by him in the execution of his authority, or in the reasonable performance of the duties of his employment.”
“I am unable to accept [the submission of counsel for the cargo owners] that a condition of prior payment is, at common law, implicit in a contract of indemnity. I accept that, at common law, a contract of indemnity gives rise to an action for unliquidated damages, arising from the failure of the indemnifier to prevent the indemnified person from suffering damage, for example, by having to pay a third party. I also accept that, at common law, the cause of action does not (unless the contract provides otherwise) arise until the indemnified person can show actual loss: see Collinge v. Heywood (1839) 9 Ad. & E. 633. This is, as I understand it, because a promise of indemnity is simply a promise to hold the indemnified person harmless against a specified loss or expense [emphasis supplied]. On this basis, no debt can arise before the loss is suffered or the expense incurred; however, once the loss is suffered or the expense incurred, the indemnifier is in breach of contract for having failed to hold the indemnified person harmless against the relevant loss or expense.”
“Here is a contract. The plaintiff is hired by defendant to sell, which implies a warranty to indemnify against all the consequences that follow the sale [emphasis supplied].”
“In order to bring a case within [the rule] it is not enough that if the plaintiff succeeds the defendant will have a claim for damages against the third party, but the defendant must have against the third party a direct right to indemnity as such, which right must – generally, if not always – arise from contract express or implied, and that here there was no ground for implying such a contract.”
“Of course, if A requests B to do a thing for him, and B in consequence of his doing that act is subject to some liability or loss, then in consequence of the request to do the act the law implies a contract by A to indemnify B from the consequence of his doing it. In that case there is not an express but an implied contract to indemnify the party for doing what he does at the request of the other.”
“Therefore the right to … damages is not a right to indemnity, although when you come to ascertain what the measure of damages is, it may be that indemnity will properly express that measure of damages.”
“Like all questions of causation, this one is sensitive to the legal context in which it arises. It depends on the intended scope of the indemnity as a matter of construction, which is necessarily informed by its purpose … The real question is whether the charterers’ order was an effective cause of the owner having to bear a risk or cost of a kind which he had not contractually agreed to bear. I use the expression effective cause in contrast to a mere but for cause which does no more than provide the occasion for some other factor unrelated to the charterers’ order to operate.”
“… there is not a single case in which an indemnity implied into an agency or employment contract has permitted the agent or employee to recover lost income. Rather, in every reported case where an indemnity was ordered it was for payments that the agent or employee had made, or was liable to make, to a third party.”
“Every agent has a right against his principal to be reimbursed all expenses and to be indemnified against all losses and liabilities incurred by him in the execution of his authority.”
“The decision in Whitlam is to the effect that if an employee could recover for such losses pursuant to an implied indemnity, the law books in relation to the existence of a duty of care on the part of the employer would have to be rewritten. Very large parts of the law of employer’s liability could be re-written and simplified as the implied indemnity would eclipse the learning on the law of negligence and breach of statutory duty. The law reports are replete with cases where complicated arguments were run including in the appellate courts which would have been unnecessary in the event that the implied indemnity had existed in the form contended for in this case. The employee could say that there was a strict liability because of the scope of the indemnity, obviating the need for the other duty contended for.”
“If it had been the case that the implied indemnity applied to all injuries and losses of earnings arising from an incident in the course of employment, then the complicated arguments in Reid could have been avoided and a simple route to recovery established through the implied indemnity.”
“The classic formulation of the duty owed by an employer to an employee is focused on protection of the employee from physical injury, not protection from economic harm (albeit if there is physical injury then damages may be recovered for consequential loss of earnings), and this is true both in contract and tort … .”
“The law does not furnish a remedy for every harm suffered by an individual, and in particular does not do so where the infliction of the harm in question does not constitute a ‘wrong’ in the contemplation of the law: see D v East Berkshire Community Health NHS Trust[2005] 2 AC 373 , at [100] per Lord Rodger of Earlsferry.”
“An imposition of strict liability through the implied indemnity would impose a huge burden on employers including employers in a very different financial position from the Bank in the instant case. It would have to be seen how, if at all, and at what cost, they would be able to insure against such a liability.”
“At the heart of these points is a case that the risk profile of Mr Benyatov in Romania as regards the country and/or the transactions in which he was involved was high-risk, such that there should be a broader indemnity in fact than the indemnity in law.”
“The Judge was wrong in law in failing to find that there was an indemnity implied in fact [359]-[365]. He applied the wrong analysis to the question and simply relied on his findings in relation to the duty of care without any regard to the different considerations that are necessary to the question whether an indemnity was to be implied as a matter of fact (as opposed to as a matter of law).”
“The question is a simple contractual one: Who bears the risk that Mr Benyatov’s work for the Defendant – done in accordance with international banking standards (Judgment [373]) – might result directly in his conviction and the destruction of his career and earning potential? Self-evidently, the Defendant. It stood to make a significant profit from his work. Clearly that was a risk that he did not undertake to be responsible for.”
“It has always been an implied term that the master will indemnify the servant from liability arising out of an unlawful enterprise upon which he has been required to embark without knowing that it was unlawful.”