Alta Trading UK Limited & Ors v Peter Miles Bosworth & Ors [2025] EWHC 1837 (Comm)

[2025] EWHC 1837 (Comm)Case No CL-2015-000047
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of Justice, Rolls Building, Fetter Lane,Date 18/07/2025
Between
(1) ALTA TRADING UK LIMITED (formerly known as ARCADIA PETROLEUM LIMITED)Claimants(2) ARCADIA ENERGY (SUISSE) SA(3) ARCADIA ENERGY PTE. LTD.(4) FARAHEAD HOLDINGS LIMITED(1) PETER MILES BOSWORTHDefendants(2) COLIN HURLEY
London, EC4A 1NL
David Quest KC, Clarissa Jones and Chinmayi Sharma (instructed by Reed Smith LLP) for ClaimantsRichard Eschwege KC (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP) for First and Second DefendantsTom Sprange KC and Freddie Popplewell (instructed by King & Spalding International LLP) for Fifth and Ninth Defendants for The Seventh and Eighth Defendants did not appear and were not representedHearing Hearing date: 27 June 2025Draft judgment circulated to parties: 14 July 2025Approved Judgment
[1]This is an application by the Claimants to strike out certain allegations of dishonesty made by the active Defendants in the context of an inquiry into damages caused by a freezing order granted in the Claimants’ favour in 2015, which I discharged in February 2025 following my judgment in the Defendants’ favour after the trial of the action.[2]The Claimants submit that the dishonesty allegations are not relevant, save possibly to two matters which the Claimants are willing to concede. The Defendants submit that the allegations are relevant for reasons over and above those two matters, and that the strike-out application should be dismissed.[3]I have concluded, for the reasons given below, that the dishonesty allegations may be relevant to certain matters concerning causation which the Defendants seek to advance, and that the strike-out application must be adjourned in order to give the Defendants an opportunity to plead those matters and the Claimants an opportunity to respond to them.

(B) BASIS OF THE CLAIMANTS’ APPLICATION

[4]The Claimants, members of the Arcadia Group, commenced proceedings in 2015 alleging a substantial and sustained fraud by the Defendants, in connection with 144 crude oil purchase and sale transactions between April 2007 and May 2013 relating to oil originating in West Africa.[5]At the outset of the proceedings, on 12 February 2015, Teare J granted the Claimants a worldwide freezing order against the Defendants covering assets worth up to US$335 million, containing the usual undertaking in damages. The order was continued by an order of Flaux J of 1 July 2015, and in substance remained in place until February 2025.[6]On 22 January 2025 I handed down judgment, following a ten-week trial, concluding that the Claimants’ claims should be dismissed and that certain counterclaims made by the First Defendant (“D1”) and the Second Defendant (“D2”) (together “D1/D2”) succeeded. The active Defendants by this stage were D1, D2, the Fifth Defendant, Mr Kelbrick (“D5”), and the Ninth Defendant Attock Oil International Limited, Mauritius.[7]In the course of that judgment, I found that several of the allegations which had been central to the Claimants’ case had been entirely unsustainable and lacked any coherent basis. Those allegations had also, naturally, been central to the evidence that the Claimants adduced in order to obtain and maintain the freezing order.[8]At the hearing of consequential matters on 10 February 2025, I dismissed the Claimants’ claims, upheld certain counterclaims and made various costs orders. In addition, I made an order, which was unopposed by the Claimants, directing that the Claimants’ undertakings in damages in connection with the freezing injunction be enforced and there be an inquiry into damages (“the Inquiry”), to be heard at a 2-week trial not before March 2026.[9]D1/D2 on 14 March 2025 served Particulars of Loss and Damage in the Inquiry, seeking 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.[10]As part of their 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).[11]In addition, D1/D2 served Particulars to Set Aside Judgments for Fraud, alleging that, in the context of their jurisdiction challenge in the course of the proceedings (including appeals to the Court of Appeal and the Supreme Court), the Claimants consciously and deliberately made dishonest representations to the court. On that basis, D1/D2 seek the setting aside of eight costs orders made against them in the course of the jurisdiction challenges, and repayment of the relevant sums paid by way of costs.[12]D5, on 14 March 2025, served Points of Claim in Relation to the Inquiry, seeking compensation on two main bases. He 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 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.[13]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.[14]The Claimants apply to strike out the allegations that the freezing order was obtained dishonestly. The starting point, they say, is that an inquiry into damages is not generally concerned with whether the injunction was properly granted (see, e.g., Gee on Commercial Injunctions, 7th ed., § 11-037 citing Norwest Holst Civil Engineering Ltd v Polysius Ltd, The Times, 23 July 1987). The Claimants submit that the dishonesty allegations are arguably relevant only to two matters, namely(i) the Defendants’ contention that if the freezing order was obtained dishonestly, then they can recover without regard to foreseeability, and(ii) D1/D2’s application for repayment of the costs which they were ordered to pay, and paid, in connection with their jurisdiction challenge. The Claimants seek an order striking out the dishonesty allegations conditionally upon the Claimants (a) amending their own statements of case in the Inquiry so as to concede the foreseeability point (which the Claimants accept is arguable) and (b) repaying the relevant costs of the jurisdiction challenge.[15]The application is put forward under CPR rule 3.4(2)(a) and/or (b), under which the court can strike out part of a statement of case if it discloses no reasonable grounds for bringing or defending the claim, is an abuse of the court’s process, or is otherwise likely to obstruct the just disposal of the proceedings. The Claimants refer to Warby J’s summary in HRH The Duchess of Sussex v Associated Newspapers Ltd [2020] EWHC 1058 (Ch) at [33]-[34]:- “[33] … (2) An application under CPR 3.4(2)(a) calls for analysis of the statement of case, without reference to evidence. The primary facts alleged are assumed to be true. The Court should not be deterred from deciding a point of law; if it has all the necessary materials it should “grasp the nettle”: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725… (3) Rule 3.4(2)(b) is broad in scope, and evidence is in principle admissible. The wording of the rule makes clear that the governing principle is that a statement of case must not be “likely to obstruct the just disposal of the proceedings”. Like all parts of the rules, that phrase must be interpreted and applied in the light of the overriding objective of dealing with a case “justly and at proportionate cost”. The previous rules, the Rules of the Supreme Court, allowed the court to strike out all or part of a statement of case if it was “scandalous”, a term which covered allegations of dishonesty or other wrongdoing that were irrelevant to the claim. The language is outmoded, but I agree with Mr White that the power to exclude such material remains. Allegations of that kind can easily be regarded as “likely to obstruct the just disposal” of proceedings. (4) “Abuse of process” is a sub-set of category (b). An abuse of process is a significant or substantial misuse of the process. It may take a variety of forms. Typical examples are proceedings which are vexatious, or attempts to re-litigate issues decided before, or claims which are “not worth the candle” (Jameel v Dow Jones & Co Inc [2005] EWCA Civ 75 [2005] QB 946). But the categories are not closed…[34]In the context of r 3.4(2)(b), and more generally, it is necessary to bear in mind the Court’s duty actively to manage cases to achieve the overriding objective of deciding them justly and at proportionate cost; as the Court of Appeal recognised over 30 years ago, “public policy and the interest of the parties require that the trial should be kept strictly to the issues necessary for the fair determination of the dispute between the parties”: Polly Peck v Trelford [1986] QB 1000, 1021 (O’Connor LJ). An aspect of the public policy referred to here is reflected in CPR 1.1(2)(e): the overriding objective includes allotting a case “an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases”.” Alternatively, the Claimants seek an order staying the same parts of the pleadings in reliance on CPR r 3.1(2)(g). If necessary, they also rely on the court’s general power under CPR r 3.1(2)(p) to “take any other step or make any other order for the purpose of managing the case and furthering the overriding objective”.[16]The Claimants cite Akenhead J’s statements in Charter UK Ltd v Nationwide Building Society [2009] EWHC 1002 (TCC) at [16] that it is generally wrong to plead a matter which does not support or relate to any of the remedies sought, and that the court has wide powers to strike out parts of a pleading if it contains immaterial matter; and the similar statement of Sara Cockerill QC (sitting as a Deputy Judge of the High Court) in Ventra Investments Ltd v Bank of Scotland plc [2017] EWHC 199 (Comm) at [41] that:
“The basis on which strike out applications are capable of being made is set out in the CPR. Cases may fall into one or more of the categories within those rules. The starting point for an application is for the party complaining of the pleading to set out how it says that the document or passages fall within one or more provisions of the rule. It is the function of the Court simply to weigh the complaint or complaints against the particular pleading and the facts of the particular case and decide whether an allegation is sufficiently irrelevant or incomplete or in breach of the rules – or a combination thereof - that it is appropriate to order its removal from the pleadings.”
In striking out certain allegations there, the judge noted that they would have had “a real tendency to inflate and overcomplicate trial preparation”.[17]The Claimants add that the dishonesty allegations here are having, and will (if not struck out) continue to have, a significant impact on the Inquiry, increasing the scope of the issues, the necessary disclosure, potentially the likely length of the trial, and the costs. The Claimants note that the dishonesty allegations occupy about half of the Defendants’ pleaded cases in the Inquiry, and that in the List of Issues for Disclosure, the Defendants seek disclosure on 19 issues/sub-issues from 15 custodians in relation to the dishonesty allegations.

(C) SUGGESTED RELEVANCE OF THE DISHONESTY ALLEGATIONS

[18]The Defendants submit that, in addition to the foreseeability and jurisdiction cost issues mentioned above, the dishonesty allegations are relevant, and/or should in any event be allowed to continue, for the following reasons. The allegations are said to be relevant to the following matters in issue: i) whether the freezing order was wrongly granted, which formally remains in issue on the statements of case, at least as between D5 and the Claimants; ii) the failure of the Defendants’ application to set aside the freezing order; iii) the Claimants’ conduct in policing of the freezing order and the losses caused by their allegedly aggressive policing of it; iv) the Claimants’ argument that, by way of mitigation, D5 should have sought the Claimants’ agreement to an appropriate variation of the freezing order; v) questions of causation; vi) whether the Defendants were obliged to take reasonable steps to mitigate any losses otherwise caused by the freezing order; vii) the Defendants’ claims for injury to their reputation, distress caused to them and their families, and hence their claims for aggravated damages; viii) the Defendants’ claims for compound interest and costs on the indemnity basis; and ix) certain prospective applications which D5 may make.[19]In addition, the Defendants submit that it is in the public interest, and part of the necessary vindication of their rights, for the dishonesty allegations to be determined.

(D) ANALYSIS

[20]I consider in turn the submissions referred to in §§ 18 and 19 above.

(i) Whether freezing order wrongly granted

[21]On the face of the statements of case, the Claimants have denied D5’s allegation that the freezing order was wrongly granted. However, as noted earlier, on 10 February 2025 I made an order, unopposed by the Claimants, directing that the Claimants’ undertakings in damages in connection with the freezing injunction be enforced and there be an inquiry into damages. As the Claimants pointed out at the hearing on 27 June, those orders presuppose that the freezing order was wrongly granted. There is in reality no issue between the parties on this matter. (ii) Freezing order set-aside application[22]The Defendants submit that, by making dishonest allegations, the Claimants not only obtained but also secured the continuation of the freezing order (and continued to benefit under it): thereby causing the Defendants to suffer loss for far longer – nearly 10 years – than would otherwise have been the case.[23]Since the Inquiry into damages will cover all losses arising from the freezing order, for its full duration, there is no extant issue in this regard such as to make it necessary to determine the dishonesty allegations. (iii) Policing of freezing order[24]D1/D2 plead that the Claimants maintained their allegations that D1/D2 were ‘dishonest fraudsters’ and so aggressively policed the freezing order on that basis. The Claimants plead in response that, given their ‘claims of fraud’, they sought ‘properly to ensure’ compliance with the freezing order and did not aggressively police it; they say that their conduct was not unreasonable. However, D1/D2 point out, if the claimants obtained the freezing order dishonestly, then there was nothing proper about their policing it.[25]This point too does not require the dishonesty allegations to be investigated. The Inquiry will have regard to all the losses caused by the freezing order, including any arising from aggressive ‘policing’ of the order. (iv) Variation of freezing order[26]In relation to D5’s alleged Attock Dubai losses, the Claimants say that D5 should have sought “the Claimants’ agreement to an appropriate variation of the Injunction”. In Reply, D5’s case is (in part) that the Claimants would not have consented to any variation application, including because “[t]he Claimants’ conduct of the litigation was aggressive”. The dishonesty allegations are said to be relevant to the Claimants’ litigation conduct and whether the Claimants would have consented to any variation application.[27]Similarly, in response to the Claimants’ allegation that D1/D2 should have sought a suitable variation by consent to the terms of the freezing order, D1/D2 submit that in circumstances in which the Claimants obtained and maintained the freezing order dishonestly, they would never have consented at any time to any variation of it.[28]The Defendants have not to date pleaded that the dishonesty of the Claimants’ allegations indicates that they would not have consented to a variation, though they have set out other reasons for saying no such consent would have been given. In any event, it would (as the Claimants submitted) at most be a propensity point. The Defendants would be able to maintain an argument based on the manner of the Claimants’ conduct of the litigation independently of whether or not the Claimants’ allegations were advanced dishonestly. Ultimately it seems more likely the court at the Inquiry trial will have regard to whether or not the court would have granted a variation. It appears unlikely that the court will find that the Claimants would have agreed to a variation in circumstances where the court would not have granted one.

(v) Causation

[29]As part of their defence to the Defendants’ claims in the Inquiry, 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 claim §§ 4, 57(2), (4) and (5), 59(3), 65(1), 66 and 81; Claimants’ Defence to D5 claims §§ 38(1) and (2) and 44(2)).[30]D1/D2 in their Reply take issue with the Claimants’ approach, alleging that “[t]he Freezing Order gave material credence to the Claimants’ allegations of fraud” (Reply § 28b) and that: “It was reasonable and/or foreseeable for potential business partners and/or investors to be concerned by the legal and commercial risks that the Freezing Order posed in respect of the Oil Trading Business. Further, it was reasonable and/or foreseeable for potential business partners and/or investors to be deterred from working with Mr Bosworth and Mr Hurley by the Freezing Order. Those parties would not have been aware that the Claimants had obtained the Freezing Order dishonestly and/or without any fair presentation of the true position.” (Reply § 30e)[31]D5 in his Reply says that “it is averred that the Injunction gave credibility to the (false) fraud allegations made by the Claimants against Mr Kelbrick [D5]” (Reply § 43).[32]In their skeleton arguments for the present hearing, the Defendants set out their position, or proposed position, more fully. D1/D2 submit that the fraud allegations in the underlying claims were themselves dishonest, and that: “21(4) The Cs’ alleged dishonesty is relevant to the Court’s assessment of the effect of the Freezing Order on the willingness of third-party business partners/investors to work with D1/D2. The Cs say that it was unreasonable and unforeseeable for such parties to decline to work with D1/D2 because of effect of the Freezing Order and that this would apply to ‘any third party who, concerned about the allegations of dishonesty against D1/D2, was deterred by the Freezing Order but would not have been deterred by the fraud claim itself’. D1/D2 say that it was reasonable and foreseeable for the Freezing Order to deter business partners/investors from working with D1/D2 and that such third parties would not have been aware that the Cs had obtained the Freezing Order dishonestly. …[23]… At the Inquiry hearing, D1/D2 will say that the Cs’ reliance on allegations of fraud in the underlying proceedings is untenable when the Cs themselves knew that such allegations were false and obtained the Freezing Order dishonestly. For example, D1/D2 will submit:(1) The fact that (so D1/D2 say) the Cs dishonestly obtained and maintained the Freezing Order for so long is all the more reason for the Court to find that the Freezing Order was an effective cause of the D1/D2 loss. Causation is a fact-specific exercise that the Court will approach in a common-sense way. If the Cs obtained and maintained the Freezing Order dishonestly, those facts fall into account in the Court’s overall assessment.(2) Insofar as the assessment of damages caused by a freezing order may be imprecise, the Court should exercise any discretion in favour of D1/D2. As Males J said in Fiona Trust at [144]:
‘The potentially devastating consequences of a freezing order have often been recognised. It is only just that those who obtain such orders to which they are not entitled, a fortiori when they are guilty of serious failures to disclose material facts and have pursued claims described by the trial judge as “obviously unsustainable”, should be ordered to provide appropriate compensation for losses suffered.’
[24]The Cs’ proposed amendments to their Defence do not address the issues above. The Cs wish to rely on the underlying allegations of fraud against D1/D2, but at the same time prevent D1/D2 from showing that those underlying allegations were dishonest. That is not just.” (footnotes omitted)[33]D5 puts the point this way:
“8.2 … However, if the allegations comprising the fraud claim were dishonestly made (including by Mr Fredriksen) (i.e. the Dishonesty Allegations), that is (at the very least arguably) relevant to the Cs’ causation case. Hence in Reply, D5 pleads that the Injunction gave credibility to the (false) fraud allegations made by the Cs against D5 {C7/13/11} (¶43). Further, D5 will say at trial that the Cs (including through Mr Fredriksen) cannot make fraud allegations dishonestly and then rely on the fact of those dishonest allegations in support of the Cs’ causation case. That would be to rely on the Cs’ own wrong. If Vitol Dubai had known that the fraud allegations were dishonestly made by Mr Fredriksen against D5, that would (at the very least arguably) affect the Cs’ causation case that Vitol Dubai would have been deterred from employing D5. Further, D5 will say at trial that the Cs cannot argue that Vitol Dubai would have regarded it as a “serious dispute” if the underlying allegations were, and were known to be, dishonest.”
The Claimants made three main points in response.[35]First, the Claimants submit that the Defendants’ contentions are illogical. The causation issues involve comparing the actual position with a counterfactual situation where the underlying proceedings existed but not the freezing order. How the relevant third parties would have reacted cannot be affected by the Claimants’ state of mind (particularly as, as D1/D2 put it, the third parties would not have known that the freezing order was wrongly obtained). Conversely, any counterfactual situation in which a third party (e.g., Vitol, in D5’s submission) knew about the freezing order, but also knew that it was dishonestly obtained, is not relevant to the analysis. The Claimants add that the Defendants have not pleaded that third parties’ reactions were, or would have been, different for reasons relating to the Claimants’ state of mind.[36]Secondly, the Claimants make the point that any argument based on the ‘own wrong’ principle (as expressed by D5), or to the effect that it would be “unjust” (as D1/D2 put it) for the Claimants to rely on the effect of allegations dishonestly made in the underlying proceedings, has not been pleaded and has not been developed properly on the present application. It would be necessary to see how the point was raised and justified, so that the Claimants had a fair opportunity to respond to it.[37]Thirdly, however, the Claimants submit that even if they had been dishonest, that would not logically preclude an argument on the Inquiry that the cause of any losses was the underlying proceedings rather than the freezing order. The Defendants’ ‘own wrong’ point is not supported by any authority, and there is no general principle of the kind suggested, outside of certain specific contexts such as where a party is seeking equitable relief. Causation is a factual matter, and a party is not generally estopped from relying on a matter of fact merely on the basis that it involved some wrongdoing by that party.[38]The Defendants point out that although, on an inquiry, losses caused by a freezing order are assessed by reference to contractual principles such as causation, mitigation and remoteness, “these principles may need to be applied with some flexibility to take account of the fact that analogy with breach of contract is not exact”: Fiona Trust v Privalov [2016] EWHC 2163 (Comm) at [47] per Males J, citing Abbey Forwarding v Hone (No. 3) [2015] Ch. 309 (CA). Causation is assessed in a common-sense way: Fiona Trust v Privalov [2018] 1 WLR 5623 (CA) at [45] per Beatson LJ. As noted in Grant and Mumford, Civil Fraud § 31-037, the court is ultimately exercising an equitable jurisdiction to award compensation. As Peter Gibson LJ stated in Cheltenham & Gloucester Building Society v Ricketts [1993] 1 WLR 1545, 1555,“[t]he courts are properly concerned lest these weapons are used inappropriately and the undertaking in damages provides a salutary potential deterrent against their misuse”. The following statement of Males J in Fiona Trust also arguably indicates the potential relevance to an inquiry of a claimant’s culpability when obtaining the freezing[39]In summary, therefore, the Defendants submit that the dishonesty allegations were relevant(i) to the court’s overall assessment, which is not strictly fact-bound, as to the losses for which the Defendants should be entitled to receive equitable compensation, and(ii) because the court at least arguably should not allow the Claimants, as part of their causation case, to rely on the effect of allegations which they made dishonestly in the underlying proceedings.[40]After the hearing, the Defendants sent a communication citing certain observations by the Court of Appeal in Coudert Brothers v Normans Bay Limited [2003] EWCA Civ 215. Waller LJ said:- “Is there a principle which disallows a defendant from relying on a wrong which he has committed in order to reduce the damages that would otherwise flow from a tort or breach of contract? It seems to me that there should be such a principle…It is quite difficult to say why it should be so, other than it flows from public policy where it is a principle that a person should not be entitled to rely on their own wrong in order to secure a benefit. It is furthermore not unfair to apply such a principle”. [46] Laws LJ stated:- “I have reached the clear conclusion that in principle a defendant should not be allowed to rely on a wrong perpetrated by himself in order (in whole or in part) to break the chain of causation put forward by the claimant to establish and quantify the damage sustained by him by reason of the defendant’s breach of contract or tort. This may be seen…as an application of the general rule of the common law that a party may not rely on his own wrong to secure a benefit…it is also consonant with modern ideas of causation now being developed in the cases. Authority supports the proposition that the resolution of causation issues, certainly in the law of tort, is by no means merely a fact-finding exercise; in many instances, it is an evaluative judgment, concerned to establish the extent to which a defendant should justly be held responsible for what has befallen the claimant.” [64] The court there was considering an argument that there had been a break in the chain of causation, but some of the statements quoted above may be of wider application.[41]Unsurprisingly, the Claimants responded that the Defendants should not be permitted to introduce new authorities after the court had already heard the argument, and in relation to a point which was itself first raised at the hearing and was not the subject of any pleaded case. The Claimants indicated that they would not make further submissions unless and until the court indicated that it wished to receive them.[42]Provisionally, I am inclined to consider that the Defendants’ contentions are at least arguable. It seems somewhat counterintuitive to contemplate that an inquiry claim might fail on the ground that the loss was caused by the reputational effect of allegations made in the underlying proceedings, being the same as or overlapping substantially with the allegations made in order to obtain the freezing order, if those allegations were dishonestly made.[43]However, there may be an answer to the point, and there is force in the Claimants’ complaint that they have not had a fair opportunity to deal with it. Leaving aside the technical question as to whether it needs to be pleaded – the Defendants say not, on the basis that it is unnecessary to plead matters of law and argument – the arguments summarised in §39 above were not clearly flagged up in the Defendants’ Replies or in the evidence in response to the Claimants’ strike-out application.[44]I am also not convinced that the argument does not need to be pleaded. For one thing, it probably implies an allegation that the allegations in the underlying proceedings that (on the Claimants’ case) caused the loss were the same as the alleged dishonest allegations said to have enabled the Claimants to obtain/retain the freezing order (or, perhaps, even if different were also dishonestly made). In my view, the Defendants ought to set out their position on these arguments, with reasonable precision, so that the Claimants can consider and respond to them more fully in the context of the present application.[45]Conversely, I consider that the Defendants should have an opportunity to do so, rather than the Claimants’ application being determined against them at this stage. First, the Claimants themselves have not so far actually put forward proposed amendments, but have instead indicated a wish to amend conditionally on the outcome of their strike-out application. Secondly, it is in any event appropriate to give an opportunity for the Defendants here to consider proposing amendments before taking any final decision as to strike-out, cf Sussex § 33(2): “… [the court] should not strike out under [CPR 3.4(2)(a)] this unless it is “certain” that the statement of case, or the part under attack discloses no reasonable grounds of claim: Richards (t/a Colin Richards & Co) v Hughes [2004] EWCA Civ 266 [2004] PNLR 35 [22]. Even then, the Court has a discretion; it should consider whether the defect might be cured by amendment; if so, it may refrain from striking out and give an opportunity to make such an amendment.” (vi) Mitigation[46]The Defendants plead that any obligation to mitigate would arise only once they discovered the Claimants’ (alleged) dishonesty. In oral argument, D1/D2 said the logic of the rule is that only the court’s judgment establishes the wrong and gives rise to the duty to mitigate.[47]As the Claimants point out, no authority is cited in support of the Defendants’ contentions. There is a principle that a person claiming in deceit is not obliged to mitigate any loss unless they have discovered the truth: see, e.g., Smith New Court Securities Ltd v Citibank NA [1997] A.C. 254. The logic there is that the claimant is unaware that he has a claim to mitigate while he remains deceived. For example, in Downs v Chappell [1997] 1 W.L.R. 426, 441E it was said that “[w]here a party has been misled, it must always be relevant to consider his position when he discovered the truth. Until that time the misrepresentation will be continuing to affect him and he cannot be expected to mitigate his loss…”.[48]By contrast, the respondent to an injunction is aware as soon as he is served that he has a potential claim for compensation under the cross-undertaking, and so can reasonably be expected to take steps to mitigate that claim. Further, that potential claim will not generally depend on showing dishonesty on the beneficiary of the freezing order. Moreover, the Defendants here do not plead any case as to the date at which they discovered the alleged dishonesty. To the contrary, the 33rd witness statement of Mr Greeno, solicitor for D1/D2, states that it has “always been D1/D2’s belief that it was Mr Fredriksen’s intention to ruin them financially by making false allegations of fraud”.[49]For these reasons, I do not consider that questions of mitigation make the dishonesty allegations relevant to the issues on the Inquiry. (vii) Aggravated damages/injury to reputation[50]The Defendants submit that, when considering whether to award aggravated damages, the court will need to consider the Claimants’ conduct and determine whether it justifies an award of aggravated damages. In Al-Rawas v. Pegasus Energy [2008] EWHC 617 (QB), Jack J said: “I consider that the fact that the order was obtained by intentionally concealing a material matter from the court is something which justifies an award of aggravated damages. That is consistent with the approach of Scott J in the Columbia Pictures case [Columbia Picture Industries Inc v Robinson & Others [1987] 1 Ch 38]. …” [42][51]The Court of Appeal in Abbey Forwarding confirmed that damages could be recovered for the unjustified restrictions imposed by an injunction, in addition to compensation for distress and anxiety ([110] and [150]). In Northcott v Hundeyin [2025] E.M.L.R. 2, a libel case, Julian Knowles J quoted at [65] the statement in Gatley on Libel & Slander (13th ed.) that: "[I]t is very well established that in cases where the damages are at large the jury (or the judge if the award is left to him) can take into account the motives and conduct of the defendant where they aggravate the injury done to the plaintiff. There may be malevolence or spite or the manner of committing the wrong may be such as to injure the plaintiff's proper feelings of dignity and pride. These are matters which the jury can take into account in assessing the appropriate compensation.” (§ [10-016]) albeit the quoted passage from Gatley goes on to cite a statement by Nicklin J in Lachaux v Independent Print Ltd [2021] EWHC 1797 (QB) concluding that “The real question is whether the claimant can demonstrate, by admissible evidence which the court accepts, that the damage to his/her reputation and/or his/her distress or upset has been increased by conduct of the defendant.” ([227])[52]In the present case, the Defendants’ pleaded claims do not specifically link their claims for aggravated damages to the dishonesty allegations, though there is some force in D1/D2’s point that the claim as a whole includes the allegations that the freezing order was dishonestly obtained. Nonetheless, there would be policy and proportionality arguments against relying on the aggravated damages as a sole ground for allowing the dishonesty allegations to be pursued. In Sussex, Warby J concluded among other things that: “the costs and time that would be required to investigate and resolve the factual issues raised by the case as currently pleaded bear no reasonable relationship of proportionality with the legitimate aim of recovering some additional compensation for emotional harm.” [72] and he considered that, along with the inadequacy of the pleading, as a reason for striking the relevant passages out. It is true that the aggravated damages claim in Sussex was based on matters extraneous to the focus of the claim, viz a series of press articles other than those which were the subject of the claim. Nonetheless, it is similarly arguable that the subject of the present claim is the losses caused to the Defendants by the freezing order, as distinct from the Claimants’ culpability in obtaining it.[53]Warby J also noted that: “A claimant cannot, as a matter of well-established principle, use a claim for aggravated damages as a means of obtaining damages for torts other than the one(s) sued upon; nor may a claimant plead and seek to prove a case about extraneous conduct of the claimant that tends to establish other causes of action, without permitting the defendant to plead and seek to establish a defence to such a cause of action: see Pearson v Le Maitre (above) [(1843) 5 Man & G. 700, 134 ER 742], Collins Stewart Ltd v Financial Times Ltd [2005] EWHC 262 (QB) [2006] EMLR 100 [24-27] (Gray J), ZAM v CFW and TFW [2012] EWHC 662 (QB) [2013] EMLR 27 [70]-[71] (Tugendhat J), my decision in Rudd v Bridle [2019] EWHC 893 (QB) [60(5)], and ZXC v Bloomberg LP [2019] EWHC 970 (QB) [2019] EMLR 20 [150(iii)] (Nicklin J). The objections to either course of action are obvious. The rule of law requires that damages should be recovered only for the consequences of conduct that is pleaded and proved to be unlawful, according to rules that are clear and accessible. An important distinction is to be drawn between a claim seeking damages for tort X, based upon conduct X and aggravating behaviour Y, and a claim which seeks compensatory damages for tort X and for additional conduct Y.” [69][54]In the present case, a potential objection to a claim for aggravated damages based on the dishonesty allegations would be that it would ‘tend to establish’ a claim for malicious prosecution (a claim which D1/D2 have in fact previously threatened), a tort carrying its own set of requirements including proof of malice (as distinct from mere recklessness): see Patel v Minerva Services Delaware Inc [2024] EWHC 172 (Ch) at [20]-[25].[55]More broadly, however, the considerations of proportionality referred to by Warby J in Sussex § 72 would in my view point against permitting the dishonesty allegations to remain solely as a basis for seeking aggravated damages. (viii) Interest and costs[56]The Defendants submit that the dishonesty allegations will be relevant to their claims for compound interest. In addition, they say they expect to seek their costs of the Inquiry to be assessed on the indemnity basis, which on ordinary principles will involve having regard to the parties’ conduct, including the manner in which allegations have been pursued (see CPR 44.2(4) and (5)). The dishonesty allegations, if proven, would thus be likely to be a relevant consideration.[57]In my view, however, it would be disproportionate to permit the dishonesty allegations to be pursued solely on those bases: it would involve a major piece of satellite litigation going only to the question of interest and costs. (ix) Potential further applications[58]D5 submits that the dishonesty allegations are relevant to various applications he may make in due course. In addition to indemnity costs (see above), D5 states that he might seek:- i) a non-party costs order against Mr Fredriksen or others, in the event that the Claimants refused to honour a costs order in favour of D5 and D5’s security for costs were insufficient: impropriety is a relevant factor in deciding whether to make such an order (see Dymocks Franchise Systems (NSW) Pty Ltd v Todd (Costs) [2004] UKPC 39 at [33], and Turvill v Bird [2016] EWCA Civ 703 at [27(3)]); ii) a freezing injunction against the Claimants, if D5 is awarded compensation in the Inquiry in excess of the amount for which he is secured, in circumstances where the Claimants have wound down their UK businesses and assets: here, the dishonesty allegations may be relevant to risk of dissipation and to whether a freezing order would be “just and convenient”; and iii) an order imposing conditions upon which any appeal may be brought, under CPR 52.18(1)(c), if D5 succeeds in the Inquiry and the Claimants seek to appeal: in these circumstances the court would consider the justice of the case and all the circumstances (White Book ¶52.18.4), and so the dishonesty allegations may be relevant.[59]In my view, the mere possibility of such applications, in circumstances that may not arise, is insufficient to make the dishonesty allegations relevant to the Inquiry or to make it proportionate for them to be pursued as issues in the Inquiry.

(x) Public interest/vindication

[60]The Defendants submit that it would in any event be appropriate and in accordance with the overriding objective for the court to determine the dishonesty allegations. They make the following points. The Claimants maintained their fraud case and the freezing order for over a decade, using the freezing order in order to try to destroy D1/D2. It is a matter of public importance for the court to investigate whether the ‘nuclear weapon’ of a freezing order was used appropriately. It would be unjust if, as a result of their present applications, the Claimants were able to avoid any scrutiny of the circumstances in which they obtained and retained the freezing order, and whether they complied with their duties of full and frank disclosure. Breaching the duty of full and frank disclosure (by making dishonest allegations) is an abuse of the court’s process, and there is a public interest in such abuse being corrected by a public judgment or admission of wrongdoing. Where such an abuse occurs, it is well-established that the court can act to punish and deter the specific litigants, as well as to ensure that other court users are deterred from such conduct in the future (which it usually achieves through the sanction of discharge and non-renewal of the injunction): see e.g. Banca Turco Romana SA (In Liquidation) v Cortuk [2018] EWHC 662 (Comm) at [45]. Further, as Nicklin J said in Alsafi v Trinity Mirror Plc [2018] EWHC 1954 (QB):- “The Court cannot strike out a claim for a £50 debt simply because, assessed against the costs of the claim, it is not ‘worth’ pursuing. Inherent in the value of any legitimate claim is the right to have a legal wrong redressed. The value of vindicating legal rights – as part of the rule of law – goes beyond the worth of the claim. The fair resolution of legal disputes benefits not only the individual litigants but society as a whole.” [45][61]The Defendants submit that, in the present case, public admonishment of the Claimants is consistent with the proper administration of justice and will punish/deter them as specific litigants, will serve to deter abusive conduct of this kind more generally, and will publicly vindicate the Defendants after they were not only wrongly injuncted for 10 years but also dishonestly injuncted by the Claimants. They say that if the Claimants wish to avoid having to litigate the dishonesty allegations, then they should admit them.[62]Whilst I see some force in those points, I am not persuaded that they would justify litigating to trial (including, of course, the necessary intermediate stages of disclosure and witness statements) dishonesty allegations not otherwise relevant to the issues to be determined on the Inquiry. As the Claimants say, the courts do not decide issues merely because a party seeks vindication. Moreover, the Defendants have received vindication, and (if merited) may receive further vindication, from the existing public judgment dismissing the Claimants’ claims against them, the notifications made to third parties of that judgment and of the discharge of the freezing order, the claims being made in the Inquiry and its ultimate outcome. The Defendants’ proposal that the Claimants should admit the dishonesty allegations presupposes that they are, properly considered, issues in the Inquiry.

(E) CONCLUSIONS

[63]The dishonesty allegations may be relevant to questions of causation, in the manner summarised in section (D)(v) of this judgment. The Defendants should be given an opportunity to set out their position more precisely in that regard, probably in the form of draft amendments to their Replies, so that the Claimants can have a proper opportunity to consider and respond to them. The strike-out application should be adjourned in the meanwhile. I shall hear the parties on the appropriate directions.

Insert Judge title and name here :

order

“The potentially devastating consequences of a freezing order have often been recognised. It is only just that those who obtain such orders to which they are not entitled, a fortiori when they are guilty of serious failures to disclose material facts and have pursued claims described by the trial judge as “obviously unsustainable”, should be ordered to provide appropriate compensation for losses suffered.” ([144], my emphasis)

Cited in 1 later judgment