Civil Fraud Case Update: Q3 2025

This quarterly civil fraud update provides a summary of reported decisions handed down in the courts of England and Wales in the period of July - September 2025.

APP Fraud

A litigant in person’s claim against their bank for damages following payments made pursuant to an APP fraud was partially struck out and an unless order made that the particulars of claim be amended to properly plead the remaining parts of the claim in Barclay-Ross v Starling Bank Ltd. The Court agreed that it was at least arguable that the Defendant bank could owe a duty to take instructions to try to recover payments once fraud had been established.

Breach of Fiduciary Duty

In Pagden v Fry the Court considered the distinction between a liquidator and the firm they operated through. Liquidators could not limit their personal liability for breaches of duty on the basis that they held company assets on a statutory trust, and the obligations which arose by virtue of the creation of that trust could not be varied by the company in liquidation. However, the firm through which the liquidators operated could, by contract, limit its own liability, including for vicarious liability for breaches by the liquidators.

12345 Retail Group Ltd v Bubble City Ltd involved a settlement agreement entered into by two of the Defendants, with the effect of transferring business out of a Defendant company, against the company’s best interests. The settlement agreement had the effect of avoiding repayment of an investor’s loan and cutting the investor out of the business. Whilst the agreement was validly made, the clause relating to the transfer of the share was void as a result of the breach of fiduciary duty and was treated as deleted. The Claimant also had proprietary claims in dishonest assistance against the recipients of shares in the company as those shares had been received with knowledge of the transferor’s breach of fiduciary duty.

The Supreme Court considered issues of breach of fiduciary duty, dishonest assistance and equitable compensation in Stevens v Hotel Portfolio II UK Ltd. In particular, whether a dishonest assistant was liable to compensate a beneficiary for breach of trust where the trust in question constituted an unauthorised profit made in breach of fiduciary duty. The Supreme Court confirmed that in principle liability did arise in those circumstances, even where the beneficiary had suffered no loss and the dishonest assistant had not personally made any profit. The Supreme Court also considered issues of set-off, where gains and losses were made as a result of breaches of trust and concluded that set off would only be available where the breaches were part of one transaction.

Bribery

In the combined “motor finance” cases of Hopcraft v Close Brothers Ltd and others the Supreme Court confirmed that a fiduciary relationship was a necessary condition for civil liability for bribery to arise. In these particular cases the Supreme Court confirmed that car dealers did not owe fiduciary duties to their customers. As such, a failure to disclose commissions paid by lenders to those dealers when finance was arranged to enable the customers to buy cars did not give rise to claims in bribery.

Calculation of damages

Following judgment on liability for claims under FSMA, misrepresentation, deceit and breach of duty (in the claim formerly known as Autonomy Corporation and others v Lynch and another) the Court in ACL Netherlands BV v Sandelson was required to assess quantum. The Court took a broad-brush approach to the damages claimed under the FSMA claim: taking into account the parties’ expert evidence in order to determine a price per share which would have been paid in the counterfactual scenario advanced by the Claimants. The Court also considered the deceit and misrepresentation claims and determined that a counterfactual consistent with the FSMA claims would have to be adopted. Direct losses were awarded and the Court considered that USD was the currency which most closely reflected the loss to the Claimants.

Freezing Injunctions

Apollo XI Limited v Nexedge Markets Limited involved the discharge of a freezing injunction as a result of material non-disclosure and a failure of fair presentation. The Court reflected on the obligations of full and frank disclosure confirming the obligation on Applicants that material facts must be fairly and objectively presented and that obligation is breached where facts are buried in an exhibit or subject to unfair summary. The obligation applies to clients and legal advisors with the latter required to take steps to satisfy themselves that the position being put forward is supported by the available material. In this particular context, the provision of an incomplete transcript of more than four hours of recording apparently obtained in breach of confidence, with cherry-picking of particular sections presented without context provided a misleading picture and led to serious error.

The Court of Appeal considered issues of failures of full and frank disclosure in Astor Asset Management 3 Ltd v Salinas Pliego (discussed previously in my Civil Fraud Case update Q4 2024). The Appellants had originally sought the discharge of the freezing injunction on the return date, but had failed. The appeal was likewise refused: the Appellants' scatter-gun approach to complaints of failure of full and frank disclosure was criticised by the Court of Appeal. The Court of Appeal also drew a distinction between the assessment of a party’s ability and its willingness to satisfy a claim made under a cross undertaking in damages.

In FW Aviation (Holdings) 1 Ltd v Vietjet Aviation Joint Stock Co the Court refused to make a post-judgment freezing injunction on the basis that there was no evidence of a risk of dissipation of assets. A dividend distribution, even one made after a judgment was obtained, was a decision taken in the ordinary course of business and did not indicate a risk of dissipation of assets.

The Court of Appeal in Gable Insurance AG v Dewsall considered whether it had been justified to make a freezing injunction against a Defendant wife where her husband had been accused of misappropriating funds. The Court of Appeal concluded that the injunction was justified where the ownership of their combined assets was not clear. In particular the Defendant wife was prevented from using the proceeds of sale of a certain property to pay her legal and living expenses where there was a proprietary claim against those proceeds.

The Court of Appeal revisited the Derby v Weldon principle that the Court should not resolve disputed issues of fact on an interim basis in Mold Investments Ltd v Holloway. The Court of Appeal concluded that the Derby v Weldon principle was not an absolute rule. Nonetheless, it concluded that an application to set aside a freezing injunction should be heard at trial because the issues significantly overlapped with the substantive claim and the set aside hearing would take five days and involve multiple experts and witnesses of fact. Listing the set aside hearing separately would involve increased cost, be less efficient and increase the risk of procedural unfairness.

The Court refused to discharge a freezing injunction which had been in place for eight years in Nicholas v Jeffery. However, the freezing injunction was only continued on terms intended to bring the matter to trial: the Claimant was ordered to file and serve evidence explaining the delay in prosecution of the claim. Following any responsive evidence, the application to discharge would be restored.

The Commercial Court granted a freezing injunction under s.44 Arbitration Act 1996 to support LMAA arbitral proceedings in Universal Africa Lines BV v Knidos Shipping Corporation. This injunction was made in circumstances in which the LMAA rules do not allow an LMAA tribunal to grant such relief.

Misappropriation

JSC Commercial Bank Privatbank v Kolomoisky (discussed in my civil fraud cases updates of Q2 2018, Q4 2018, Q1 2021 and Q3 2021) involved the question of whether controlling shareholders of an insolvent Ukrainian bank were liable for misappropriation of funds. The Court found that they had set up a complex scheme of sham loans to conceal transfers out of Ukraine. As members of the board, this involved breach of fiduciary duty which constituted unlawful conduct. Claims in unjust enrichment were subject to the law of Ukraine because of the close connection and the fact of the fraud being set up to get around Ukrainian currency controls.

About the author 

Mary Young is a Partner in the Dispute Resolution team. Her practice covers a wide range of areas but Mary’s particular interests and expertise lie in civil fraud and asset tracing as well as claims against professionals in negligence, breach of fiduciary duty and breach of trust.