A Non-Party Whose Legal Interests Are Directly Prejudiced by an Order May Seek Its Reversal Under CPR 40.9

1. Introduction

This appeal concerned the standing of a non-party under CPR 40.9 to challenge a judgment that directly affected its interests. The underlying proceedings arose from a cryptocurrency fraud in which the claimant transferred 89.6 Bitcoin to a fraudulent investment platform. He later obtained summary judgment requiring Huobi Global Ltd, a cryptocurrency exchange, to transfer 89.6 Bitcoin—together with a further amount in respect of costs—from a specified wallet.

Huobi complied by transferring approximately 98.2 Bitcoin to the claimant and debiting that amount from the account of Kyrrex Ltd, another cryptocurrency exchange and the entity primarily associated with the specified wallet. Kyrrex had not been joined to, notified of, or heard in the proceedings.

Subsequent expert evidence indicated that the claimant’s stolen Bitcoin had never reached the wallet identified in the summary judgment order. Kyrrex therefore applied under CPR 40.9 to set the order aside. The High Court dismissed the application, holding that Kyrrex had been affected only indirectly and that delay and uncertainties about Kyrrex’s recovery claim would in any event have justified refusal.

The Court of Appeal reversed that decision. It held that Kyrrex was directly affected, that the original order appeared to have been made on a fundamentally false factual basis, and that the resulting injustice outweighed the delay and possible prejudice relied upon by the claimant.

2. Factual and Procedural Background

2.1 The fraud

Between January 2019 and January 2020, the claimant purchased and transferred 89.61616088 Bitcoin to an online platform presented as a legitimate cryptocurrency exchange. The platform was alleged to be a vehicle for an overseas cyber fraud. Apparent trading profits were fictitious, and the claimant recovered only a small sum.

A cyber-investigation report was understood to identify a wallet controlled by Huobi—the “tHEL wallet”—as connected with the fraud. On that basis, the claimant sued three classes of persons unknown and Huobi.

2.2 Summary judgment and transfer of Bitcoin

In September 2022, summary judgment was entered without participation by any defendant. The order declared that Huobi held the claimant’s Bitcoin as constructive trustee and required the transfer of:

• 89.61616088 Bitcoin as delivery up of the claimant’s alleged property; and
• approximately 8.6 additional Bitcoin to discharge a £148,000 costs award made against the first and second defendants.

Although the transfer to the claimant was made from another Huobi wallet, Huobi reimbursed itself by deducting approximately 98.2 Bitcoin from Kyrrex’s account associated with the tHEL wallet. Kyrrex was consequently left substantially out of pocket.

2.3 Kyrrex’s application

Kyrrex obtained the relevant court documents after making an application for access and commissioned independent tracing evidence. Its expert concluded that there was no reliable link between the claimant’s stolen Bitcoin and the tHEL wallet.

The High Court accepted that the original judgment had wrongly attributed the claimant’s Bitcoin to that wallet. Nevertheless, it held that Kyrrex was not “directly affected” because Huobi could have satisfied the order without debiting Kyrrex. It also considered Kyrrex’s possible proprietary or restitutionary claim insufficiently clear and criticised its delay in bringing the application.

3. Decision of the Court of Appeal

The Court of Appeal unanimously allowed the appeal and held that:

1. Kyrrex was a person “directly affected” by the order within CPR 40.9.
2. A legal interest under CPR 40.9 need not be proprietary; contractual rights can qualify.
3. The relevant merits question was whether the original claim and order could successfully be resisted, not whether Kyrrex had an independent restitutionary claim against the claimant.
4. The evidence strongly indicated that the original order had been made on a false factual basis and should not have been made.
5. Kyrrex’s delay, although unjustified in part, was not gross and did not outweigh the injustice caused by the order.
6. The possible existence of a claim against Huobi did not justify preserving an otherwise unsupportable judgment.

The relevant provisions of the summary judgment order were therefore set aside under CPR 40.9. The Court did not, however, order immediate repayment of the Bitcoin directly to Kyrrex. Questions concerning ownership, restitution and any continuing claim to the Bitcoin remained to be determined.

4. Analysis of the Legal Reasoning

4.1 CPR 40.9 as a two-stage process

“A person who is not a party but who is directly affected by a judgment or order may apply to have the judgment or order set aside or varied.”

The Court treated CPR 40.9 as involving two distinct stages:

1. Standing: the applicant must show that it is directly affected by the judgment or order.
2. Discretion: if that threshold is met, the court must decide whether the judgment or order should be set aside or varied.

Standing does not itself guarantee relief. Conversely, discretionary considerations such as delay cannot be used to redefine whether the applicant was directly affected.

4.2 What amounts to being “directly affected”?

Nugee LJ derived six principal propositions from the authorities:

1. CPR 40.9 applies across a broad range of factual situations and should not be confined by rigid categories.
2. The applicant must identify an interest recognised by law.
3. The qualifying interest need not be proprietary and may include contractual, financial, procedural or human-rights interests.
4. The applicant need not prove that the right has been extinguished; material prejudice to its assertion may suffice.
5. The effect must be direct rather than merely economic or consequential.
6. It is enough that the order is prima facie capable of materially and adversely affecting the applicant’s legal interest.

4.3 Contractual rights are sufficient

Kyrrex did not establish that it retained a proprietary interest in the Bitcoin held by Huobi. The Court nevertheless held that this was not fatal. Even if Kyrrex had only a contractual right against Huobi to withdraw the credited Bitcoin, Huobi’s debit deprived Kyrrex of the practical ability to exercise that right.

Contractual rights may be highly valuable legal interests. CPR 40.9 does not privilege ownership rights over contractual ones. The removal of 98.2 Bitcoin—worth approximately £1.7 million at the exchange rate used in the original order and considerably more later—materially prejudiced Kyrrex’s legal position.

4.4 The connection between the order and Kyrrex’s loss

The claimant argued that the order affected only Huobi. On that analysis, Kyrrex’s loss resulted from Huobi’s separate decision to debit Kyrrex rather than some other person interested in the wallet.

The Court rejected that characterisation for two related reasons:

• The evidence showed that the tHEL wallet was primarily associated with Kyrrex. Huobi described it as exclusively associated with Kyrrex’s account, and the overwhelming majority of deposits came directly or indirectly from Kyrrex.
• An order requiring assets to be removed from a wallet necessarily affects the fixed class of persons legally interested in that wallet. Once a particular member of that class bears the loss, that member may invoke CPR 40.9.

Huobi’s ability to fund the payment in a different way did not break the causal connection. It was foreseeable, and possibly probable, that Huobi would charge the transfer to the primary account holder associated with the specified wallet.

4.5 The relevance of joinder

The Court used CPR 19.2 as a useful cross-check. Had Kyrrex learned of the proceedings before summary judgment, it would probably have been joined because its rights might be affected by an order directing payment from the wallet. Although CPR 19.2 and CPR 40.9 are not identical, the likely availability of pre-judgment joinder supported the conclusion that Kyrrex was directly affected after judgment.

4.6 The correct merits inquiry

The High Court had focused on whether Kyrrex could prove a proprietary, constructive-trust or unjust-enrichment claim to recover the Bitcoin from the claimant. The Court of Appeal held that this addressed the wrong question.

The proper inquiry was whether Kyrrex had a real prospect of showing that the original claim should not have succeeded and that the resulting order should never have been made. Kyrrex’s tracing evidence directly addressed that question and appeared compelling. The claimant’s replacement expert did not answer the critical tracing analysis.

Whether Kyrrex could ultimately recover the Bitcoin was a separate matter. Setting aside an unjustified judgment and determining the consequences of that setting aside are analytically distinct issues.

4.7 Delay and prejudice

The Court upheld the High Court’s assessment that Kyrrex could and should have acted more quickly. Approximately 20 months elapsed between access to the documents and the issue of the application, and the process of instructing an expert was insufficiently urgent.

The delay was not, however, gross or egregious. More importantly, the claimed prejudice was weak:

• Huobi had been struck off, but the available material suggested that the claimant probably had no valid claim against Huobi in any event.
• It was uncertain whether a more prompt application would have materially improved the claimant’s ability to pursue the fraudsters.
• The claimant’s alleged change of financial position was not sufficiently established.

The strength of the challenge was decisive. Substantial countervailing considerations would have been necessary to justify preserving an order that appeared to be factually insupportable and that had imposed a major loss on an innocent non-party.

4.8 Natural justice and Article 6

Kyrrex also relied on natural justice, the right to be heard and Article 6 of the European Convention on Human Rights. Because the appeal succeeded under CPR 40.9, the Court found it unnecessary to determine those grounds.

5. Precedents Cited

Latif v Imaan Inc [2007] EWHC 3179 (Ch)

This decision supported a broad understanding of direct effect. A non-party had standing where an earlier judgment materially prejudiced its ability to challenge a purported security interest. The case demonstrated that CPR 40.9 can apply even where a right has not been extinguished but its assertion has been materially obstructed.

Abdelmamoud v The Egyptian Association In Great Britain Ltd [2015] EWHC 1013 (Ch), [2015] Bus LR 928

The High Court held that a judgment must be prima facie capable of materially and adversely affecting an interest recognised by law. Members of a charitable company did not possess a legal interest in its assets sufficient to challenge a judgment against it.

Abdelmamoud v The Egyptian Association In Great Britain Ltd [2018] EWCA Civ 879, [2018] Bus LR 1354

The Court of Appeal confirmed that direct effect is a threshold condition, not a general case-management discretion. It also stated that a non-party should ordinarily be capable of defending the original claim on the defendant’s behalf or advancing a defence of its own.

Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204

This authority illustrated the distinction between direct and indirect effect. Wrongdoing against a company does not ordinarily affect shareholders’ rights directly, even if it reduces the economic value of their shares.

Ageas Insurance Ltd v Stoodley [2019] Lloyd’s IR 1

An insurer was directly affected where a declaration concerning another insurer immediately increased its own contractual liability. The case established that an order may directly affect a non-party “in its pocket” and informed the Court’s conclusion that contractual and financial interests can qualify under CPR 40.9.

Tolmie v Taylor [2019] EWHC 3424 (Ch)

This case treated a husband as only indirectly affected by a money judgment against his wife. Nugee LJ expressed reservations because the husband was himself pursued on the basis that he held assets belonging to her. The reservation indicates that direct effect depends on the real legal consequences of the judgment rather than formal party boundaries.

Esso Petroleum Co Ltd v Breen [2022] EWHC 2600 (KB)

Environmental protesters were directly affected by an injunction capable of rendering their proposed activity unlawful. The decision illustrated the wide range of qualifying legal interests, including freedom of movement, work, private life and Convention rights.

Shell UK Ltd v Persons Unknown [2023] EWHC 1229 (KB), [2023] 1 WLR 4358

Following Esso, the court held that a protester was directly affected by injunctions that could restrict rights under Articles 10 and 11 ECHR and expose her to financial penalties or imprisonment.

Ras Al Khaimah Investment Authority v Azima [2023] EWHC 2108 (Ch)

Non-parties were directly affected where setting aside an earlier judgment would deprive them of a material part of their defence in related proceedings. This reinforced the proposition that prejudice to litigation rights can satisfy CPR 40.9.

IPCom GmbH & Co KG v HTC Europe Co Ltd [2013] EWHC 2880 (Ch)

This authority linked CPR 40.9 with the principles governing joinder. A non-party likely to succeed under CPR 40.9 will often be someone who could arguably have been joined before judgment.

Gurtner v Circuit [1964] 2 QB 587; Penang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52; and In re Pablo Star Ltd [2017] EWCA Civ 1768, [2018] 1 WLR 738

These decisions supported a flexible approach to joinder so that persons whose rights may be affected can participate. The policy informed the Court’s application of CPR 40.9.

Foley v Hill (1848) 2 HL Cas 28

The Court used this case by analogy. A bank customer normally has a debtor-creditor relationship with the bank rather than ownership of the deposited funds. Even if Kyrrex’s position was similarly contractual, it still possessed legally recognised rights capable of direct prejudice.

Investment Trust Companies v Revenue and Customs Commissioners [2017] UKSC 29, [2018] AC 275

This authority had been invoked in relation to Kyrrex’s possible unjust-enrichment claim. The Court of Appeal held that such a recovery claim was not the correct focus when deciding whether the original judgment should be set aside.

Lombard North Central plc v European Skyjets Ltd [2020] EWHC 679 (QB)

The High Court used this decision when assessing delay. It supported the conclusion that Kyrrex’s delay was not “gross”, although Kyrrex had failed to act with proper urgency.

Delta Petroleum (Caribbean) Ltd v British Virgin Islands Electricity Corpn [2020] UKPC 23

This authority established that a court setting aside an order may make consequential orders reversing payments or transfers made under it. Immediate reversal was nevertheless inappropriate because Huobi no longer existed and Kyrrex’s precise rights remained unresolved.

Federal Republic of Nigeria v Process & Industrial Developments Ltd [2025] UKSC 36, [2026] AC 50

The case states that costs should generally be awarded in the currency in which the receiving party paid, or became liable to pay, its lawyers. It informed the Court’s concern about the original direction that sterling-denominated costs be discharged in Bitcoin.

Miliangos v George Frank (Textiles) Ltd [1976] AC 443

This authority permits judgments in foreign currencies. The Court questioned whether its reasoning extends to cryptocurrency, which English law recognises as property but does not presently treat as money in the same way as fiat currency.

6. Cryptocurrency-Specific Observations

6.1 Fungibility

The fact that Huobi transferred Bitcoin from a different wallet did not alter the analysis. Bitcoin was treated as fungible for practical purposes: the recipient ordinarily does not care which particular units are transferred. What mattered was that Huobi then charged the transfer to the wallet identified in the order.

6.2 Tracing into high-volume wallets

A wallet’s receipt of some illicitly obtained cryptocurrency does not prove that a particular claimant’s assets reached or remained in it. In a highly active wallet through which more than 100,000 Bitcoin had passed, a claimant needed reliable transactional tracing rather than general evidence of association with fraud.

6.3 Costs ordered in Bitcoin

The Court expressed serious doubt—without finally deciding the issue—about requiring a sterling costs liability to be discharged in Bitcoin. Such an order:

• may improperly impose payment on a person against whom no costs order was made;
• may transfer assets belonging to an innocent third party;
• treats cryptocurrency as money despite its current legal classification as property; and
• may overcompensate the recipient because of exchange-rate volatility.

Courts should therefore avoid ordering costs in cryptocurrency without full argument and a clear legal basis.

7. Complex Concepts Simplified

CPR 40.9

A procedural rule allowing someone who was not a party to a case to challenge an order that directly affects that person’s legal interests.

Directly affected

The order must materially prejudice a legally recognised interest without the impact being merely remote, incidental or reflective of harm suffered by another person.

Constructive trust

An equitable mechanism under which a person holding property may be required to treat it as belonging beneficially to someone else. Mere control of a wallet does not automatically establish such a trust.

Proprietary claim

A claim asserting ownership of an asset or its traceable substitute, rather than merely seeking payment of a debt.

Tracing

The evidential and legal process of following property, or its value, through transactions and substitutions.

Fungibility

The characteristic that one unit is treated as interchangeable with another unit of the same kind.

Unjust enrichment

A claim seeking restitution where the defendant has been enriched at the claimant’s expense in circumstances the law regards as unjust.

Change of position

A defence to restitution where a recipient has innocently and irreversibly altered their position in reliance on the receipt.

Persons unknown

A procedural description used where defendants cannot yet be identified by name but can be defined by their conduct or relationship to the dispute.

8. Impact of the Judgment

The decision is an important procedural and cryptocurrency-law precedent.

• Broader protection for non-parties: A person need not establish ownership of the affected property. Contractual and other legally recognised interests may provide standing.
• Substance over payment mechanics: An intermediary’s discretion over how to implement an order will not necessarily make the impact on an account holder indirect.
• Protection of pooled-asset holders: Where an order necessarily reduces a pool of assets, members who actually bear that reduction may be directly affected.
• Greater scrutiny of ex parte crypto tracing: Courts should require precise tracing evidence before ordering exchanges to transfer cryptocurrency from identified wallets.
• Correct focus on set-aside applications: The principal merits question is whether the original judgment was supportable, not whether the non-party has already proved a separate recovery action.
• Delay remains relevant but not determinative: Even substantial delay may be outweighed by the injustice of maintaining an order shown to rest on a fundamental mistake.
• No automatic restitution: Setting aside an order does not automatically establish ownership or entitle the applicant to immediate repayment.

9. Conclusion

Jones v Persons Unknown establishes that CPR 40.9 protects non-parties whose legally recognised interests are materially and directly prejudiced by a judgment, whether those interests are proprietary or contractual. Direct effect is assessed realistically, not merely by asking whether an intermediary had some choice in implementing the order.

The decision also separates two questions that had become conflated: whether an unjustified judgment should be set aside, and what restitutionary consequences should follow. Where a non-party has suffered major loss under an order founded on mistaken tracing evidence, the absence of an already established proprietary recovery claim does not justify leaving that order in place.

As Peter Jackson LJ observed, the original order effectively made Kyrrex the unwitting insurer of the claimant’s fraud loss. Sympathy for a fraud victim cannot justify transferring that loss to an innocent non-party through an apparently unjust order.