Defender Ltd v HSBC France (Approved)

Factual and Procedural Background

Company A (the Plaintiff/Appellant) invested substantial funds that were ultimately lost in the fraudulent scheme operated by Person X. After Person X’s bankruptcy, Company A reached a settlement with the bankruptcy trustee recovering approximately 75 % of its loss. Company A then sued Company B (the Defendant/Respondent), a custodian and trustee of the investment funds, alleging negligence and breach of duty. In the High Court a preliminary issue was decided in favour of Company B, the trial judge holding that the settlement with the trustee effectively identified Company A with Person X, thereby extinguishing any further liability of other defendants. The Court of Appeal upheld that approach. On further appeal, the Supreme Court (per Judge Charleton, concurring with Judge O'Donnell’s lead judgment) set aside the preliminary determination and directed that the matter proceed to a full trial.

Legal Issues Presented

1. Whether a civil settlement between Company A and the bankruptcy trustee of Person X’s entities bars Company A from pursuing tort claims against Company B under the Civil Liability Act 1961.
2. Whether the existence of criminal conduct (Person X’s fraud) “trumps” or otherwise extinguishes potential tortious liability of other parties.
3. How the Rules of the Superior Courts empower and oblige trial judges to manage complex commercial litigation efficiently.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Court's Reasoning and Analysis

The Supreme Court held that the trial judge erred in treating Person X’s criminal fraud as extinguishing potential tortious liability of other actors. Judge Charleton emphasised that:

• The Civil Liability Act 1961 is designed to apportion responsibility equitably among all contributors to a wrong; criminality does not override civil liability.
• Assault, fraud, homicide and other wrongs can simultaneously constitute crimes and torts; recovery in tort remains possible regardless of criminal convictions.
• The settlement with the bankruptcy trustee merely limits Company A’s potential recovery to the remaining 25 % of its loss; it does not confer immunity on Company B.

Beyond the substantive point, the Court delivered extensive guidance on case management. Citing multiple provisions of the Rules of the Superior Courts (Orders 63A, 63C, 39 and 36), Judge Charleton stressed that trial judges possess—and must exercise—robust powers to:

• Define and confine the issues,
• Limit discovery, expert evidence and witness numbers,
• Impose time limits on openings, examinations and submissions, and
• Convene regular case management conferences to keep lengthy trials on course.

The decision signals that complex commercial cases should not monopolise public resources and that judicial management is essential to deliver timely justice.

Holding and Implications

The preliminary determination barring Company A’s claim was set aside; the matter is remitted for a full trial.

Immediate Effect: Company A may pursue its negligence claim against Company B, subject to a maximum recovery of the unrecovered 25 % of its loss.

Broader Implications: The Court reaffirmed that criminal wrongdoing does not eclipse civil liability and issued authoritative guidance encouraging active judicial case management in complex litigation. No new legal test was created, but the judgment underscores existing statutory powers and may influence procedural practice in future high-value commercial disputes.