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Logix Aero Ireland Ltd v Siam Aero Repair Company Ltd
Factual and Procedural Background
This appeal arises from an email-interception fraud in which unknown fraudsters inserted themselves into correspondence between the Appellant and the Respondent during finalisation of the Appellant's purchase of two aircraft engines. US$824,900 was paid by the Appellant to a bank account controlled by the fraudsters in Vietnam. The Appellant sued the Respondent on multiple bases; the only claim pursued on this appeal was for damages for breach of a confidentiality clause contained in a predominantly non‑binding Letter of Understanding dated 4 July 2024 ("the LOI").
On 23 May 2025 the Respondent obtained an order striking out the Claim Form and Particulars of Claim (alternatively summary judgment) under CPR 3.4(2)(a) as disclosing no reasonable grounds. The High Court judge (Judge Williams) accepted it was arguable the Respondent had breached the confidentiality clause by sending documents and information to the fraudsters (unwittingly) but held that any such breach did not cause the Appellant's loss because the fraudsters' intervening actions were the cause. Permission to appeal was granted solely on the issue of causation. The Court of Appeal panel (Judge Phillips giving the lead judgment, Judges Jackson and Cockerill concurring) dismissed the appeal.
Legal Issues Presented
- Whether the High Court judge was wrong to find that the chain of causation between the Respondent's assumed breach of the LOI confidentiality clause and the Appellant's loss was broken by the voluntary intervention of third‑party fraudsters.
- Whether the decision in London Joint Stock Bank Limited v Macmillan and Arthur [1918] AC 777 required the Appellant's loss to be treated as caused by the Respondent notwithstanding the intervening fraudsters.
Arguments of the Parties
Appellant's Arguments
- The High Court erred in concluding the chain of causation was broken; the Respondent's assumed breach was an essential, continuing element of the fraud and without it the fraud could not have been completed.
- The case is analogous to London Joint Stock Bank Limited v Macmillan and Arthur [1918] AC 777, which the Appellant relied on for the proposition that an intervening act of forgery does not automatically break causation where the defendant's breach facilitated the fraud.
Respondent's Arguments
- The High Court's finding on causation was correct: the fraudsters' voluntary intervention broke the chain of causation and were the effective cause of the Appellant's loss.
- By Respondent's Notice the Respondent also contended, among other grounds, that it was not arguable that its actions breached the confidentiality clause.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| London Joint Stock Bank Limited v Macmillan and Arthur [1918] AC 777 | Authority that a party may be liable where its negligent preparation of a payment instrument facilitated a fraud; forgery may be the natural consequence of such negligence. | Court distinguished Macmillan: the decision depends on a specific duty to prevent the very fraud, and is not a general rule that intervening fraud never breaks causation. Macmillan did not assist the Appellant. |
| Begum v Marcan (UK) Limited [2021] EWCA Civ 326 | Test applicable on strike out is equivalent to that on summary judgment; determine whether claim is "bound to fail". | Applied as authority for the appropriate test to apply on the Respondent's strike out/summary judgment application. |
| Altimo Holdings v Kyrgyz Mobil Tel Ltd [2011] UKPC 7, [2012] 1 WLR 1804 | Authorities on approach to strike out/summary judgment (cited as part of the "bound to fail" test). | Referenced in relation to the standard for determining whether a claim is bound to fail. |
| Galoo v Bright Grahame Murray [1994] 1 WLR 1360 | Intervention of a third party can mean the defendant's breach only provided an opportunity for loss rather than being the effective cause (legal causation concept). | Relied on to support the proposition that the Respondent's assumed breach gave the fraudsters the opportunity but was not the effective cause of the Appellant's loss. |
| Armstead v Royal & Sun Alliance Insurance Co Ltd [2024] UKSC 6, [2025] AC 406 | Discussion of "legal causation" as distinct from factual causation; intervening significant factual causes may break the causal link. | Invoked to explain the concept of legal causation and its relevance to intervening third‑party acts. |
| Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2008] UKHL 48, [2009] 1 AC 61 | Principles on scope of duty—whether a type of loss is within the scope of responsibility assumed by the defendant. | Referenced as one of the principles engaged when assessing whether loss caused by a third party is within the defendant's assumed responsibility. |
| Hadley v Baxendale (1854) 9 Ex. 341 | Remoteness principle: whether loss arises "in the usual course of things". | Cited as one of the legal frameworks (remoteness) against which loss caused by third‑party intervention may be assessed. |
| Young v Grote (1827) 4 Bing. 253 | Early authority on liability where failure to take precautions facilitated forgery; considered in Macmillan. | Discussed in the Court's review of Macmillan as underlying authority for that decision. |
| Monarch Steamship Co. Ltd. v. Karlshamns Oljefabriker (A/B) [1949] A.C. 196 | Principles on causation cited in Galoo regarding effective/dominant cause. | Used as authority for distinguishing causative and merely opportunistic breaches. |
| Quinn v Burch Bros. (Builders) Ltd [1966] 2 QB 370 | Assists distinction between breach causing loss and breach giving opportunity for loss. | Referred to in support of the commonsense evaluation of whether a breach was the effective cause. |
| County Ltd. v Girozentrale Securities [1996] 3 All ER 834 | Statement that legal causation involves facts and common sense; if defendant had duty to protect against others' conduct, that conduct will not break causation. | Quoted to support the approach that causation is a factual commonsense question informed by legal principles. |
| Heskell v Continental Express Ltd [1950] 1 All ER 1033 | Example where two concurrent effective causes both operated so that a defendant's continuing breach remained an operative cause of loss. | Applied to show that a breach can remain an effective cause even when another intervening cause also contributed. |
| Stacey v Autosleeper Group Ltd [2014] EWCA Civ 1551 | Authorities that an intervening cause breaks the chain only if it destroys the causative potency of the prior breach. | Approved as part of the legal analysis that an intervening act breaks causation only if it obliterates the earlier breach's causative effect. |
| Borealis v AB Geogas Trading SA [2010] EWHC 2789 (Comm), [2011] 1 Lloyd's LR 482 | Commercial Court analysis of intervening causes and causation. | Cited (via Stacey) for the analysis of when intervening acts break the chain of causation. |
Court's Reasoning and Analysis
The Court applied the strike‑out/summary judgment standard (Begum v Marcan and Altimo) and accepted the High Court's characterisation that the confidentiality clause in the LOI was arguable and that communications with the fraudsters could amount to "disclosure". The central question, however, was causation: whether the Respondent's assumed breach was an effective cause of the Appellant's loss notwithstanding the fraudsters' voluntary intervention.
The Court identified three overlapping legal concepts engaged when a third party intervenes: (i) causation (whether the breach is the effective/dominant cause), (ii) scope of duty (whether the loss is the type for which the defendant assumed responsibility), and (iii) remoteness (Hadley v Baxendale). The Court reviewed authorities (notably Galoo, Monarch Steamship, Heskell, County Ltd., Stacey and Macmillan) and concluded that Macmillan is confined to situations where the defendant owed a specific duty to prevent the very intervention which caused the loss; Macmillan therefore does not establish a general rule that intervention by fraudsters cannot break causation.
Applying those principles to the undisputed email evidence, the Court concluded the fraudsters intervened before and caused later communications by both parties such that the Respondent's assumed breach formed only part of the opportunity exploited by the fraudsters and was not the effective cause of the Appellant's loss. The fraudsters both brought about and exploited subsequent disclosures; the decisive act causing payment to the fraudsters occurred without further involvement of the Respondent. The breach thus lacked the causative potency required to found liability. The Court noted the Judge could also have found against the Appellant on scope of duty or remoteness grounds, but did not need to decide those issues given the causation conclusion.
Holding and Implications
DISMISSED
Holding: The Court of Appeal dismissed the Appellant's appeal, upholding the High Court's strike‑out on the ground that the chain of causation was broken by the voluntary intervention of third‑party fraudsters; the Respondent's assumed breach was not the effective cause of the Appellant's loss.
Implications: The direct consequence is that the strike‑out judgment in favour of the Respondent stands and the Appellant's claim for damages for breach of the LOI confidentiality clause is not permitted to proceed. The Court emphasised that Macmillan does not operate as a general rule displacing causation analysis; no new general principle of law was established beyond the application of existing causation, scope‑of‑duty and remoteness principles. Judges Jackson and Cockerill agreed with the lead judgment.
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