Key Point

The recoverability of loss suffered by reason of a cross-undertaking in damages requires only that the party giving the undertaking should have reasonably foreseen loss of the type that was actually suffered by the defendant – and not the specific loss within that type.

The Facts

The provisional liquidator of Abbey Forwarding Limited (the "Company") was granted a worldwide freezing order against three of its shareholder-directors.  The freezing order was subsequently discharged and the Court awarded the shareholder-directors compensation pursuant to the Company's cross-undertaking in damages.  The shareholder-directors appealed against the sum awarded.

The Decision

The appeal was allowed in part and the award was increased.  The Court clarified that the recoverability of loss suffered by reason of a cross-undertaking in damages requires only that that the party giving the undertaking should have reasonably foreseen loss of the type that was actually suffered by the defendant – and not the specific loss within that type.

Comment

The decision should be of comfort to applicants seeking freezing orders in the future, clarifying the extent of losses which a party will be expected to cover: a claimant should not bear losses that no reasonable person would have foreseen.

Hone v Abbey Forwarding Ltd (In Liquidation) [2014] EWCA Civ 711