The Court of Appeal (Males, Popplewell, and Nugee LJJ) recently decided ED&F Man Capital Markets v Come Harvest and others  EWCA Civ 1704. This is a significant decision that addresses the application of the principle of res inter alios acta (or, as the Court said, “none of your business”), delineating when a benefit does and does not reduce a claimant’s recoverable loss.
The Court of Appeal ultimately upheld Calver J’s first instance judgment on quantum. But it did so for different reasons.
The claimant had succeeded in a claim for unlawful means conspiracy, having purchased forged warehouse receipts. The key issue before the Court of Appeal was whether a settlement agreement between the claimant and ANZ, to whom the claimant had on-sold the forgeries, was to be taken into account when assessing the claimant’s loss. The claimant argued that the settlement agreement was res inter alios acta, and that it was simply entitled to recover damages in the amount it had paid for the forgeries.
Males LJ held that the Court should follow a two-step approach to determine whether a benefit is collateral.
The first step is to identify the relevant transaction.
On this point, the Court of Appeal disagreed with Calver J. The Judge had considered that there were two separate sets of transactions, namely the claimant’s purchase and its on-sale to ANZ, involving the same set of forged documents, with the result that the claimant’s dealings with ANZ and, in particular, the settlement agreement were res inter alios acta. Instead, the Court of Appeal considered at §57 that there was “in substance … a single transaction, in effect a package deal.”
The second step is to identify the benefits received because of that transaction.
As to the second step, Males LJ held at §52 that: “The broad principle … is that collateral benefits are those whose receipt arose independently of the circumstances giving rise to the loss, and the critical factor is the character of the benefit,” clarifying that the timing of the receipt of the benefit was not determinative. The question is ultimately one of causation, as Males LJ explained at §54.
On this issue, while the settlement agreement was, in principle, relevant, the Court of Appeal considered that the settlement agreement did not, in the event, serve to avoid the claimant’s loss. Rather, applying Mobil North Sea Ltd v PJ Pipe & Valve Co  EWCA Civ 741, it represented a reorganization of the terms on which the claimant and ANZ were going to conduct litigation against the conspirators. In consequence, the Court of Appeal dismissed the appeal.