Sums Payable By The Serious Fraud Office

In the matter of Eurasian Natural Resources Corporation Ltd v Dechert LLP & Anor [2023] EWHC 3280 (Comm the Serious Fraud Office (“SFO”) commenced a criminal investigation into ENRC.

ENRC brought proceedings against the SFO and its former solicitors who it said acted against its interests. In August 2023 the SFO has closed down its investigation. There were significant costs for all the parties in this matter.

Disclosures

ENRC complained about the SFO as follows amongst other things:

ENRC alleged that the various representatives of the SFO (including Mr Alderman) were complicit with Mr Gerrard in the DCs, in that they knew or were reckless as to the fact that he was acting without authority and plainly against his client’s own interests.

The solicitor acting for ENRC was said by the judge to have leaked information:

In the Phase 1 Judgment, I found that Mr Gerrard was indeed the instigator of all three leaks to the press. I further found that he engaged with Mr Alderman without authority prior to the August Article, at least alerting Mr Alderman to it. Mr Alderman then tipped Mr Gerrard off about the forthcoming SFO Letter and Mr Gerrard was informed about it on the day it was sent.

In respect of the SFO Mr Justice Waksman notably took issue with it:

As for the SFO, I found that, acting by Mr Alderman and/or Mr Thompson and/or Mr Gould, it was in serious breach of its own duties in relation to 15 out of the 30 DCs, which included engaging with and taking information from Mr Gerrard which was plainly unauthorised and against his client’s interests. These DCs were DCs 1, 4-11, 13, 15, 19A, 20, 23 and 24. They have been referred to in submissions for the Phase 1A Trial as “the Induced DCs”. I shall refer to them as “IDCs”. On the facts, I found that in relation to the IDCs (and subject to proof of causation and loss) the tort of inducement to breach of contract on the part of Mr Gerrard had been established. Some but not all of the elements of misfeasance in public office were also established, but not sufficient to make out the tort itself…I also found that in acting wrongfully as the SFO did, this was not because it had a particular desire to assist Mr Gerrard to earn more fees, rather, it was what I have referred to in the Phase 1 Judgment as “bad faith opportunism” in relation to the relevant pieces of information wrongfully communicated to it by him.

The judge said had the SFO not made itself available to the receipt of information that amounted to unauthorised and wrongful disclosures then there would not have been any breach at all:

The whole point is that Mr Gerrard’s breaches on the relevant DCs all involved (save DC19A dealt with below) the unauthorised and wrongful disclosure of information to the SFO. Without the SFO as an audience and a receptacle for this information, there could not have been any breach at all. Accordingly, the SFO’s primary case must be rejected. It is not the case that absent the SFO’s breaches, Mr Gerrard would have acted so as to make the same disclosures in any event. There was no novus actus on the part of the DDs.

The upshot was damages of high level were awarded in favour of ENRC to be paid by the SFO:

(1)               There is going to be a very substantial award of damages in favour of ENRC and against the SFO in any event; the fact that as between it and Dechert, the present award will be apportioned 25:75 does not detract from this fact;

(2)               My findings against the SFO here are obviously very serious, not least because it must be very unusual for a public body in the position of the SFO to be found liable for the tort of inducement at all; ENRC is also right to point out the sustained nature of the SFO’s breaches of duty and also the involvement of its then Director, Mr Alderman, at the outset, together with the involvement of Mr Thompson and Mr Gould who were senior officers; it is further correct that I rejected their evidence in respect of a number of matters and on one occasion found that they were lying;

Some Of The Judge’s Conclusions

(1)               The SFO’s wrongdoing was an effective cause of the losses claimed by ENRC in respect of Unnecessary Work, Unnecessary Costs and WMT;

(2)               But for the SFO’s wrongdoing, it would not have commenced the Criminal Investigation; the separate losses claimed by ENRC in this respect will have to be assessed at a yet further trial;

(3)               The effect of my assessment of Quantum in relation to Unnecessary Work, Unnecessary Costs and WMT is that ENRC is entitled to significantly more by way of damages than Dechert and the SFO have contended, though not as much as ENRC has sought; the detailed implications of my findings will have to be worked out by the parties;

(4)               SFO’s claimed defences on the basis of remoteness as to reasonable foreseeability or novus actus, and failure to mitigate, are rejected;