Service pages: commercial and corporate disputes

When litigation tactics go too far: Court of Appeal addresses “Privilege Hunting”

Commercial and corporate disputes

In ‘Salinas Pliego v Astor Asset Management 3 LTD [2026] EWCA Civ 940’ the Court of Appeal has delivered a stark warning to litigants tempted to gain an unfair advantage through “privilege hunting”. 

While the courts remain reluctant to shut the courtroom doors by striking out a claim, the case demonstrates that, while remaining a remedy of last resort, the courts are willing to impose serious sanctions where parties engage in abusive conduct. This is particularly relevant, where a party seeks to obtain an opponent’s confidential and privileged information (so-called “privilege hunting”), in order to gain a litigation advantage, thereby threatening the integrity of the judicial process. 

While the Court of Appeal characterised the conduct in issue here as a “very serious abuse of the process of the court”, it stopped short of striking out the claim entirely, emphasising that such a sanction is exceptional and should only be imposed where it is just and proportionate to do so. 

Background

A claim was issued on 2 August 2024 by a wealthy Mexican businessman, Mr Ricardo Salinas Pliego, and a company under his control. The Claimants alleged that they had been induced into entering a stock lending agreement under false pretences and that, in exchange for a loan of approximately US $115 million, they transferred shares said to be worth around US $415 million. The Claimants pursued a range of claims against the Defendants, including claims for damages, proprietary relief, and equitable compensation arising from alleged knowing receipt and dishonest assistance. 

During the proceedings, the Claimants obtained worldwide freezing orders against certain Defendants. The Defendants subsequently applied to discharge those orders, alleging that the Claimants had breached their duty of full and frank disclosure. However, these allegations were unrelated to the later allegations of “privilege hunting”, of which the Defendants were unaware at the time. 

At some point before or after the freezing orders were obtained, the Claimants engaged Black Cube, a private intelligence firm staffed by former Israeli intelligence officers, to conduct a covert operation targeting the solicitor with conduct of the Defendants’ case. Operatives posing as prospective clients persuaded the solicitor to attend meetings in Amsterdam, which were secretly recorded. During those meetings, the solicitor disclosed information concerning litigation strategy, settlement considerations, perceived strengths and weaknesses of the case, and the practical effects of the freezing orders. 

The recordings obtained through the covert operation were subsequently provided to the Claimants, who thereafter issued an application for summary judgment on 5 March 2025. The Defendants responded by applying to strike out or stay the claim for abuse of process, seeking directions that the information obtained by Black Cube was inadmissible, and applying to discharge the freezing orders obtained by the Claimants. 

The key legal issue

The Court of Appeal was required to determine whether the Claimants’ conduct in obtaining information through the Black Cube operation constituted an abuse of process and, if so, what consequences should follow. In particular, it considered whether the Deputy Judge had been correct to strike out the Claimants’ summary judgment application as a proportionate response to the misconduct, or whether a different sanction was warranted in the circumstances.

The Court of Appeal’s decision

The Court held that the Claimants’ conduct amounted to a serious abuse of process and condemned attempts to obtain privileged information from an opponent’s legal advisers through deceptive means. 

Furthermore, the Court described the operation as a form of “privilege hunting” and regarded the deliberate targeting of the Defendants’ solicitor as particularly egregious. It rejected arguments that the conduct should be excused because some information might ultimately have fallen outside the protection of privilege or because the solicitor himself had acted improperly.

Notwithstanding the seriousness of the misconduct, the Court declined to strike out the underlying claim. Instead, it concluded that the more appropriate response was to discharge the freezing orders obtained by the Claimants and allow the substantive proceedings to continue to trial. In reaching that conclusion, the Court reaffirmed that striking out a claim is a remedy of last resort, to be reserved for exceptional cases where no lesser sanction would be sufficient to protect the integrity of the justice system. 

Key takeaways

1. Privilege hunting will be treated seriously

The judgment leaves little doubt that attempts to secure an opponent’s privileged or confidential information through covert, dishonest or deceptive means are likely to constitute an abuse of process. 

2. Legal professional privilege remains fundamental

The Court of Appeal reaffirmed that legal professional privilege is a fundamental aspect of the relationship of trust and confidence between solicitor and client, which is essential for the legal system to function in accordance with the interests of justice. 

3. Strike-out remains exceptional

Even where litigation misconduct is severe, the courts will carefully consider proportionality before depriving a party of the opportunity to pursue its claim. The decision demonstrates a continued reluctance to strike out a claim unless absolutely necessary. 

Comment

The judgment serves as a stark warning against attempts to gain a strategic advantage through covert intelligence-gathering exercises. It underscores the courts’ commitment to protecting the integrity of the judicial process while maintaining a proportionate approach to sanctions.

Although the Court of Appeal was unwilling to strike out the claim entirely, this decision demonstrates that serious consequences can follow where parties interfere with the fundamental protections that underpin the administration of justice. 

Cause and effect: Court of Appeal confirms fraudsters’ intervention can break the chain of causation

Commercial and corporate disputes

As business email compromise fraud continues to evolve in scale and sophistication, the Court of Appeal’s decision in Logix Aero Ireland Ltd v Siam Aero Repair Company Ltd [2026] EWCA Civ 510 provides guidance on where legal responsibility begins and ends. The Court concluded that the actions of sophisticated fraudsters constituted an intervening event, breaking the chain of causation between the alleged contractual breach and the loss suffered.

The judgment offers a reminder that, even in disputes arising from complex cyber-enabled frauds, courts will continue to apply conventional principles of causation and contractual risk allocation. 

Background

During negotiations as part of a transaction, unknown fraudsters succeeded in infiltrating the parties’ email communications. Using deceptive email domains and manipulated correspondence, they inserted themselves between the buyer, Logix Aero Ireland Ltd (Logix), and the seller, Siam Aero Repair Company Ltd (Siam Aero). Genuine communications were intercepted, altered and retransmitted, enabling the fraudsters to replace authentic payment details with information for an account under their control. 

As a result, Logix transferred the purchase monies to a bank account controlled by the fraudsters rather than to the seller’s. By the time the deception was uncovered, the funds had been dissipated. 

Logix pursued a number of claims against Siam Aero. By the time of the appeal, the only surviving claim was an allegation that Siam Aero had breached a confidentiality provision contained in a Letter of Understanding. The essence of the claim was that Siam Aero had disclosed confidential information and documents to the fraudsters, albeit unknowingly, and that this breach ultimately caused Logix’s loss. 

The High Court struck out the claim. It accepted that Siam Aero had an arguable case to answer on whether its communications with the fraudsters breached the confidentiality clause. However, it held that any such breach did not legally cause Logix’s loss. The fraudsters caused the loss through their own independent actions, which broke the chain of causation between Siam Aero’s actions and Logix’s loss. The Court of Appeal agreed. 

Breaking the chain of causation 

The central issue was whether Siam Aero could be held liable for damages notwithstanding the intervention of third-party fraudsters between its assumed breach of contract and the loss. 

The Court of Appeal concluded that the fraudsters’ conduct was the true cause of the loss. Their intervention involved multiple deliberate and independent acts, including intercepting communications, manipulating transaction documents, altering banking information and inducing Logix to transfer funds to an account controlled by them. The loss ultimately resulted from those fraudulent acts rather than from Siam Aero’s alleged disclosure of information. 

It was noted that the fraudsters had already placed themselves within the communications chain before the alleged breach occurred. In that sense, the fraudsters’ intervention was not merely a consequence of the breach but the effective cause of Logix’s loss.  

Providing an opportunity is not the same as causing a loss

One of the most significant aspects of the judgment is its treatment of the relationship between opportunity and causation.

The court accepted that the alleged disclosure may have been one of the events which enabled the fraud to succeed. However, it rejected that creating an opportunity for fraud is necessarily equivalent to causing the resulting loss. 

That distinction is particularly important in cases involving cyber-enabled fraud. Businesses routinely exchange information and documents electronically. If every inadvertent disclosure that assisted a subsequent fraud were treated as the legal cause of resulting losses, the scope of contractual liability could become extremely wide. The Court of Appeal’s decision draws a clear boundary by requiring claimants to establish a more direct causal connection. The courts can be slow to impose liability where a party’s conduct is merely part of the background to a fraud, rather than its legal cause.

Scope of duty remains critical

The judgment also reaffirms that, as a matter of the scope of the duty, loss caused by the intervention of a third party may not be regarded as the type or kind of loss in respect of which the contract breaker had assumed responsibility. 

The confidentiality clause in issue was directed towards preventing the disclosure or misuse of commercially sensitive information. It did not impose a special duty to protect the other party from being deceived by fraudsters. 

This aspect of the decision will be particularly relevant when parties seek to rely upon confidentiality provisions, data-protection obligations or information security clauses as a basis for recovering fraud losses. The precise purpose of the contractual obligation will remain central to the analysis. 

Practical implications

The decision has a number of practical implications for businesses. In an age of increasing cybercrime, it is crucial to ensure that transactions are underpinned by robust verification processes (such as always confirming bank details by telephone). Moreover, businesses should have clear anti-fraud policies, together with fraud prevention training, to ensure they are doing all that they can to prevent costly mistakes. There may be warning signs for employees to spot when a potential fraud is brewing.  

When negotiating contracts, it is worth businesses giving proper thought to the allocation of cybercrime-related risk. Logix Aero v Siam Aero suggests that ordinary confidentiality clauses are unlikely to offer protection against losses caused by fraud. It may therefore be worth including express provisions to deal with the verification of payments, cybercrime risks or other protections against fraud. 

Civil fraud and reconstructed narratives: The Commercial Court draws firm lines in Trafigura v Gupta

Commercial and corporate disputes

The Commercial Court’s recent decision in Trafigura PTE Ltd v Gupta & Ors [2026] EWHC 159 (Comm) provides a helpful illustration of the Court’s approach to civil fraud in the context of complex commodities trading arrangements. Although fact‑specific, the judgment is of broader significant in two respects: first, in its treatment of attempts to recharacterise fraudulent conduct after the event; and secondly, in its emphasis on contemporaneous documentary evidence as the decisive benchmark against which competing explanations must be tested. 

Fundamentally, the case is concerned with responsibility for loss, and the limits that will be imposed upon attempts to shift that responsibility by seeking to reframe fraudulent transactions as merely sophisticated commercial structures.

Fraud presented as commercial structure

The proceedings arose out of a series of nickel “buy‑back” trades between Trafigura and companies owned or controlled by Mr Prateek Gupta. Under these arrangements, Trafigura purchased containerised LME‑grade nickel, held title during transit and resold the cargo at destination for a modest return. The trades were supported by apparently orthodox inspection certificates, bills of lading and insurance documentation.

That appearance unravelled when inspections revealed that many of the containers did not hold nickel at all, but low‑value scrap metal. Trafigura alleged that it had been the victim of a US$500 million fraud involving fabricated cargoes and falsified documentation across multiple counterparties and jurisdictions.

The defendant did not confine himself to a simple denial of dishonesty. Instead, he advanced a positive case that the transactions were never intended to operate as genuine commodity trades, but instead operated as a form of financing arrangement, the economic substance of which rendered the absence of real nickel immaterial. On that basis, it was argued that the claimant had knowingly assumed the relevant risk and could not now seek to displace the resulting losses.

The court’s rejection of a retrospective reconstruction

The Commercial Court rejected that explanation in clear and emphatic terms. Mr Justice Saini found that Mr Gupta had orchestrated a “fraud on a grand scale”, involving systematic misrepresentation to not just Trafigura, but also banks, insurers and logistics providers.

Of particular importance was the Court’s treatment of the defendant’s explanatory narrative, the central difficulty with which was found to be that it  was not merely inconsistent with the objective evidence, but that it depended upon a process of tenuous retrospective reconstruction. The judge held that Mr Gupta had sought to “knit together” fragments of internal communications, taken out of context, to construct a self‑serving account of what the transactions were said to represent. The Court was not prepared to accept that approach. Contemporaneous documentation, commercial logic, and credible witness evidence all pointed in the opposite direction. In such circumstances, the defendant’s explanation was not merely unpersuasive: it was untenable.

The judgment makes clear that, in cases of this kind, the Court will not approach competing narratives on an equal footing merely because each is capable of articulation. Where one account depends on selective reconstruction with the benefit of hindsight, and the other is supported by contemporaneous documentary material, there will be a clear winner. 

Reputational allegations and judicial vindication

The defence strategy also involved the making of serious allegations that Trafigura traders were complicit in the alleged arrangement. The court rejected those claims entirely, finding that the individuals concerned had no knowledge of the fraud and were themselves victims of Mr Gupta’s conduct. Indeed, the Court went even further, making clear findings that expressly exonerated those traders. 

That aspect of the judgment is notable for its recognition of the reputational damage that can flow from unsubstantiated allegations in high‑value fraud litigation. Clear judicial findings on personal responsibility can be as significant as findings on liability, particularly where allegations are aired in a public forum. The Court’s willingness to address such allegations directly, and to reject them clearly where they are not made out, underscores that cynical or speculative assertions of complicity will not be permitted to gain traction. 

Risk allocation and commercial reality

The decision also reinforces the Court’s approach to questions of risk allocation in complex trading structures. 

The defendant’s case depended, in substance, on the proposition that the claimant had agreed to assume the risk of non-existent cargoes. That proposition was inconsistent with both the documentary framework of the transactions and ordinary commercial practice. In particular, there was no contractual or documentary indication that such a risk had been contemplated, let alone accepted. In the circumstances, the Court rejected the notion that a sophisticated commodities trader would knowingly assume the risk of fictitious cargoes without documentation or contractual protections reflecting that reality. 

The judgment confirms that civil law will not lend legitimacy to fraudulent conduct by recharacterising it as commercial sophistication. Where loss flows from systematic deceit, attempts to shift responsibility through creative reframing are unlikely to succeed.

Why the decision matters

Trafigura v Gupta sheds light on how the courts approach complex fraud claims involving sophisticated commercial arrangements. It underlines the importance of reliable, contemporaneous evidence, shows a clear judicial reluctance to accept narratives reconstructed after the event, and demonstrates a willingness to confront reputational harm head‑on where unfounded allegations are made.

The case is also a reminder that documentation which appears formally sound can still conceal serious risk. Civil proceedings are not a means of recasting events to avoid responsibility: where fraudulent conduct is presented as commercial ingenuity, the court will look past form and examine the underlying reality.

Beyond reach: High Court draws the line on non-party freezing orders

Commercial and corporate disputes

The English Court has power to grant wide-ranging and invasive freezing injunctions. But there are limits. Even where there exists a real risk of dissipation, a recent court decision shows that it is likely to be difficult to obtain a post-judgment freezing order over assets held by a third party based abroad. 

Background

So you bring a claim against an English company for payment of significant business loans.

You win and look to enforce that judgment. 

You discover that the company has received large sums of money which could not be accounted for in its financial statements and which had not been retained in its bank accounts. 

Moreover, it appears that payments had been made by the company to associated parties based abroad. There appears to be no proper purpose for those payments, and the recipients do not seek to justify or explain them or suggest that they provided any value in return for the same. 

Further still, you can show that there is a real risk that enforcement of your judgment will be frustrated by dissipation of the assets in question. 

Surely in those circumstances the English court would be willing to grant a freezing injunction against the assets of those foreign associates?

Well, in the recent case of Gilbert v Broadoak [2026] EWHC 153 that’s exactly what happened.

On a without notice application made by the successful claimant following judgment, the Court granted a freezing injunction over the assets of two non-parties that were related to the defendant and were based in Spain.

But when the matter came back before the court at the return date hearing, those foreign parties argued that the English court did not in fact have personal jurisdiction over them. 

The court agreed and the injunction against the Spanish respondents was discharged. 

Decision

Harsh? At first blush maybe, but a closer examination of the decision reveals a sound basis for this outcome. 

It is well established that the English Court can grant a freezing injunction over the assets of defendants to English proceedings. 

Based on the decision in TSB Private Bank International SA v Chabra [1992] 2 All ER, the English court can also grant a freezing injunction against parties that are not themselves defendants in the litigation. This applies to injunctions sought against such non-parties both before and after judgment is made in the proceedings. 

‘Chabra’ injunctions – as they are known – are often granted in circumstances where there is evidence that the foreign party is holding assets for the benefit of the defendant (although it is less well known that such injunctions can be put in place where the third party is merely accountable to the principal defendant for some debt or other receivable, claim or potential claim). As with any freezing injunction though, it will still be necessary in all cases to show that the assets of the third party are still at risk of dissipation. 

The application for an injunction must first be served on the non-party in question. And where they are based abroad it will be necessary to obtain the permission of the court to serve the application out of the jurisdiction. In turn, the applicant will need to show (among other things) that one or more of the jurisdictional gateways as set out in CPR PD 6B paragraph 3.1 is satisfied. 

In the Gilbert case, the claimant argued that five such gateways were satisfied. The Court disagreed on each occasion. In particular, the claimant relied on:

  • Gateway 2 which applies where ‘a claim is made for an injunction ordering the defendant to do or refrain from doing an act within the jurisdiction’. This was rejected by the Court: gateway 2 does not apply to an interim freezing injunction. The term ‘injunction’ in the rule refers only to an injunction sought as final, substantive relief.
  • Gateway 3 which applies where ‘a claim is made against the defendant on whom the claim form has been or will be served and – (a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and (b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim’. This might have worked had the Chabra injunction been sought at the start of the proceedings. But here the claim against the defendant had already been tried and determined. The possibility that a common issue might arise at some point in future was held to be insufficient to invoke gateway 3.
  • Gateway 10 which applies where ‘a claim is made to enforce any judgment’. This was rejected on the basis that a freezing injunction is not enforcement of a judgment but merely a remedy to prevent the right of enforcement from being rendered ineffective by the dissipation of assets against which the judgment could otherwise be enforced.
  • Gateway 20 which applies where a claim was made ‘under an enactment which allows proceedings to be brought’ and those proceedings were not covered by any of the other gateways. The claimants argued that the application should pass through gateway 20 because it was a claim made under the Senior Courts Act 1981 s.37 which empowers the court to make interim or final injunctions. Again, this was rejected: the phrase “an enactment which allows proceedings to be brought” meant an enactment which established the procedural right to bring proceedings. The fact that a claim or application might be connected with or dependent in some way on an enactment – e.g. s37 – was not sufficient to engage gateway 20. 

On this basis it was held that the Court did not have jurisdiction over the Spanish non-parties. As such, the freezing order against them was discharged. 

The decision is understood to be under appeal.

Key takeaways

So a possibly surprising outcome, but the Court was clearly constrained by the limitations of the jurisdictional gateways in question. Indeed, it is notable that the Judge in the Gilbert case concluded as follows: “It may seem harsh that the Claimants have a good claim in principle to freezing relief against the Respondents…..but no apparent route to establish jurisdiction. However, as Foxton said in Commercial Bank of Dubai…., ‘if there is to be a general power to serve proceedings out of the jurisdiction to assist the enforcement of an English judgment debt, that is a matter for the Rules Committee’”.

Parties faced with cases involving assets by foreign non-parties may well wish to look for alternative ways in which to prevent dissipation. This may include seeking a Chabra injunction at the start of the litigation (in order to engage gateway 3) or even seeing if the facts support the Chabra respondent being added as a party to the claim (for example, on the basis of knowing receipt) and being made subject to a freezing injunction in the usual way.

Ultimately, timely and strategic action at the very outset can often prove decisive in preserving assets and safeguarding the integrity of a claim.

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2026 ICC Arbitration Rules: Key changes

Commercial and corporate disputes

The 2026 ICC Arbitration Rules entered into force on 1 June 2026 and will apply to arbitrations commenced on or after that date. The amendments build on the previous 2021 Rules and reinforce the ICC’s focus on efficiency, procedural flexibility, transparency and cost-effectiveness. Whilst impactful, the changes do not fundamentally reshape ICC arbitration. Rather, they introduce targeted reforms designed to streamline proceedings in key areas, while preserving the procedural safeguards and institutional oversight that underpin the ICC’s global reputation. But what is the substance of the latest changes?

1. Terms of Reference no longer mandatory

Perhaps the most significant change in the 2026 Rules is the removal of mandatory Terms of Reference in standard arbitrations. Under the 2021 Rules, the Terms of Reference defined and limited the claims that could be advanced in the arbitration without the tribunal’s permission. They were required to be agreed at an early stage of the arbitration, within 30 days of the tribunal receiving the case file. The Terms of Reference were unpopular with some practitioners, who considered them time-consuming to agree and of limited use in practice. Their removal will bring the ICC into line with the other major arbitral institutions, none of which require terms of reference.

2. New cut-off for new claims

The first case management conference, which the tribunal must hold within 30 days of receiving the case file, will now assume a more significant role. Following the abolition of the Terms of Reference, the conference is now the cut-off point for the introduction of new claims without the tribunal’s permission. Parties thus remain required to set out their cases in full at an early stage.

3. New early determination mechanism

The Rules now expressly permit the tribunal to dispose of claims or defences at an early stage where they are manifestly either without merit or outside its jurisdiction. While tribunals arguably already possessed this power, the new rule resolves any doubt on the matter. The rule is intended to improve efficiency by avoiding time and money being spent on clearly unmeritorious cases. The change brings the ICC rules in line with other arbitral institutions, which have included similar provisions in recent revisions to their rules.

4. Expanded expedited and emergency procedures

The 2026 Rules contain a number of changes pushing parties towards faster and more streamlined proceedings where appropriate.

The threshold for automatic opt-in to the ICC’s expedited procedure, whereby disputes are generally determined by a sole arbitrator without an oral hearing, is increased to US$4 million, provided the arbitration agreement was concluded on or after 1 June 2026. 

In addition, the Rules introduce Highly Expedited Arbitration provisions as an additional opt-in mechanism for the most straightforward disputes. These provisions are based on the expedited procedure but are even more streamlined, for example, requiring the parties to submit their Statement of Claim or Defence alongside their Request for Arbitration or Answer.

The emergency arbitration provisions, which provide a mechanism for seeking urgent relief before the tribunal is constituted, have also been clarified and expanded. For example, ex parte (i.e., without notice) applications are now expressly permitted, catering for scenarios (for example, asset dissipation) where notice to the other party would frustrate the purpose of the application. Orders may now also be sought against “any party for which the President is satisfied, on a prima facie basis, that a binding arbitration agreement exists”, thereby expanding the regime to include parties who have become parties to the arbitration agreement alongside its original signatories.

5. Greater emphasis on disclosure, digital procedure and award management

The 2026 Rules modernise several aspects of the arbitral process. They reinforce disclosure obligations for arbitrators by expressly stating that any doubt should be resolved in favour of disclosure, while also clarifying that disclosure does not in itself establish a lack of independence or impartiality. Parties are additionally required at the outset to identify relevant persons and entities for conflict-checking purposes. 

More broadly, the Rules make electronic communications the default, support remote and hybrid hearings, allow digital award formalities and revise the framework for setting and extending the time limit for the final award. 

Conclusion

Overall, the 2026 ICC Arbitration Rules are evolutionary rather than revolutionary. They preserve the core structure of ICC arbitration while enhancing the ability of parties to resolve disputes efficiently, flexibly and proportionately in light of the issues and the value in dispute.

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Illegality defence reaffirmed by the Supreme Court

Commercial and corporate disputes
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It has long been established – ever since Lord Mansfield declared in Holman v Johnson (1775) 1 Cowp 341 that “no court will lend its aid to a man who founds his cause of action upon an immoral or an illegal action” – that illegality can bar civil claims under English law. 

That doctrine was reconsidered and reaffirmed this year by the Supreme Court in the exceptional (and very sad) case of Lewis‑Ranwell v G4S Health Services (UK) Ltd & Ors [2026] UKSC 2 in which the Supreme Court found that the claims Mr Lewis-Ranwell advanced in negligence and under the European Convention on Human Rights should be struck out owing to the illegality defence.

Background:

It is worth pausing to note that the facts giving rise to this Supreme Court judgment are deeply sad. 

Mr Lewis-Ranwell had been diagnosed with schizophrenia in his mid-twenties and had previously received psychiatric intensive care. In early February 2019, he was twice arrested and detained by the police on suspicion of burglary and assault. Whilst in custody, he behaved violently, appeared mentally unwell, and was seen by mental health practitioners. He was, nevertheless, released into the community without undergoing a mental health assessment on the morning of 10 February 2019.

On the day of his release, and in the course of a serious psychotic episode, Mr Lewis-Ranwell violently murdered three elderly men.

He was tried with murder and, during the course of his criminal trial, the Jury passed a note to the Judge saying “We, the Jury, have been concerned about the state of the psychiatric health service provision in our county of Devon. Can we be reassured that the failings in care for ALR will be appropriately addressed following this trial”. Ultimately, Mr Lewis-Ranwell was found not guilty of murder by reason of insanity. A hospital and restriction order followed to protect the public at large.

Mr Lewis-Ranwell later commenced civil proceedings, which were the subject of the Supreme Court’s judgment, in which he sought significant financial compensation from various parties (including G4S Health Services and Devon and Cornwall Police).

In short, Mr Lewis-Ranwell contended that the Defendants had caused him significant loss by negligently (and/or in breach of his human rights) failing to provide him with adequate care and by releasing him into the community and that, but for that negligence, he would have been admitted to hospital and the killings would not have occurred.

The Defendants denied the claims and certain of them applied for strike out on the basis that the claims were barred by the doctrine of illegality. 

The Supreme Court’s decision:

The Supreme Court, in contrast to the Court of Appeal, unanimously held that the illegality defence applied.

Although Mr Lewis-Ranwell had not been convicted of a crime (by reason of his insanity), the Supreme Court found that the threshold for the illegality defence to apply was met as he had killed the three men without lawful justification. His acts were not, on any view, trivial acts of unlawfulness capable of barring an otherwise legitimate claim.

Applying the policy-based considerations in Patel v Mirza [2016] UKSC 42; [2017] AC 467, the Supreme Court found that, even assuming the Defendants had acted negligently, the claim should not proceed.  

In applying the guidance in Patel v Mirza to the doctrine of illegality in the context of Mr Lewis-Ranwell‘s claim, the Supreme Court found that:

  • Allowing the claim to proceed could give rise to inconsistencies that would damage the integrity of the legal system; public confidence in the legal system would be undermined if a criminal court lawfully made a hospital and restriction order and the civil courts thereafter ordered payment of compensation for the consequences of that lawful detention;
  • Alternative procedures and forums, such as inquests and public inquiries, were better suited for the purpose of examining concerns like those expressed by the Jury at the criminal trial; and
  • Denying the claim was proportionate given the seriousness of Mr Lewis-Ranwell’s acts and their centrality to the heads of loss claimed. 

Takeaways for businesses 

Although the facts of Lewis-Ranwell are exceptional, the decision has wider significance. It serves as a clear reminder that the illegality defence remains a potent bar to civil recovery in appropriate cases. The Supreme Court emphasised that the defence is not limited to cases involving a criminal conviction, and that its application is not determined by formal classification alone. Rather, the court must ask whether allowing the claim would damage the coherence and integrity of the legal system by permitting compensation for loss arising out of serious unlawful conduct.

Homicide is thankfully not an issue most businesses face on a day-to-day basis. However, the principle that criminal conduct is not required for the illegality defence to apply is of wider application. The Supreme Court was clear that criminal responsibility is not required for the doctrine to be engaged. Rather, the question is whether the conduct at the core of the claim constitutes unlawful behaviour of sufficient seriousness. 

For businesses or individuals considering bringing legal proceedings to enforce rights or seek redress for any wrongdoing, it is worth carrying out a thorough investigation as early as possible to establish exactly what wrongdoing has occurred, and by whom. If there are questions about the conduct of those acting on behalf of a business or individual (for example, any agents or employee), such conduct could engage the doctrine of illegality. It is particularly worth keeping an eye out for fraud and bribery, particularly for businesses operating internationally. Whether the activity in question is sufficiently serious to prevent recovery will be highly fact-specific.

For businesses, ensuring that you have robust policies and procedures in place to promote compliance with law and regulation, together with clear reporting mechanisms, is likely to be the best way of preventing wrongdoing from occurring in the first place. Moreover, irrespective of any legal liability, businesses should be alive to the negative reputational consequences that often ensue whenever potential illegality is identified.