England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		17th October 2003

Mr Justice Evans-Lombe:

 

1. This is a further judgment in proceedings consequent on the collapse of the Barings Group in February 1995. The hearing, of which it is the result, extending over a period of rather more than five days was a follow on from my reserved judgment which I handed down on the 11^th June 2003. I will use the same abbreviations in this judgment as those used in the judgment of the 11^th June. I refer to the summary at the commencement of that judgment for a brief outline of its effect. This judgment is intended to deal with issues of quantum of damage arising between the claimants BFS and the defendants D&T resulting from my finding that D&T were negligent in their audits of BFS' financial statements for the period of approximately five months to the 30^th September 1992 and for the period of 15 months till the 31^st December 1993.

THE GENESIS OF THE PRESENT HEARING

2. The hearing of which the June judgment is the consequence extended over a period of 155 working days starting on the 7^th May 2002. In the course of the hearing on the 27^th June 2002 I dealt with an application by D&T consequent on a letter of the 21^st June by their solicitors proposing to BFS's solicitors "that quantum issues be hived off to be decided (should they ever arise) at a separate hearing." That application was resisted by BFS. The burden of Mr Brindle's submissions on BFS behalf was that once the principles upon which any judgment for damages had been determined by the court the calculation of the quantum of actual damage would be easy since the issues relating to quantum had "shrunk to a very small compass indeed." In the result I declined to make an order specifically postponing the issue of quantum of damage to a separate and later hearing although I did not rule out the possibility that such a hearing would be necessary to deal with the "nuts and bolts" of the calculation of damage once the "parameters" for that calculation had been determined.

3. As a result of a further order made on the 23^rd September 2002, I did order that the trial be split into a stage one and a stage two. Stage two was designed primarily to deal with claims of contribution between defendants and a third party consequent on the conclusions arrived at in stage one. At paragraph two of the order which I made on the 23^rd September I directed that the court would "consider and determine BFS' claim for damages against D&T Singapore" in stage one.

4. Notwithstanding the result of these two applications it became assumed by all parties as the hearing progressed that it would probably be necessary for there to be a further hearing consequent on the main judgment at which details of the quantum of any order for damages would be finalised.

5. Between paragraphs 9 and 25 of the June judgment I give a procedural history of the hearing up to the giving of that judgement. An order consequent on the June judgment has been drawn up. Accordingly I am functus officio in respect of all matters which that judgment determines.

6. Issues having emerged as to quantum of damage, by an order of the 10^th July 2003 I directed a hearing of those issues for which purpose I ordered an exchange of "statements of case on quantification" between BFS and D&T. Those statements were exchanged and both BFS and D&T have answered part 18 requests for further information of their statement of case.

THE ISSUES TO BE DETERMINED

i Between paragraphs 1124 and 1145 of the June judgment I concluded that D&T "should be relieved from liability to BFS for the profits received by other Barings companies arising from Leeson's switching business up to the cut off date at the end of April 1994." There is an issue between BFS and D&T whether the amount for which D&T are to be relieved is the agreed amount of those profits, some £12.46m, or whether that sum should be reduced by the amount of artificial profit, of which BSL and BFS have had the benefit, created by Leeson's unauthorised adjustment of the terms of a large number of transactions so as to increase BSL's and BSJ's profit at the expense of BFS as recorded in the 88888's account. This process is described in paragraph 293 of the June judgment, and in particular sub-paragraph (iii) and at paragraph 301. BFS has not claimed as damages consequent on D&T's negligence the amount by which the profits accounted for by BFS to BSL and BSJ were increased as a result, at BFS' expense. It is argued by BFS that to that extent BFS has already given relief and that the figure of £12.46m should be consequently reduced.

ii In deciding the impact of contributory negligence by BFS on any damages to be awarded against D&T, having concluded that there should be a cut-off date of 30^th April 1994, I divided the period up to that cut-off date from the 2^nd November 1992 into three parts, period one being from the 2^nd November 1992 until mid August 1993, period two from mid August 1993 till the 31^st December 1993 and period three from the 1^st January 1994 to the 30^th April 1994. I ordered that there should be deductions from any damages of 50%, 60% and 80% in respect of the damage accrued during those periods respectively. With the exception of the losses to BFS as a result of "fictitious transfer trades" described at paragraph 301(i) of the June judgment, BFS claim as damage only the amount of the losses on SIMEX on account 88888 incurred as a result of Leeson's unauthorised trading. At times that trading was in fact profitable and, particularly early on, had the trading been stopped on particular days, it would have been in overall profit. It happens that at the end of period one, during which BFS earned income by way of commission and interest on deposits, Leeson's unauthorised trading was in overall profit. The issue between the parties is how BFS's earnings during period one are to be treated in the calculation of the damage accruing to BFS over all three periods.

iii There is an issue between the parties as to which of Japanese Yen and Singapore Dollars is the currency in which BFS is to be taken as having suffered the loss for which it claims and in which judgment should be given.

iv There is an issue as to what is the appropriate rate of interest that any sum for damages should carry down to judgment and thereafter.

ISSUE (i)

7. The passages in the June judgment with which this issue is concerned appear at paragraphs 1009 and 1091 and paragraphs 1124 to 1145. The material passages in the judgment are at paragraph 1090 where I said:-

"D&T contended that they should receive a credit for the monies paid or credited by BFS to BSJ, BSL and BSLL as apparent profits from its switching activities on their behalves. Up to the end of April 1994 those apparent profits were £12.46m."

And at paragraph 1145 where I said:-

"I conclude therefore that D&T should be relieved from liability to BFS for the profits received by other Barings companies arising from Leeson's switching business up to the cut-off date of April 1994."

8. At paragraph 82AB (3) of D&T's further amended defence D&T pleaded that BFS "must give credit for any profits or interest income (full particulars whereof are set out in D&T (S)'s income tables) accruing to the benefit of other entities in the Barings Group after the cut-off date at which it is alleged that Leeson's trading should have been brought to an end."

9. Particulars of the apparent profits earned by the other Barings companies as a result of Leeson's trading, at the relevant time through his switching activities, are set out in a document referred to at the main hearing as Q8. At the material time Leeson's Nikkei switching trading was being conducted through a trading book of BSJ managed by Mr Brindle of that company. So far as relevant to this issue document Q8 sets out the total profit recorded in that trading book for the relevant period. Under the heading "Leeson's estimated contribution" document Q8 then sets out further figures week by week reducing the overall figure to 60% of that figure for each week. This is because of an estimate given in evidence that the profits earned as a result of Leeson's trading amounted to approximately 60% of the profits of Mr Brindle's trading book. The sum of Leeson's estimated profit for the relevant period up to the end of April 1994 is the £12.46m figure appearing in my judgment at paragraph 1090. That figure consists in part of apparent, but not real, profits resulting from Leeson's adjustments to trades which I have described. Nonetheless it was profits including the adjustments that BFS accounted for daily to its customers by means, of inter alia, the Daily Spreadsheets. Based on BFS's reported profits payments were made from time to time by BFS to its Baring company customers.

10. The amounts for which BFS's claim damages are explained in schedule 8 to BFS amended statement of claim. It is accepted that amounts representing the false profits passed to BFS's customers as a result of Leeson's adjustments to trades are not claimed in schedule 8 and have not been pleaded elsewhere. This is to be contrasted with profits from "fictitious transfer trades" which were similar to "adjusted trades" in that a fictitious trade like an adjusted trade did not pass through SIMEX but the "profit" appearing to result from it was reported to the Barings client and accounted for. A claim for the damage resulting from fictitious trades was made by BFS. No explanation has been given for this different approach.

11. The issue now sought to be raised was not raised at all in the course of the main hearing. In BFS's closing written submissions for the main hearing at paragraph 593 under the heading "damages" the following passage appears:-

"593 The only issues which BFS is sure to be still outstanding are:-

(1) Whether BFS must give credit for profits and/or commission and/or interest earned in respect of Leeson's trading…

594 This argument divides into credit on the one hand for profits which it is said that Leeson made for the Barings Group in respect of his trading and on the other hand credit for commission and interest generated by BFS from his trading. D&T argue that credit must be given for both. BFS denies this, but in any event argues that it must be wrong to give credit for both for reasons explained below.

Profits

595 … the quantum of these profits is not in issue and the figures are set out in bundle Q8."

12. These passages were a repeat of submissions which had been made in the course of the June 2002 application to hive off the issue of damages to a later hearing. Relevant extracts from BFS's written submissions on that application are as follows:-

"8(b) As a separate but possibly over lapping argument D&T argue that BFS must give credit for profits made and/or commission and interest earned. As to profits, there are no computation issues at all but only an issue of principle….

10 … as to profits these have been calculated by D&T in their bundle Q8. BFS does not dispute that these "profits" were made, but contends that they were made by BSL and not by BFS and that BFS, which suffered losses in relation to the relevant transactions, should not as a matter of law have to give credit for profits which are not its own profits. It is a pure point of principle."

13. In the course of his submissions opposing the hive off Mr Brindle said:-

"We accept if, as a matter of principle they are to be treated as our profits and we are to give credit for them, the quantum of those is the figures in Q8… there is absolutely no issue at all which your Lordship would then need to refer to any Master or anybody else."

14. It was in these circumstances that, by means of the operation of the Singapore equivalent of section 727 of our Companies Act 1985, when I decided that that section was available to give D&T relief on the basis that otherwise the Barings companies would, in effect, obtain double recovery from D&T, I found that the figure for which relief should be given was £12.46m which was agreed. BFS now seeks to say that the figure for which relief should be given should be reduced by the amount which it says equals the total of the value to BFS's customers of the false profits accounted for by BFS resulting from Leeson's adjustments to trades. In my judgment they are estopped per rem judicatam from doing so.

15. It is not even now suggested that the "profits" for which D&T were, by the judgment, entitled to relief are not £12.46m. It is submitted however that the credit which D&T should receive is only some £1.7m after taking account of the fact that BFS has not claimed the damage suffered as a result of BFS accounting for false profits consequent on Leeson's adjustments to trades. It is submitted that they are able to do this notwithstanding that no claim in respect of these false profits was pleaded or raised in the course of the main hearing. However it is not sought now to amend to include such a claim or now to put it forward as a claim. It seems to me that had BFS sought to raise this matter at the main hearing it would have had to have raised it as a separate claim for damage and pleaded it. It was Mr Gaisman's submission that even if that had been done at a time when such a claim would not have been statute barred the claim would have failed as being too remote. He submitted that if for no other reason than that the claim would now be clearly statute barred it could not now be raised.

16. Mr Gaisman also pointed to what he described as "litigation prejudice" which would follow if I permitted the matter to be reopened in the course of the hearing on quantum. He pointed to inconsistencies in the case presented by BFS that it was entitled to be treated as having already relieved D&T in respect of the false profits. Mr Brindle for BFS denied that any such inconsistencies existed. In the light of the conclusion that I have arrived at I do not have to determine that issue or whether D&T have suffered prejudice as a result of the issue not being fully investigated through evidence at the main trial.

17. However I do find the situation resulting from the conclusion which I have arrived at unsatisfactory. It seems to me now to be very probable that at the main hearing, had the matter been raised, I would have concluded that, to the extent that the false profits passed to BFS's customers were reflected in an equal claim for damages against D&T the figure for which D&T were entitled to relief would fall to be reduced. As an alternative argument on the basis that the issue was not res judicata and I had permitted it to be raised late, and on the basis that the false profits are reflected in a claim for damage by BFS, D&T submitted that the appropriate figure for relief would be some £6.72m.

18. Under this heading it was further submitted by Mr Gaisman for D&T that a construction of section 727 and its Singapore equivalent required the court to apply the relief as the last stage in the calculation of damage and after the gross figure for damage had been found and the appropriate percentage reduction for contributory negligence had been made. I indicated, at an early stage in the argument that this submission did not appeal to me and it was not pressed. It seems to me that the discretion conferred by section 727 is wide enough to permit the court to grant relief from damages to D&T as if BFS was required to give credit for profits passed to its customers to be deducted from the damages figure in the same way and at the same stage as it own profits derived from commission and interest earnings. The point was not raised in the course of argument leading up to my June judgment but had it been raised such would have been my answer.

ISSUE (ii)

19. It was initially argued by BFS that because there were no losses in period 1 against which to set off BFS's earnings from commission and interest, those earnings should be discounted altogether and taken out of the calculation of the damage recoverable as a result of D&T's negligence. At an early stage in the argument I indicated that I had doubts as to this contention and it was not seriously pressed. My judgment directs that BFS must give credit for commission and interest earned during the period in which Leeson's unauthorised trading continued as a result of D&T's negligence down to the cut off date of 30^th April 1994 (see paragraph 1124(i)). This giving of credit is not expressed to be in any way dependant on the loss or profit shown from time to time during that period by the 88888's account trading. The problem only arises because I have elected to impose stepped reductions for contributory negligence over that period. Had I not done so the profits in period 1 would have been subsumed in the losses in periods 2 and 3 and the calculation of damage would have been simple. BFS had an alternative argument as to how the profit from period one was to be dealt with, namely, by carrying it forward into period two.

20. Counsel for D&T deal with this question at paragraphs 85, 86 and 87 of their written submissions. Since they are brief and to the point I will set them out verbatim:-

"85 The second question which arises in the context of contributory negligence is similarly the result of the peculiarity, in this case, of a contributory negligence period in which there is no loss but in respect of which there is a credit to be given. The issue is whether the credit (for commission and interest earned by BFS) in the first contributory negligence period is to be dealt with separately from the second contributory period or whether it is to be carried forward and combined with the commission and interest earned in the second period (the tables in appendix 6 to D&T's statement of case illustrate the different approaches).

86 The situation is one in which either approach might be said to give rise to anomalies though these are minor compared with BFS's argument that all commission and interest in period 1 should simply be ignored. However D&T submit that the approach now advocated by BFS treating the commission and interest earned in the first period together with that in the second and setting both against the loss sustained by BFS in the second period is more anomalous and is to be rejected. Adopting BFS approach would have the effect of ignoring the 50% figure in the early contributory period completely. As BFS itself pointed out in Ashurst Morris Crisp letter of 10^th June 2003 such an approach unjustifiably "conflates figures from period 1 with figures from period 2." It treats commission and interest earned in the first period as if it were earned in the second period. This is contrary to logic and commonsense.

87 The alternative approach, applying the 50% contributory negligence deduction to the commission and interest earned and to the balance on account 88888's in the first period is to be preferred. It gives proper recognition to the three distinct periods of contributory negligence found by the court, and the respective responsibilities of BFS and D&T in those periods. Thus in the first period D&T were responsible for 50% of the position both on account 88888's and in relation to commission and interest. In the second period D&T's responsibility fell to 40%. It is therefore entirely consistent with the contributory negligence findings (and the logic of shared responsibility that underlines contributory negligence percentages) to apply the 50% figure from the first period to the financial consequences for BFS which resulted in that period. That is the approach which D&T have adopted in tables 1A and 1B of appendix 6 of their statement of case. It is, in D&T's submission the only logically consistent approach."

21. I need say no more than to indicate that I accept D&T's submissions contained in those three paragraphs. I would add that in my judgment the contributory negligence deduction should be applied after the earnings have been deducted from the accumulated losses which would have been the figure for damage had there been no contributory negligence. Thus the calculation of damage should be on the basis of table 1B of appendix 6 to D&T's statement of case.

ISSUE (iii)

22. BFS's claim for damage is pleaded in Japanese Yen and to a lesser extent United States Dollars. BFS accepts that in order to advance its arguments on this issue it needs permission to amend its statement of claim. Initially two alternative currencies were to be advanced by BFS for the purpose of this hearing as the appropriate currencies in which the court should award any damages against D&T, Sterling and Singapore Dollars. At the outset of the hearing I was told that BFS was only advancing Singapore Dollars as that currency.

23. As in respect of issue (i) D&T submitted that it is now far too late to advance this argument after the main hearing is complete and judgment given. As an alternative argument D&T submitted that on the merits of BFS's case, it failed because on the authorities Japanese Yen remained the most appropriate currency in which to express any loss suffered by BFS. It is convenient to deal with this submission first.

THE LAW

24. Since the decisions in the House of Lords in Miliangos v George Frank (Textiles) Ltd 1976 AC page 443 and The Despina R 1979 AC page 685 the courts have discovered a power to give judgment in a foreign currency in respect of claims in both tort and contract. The relevant law is to be found most succinctly summarised in the judgment of Lord Wilberforce in The Despina R. In that case the House of Lords was dealing with the issue of the proper currency of damages in two cases, the first, The Despina R, a tort case involving damages resulting from a collision at sea, the second case, The Folias, a case of damages in contract involving a claim by charterers of a ship against the owners to be recouped compensation that they had paid to cargo receivers in respect of cargo which had arrived damaged. In The Despina R case the damage was the cost of repair of a ship which had been paid in various currencies. The House of Lords, upholding the Court of Appeal, held that, since United States Dollars was the currency in which the claimant was conducting its relevant business, and that with which it acquired the currency of expenditure in repairing the ship, judgment should be in United States Dollars. In the Folias the House of Lords held that since the charterers were a French company that was conducting its business in Francs with which it had acquired Brazilian Cruzeiros to compensate the cargo receivers, Francs best expressed the charterers' loss and judgment should be in that currency.

25. At page 696 of the report Lord Wilberforce posed the question of whether plaintiffs, who have suffered damage or sustained loss in a currency other than Sterling, are entitled to recover damages in respect of such damage or loss expressed in such other currency. He said that there were two alternative answers and continued:-

"The first is to take the currency in which the expense or loss was immediately sustained. This I shall call "the expenditure currency." The second is to take the currency in which the loss was effectively felt or borne by the plaintiff having regard to the currency in which he generally operates or with which he has the closest connection. This I shall call "the plaintiffs currency".

26. Then at page 697:-

"I return to consider the alternatives.

My Lords in my opinion this question can be solved by applying the normal principles which govern the assessment of damages in cases of tort (I shall deal with contract cases in the second appeal) these are the principles of restitutio in integrum and that of the reasonable foreseeability of the damage sustained. It appears to me that a plaintiff who normally conducts his business through a particular currency, and who, when other currencies are immediately involved, uses his own currency to obtain those currencies, can reasonably say that the loss he sustains is to be measured not by the immediate currencies in which the loss first emerges but by the amount of his own currency, which in the normal course of operation, he uses to obtain those currencies. This is the currency in which his loss is felt, and is the currency which it is reasonably foreseeable he will have to spend."

27. Then at page 698:-

"The plaintiff has to prove his loss: if he wishes to present his claim in his own currency, the burden is on him to show to the satisfaction of the tribunal that his operations are conducted in that currency and that in fact it was his currency that was used in a normal manner to meet the expenditure for which he claims or that his loss can only be appropriately measured in that currency (this would apply in the total loss of a vessel which cannot be dealt with by the "expenditure" method). The same answer can be given to the objection that some companies, particularly large multi national companies, maintain accounts and operate in several currencies. Here again it is for the plaintiff to satisfy the court or arbitrators that the use of the particular currency was in the course of normal operation of that company and was reasonably foreseeable …

I wish to make it clear that I would not approve of a hard and fast rule that in all cases where a plaintiff suffers a loss or damage in a foreign currency the right currency to take for the purpose of his claim is "the plaintiffs currency". I should refer to the definition I have used of this expression and emphasise that it does not suggest the use of a personal currency attached, like nationality, to a plaintiff, but a currency which he is able to show is that in which he normally conducts trading operations. Use of this currency for assessment of damage may and probably will be appropriate in cases of international commerce. But even in that field and still more outside it, cases may arise in which a plaintiff will not be able to show that in the normal course of events he would use, and be expected to use, the currency, or one of several currencies, in which he normally conducts his operations (the burden being on him to show this) and consequently the conclusion will be that the loss is felt in the currency in which it immediately arose."

28. Lord Wilberforce then dealt with the appeal in respect of The Folias. At page 700 of the report he indicated that in respect of a contract case the basic test was virtually the same as in a tort case namely "restitutio in integrum, regard being had to what was in the reasonable contemplation of the parties."

29. At page 701 Lord Wilberforce adopted the test of Lord Denning in the Court of Appeal that "the plaintiff should be compensated for the expense or loss in the currency which most truly expresses his loss." He continued:-

"If then the contract fails to provide a decisive interpretation, the damage should be calculated in the currency in which the loss was felt by the plaintiff or "most truly expresses his loss". This is not limited to that in which it first and immediately arose. In ascertaining which this currency is, the court must ask what is the currency payment of which will as nearly as possible compensate the plaintiff in accordance with the principle of restitution, and whether the parties must be taken reasonably to have had this in contemplation."

30. It was submitted by Mr Gaisman for D&T and I accept that the following principles emerge from the judgment of Lord Wilberforce:-

i The court can award damages for breach of contract or tort in a foreign currency. The basic principles applicable to the choice of currency are substantially the same in both types of case.

ii The choice is usually between the currency of "immediate expenditure" and the "plaintiff's currency" as defined by Lord Wilberforce namely the currency in which the loss was effectively felt or borne by the plaintiff having regard to the currency in which he generally operates or with which he has the closest connection.

iii If the claimant wishes to substitute his currency for the currency of expenditure or immediate loss the burden is on him to show by evidence that that is appropriate. The issue is one of fact.

iv "The plaintiff's currency" is not the same as what Mr Gaisman described as his "capital currency". It is the currency through which the claimant "normally conducts his business…and…when other currencies are immediately involved, uses" that "currency to obtain those currencies." By capital currency, as I understand the submission, Mr Gaisman intended to describe the internal currency of a claimant such as the currency of his accounts and formal capital also including the currency used for his internal operations such as the payment of wages to staff.

v Lord Wilberforce specifically deprecated any idea that the plaintiffs currency was "a personal currency attached, like nationality to the plaintiff" but rather "a currency which he is able to show is that in which he normally conducts trading operations".

I would add:-

vi The test for the court is to decide what is the currency payment of which will as nearly as possible compensate the claimant in accordance with the principle of restitution and whether the parties must be taken reasonably to have had this in contemplation.

THE PRESENT CASE

31. BFS was a company incorporated in Singapore which conducted its internal affairs in Singapore Dollars. It was by statute required to render its accounts in that currency. It paid its staff in Singapore Dollars.

32. BFS came into existence in order to fulfil the role of futures and options broker for the Barings Group in Singapore, intended primarily to provide a dealing service for Barings companies on SIMEX. In the early 1990s Barings management identified an opportunity, created by the relative overvaluation of Japanese stock markets, to deal for their clients and in house, in futures and options on the SIMEX exchange, a newly created exchange, where dealing costs were lower and regulatory restrictions less severe than on the equivalent Japanese exchanges. The activation and early trading history of BFS are described between paragraphs 163 and 194 of the June judgment. As set out at paragraph 187 BFS was initially intended to function as a SIMEX clearing operation for BSJ and its clients. BSJ dealt on the Tokyo and Osaka exchanges for its own clients, for clients of BSL and for the Barings companies themselves.

33. Although BFS dealt on SIMEX to a small extent in Hong Kong Dollars and United States Dollars, in the latter as a result of dealing in Euro Dollar financial instruments, the overwhelming proportion of BFS dealing operations were in Yen in respect of transactions in Yen denominated instruments. BFS dealings on the SIMEX exchange were conducted in Yen, accounted for and reported in Yen and payments required by BFS dealings on SIMEX were made in Yen.

34. The losses to BFS resulting from Leeson's unauthorised trading were occasioned by the requirement to pay margin and settlement variation in Yen in respect of unauthorised transactions in futures and options on SIMEX which were, taken as a whole, substantially loss making. Between paragraphs 317 and 322 of the June judgment I describe how Leeson's unauthorised trading was funded. During the period in question, from the 2^nd November 1992 to 30^th April 1994, the primary source of funding for BFS dealing operations, and so for Leeson's unauthorised trading, were payments in Yen by BFS customers (see paragraphs 124 and 125 of the judgment). At the very end of the period payments started to be received in Dollars as a result of the "Dollar Funding" (see paragraph 325 of the judgment and following). The other primary sources were overdraft facilities provided by Citibank Singapore in Yen (see paragraph 321) and by the margin surplus held by BFS in Yen as a result of the differential between the level of margin required by SIMEX to be deposited by BFS and that which BFS required its clients to deposit with itself (see paragraph 318(vi)).

35. BFS's losses as a result of Leeson's unauthorised trading accrued from day to day. BFS dealt as a principal on SIMEX and was procured by Leeson to margin unauthorised transactions using its clients and its own money. That money was overwhelmingly Yen and never Singapore Dollars.

36. D&T's 1992 and 1993 audits were conducted in Yen. It seems clear that it would have been in both D&T's and BFS' contemplation that, had BFS suffered losses as a result of unauthorised dealings by employees, those losses would have been suffered in Yen and would have had to be made good, in the short term, by payments to the market and to customers in Yen.

37. It was submitted by BFS that because BFS has been wound up in Singapore where all liquidations must, by statute, be conducted in Singapore Dollars, that currency must be taken to be "BFS currency" and so is the appropriate currency in which to express BFS's loss. I cannot accept this submission. The fact that a claimant may be in insolvent liquidation conducted in a particular currency fits none of Lord Wilberforce's criteria in The Despina R. It seems to me to be irrelevant to the issue of what currency most truly expresses the claimant's loss which results in a claim in the liquidation. In any event as at 30^th April 1994 no liquidation had started and none was in prospect. At that date, had Leeson's activities been discovered and stopped the Barings Group would probably have survived and discharged BFS's indebtedness.

CONCLUSION

38. In my judgment it is clear that the currency "which most truly expresses BFS loss" is Japanese Yen and that, in consequence, any judgment for damages in this case should be expressed in that currency. It is not in issue that the currency in which the loss was immediately suffered was Yen. In order for BFS to substitute Singapore Dollars for that currency the burden of proof is on them to prove that that currency, "the plaintiff's currency", was the appropriate currency most truly expressing their loss. The main hearing proceeded on the basis of BFS pleading their damage in Yen. In the result no evidence was called with the intention of establishing that Singapore Dollars was a more appropriate currency. In my judgment such evidence as there was at the main hearing relevant to the point, indicated strongly that the appropriate currency was Yen. No further evidence has been adduced.

39. In the result, because I have concluded that BFS's arguments fail on their merits, I do not have to consider whether, if a case on the merits had been established, I would have given leave yet further to amend the statement of claim to permit BFS to argue it. All I would say at this stage is that on principles highlighted in the decision of the House of Lords in Ketteman v Hansell Properties 1987 1 AC page 189 I would not have been inclined to do so. It is accepted by BFS that the reason this question has been raised at this late stage is a realisation of the impact of the relative decline in the value of the Yen since the collapse of the Barings Group. It is clear from the judgment of Lord Goff in The Texaco Melbourne 1994 1 Lloyd's reports page 473 at page 476 that in deciding what should be the appropriate currency no account should be taken of fluctuations in the value of currencies between the date of breach and the date of judgment.

ISSUE (iv)

40. It is clearly established to be the normal rule that, save in exceptional cases, the rate of interest should be awarded as the rate of the currency of the award of damages: see Miliangos v George Frank (Textiles) Ltd (No 2) 1977 QB page 489 at page 495, The Pacific Colocotronis 1981 2 Lloyd's Reports page 40 per Waller LJ at page 46 and The Texaco Melbourne ibid at page 477. Such exceptional circumstances are illustrated by the case of Helming Schiffahrts GMBH v Malta Drydocks Corporation 1977 2 Lloyd's Reports page 5. In that case the claimant was a German ship owning company whose claim was in contract arising from a contract for the construction of two ships in Malta. The currency of account specified by the contract was Maltese Pounds. The court awarded interest on the judgment, although in Maltese Pounds, based on the German commercial borrowing rate at the relevant time. The exceptional feature which guided the court to produce this result was that Maltese Pounds being a "soft" currency it was not possible to borrow that currency in Germany. Interest on a judgment is awarded in order to compensate the judgment creditor for the cost of borrowing the amount of the judgment in his home country between the date of breach and judgment.

41. It is for the claimant to establish its right to recover interest on the judgment amount and its rate. BFS have not introduced any evidence directed to this but D&T and asserted that there should be an award of interest and that the rate should be based on the Yen LIBOR rate in Singapore at the material times. They suggest an uplift of 0.5% over that rate based on indications that BSJ was able to borrow Yen at that rate with uplifts of between 0.25 and 0.75% over the same period. The practice in the commercial court is to award LIBOR plus 1.0 % in most cases. In default of evidence I will award the Yen LIBOR rate in Singapore plus 1.0%. The matter can be brought back to me if either of the parties wish to seek to vary that rate having produced evidence in support. I will substitute that rate to apply to the amount of the judgment, until payment, in place of the normal Judgment Act rate.