England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LONDON MERCANTILE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL

Judge Mackie QC :

1. This is a claim by a casino, Playboy Club London Limited, ("The Club"), that a bank, Banca Nazionale di Lavoro SPA ("the Bank"), was negligent in providing a reference for one of its customers Mr Hassan Barakat. Mr Barakat's cheques were then accepted by the casino which allowed him to play. Mr Barakat made losses, the cheques bounced and neither he nor his assets can be found. The casino claims to have lost £1.25 million. The bank denies negligence and says that the casino broke any chain of causation, or was in the alternative contributorily negligent, in taking cheques that it says were counterfeit. This is the conventional case where two innocent parties disagree about which of them should be responsible for the consequences of a disreputable third party except that it seems that Mr Barakat was assisted by an employee of the Bank.

Background and facts not much in dispute.

2. The First Claimant, the Club, is a casino in Mayfair. At the relevant time, it was known as the Rendezvous Club but changed its name in 2011. The Club is owned indirectly by the Second Claimant ("LCI") which forms part of a large casino group. The Third Claimant ("Burlington") is a company owned by LCI used, amongst other things, as a vehicle for obtaining references. The Second and Third Claimants have played no active part in what seems in reality to be a claim by the First Claimant alone. The Defendant is a well known bank incorporated in Italy and part of the BNP Paribas Group.
3. Mr Barakat became a member of the Club on 29 September 2008. Until October 2010 he had only played at the Club on one occasion for a modest amount. However, he was a well known player at a casino in Lebanon, the Casino du Liban, where he would typically gamble for stakes of around $100,000 per day funded in cash and was accorded "VIP status." The Casino du Liban had a contract for consultancy services provided by LCI.
4. In early October 2010 Mr Barakat opened an account with the Bank. He was not provided with a cheque book for that account which never contained any funds. Later in 2010 Mr Barakat indicated to a Mr Shephard (who was employed at CDL but had previously been a senior manager at the Club) that he intended to visit London and wished to gamble there. Mr Shephard recommended the Club to him and notified it (through Mr Adam Roberts and Mr Zaki El-Borhami) that a high-value customer was intending to visit them. Mr Shephard told them that Mr Barakat was expected to bring a substantial amount of cash, between $300-400,000, with him to gamble. He told the Club to expect Mr Barakat and to make the usual arrangements (such as hotel and airport transfers) for visiting VIP players.
5. Mr Barakat arrived at the Club on 11 October 2010. He applied for a cheque cashing facility ("CCF") in the amount of £800,000. A CCF allows a customer to present a cheque to the casino and, before that cheque is cashed, obtain plaques (i.e. high-value gaming chips) to an equivalent value. It therefore allows a customer to draw down on a cheque (up to a set limit) immediately upon presenting it to the casino.
6. Brenda Jamison, the cashdesk manager at the Club, took Mr Barakat through his application for a CCF and completed the forms with him. Mr Barakat also signed a document called a Status Enquiry Request on the headed paper of Burlington by which an opinion was sought from the Bank as to the means and standing of Mr Barakat and his trustworthiness to meet a financial commitment to the extent of £1,600,000. This document was addressed to the Manager at the Bank's branch in Reggio Emilia. In accordance with internal policies, Ms Jamison explained that it would be necessary to obtain a reference from his bank for double the amount of the CCF, i.e. £1.6 million. Mr Barakat gave details of his bank from which the reference was to be sought. He handed Ms Jamison a business card of his relevant contact at the Bank, Ms Paola Guidetti, described as "Svillupo Business" (Business Development) and an information sheet setting out his account details and Ms Guidetti's contact details. Mr Barakat correctly stated that he held an account bearing account number 301 at the Bank's Parma (Agency No.3) branch. The Bank accepts that Ms Guidetti was employed at the Reggio Emilia branch and was involved in opening Mr Barakat's account.
7. Ms Jamison arranged for a cashier (Ms David) to telephone three London casinos to see if Mr Barakat was a player known to them. He was not. No check was made of the "Vic", a club that Mr Shepherd had told the Club that Mr Barakat had used in the past. Ms Jamison also e-mailed Mr Shephard in Lebanon to find out further information about Mr Barakat. In response Mr Shephard forwarded what he had told Mr Roberts, and said that he was surprised that Mr Barakat was seeking a cheque cashing facility as he had been expecting to come to London with a large amount of cash to gamble.
8. The request for a reference was made by Burlington because that was the Club's standard practice designed to preserve confidentiality for customers preferring to keep their gaming activities private. Burlington has no employees or business of its own and is used only for administrative purposes.
9. As is standard practice, the reference was requested through the Club's bank, Natwest. On 11 October, Ms Jamison provided Natwest with the contact information for Ms Guidetti, to whom the reference was to be sent. On 12 October, Natwest then faxed the request for a reference to the Bank marked for the attention of Ms Guidetti. The fax was three pages (including the coversheet). It was faxed successfully to the Bank's fax number (0522 432141) as set out on Ms Guidetti's business card. That was one of three correct fax numbers for the branch. The request was addressed to the manager of the Bank's Reggio Emilia branch. The reference sought the Bank's opinion as to the means and standing of Mr Barakat and his trustworthiness to meet a financial commitment to the extent of £1.6 million at any one time.
10. On 13 October, Natwest received a faxed response from Ms Guidetti at the Bank and faxed it on to the Club. The reference, which is addressed to Burlington, reads as follows:

"WE CONFIRM AND CERTIFY, THAT MR HASSAN BARAKAT, OF VIA TANARA 35, PARMA 43100, MAINTAINS AN ACCOUNT NUMBER 301 WITH US TO OUR SATISFACTION, AND HE IS FINANCIALLY HEALTHY AND CAPABLE TO MEET HIS BUSINESS COMMITMENTS AND ALL HIS OBLIGATIONS.

MR BARAKAT IS TRUSTWORTHY UP TO THE EXTENT OF 1,600,000.00 ONE MILLION SIX HUNDRED THOUSAND STERLING POUNDS IN ANY ONE WEEK.

THIS INFORMATION IS GIVEN IN STRICT CONFIDENTIAL"

11. The Bank points to some features of the reference. The fax header bears the fax number 0522432141 which is a fax number at the Reggio Emilia branch of the Bank. However the fax header also refers to the source of the fax as "BNL UFFICIO ESTERO". This was a department of the Bank which had closed down by early 2008. It includes the reference "YOUR REF: RVC" in the top left corner. It purports to be signed by Ms Guidetti but the Bank points out that she told them in March 2011 that the signature was not hers. The final line of the typed text reads "PIN: BNL SPA 42537". This is a reference to an internal number for employee identification. By the date of the Reference, this numbering system was obsolete. The standard form information at the bottom of the Reference includes the share capital of the Bank which is stated to be €2,229,025,911. This is not however, the correct amount as at 13 October 2010 (and had not been since at least mid 2009).
12. The Club points out that this was a response from the Bank signed by Ms Guidetti and faxed on its letterhead from the same fax number (0522 432141) to which the request had been sent. The reference bore the same reference (RVC) used in Natwest's covering letter.
13. The Bank does not admit that the response came from the branch but in the light of the documents disclosed recently it is clear that it did.
14. The reference was passed by Natwest to the Club and recorded on the Club's internal computer system. On 13 October, M Michael Rothwell, Group Finance Director at LCI, was asked to authorise the CCF for Mr Barakat. Mr Rothwell reviewed the reference and approved the CCF in the amount of £800,000 acting, he says, on the strength of the reference.
15. Mr Barakat played roulette at the Club each day between 15 and 18 October. On 15 October, he presented a cheque for €346,980 (equivalent to £300,000) and drew down on his CCF for that amount. (There is debate about whether what Mr Barakat signed were in truth "cheques". That is an issue I do not have to decide and for convenience I shall call the documents "cheques" throughout this judgment.) He won £101,000 and redeemed his cheque. On 16 October Mr Barakat again presented a cheque for €346,980 (equivalent to £300,000) and drew down on his CCF for that amount. This time he won £100,000 and redeemed the cheque. He took his winnings for that day and the day before in cash and casino win cheques. On 17 October, Mr Rothwell authorised an increase of £200,000 to Mr Barakat's CCF, taking it up to £1 million. Mr Rothwell says that he was comfortable doing so given the reference confirming that Mr Barakat had the financial means to support a commitment of up to £1.6 million in any one week. Mr Barakat presented a cheque for €1,156,600 (equivalent to £1 million) and drew down on his CCF on that full amount, i.e. he was given gaming plaques in the sum of £1 million. He made losses of £849,600.
16. On 18 October, Mr Barakat sought a further increase in his CCF to take it up to a total of £1.25 million. This was granted. He presented a cheque for €291,075 (equivalent to £250,000) and was given plaques to that value. He lost £174,000 that day.
17. On 17 and 18 October, Mr Barakat had taken cash and casino win cheques in the total amount of £226,400. That is the difference between the £1.25 million (i.e. the total value of plaques given to Mr Barakat under the CCF on 17 and 18 October) and the losses made on those two days (totalling £1,023,600). The two cheques presented by Mr Barakat on 17 and 18 October – the €1,156,600 cheque on 17 October and the €291,075 cheque on 18 October – were returned unpaid. In early November, the Club was told that these cheques were counterfeit.
18. Efforts were made to contact and resolve the situation with Mr Barakat who returned to Lebanon and continued to play for cash at the casino where Mr Shepherd worked until October 2011. The Club has engaged a debt collection agency and reported the matter to the police so far without result.

Mr Barakat's account with the Bank

19. Mr Barakat opened an account with the Bank, the Claimants say, on around 4 October 2010, the Defendant says 15 October. The Bank is probably right although the account was in the course of being opened on 4 October. Ms Guidetti was involved in opening the account. The account was closed on 14 December 2010. In the period of around 3 months when the account was open, the account always had a nil balance.

The issues

20. The Club's case in summary is as follows. The Club requested and obtained a reference from the Bank that certified that Mr Barakat was trustworthy and able to meet commitments of up to £1.6 million in any one week. The Club relied upon that reference in granting the CCFs and allowing Mr Barakat to undertake gaming during the period from 15 to 18 October 2010. The Bank owed a duty to exercise reasonable skill and care in preparing the reference. That it failed to do. The account had a nil balance. On any view, reasonable skill and care cannot have been exercised. But for the reference, the Club would not have advanced a CCF to Mr Barakat. The negligent reference has therefore caused it to lose £1.25 million, alternatively £802,940.
21. The Bank does not admit providing the reference. It denies that it is responsible for the reference in law. It denies that it owed any duty of care to Playboy. It denies that the loss was within the scope of any duty owed by the Bank to the Club. It also says that presentation by Mr Barakat of forged cheques and the actions of the Club in accepting those cheques broke the chain of causation. The true cause of any loss suffered by the Claimants is the acceptance by the Club of self-evidently forged cheques. Finally, the Bank says that, even if it is liable, the Club was itself negligent in accepting the cheques and the liability of the Bank should be significantly reduced by reason of that contributory negligence.
22. The main issues are therefore:

(1) Did the Bank send the reference and is it responsible for its contents?

(2) Did the Bank owe a duty of care to the Club?

(3) Did the Bank breach that duty?

(4) Did that breach cause the Club's losses?

(5) If so, what loss has the Club suffered and should any award be reduced on grounds of contributory negligence?

The evidence

23. At the trial last week the court had one bundle of relevant documents and heard from eight witnesses. Six witnesses were called by the Claimants:

a) Mr Phil Shephard the current venue director of the Club but who was working at CDL in Lebanon at the time of the relevant events. Mr Shephard provided some information to the Club in October 2010 about Mr Barakat's history of gambling at CDL.

b) Mr Michael Rothwell, the Group Finance Director for LCI. Mr Rothwell authorised the grant of the cheque cashing facility to Mr Barakat on 13 October 2010 and an extension of that facility on 17 October 2010.

c) Mr Alan Jasper, the Chief Cashier for the Second Claimant. Mr Jasper was out of the country, in Egypt, when Mr Barakat applied for and was granted the cheque-cashing facility.

d) Mrs Brenda Jamison, a cashdesk manager at the club. Mrs Jamison dealt with Mr Barakat during the week he was in England.

e) Mr Gabriele de Propris, a cashdesk manager employed by the Second Claimant, who filled out the cheques.

f) Ms Danielle David, an employee (or former employee) of the Second Claimant who called other casinos in London to check if Mr Barakat had any relationship with them. Her evidence is that she may also have handled the cheques at issue in these proceedings.

24. Two witnesses gave evidence for the bank through an interpreter:

a) Mr Eugenio Colleoni from the IT security and operation risks department at the Bank gave evidence about a number of the documents in the case including the reference and the two cheques which were presented by the Club to the Bank.

b) Mr Piero Turlon, a former member of the compliance department at the Bank gave evidence about the cheques at issue and the position of Ms Guidetti.

25. All the witnesses were honest and candid. For example the Club witnesses who dealt with the cheques readily accepted that in hindsight these documents when seen and handled seemed odd in a way which they had not done at the time. The two witnesses for the Bank had not been directly involved in events and in their witness statements they made assertions, for example in Mr Colleoni's case about whether the reference had been sent and in Mr Turlon's case about the relevance of Ms Guidetti's account of events, which were implausible. In live evidence, however, they reported matters, for example about the actions of Ms Guidetti, which did not assist their employer as readily and as frankly as those which did.

Did the Bank send the reference and is it responsible for its contents?

26. The question whether or not the Bank sent the reference can be dealt with briefly. The Bank does not admit this but some points are obvious. The request was sent to the Bank's fax number by Nat West as a verification report confirms. The next day, the reference was faxed from that same fax number. It bears the signature of Ms Guidetti. There is no evidence to suggest otherwise. The reference was apparently on out-of-date letterhead leading to the features the Bank draws attention to. None of these small points would have put an outside reader on guard. But whether Ms Guidetti used new letterhead or old letterhead, she was sending a reference signed by her from the Bank. The Bank's apparent reliance on an email in which Ms Guidetti says that her signature was forged does not fill the evidential gap and is unhelpful now that it is clear that this employee was dismissed for irregularities unrelated to this case but similar in kind. It is puzzling that the Bank should rely on what this lady said in a defensive email given what emerged from cross examination about a Criminal Complaint it had filed. The Bank has disclosed remarkably little about Ms Guidetti and her conduct given that her role in this case suggests gross impropriety on her part, and it seems, not just on this occasion.
27. In cross-examination Mr Turlon described the facts of Ms Guidetti's dismissal as follows:

"A client of the bank was -- he wanted to do a good business operation with another person, with another party. So the purchase he wanted to make, this client, the payment for this transaction was supposed to be made through drafts, bank drafts. On the back of these drafts there was a stamp, Banca Nazionale del Lavoro, BNL, and a signature just purportedly belonging to Miss Guidetti. This signature was supposed to be Miss Guidetti's, just like in this case. The person who had this draft asked the bank whether the signature was valid. Miss Guidetti stated that that was not her signature. The bank was able to prove that she had lied in this specific circumstance.

Q. As far as you are aware, her dismissal was not in connection with any misconduct relating to Mr Barakat with his cheques?

A. No, it is a completely different matter."

28. The more substantial question is whether Ms Guidetti had authority to bind the Bank. Mr de Mestre submits that the mere fact that an act is done by an employee is not sufficient to establish liability on the part of the employer for that act. He cites law which is common ground. Bowstead & Reynolds on Agency 19^th Ed. §8-180 summarises the current state of the law in cases of negligent misstatement as follows:

"Torts of misrepresentation involve reliance by the plaintiff. This suggests that the principal should not be liable for the misrepresentations of his agent who is also a servant unless the third party was justified in relying on them, viz. unless they were made within the agent's actual or apparent authority, which of course they may be. This approach was adopted by the House of Lords in Armagas Ltd v. Mundogas S.A. [1986] AC 717, at least as regards the tort of deceit. On the other hand, it has been argued that this approach places limits on "the course of employment" test which would otherwise be applied in a tort case. For an agent authorised to make a contract who makes false representations outside his actual or apparent authority in connection with it can be said to be doing an act within the scope of his duties in a wrongful manner; or such a representation may be sufficiently related to his duties to justify vicarious liability. It has recently been held that Armagas is indeed confined to deceit on the issue of vicarious liability, and that the "course of employment" test applies to an action in negligent misstatement [So v HSBC Bank Plc [2009] EWCA Civ 296]. This conclusion is currently authoritative. However, it is not obvious why deceit should be treated differently to negligence in this regard. Secondly, the tort of negligent misstatement seems itself to invoke the concepts of authority, since it has been held that employees, as with other agents, cannot be taken to be assuming personal liability for the accuracy of statements made on behalf of their employers; they speak only on behalf of the employer. Relatedly, the opposing view assumes that all torts attract vicarious liability in the same way, which is not a necessary truth. There remains room for doubt, therefore, whether it is ever reasonable in law (however convenient as an assessment of commercial risk) for the third party to rely on statements neither actually nor apparently authorised. At least, a failure to take defensive steps by checking with the employer may be regarded as raising the possibility of contributory negligence. Liability for other wrongs committed in connection with authorised activities where the claimant has less control over events (e.g. assault, negligent driving) remains; in this respect the course of employment test is wider than "authority" reasoning."

29. In So v HSBC, which concerned misstatements made by an HSBC employee, Etherton LJ referred at paragraph 55 to the decision of the House of Lords in Dubai Aluminium Co. Ltd v Salaam [2002] UKHL 48; [2003] 2 AC 366 and its comments on the "course of employment". The touchstone of liability is that the wrongful conduct must be so closely connected with acts the employee was authorised to do that the wrongful conduct may fairly and properly be regarded as done by the employee in the course of the employee's employment.
30. The Bank argues that the distinction between authority and "course of employment" makes no practical difference in this case. The Claimants cannot satisfy either test. Even with the "course of employment", the starting point is to consider the authority of the employee because (a) if the act was authorised it will be within the course of employment and (b) if not authorised, there must be a sufficiently close connection between the wrongful act and the acts which the employee was authorised to do. In this case, the giving of a reference which went beyond the regularity of the operation of a customer's account and with the signature of one employee only was not authorised. The Bank's signature policies provide for the application of two signatures "in respect of all instruments and documents relating to the matters, activities, and transactions performed by the Bank in Italy and abroad". Further, Ms Guidetti's function was business development. It was not dealing with enquiries from third parties about existing customers. This is clear from an internal Bank document describing the business development function. There was therefore no actual authority.
31. Mr Hobson for the Club points to documents that show that Bank employees have express authority to give references at least in extreme circumstances. He relies on the fact that Mr Colleoni accepted that despite what he says in his statement he did not know the position from personal knowledge. He submits that Mr Turlon's evidence on the point was not coherent and that he persistently confused references with guarantees. He submits that there is no documentary evidence to show a restriction on authority. (Mr de Mestre says that the issue there is that one would expect to see a document granting it in the first place.) Mr Hobson relies on the fact that Ms Guidetti clearly had authority to open the account and, at the least, to deal with issues arising before a relationship manager took over. Finally he relies on a document setting out the 28 circumstances in which a single employee signature, as opposed to two signatures will suffice. (That reliance did not seem to me to fit into the particular examples he cited.)
32. On the evidence produced at trial it seems reasonably clear that Ms Guidetti did not have actual authority to give a reference.
33. The Bank argues that there was no apparent authority for Ms Guidetti either. Lord Keith, sitting in the House of Lords in Armagas Ltd v. Mundogas S.A. (The Ocean Frost) [1986] AC 717, at page 777 described ostensible or apparent authority as follows:

"Ostensible authority comes about where the principal, by words or conduct, has represented that the agent has the requisite actual authority, and the party dealing with the agent has entered into a contract with him in reliance on that representation. The principal in these circumstances is estopped from denying that actual authority existed. In the commonly encountered case, the ostensible authority is general in character, arising when the principal has placed the agent in a position which in the outside world is generally regarded as carrying authority to enter into transactions of the kind in question. Ostensible general authority may also arise where the agent has had a course of dealing with a particular contractor and the principal has acquiesced in this course of dealing and honoured transactions arising out of it. Ostensible general authority can, however, never arise where the contractor knows that the agent's authority is limited so as to exclude entering into transactions of the type in question, and so cannot have relied on any contrary representation by the principal: Russo-Chinese Bank v. Li Yau Sam [1910] AC 174."

34. The Bank says that the two salient points are that (i) apparent authority depends upon a representation by the principal, and (ii) the relevant representation may arise when the principal has placed the agent in a particular position which the outside world generally regards as carrying authority to enter into transaction of the kind in question. The Bank says that there was no holding out or representation. Ms Guidetti's business card, which is the only document from the Bank that any of the Claimants says that they saw prior to the reference described Ms Guidetti as being in business development. It did not represent or convey the impression that Ms Guidetti had the authority unilaterally to give a reference on behalf of the Bank. Indeed, the role of business development does not have any obvious connection to the provision of the reference about the affairs of an existing customer. It is also notable that Burlington addressed the Request to "the Manager" of the Reggio Emilia branch of the Bank. Further, the holding out cannot come from the fact that the Request was answered by Ms Guidetti (or some other employee). The provision of a response to the Request would not clothe the person responding with authority to give that response (see British Bank of the Middle East v Sun Life Assurance Co of Canada (UK) Ltd [1983] 2 Lloyd's Rep 9).
35. As regards course of employment, the provision of a bank reference is not sufficiently closely connected to Ms Guidetti's role in business development. This is particularly so given that the request for a reference involves the dissemination of confidential material about a customer of the Bank.
36. The Club responds that this is as much a question of common sense as legal analysis. When someone receives a letter from a bank employee one is not expected to ask oneself the question whether that employee had authority to provide the letter. It is taken as a given that the employee had usual or apparent authority to send the letter by reason of occupying the particular position within the bank, unless particular circumstances ought to reasonably indicate otherwise. A copy of Ms Guidetti's business card was provided to the Club; it knew that was she an employee who dealt with Mr Barakat's account. The request for a reference was addressed to the manager and the response came back from Ms Guidetti. There can be no real question that the Club was entitled to assume that Ms Guidetti had authority to provide the reference.
37. Decision. In my judgment the Club is right. The facts of British Bank of the Middle East involved a special undertaking to be executed by "duly authorised representatives" and the posing of explicit questions about this. They are very different from those involved in a routine bank reference. Bank employees have a wider variety of titles than they used to both in this country and abroad. "Business Development" may cover a variety of levels of responsibility but they all connote a degree of executive as opposed to routine activity. The request was sent by NatWest to Ms Guidetti addressed to the manager. The Club could reasonably expect this lady to pass the request up the chain if that was necessary and, when replying herself, to have obtained the appropriate level of clearance. The fact that Ms Guidetti replied caused no surprise to Mr Rothwell, a highly experienced chartered accountant. There was nothing unorthodox or informal about the approach for or giving of the reference. Bank references are a routine feature of international trade. It is something of a surprise to learn that the Bank's witness was unaware of them. The fact that the standard Club form is addressed to "the manager" was no reason for it to be cautious when it saw a reply from an employee apparently responsible for its account. Whether put as apparent authority or vicarious liability the Bank is responsible for this reference which it issued through a conventional channel in circumstances which would not have put a third party on enquiry. As Etherton LJ put it in So, after referring to the observation of Lord Nicholls in Dubai Aluminium that "liability for agents should not be strictly confined to acts done with the employer's authority", the conduct for which the employer is sought to be held liable must be so closely connected with acts the employee was authorised to do that the wrongful conduct may fairly and properly be regarded as done by the employee in the course of the employee's employment. That is this case.

Did the Bank owe a duty of care to the Club?

38. This is an issue only because the reference was addressed to Burlington rather than the Club. The question is whether that relieves the Bank of a duty of care that it would otherwise owe.
39. The Club says that such a result would be surprising. First, it accepts that the Bank (apart perhaps from Ms Guidettti) was unaware of the identity of the Club as the person for whose benefit the reference was intended. However, that was true in Hedley Byrne v Heller [1964] AC 465. In that case, the bank providing the reference (Heller) was unaware of the identity of the company that relied upon the reference (Hedley Byrne); its identity was not disclosed in the request for a reference. That was immaterial to the House of Lords' analysis that (but for a disclaimer of responsibility) Heller would have owed a duty to Hedley Byrne.
40. Second, the Club says that this is a case where an agent received information on behalf of its principal. Burlington acted as agent on behalf of the Club in sourcing the reference. As Lord Pearce alluded to in Hedley Byrne at 539, one analysis is to regard the Club as an undisclosed principal. In contract law (where a consensual assumption of liability is all important) a party may assume contractual duties towards a party whose existence it is unaware of, namely an undisclosed principal. There is no principled reason why the position should be any different in the context of assuming tortious duties.
41. Third the Club submits that the ultimate decision whether to recognise a duty of care is pragmatic. "Proximity" does not denote a one-size-fits-all test for defining when a duty arises; rather it describes a collection of infinitely various factual circumstances from which, pragmatically, a duty of care is found to exist.
42. The Club says that following are important when considering proximity:

(1) Caparo Industries Plc v Dickman [1990] 2 AC 605 was not addressing a situation where advice was given to an agent acting on behalf of an undisclosed principal.

(2) Burlington was not only an agent. It was no more than a conduit through which the reference was obtained. It was interposed simply to preserve confidentiality. It had no trading activity of its own. Burlington and the Club formed part of the same group of companies and operated in effect as a single commercial unit. Whilst Burlington was a distinct legal person, it had no separate commercial personality in any meaningful sense.

(3) It made no difference to the Bank whether the company relying upon the reference was to be Burlington or the Club. The Bank knew that a reference was requested for the purpose of entering into a financial commitment with Mr Barakat to the extent of £1.6 million. It was immaterial who was to enter into that transaction.

(4) As Hedley Byrne illustrates, it is commonplace for a reference to be requested by one person (commonly a bank) but intended to be relied upon by an unnamed person. To the extent that it is appropriate to use the Caparo formula, there is no difficulty in concluding that the Bank is to be regarded as having reasonably contemplated that the reference might be relied upon by a person other than Burlington.

43. The Bank points to the three tests for the existence of a duty of care summarised by the House of Lords in Customs and Excise Commissioners v Barclays Bank Plc [2007] 1 AC 181. First there is assumption of responsibility. This is an objective test which usually applies in respect of "something the Defendant has decided to do: giving a reference, supplying a report..." (per Lord Hoffmann) at para 38). Secondly there is a three-fold test, the limbs of which are foreseeability, proximity, and policy fairness and justice (for example Caparo). Thirdly there is an incremental test.
44. The Bank did not assume any responsibility to the Club. It did not address the reference to it. The Club's evidence is that its role was consciously withheld in the process of obtaining the Reference. It is therefore difficult to understand how it can be said that the Bank assumed a responsibility to such a person. The Bank says that the Club will not satisfy the three-fold test either. As referred to above, that test includes as one of its elements, that there should be sufficient proximity between the parties in order for a duty of care to arise. The purpose of the reference was not particularly specified or generally described. The Club's case is that the entry into "a trading or financial relationship" by Burlington or some other person is a sufficient purpose. This is too broad a proposition, particularly where the transaction in question was, by any standards, an unusual one, namely the cashing of cheques to allow for gambling on credit. It was not a usual trading relationship.
45. The Bank also says that there was nothing to indicate that the reference would be communicated to the Club either specifically or as a member of an ascertainable class. Where one party deliberately chooses to hide its existence as the party seeking a reference and the reference is sought by a different and expressly named party (Burlington), it is counterintuitive to claim that the hidden party was within a class of persons for whom the reference "was or might be intended". The present case can be contrasted, for example, with Argos Ltd v Leather Trade House Ltd [2012] EWHC 1348 at para 41-42 where the defendant knew that the second claimant was within the group of the company with which it had contracted (the first claimant) and that the second claimant would receive and rely upon the advice given.
46. The Bank also rejects a claim by the Club that it is usual market practice for a banker's reference to be requested by and addressed to one person (commonly a bank) but intended to be relied on by another (commonly that bank's customer) whose identity may be unknown to the bank asked to provide the reference. No evidence has been adduced by the Club as to the usual practice in any market (whether in England or Italy). Further the reference was sought expressly by Burlington and not a bank, and gave no hint that it might be relied on by another party. The statements that Burlington acted as a conduit or that the Claimants "operated in effect as a single commercial unit" are, even if correct, private arrangements between Burlington and the Club.
47. Decision. The competing submissions raise fundamental questions about the basis upon on which liability for economic loss arises. I do not see that it is necessary to go beyond Customs and Excise. The relevant part of the headnote reads;

"that the tests used in considering whether a defendant sued as causing pure economic loss owed a duty of care disclosed no single common denominator by which liability could be determined and the court would focus its attention on the detailed circumstances of the case and the particular relationship between the parties in the context of their legal and factual situation taken as a whole.."

48. I refer also to the speech of Lord Mance between paragraphs 82 and 93 and to the following extracts in particular:

"82 The conceptual basis on which courts decide whether a duty of care exists in particular circumstances has been repeatedly examined. Three broad approaches have been suggested, involving consideration (a) whether there has been an assumption of responsibility, (b) whether a three-fold test of foreseeability, proximity and "fairness, justice and reasonableness" has been satisfied or (c) whether the alleged duty would be "incremental" to previous cases. Mr Michael Brindle for the bank argues that in cases of economic loss the only relevant question is whether there has been an "assumption of responsibility". Mr Philip Sales for the commissioners submits that the primary approach should be through the three-fold test of foreseeability, proximity and "fairness, justice and reasonableness" and that assumption of responsibility and incrementalism are no more than potentially relevant factors under that test.

83 All three approaches may often (though not inevitably) lead to the same result. Assumption of responsibility is on any view a core area of liability for economic loss. All three tests operate at a high level of abstraction. What matters is how and by reference to what lower-level factors they are interpreted in practice: see e g Caparo Industries plc v Dickman [1990] 2 AC 605, per Lord Bridge of Harwich, at pp 617-618, and Lord Oliver of Aylmerton, at p 633b-d…

93 This review of authority confirms that there is no single common denominator, even in cases of economic loss, by which liability may be determined. In my view the threefold test of foreseeability, proximity and fairness, justice and reasonableness provides a convenient general framework although it operates at a high level of abstraction. The concept of assumption of responsibility is particularly useful in the two core categories of case identified by Lord Browne-Wilkinson in White v Jones, at p 274f-g, when it may effectively subsume all aspects of the threefold approach. But if all that is meant by voluntary assumption of responsibility is the voluntary assumption of responsibility for a task, rather than of liability towards the defendant, then questions of foreseeability, proximity and fairness, reasonableness and justice may become very relevant. In White v Jones itself there was no doubt that the solicitor had voluntarily undertaken responsibility for a task, but it was the very fact that he had done so for the testator, not the disappointed beneficiaries, that gave rise to the stark division of opinion in the House. Incrementalism operates as an important cross-check on any other approach."

49. Application of these principles to a mundane situation does not require the able and close analysis of the authorities conducted by Counsel in this case. This was a routine request for a bank reference which was answered without, in contrast to some cases, any attempt to restrict liability to the enquirer or at all. There is nothing out of the way in a principal having this request or any other administrative task carried out by another member of the same group of companies. There is no suggestion in the evidence that the reference would not have been given or would have taken a different form if sought by the Club. The concealment of the identity of the Club is for the benefit of some players and not to hide unlawful or improper activity. There is no basis for treating the financing of trading in a casino as being of a different order to trading of financial activity. The fact that it was not known by the Bank that the Club would act on the reference without what the Bank calls "independent enquiry", whatever that might mean seems irrelevant. There is, as Hedley Byrne itself illustrates no reason to restrict the legal duty to the person actually making the enquiry. Applying the law to the facts I consider that the Bank owed a duty not just to Burlington but to the Club as regards the reference.

Did the Bank breach that duty?

50. Decision.The Bank stated that Mr Barakat was capable of meeting a financial commitment of up to £1.6 million in any one week. In fact he had a nil balance on his account. The Bank makes no admission but it cannot in those circumstances have exercised reasonable skill and care in preparing the reference. So the answer is yes.

Did that breach cause the Club's losses?

51. The Bank claims that if there was a breach it caused no loss. Mr de Mestre's submissions start with South Australia Asset Management Corporation v York Montague ("SAAMCO") [1997] AC 191 where Lord Hoffman at p.212 said this:

"In the present case, there is no dispute that the duty was owed to the lenders. The real question in this case is the kind of loss in respect of which the duty was owed.

How is the scope of the duty determined? In the case of a statutory duty, the question is answered by deducing the purpose of the duty from the language and context of the statute... The scope of the duty, in the sense of the consequences for which the valuer is responsible, is that which the law regards as best giving effect to the express obligations assumed by the valuer: neither cutting them down so that the lender obtains less than he was reasonably entitled to expect, nor extending them so as to impose on the valuer a liability greater than he could reasonably have thought he was undertaking."

52. The Bank says that this is relevant because, although the losses suffered by the Club resulted from the non-payment of the cheques, they would never have been paid however much money Mr Barakat had in any account with the Bank. They were not paid because they were counterfeit. Thus, although the purpose of the reference was to establish the financial status of Mr Barakat, the losses did not arise because of any aspect of that status. Instead they arose because he presented counterfeit cheques (a matter divorced from his financial status). The proper scope of any duty owed by the Bank to the Club was not to protect it against losses arising from the presentation to it and acceptance by it of counterfeit cheques. This is particularly so when the Bank had not even provided Mr Barakat with a chequebook.
53. The wording of the reference, which tracked the wording of the request, expressly linked the term "trustworthy" to Mr Barakat's ability to pay a sum. Thus it referred to Mr Barakat being "trustworthy up to the amount of one million six hundred thousand pounds". This is not a general statement about trustworthiness but is a reference to Mr Barakat's ability to pay up to £1.6 million. In these circumstances, the Court should conclude that, even if the Bank owed a duty of care to the Club, the scope of that duty did not extend to losses caused by the presentation by Mr Barakat of counterfeit cheques.
54. The Bank also says that the Club cannot satisfy this requirement because the presentation by Mr Barakat and the acceptance by Playboy of counterfeit cheques broke the chain of causation These acts are "...something...ultroneous, something unwarrantable, a new cause which disturbs the sequence of events, something which can be described as either unreasonable or extraneous or extrinsic" (The Oropesa [1943] P 32 at 39). The Bank says that this is not a case in which a genuine cheque has been completed by someone other than the account holder or where a genuine cheque has not been paid because of an absence of funds in the drawer's account. This is a case in which each cheque has been fabricated in its entirety and where the losses claimed arose from this fact.
55. The Bank says that the real issue on this point is whether or not the Club knew or ought to have known that the cheques were counterfeit. If it did know or ought to have known, it cannot properly be said that any losses caused by those cheques were caused by any negligence in relation to the reference. Even if the scope of the duty owed by the Bank encompassed losses caused by the dishonesty of Mr Barakat, that does not eliminate the need for any further inquiry by the Court as to the nature of the dishonesty. Where the dishonesty consisted, as in this case, of the presentation of cheques which were self-evident forgeries and this fact would have been revealed by even a cursory examination, any negligence of the Bank cannot properly and sensibly be said to have caused losses arising from those cheques. The Claimants cannot legitimately say that it was the job of the reference alone to alert them to the risk of potential fraud on the part of Mr Barakat. It was the Club who would receive the cheques and who alone was able to take proper steps to check their authenticity.
56. The Club says simply that if the Bank had not provided the negligent reference, it would not have advanced any CCF to Mr Barakat and would therefore have suffered no loss. The Club accepts that Mr Barakat's non-payment was causative of the Club's loss. Whenever a claimant seeks to recover against a bank for the provision of a negligent reference it may always be said that the claimant's loss was caused by the customer's non-payment.
57. The test is whether a supervening cause obliterates the first cause: Borealis AB v Geogas Trading SA [2011] 1 Lloyd's Rep 482 per Gross LJ at paragraphs 44 and 104. One way of testing that is through the lens of scope of duty. The issue is whether the loss suffered by the Club is a type of loss that the Bank owed a duty to protect against. It clearly was. First, the Bank specifically undertook responsibility not just for the solvency of Mr Barakat to meet a commitment of up to £1.6 million but also for the fact that he was "trustworthy" to do so. Second, had the Bank acted non-negligently it would have been apparent to the Club that the proposed transaction was not viable or would have revealed a potential fraud, and the Club would not in that event have been prepared to grant a facility. Thus the whole of the loss suffered by the Club is recoverable; the reasoning in Portman Building Society v Bevan Ashford [2000] 1 EGLR 81 at 85-86 is apposite in this context.
58. Decision. I agree with the Bank that there was not some special or self standing assurance in the final paragraph as to the customer's general trustworthiness and the reference has to be read as a whole. Nevertheless the reference provided, in unusually unqualified terms, information about the financial standing and trustworthiness of Mr Barakat. But for the reference the Club would not have taken a cheque from Mr Barakat. If what the Bank said in the reference had been true the Club might have recovered the money even if the cheques had bounced.
59. Borealis is of direct application and it explains how a break in causation is not readily established. The approach in tort is the same as that in contract insofar as it relates to the facts of this case. An edited summary of Paragraphs 42 to 47 of Gross LJ's judgment illustrates this:

"First, although an evidential burden rests on the Defendant insofar as it contends that there was a break in the chain of causation, the legal burden of proof rests throughout on the Claimant to prove that the Defendant's breach of contract caused its loss.

[44] Secondly, in order to comprise a novus actus interveniens, so breaking the chain of causation, the conduct of the Claimant "must constitute an event of such impact that it 'obliterates' the wrongdoing . . ." of the Defendant: Clerk & Lindsell on Torts (19th ed), at para 2-78. The same test applies in contract. For there to be a break in the chain of causation, the true cause of the loss must be the conduct of the Claimant rather than the breach of contract on the part of the Defendant; if the breach of contract by the Defendant and the Claimant's subsequent conduct are concurrent causes, it must be unlikely that the chain of causation will be broken. In circumstances where the Defendant's breach of contract remains an effective cause of the loss, at least ordinarily, the chain of causation will not be broken: County Ltd v Girozentrale [1996] 3 All ER 834, at p 849b-c, [1996] 1 BCLC 653, per Beldam LJ and at pp 857f-g and 858b-c, per Hobhouse LJ (as he then was). …

[45] Thirdly, it is difficult to conceive that anything less than unreasonable conduct on the part of the Claimant would be capable of breaking the chain of causation. It is, however, also plain that mere unreasonable conduct on a Claimant's part will not necessarily do so – for example where the Defendant's breach remains an effective cause of the loss, albeit in combination with the Claimant's failure to take reasonable precautions in its own interest....

[46] Fourthly, the Claimant's state of knowledge at the time of and following the Defendant's breach of contract is likely to be a factor of very great significance. For the chain of causation to be broken, the Claimant need not have knowledge of the legal niceties of the breach of contract; nor, as it seems to me, will the chain of causation only be broken if the Claimant has actual knowledge that a breach of contract has occurred – otherwise there would be a premium on ignorance. However, the more the Claimant has actual knowledge of the breach, of the dangerousness of the situation which has thus arisen and of the need to take appropriate remedial measures, the greater the likelihood that the chain of causation will be broken. Conversely, the less the Claimant knows the more likely it is that only recklessness will suffice to break the chain of causation. …

[47] Fifthly and ultimately, the question of whether there has been a break in the chain of causation is fact sensitive, involving as it does a practical inquiry into the circumstances of the Defendant's breach of contract and the Claimant's subsequent conduct…"

60. The second cause not only does not obliterate the first one but is a direct result of it. The Club had no knowledge of the first breach of duty. The limited failure by the Club to act reasonably which I identify below fails to break the chain because of the factors in the third consideration I have set out from Borealis. Any failure of the Club to act reasonably does not begin to approach being reckless as I conclude below.
61. Mr de Mestre correctly points out, by reference mainly to Caparo that it is not enough to decide that a duty is owed. The court must consider the "kind of loss in respect of which the duty was owed" as Lord Hoffmann put it in SAAMCO on the facts of this case as the issue, as I see it, is straightforward. As it was put by Otton LJ in Portman at 85:

"Thus, in summary, the measure of damage is the loss attributable to the inaccuracy of the information which the plaintiff has suffered by reason of having entered into the transaction on the assumption that the information was correct. Thus one must compare the loss actually suffered with what the position would have been if he had not entered into the transaction and asked what element was attributable to the inaccuracy of the information."

62. If the reference from the Bank had been accurate the Club would not have dealt at all with Mr Barakat, except on a cash basis and would have extended no cheque cashing facility. I see no basis for breaking the chain of causation or of restricting the loss recoverable by reference to the scope of the duty in this case

Should any award be reduced on grounds of contributory negligence?

63. The Bank says that the Club contributed to its own losses and that, accordingly, they ought to be reduced substantially.
64. Section 1 of the Law Reform (Contributory Negligence) Act 1945 provides that, where any person suffers damage as a result partly of his own fault and partly of the fault of any other person, the damages recoverable in respect thereof shall be reduced to such an extent as the Court thinks just and equitable having regard to the claimant's share of responsibility for the damage. The Court needs therefore to assess the relative responsibility for the damage and, if a claimant's fault was causative of the damage, what the relevant blameworthiness and causative potency of the parties' respective faults were (Clerk & Lindsell, para 3-84).
65. The Bank claims that there was contributory negligence at two stages in this case.
66. First, when the cheque-cashing facility was granted and extended the Club was negligent in failing to take proper and reasonable steps to ascertain the status and creditworthiness of Mr Barakat. As a matter of fact I reject that. Mr Rothwell is a man of wide experience and of high ability and understandably placed most reliance on the reference. I accept that if the Club had checked with the "Vic" as it probably should have done the result would have disclosed nothing very relevant given that Mr Barakat had been a cash player and was in all likelihood playing poker where the casino would not have had the same interest in his credit rating. On the evidence there was nothing unusual about a player planning to visit London to gamble in cash and then seeking a cheque cashing facility to do this. It appears from the evidence that gamblers may change their minds or play with the cash somewhere else before going to another casino for a facility. I detect nothing else for which the Club is open to criticism in this area.
67. Secondly when the Club accepted the cheques it negligently failed to notice that they were self-evident forgeries.
68. The Club responds that the burden lies on the Bank to establish any contributory negligence. The Club says that it followed a proper set of internal procedures in extending a CCF to Mr Barakat having undertaken suitable due diligence. Whilst the Bank points to apparently irregular features of the cheques presented by Mr Barakat, it is important to avoid being wise with hindsight. It is one thing after the event to undertake a meticulous examination of the cheques, comparing the typeface and paper weight to those of cheques ordinarily issued by the Bank. But one is not addressing the right question in embarking on that exercise. One has to put oneself in the position of the Club's cashiers at the time and ask, based on the facts that ought reasonably to have been known, whether the cheques contained any obvious indicia such as to place the Club on notice of a potential fraud. There were no such red flags. Casinos are not detectives and trust not distrust is the basis of their dealings with customers, a point which the Club illustrates with cases from a different legal context. When taking the cheques the Club had obtained a reference from a reputable bank confirming that Mr Barakat was trustworthy for a commitment up to £1.6 million.
69. Decision. The irregularities in the cheques are identified in an email from Mr Bonodi dated 5 November 2011. Mr Colleoni sets out a detailed and uncontradicted list of faults in paragraphs 8 and 9 of his witness statement. The cheques were apparently signed by Mr Barakat and I unwisely initiated a discussion based around Mr A P Herbert's tales of cheques written on the side of a cow. That aspect is irrelevant because the question of the English or Italian legal status of these documents does not arise. The cheques are forgeries in that they are altered colour photocopies of real Bank cheques issued to another customer at the relevant branch. The question is whether these documents were so irregular that the Club staff were negligent in not noticing the faults and accepting them so that Mr Barakat was permitted to play and lose. The starting point is that the staff had no reason to be wary as Mr Barakat had been cleared to be good for more than the value of the cheques. The staff receive cheques from many domestic and foreign banks and can only be expected to give these broad scrutiny before accepting them. They are examining cheques not as clerks in a bank but as businesses accepting payment in this form following some evaluation of the customer's credit. Against that the cheques are for very large sums, one for over a million Euros. Finally in most cases the only loser if the Club takes a bad cheque will be the Club itself.
70. The detailed points about the numbering and layout of the cheques seem to me to be beyond what the staff could be expected to notice but the shape and feel of the documents is another question. I mention some of the evidence.
71. Miss David's evidence was less relevant than that of Ms Jamison and Mr de Propris as she may not have seen the cheques when they were accepted. She could not recall whether she had seen the cheques on the 17th or the 18th or even whether she was on duty. But she agreed the printing was very poor and said this:

Q. Do you -- if someone handed you that cheque now, you

18 wouldn't accept it, would you?

19 A. If I was handed this cheque, I would -- I might run it

20 by -- refer it to somebody else in the desk and see what

21 they thought about it, or maybe refer it to a manager.

22 Q. Because you had concerns --

23 A. If I was in doubt, yes.

24 Q. Because you had concerns about it?

25 A. If I had concerns about it.

72. I evaluate the evidence of Ms Jamison and Mr de Propris as a whole and in context but give examples. Ms Jamison's evidence contained this;

"Q. You still think that the one signed by Mr Barakat, that

19 still feels like a genuine cheque?

20 A. This one here?

21 Q. That one in your hand, yes.

22 A. Well, I saw this three weeks ago, and in its current

23 state I wouldn't say that this was a genuine cheque.

24 Q. So you think it looked differently on 18 October?

25 A. Yes.

Q. So he told you that he'd seen the chequebook --

6 A. I know that he had a chequebook. So I would have

7 expected these cheques to come from that chequebook.

8 Q. Do you think he told you that after it had emerged that

9 the cheques had been dishonoured?

10 A. I don't know.

11 Q. To put it frankly, if someone handed you a cheque like

12 this to pay for your car, you wouldn't accept it, would

13 you?

14 A. In this condition, no, I would not accept it."

73. Mr de Propris said this:

"A. That's correct, but despite touching them right now,

4 albeit it is four years, they do feel slightly odd.

5 Q. They feel completely different, in truth, from the real

6 cheque and from most cheques you have ever held.

7 A. I think forget the comparison because once you do it by

8 comparison, it is of course very different. Just by

9 looking at them now, this feels like photocopy, and the

10 part here, where the cheque would have probably been

11 bent with the chequebook on the top, is extremely stiff.

12 It does sound -- it does feel very strange.

13 Q. But it felt very strange in October 2010, presumably.

14 A. I do not remember this cheques feeling any strange.

15 I don't know how many times I have to repeat it.

16 Because otherwise I would not have taken them.

17 Q. If you'd taken proper care, you would have immediately

18 realised those weren't real and you wouldn't have

19 accepted them, would you?

20 A. I do believe I have taken proper care. For me, it's

21 hard to believe that those were the actual cheques that

22 I accepted that day and that these were the conditions

23 of the cheques back then. I can only comment on the way

24 I see them now."

74. I do not find these answers surprising having seen the cheques. One leaves aside the genuine cheque form produced in evidence as it would not have been available at the time. Even so and recognising that the cheques may have deteriorated a little while held and examined for this litigation they feel odd and have an irregular shape as if cut out by hand. My impressions themselves have no value but they do cause me to place weight on what the witnesses said and to conclude that even a slightly more careful examination at the time may have revealed the flaws and led to the cheques being refused and the loss avoided. The system in place at the Club should have allowed the cheques to have been examined a little more closely by the staff. The Club contributed to a limited extent to its own damage I therefore conclude that there was a minor degree of contributory fault on the part of the Club. In the time honoured phrase, doing the best I can, and bearing in mind all the various factors considered in this judgment I place the contributory fault of the Club at fifteen per cent (15%).

What loss has the Club suffered?

75. The Club's primary case is that is should recover £1.25 million, the value of plaques provided to Mr Barakat on 17 and 18 October 2010. Those plaques were equivalent to cash. Mr Barakat could there and then have exchanged the plaques for cash and left the casino; he was not required to undertake any gaming. The Club's loss crystallised the moment that the Club provided value of £1.25 million to Mr Barakat and received nothing of value in return. In the event, Mr Barakat went on to gamble with the plaques as a result of which he lost (and the Club therefore received back, subject to then paying gaming duty) £1,023,600. The issue is whether that is to be taken into account in ascertaining the Club's loss. The relevant question is "whether the negligence which caused the loss also caused the profit in the sense that the latter was part of a continuous transaction of which the former was the inception": see Needler Financial Services v Taber [2001] IDS Pensions Law Reports 253 at paragraph 24 per the Vice-Chancellor. By parity of reasoning with the analysis in Needler the gaming activity undertaken by Mr Barakat comprised an independent transaction which did not flow as part of a continuous transaction from the negligence. Mr Barakat might have made money or lost money. However, the consequences of the gaming activity are res inter alios acta and do not affect the conclusion that the Club's loss crystallised in the sum of £1.25 million.
76. The Bank responds that this is akin to an action on the cheques, albeit not against the person who drew those cheques or an action on a contractual promise that Mr Barakat would pay his debts to the Club. Needler is part of a line of authorities which concern cases where a claimant has made a separate and distinct profit, often many years after the relevant wrongdoing.
77. The Bank argues that the quantum of Playboy's claim is the loss it has suffered as a result of the course of Mr Barakat's gambling correctly calculated at £802,940. This result is also supported by authority. In SAAMCO Lord Hoffmann said at p.216D-E:

"In the case of breach of a duty of care, the measure of damages is the loss attributable to the inaccuracy of the information which the plaintiff has suffered by reason of having entered into the transaction on the assumption that the information was correct. One therefore compares the loss he has actually suffered with what his position would have been if he had not entered into the transaction and asks what element of this loss is attributable to the inaccuracy of the information"

78. Decision. I agree with Mr de Mestre when he says that the transaction is the grant of the cheque-cashing facility. Only the amounts actually paid out by the Club can properly be characterised as those attributable to the inaccuracy of the information. That view is supported by the obiter remarks of Flaux J in Grosvenor Casinos v National Bank of Abu Dhabi [2008] 2All ER (Comm) 112 at paragraphs 159 to 178 (which Mr Hobson drew to the attention of the Court as being a case unhelpful to his submissions). This also seems to be an approach consistent not only with SAAMCO but also the other cases on causation and loss which I have referred to and with the justice of the case.
79. There is no dispute about the basis for the Club's secondary case or the calculation of £802,940.

Conclusion

80. The Club succeeds in its claim but for £802,940 not £1.25 million and subject to a deduction of fifteen per cent for contributory negligence.
81. I shall be grateful if the parties will, not less than 72 hours before hand down of this judgment, let me have a list of corrections of the usual kind and a draft order, both preferably agreed, and notes of any points they wish to raise at the hearing.
82. I am most grateful to Counsel and solicitors for their admirable preparation and presentation of this case which will have saved the parties substantial sums.