H&J has secured the recovery of more than £7m pursuant to a judgment handed down on 5 January 2024.
Vegesentials was an English company looking for investment to launch an innovative new product. The product was called FibreWater, Europe’s first prebiotic functional water with EU-approved digestive health benefits. Vegesentials relied upon a 'Proof of Funds' letter issued by a Taiwanese bank when signing up with a group of international investors. In doing so it passed up on an opportunity to secure alternative investment from a fund in Saudi Arabia. The 'Proof of Funds' letter turned out to be a fraud, sent by a rogue employee of the bank who was part of a wider criminal conspiracy. By the time the fraud was discovered, it was too late: the Saudi investor was no longer interested and Vegesentials' launch of the FibreWater product failed for lack of finance.
Vegesentials issued a claim against the bank in fraudulent misrepresentation and successfully defeated a jurisdiction challenge. However, the bank then brought an application for security for costs which Vegesentials did not have the financial means to meet.
H&J invested in the claim via an innovative joint venture structure - whereby a new SPV was created which was co-owned by H&J and Vegesentials and the claims against the bank were then assigned to the SPV. H&J helped Vegesentials to resolve the security for costs application and provided funding to pursue the claim.
The Claimants claimed that the bank was vicariously liable for the acts of its rogue employee and sought damages for the profits that it lost as a result of not being able to pursue the FibreWater business with the benefit of the Saudi investment. The claim was successful at trial: the Claimants were awarded total damages plus costs of more than £7m. Among other issues, the court considered the applicable law of claims arising out of cross-border fraud and principles of factual causation in loss of profits claims. The judgment has particular relevance for loss of chance claims relating to foregone business and investment opportunities.
See Vegesentials Ltd & Anor v Shanghai Commercial & Savings Bank Ltd [2024] EWHC 7 (Ch).
