Marex Financial Ltd v Sevilleja

This appeal concerns the principle that "reflective loss" cannot be recovered. Marex Financial Ltd brought proceedings against Sevilleja, the owner of two companies, Creative Finance Ltd and Cosmorex Ltd, for losses arising from the Companies' insolvency. The Companies had been found liable to Marex for more than US$5.5 million and Marex had obtained judgment against them. However, Mr Sevilleja had transferred more than US$9.5 million from the Companies' accounts offshore, preventing Marex from receiving payment. Marex brought proceedings against Mr Sevilleja, claiming damages for inducing or procuring the violation of its rights under the judgment and order of Field J dated 25 July 2013, and intentionally causing it to suffer loss by unlawful means. Mr Sevilleja argued that Marex's claim was barred by the "reflective loss" principle. The Court of Appeal held that the principle applied to about 90% of Marex's claim. Marex appealed to the Supreme Court.

The Supreme Court considered the legal issues, which were whether the "reflective loss" principle applied to claims by company creditors and whether there was any scope for permitting claims where there would otherwise be injustice to the claimant through inability to recover, or practical difficulty in recovering, genuine losses intentionally inflicted on the claimant by the defendant. The Court discussed the "reflective loss" principle, which was established in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) and Johnson v Gore Wood & Co. It concluded that the principle was not as broad as the Court of Appeal had interpreted it and that it did not apply to claims by creditors of a company. The Court held that Marex's claim against Mr Sevilleja could proceed.

The Supreme Court's decision clarifies the scope of the "reflective loss" principle and provides guidance on when claims by creditors of a company can proceed despite the company also having a claim against the same defendant. The Court's judgment highlights the importance of distinguishing between claims by shareholders and claims by creditors, and that the "reflective loss" principle does not apply to claims by creditors. This decision provides certainty for creditors of companies who have suffered loss due to the wrongful acts of a third party.