Outer House finds pursuer in abandoned £85m commercial fraud action liable for additional uplift on expenses

About this case:

• Citation:
  [2025] CSOH 39
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Sandison

Mex Group Worldwide Ltd conceded payment of expenses of process as a condition of the grant of decree of dismissal, but the defenders and respondents moved the court to award expenses on the agent and client, client paying scale. Mex resisted this, as well as the grant of an additional fee in terms of Rule 5.2 of the Taxation of Judicial Expenses Rules 2019.

The cases were heard together by Lord Sandison in the Outer House of the Court of Session.

Economic warfare

On 11 March 2025, Mex abandoned a commercial action against eleven defenders in the financial services sector and a petition under section 1 of the Administration of Justice (Scotland) Act 1972 against six of those defenders. The petition was aimed at securing “dawn raids” on the residences of two Scottish defenders and the offices of companies in Edinburgh with a view to recovering documents in support of the subject matter of the action. These raids were carried out, with a majority of the documents recovered having nothing to do with the dispute.

Mex had sought declarator that the defenders had engaged in an unlawful means conspiracy directed inter alia at harming its interests by causing Mex Securities to seek to renege on a lawful and binding agreement recorded in a consent order granted by the High Court of Justice of the British Virgin Islands dated 14 December 2020. On 31 January 2025, the deadline by which Mex was to lodge full witness statements for proof, the court was notified of the withdrawal of Mex’s agents in both actions, with abandonment subsequently occurring in March.

On behalf of the Scottish defenders, it was submitted that they had been denied the opportunity to vindicate themselves in an action for which there had never been any proper basis in the first place and sustained considerable disruption to their businesses in the process. The proceedings were a sham intended to avoid an awkward and unwarranted evidential hearing in the BVI. In these circumstances, an additional uplift to expenses was justified.

Counsel for the other defenders submitted that Mex’s conduct of the action had been unreasonable. Mex’s approach had been to engage in extensive ancillary procedure, including seeking a worldwide freezing order in the English courts, all based on affidavit evidence untested by cross-examination. There was a serious danger that this sort of conduct involved the UK courts becoming instruments in a form of attritional economic warfare to oppress defenders, particularly given the notorious costs of BVI and English litigation.

Weaponised existence

In his decision, Lord Sandison said of the effects of the case on the defenders: “The allegations made by Mex in the action were of a very serious kind, amounting to claims of the deliberate commission of economic delicts in the shadow of several varieties of fraud. Although it is fair to say that the defenders enjoyed a range of reputations at the start of proceedings, each might reasonably have been expected to resist those allegations as forcefully as they could, and – so far as their resources permitted – not to be particularly circumspect about whether every penny spent in doing so was spent necessarily and prudently.”

He continued: “The adverse effect of the action’s very existence on the businesses of the defenders (and, in the case of those against whom the dawn raids were mounted, their personal lives and privacy) was very considerable. The action was used as a basis for the dawn raids and for the worldwide freezing order granted (though eventually discharged) in England. I also see no reason to doubt the defenders’ claims that, to some extent at least, Mex weaponised the existence of the action by reporting its existence to the markets in which they were active, with a view to discouraging those who might otherwise have dealt with them from doing so.”

Considering that these factors removed the case from the general run of trade disputes, Lord Sandison added: “Relatively late in the day, and thus after a great deal of trouble and expense had been caused to the defenders, Mex decided for no demonstrably satisfactory reason not to attempt to establish its allegations. Had it been able to show, for example, that a central witness had unexpectedly changed his position on a decisive matter in the course of precognition, or that a document had emerged from a previously unsearched repository which seriously undermined the facts said to give rise to the inferential existence of the alleged conspiracy, then it might have been possible to regard its abandonment as proper and responsible.”

He concluded on the additional fee sought by the defenders: “There is no reason why the additional fee motions should not be granted in relation to each of the requested factors in combination with the agent and client general award. Each of the relevant factors was copiously reflected in the facts of the case, and that justified a correspondingly ample enhancement of 15% in respect of each such factor with no discount to reflect the multiple grounds allowable.”

The court therefore found Mex to be liable to the defenders in the expenses of the causes on an agent and client, client paying basis, with a 15% increase in the level of charges to be allowed at taxation in terms of paragraphs (a), (b), (c), (e) and (f) of Rule 5.2 of the Judicial Expenses Rules. Mex was also found liable to the Scottish defenders for payment of interim expenses in the sum of £150,000 in each process, and the court authorised the sum to be lodged as caution.

Representation (First action):
Pursuer and petitioner: Wolffe KC, Massaro; Dentons UK and Middle East LLP
First, Second, Fifth, Sixth and Seventh Defenders and First through Fifth Respondents: McBrearty KC, E. Campbell; BTO Solicitors
LLP
Third Defender: Party
Fourth and Ninth Defenders: R. Anderson; Harper Macleod LLP
Eighth Defender and Sixth Respondent: K. Young, Young & Partners Business Lawyers Limited
Tenth and Eleventh Defenders: No representation