A Taiwanese bank sends a ‘proof of funds’ letter to an English company, Vegesentials, which is looking for investment to launch an innovative new product. The product is FibreWater, Europe’s first prebiotic functional water with EU-approved digestive health benefits. Vegesentials relies on the letter, signing with a group of international investors, and so passes up on an opportunity to secure alternative investment from a fund in Saudi Arabia. But the letter is a fraud, sent by a rogue employee of the bank who is part of a wider criminal conspiracy. By the time the fraud is discovered, it’s too late: the Saudi investor is no longer interested and a promising business fails for lack of finance.
This sorry story was the basis for a claim against the Taiwanese bank for fraudulent misrepresentation. Vegesentials 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. After seeing off an early jurisdictional challenge, and with litigation funding from Henderson & Jones, Vegesentials was successful at trial: see Vegesentials Ltd & Anor v Shanghai Commercial & Savings Bank Ltd  EWHC 7 (Ch). It was awarded total damages plus costs of more than £7m.
The judgment was handed down on 5 January 2024 and a copy can be found here. 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.