Neutral Citation Number: [2011] EWHC 1582 (Ch)
Case No: HC08C01237
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 21/06/2011

Before :

MR JUSTICE NEWEY
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Between :

	THEODORE ION SOUTZOS	Claimant	
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	(1)	JOSEPH ASOMBANG
(2)	FIONA CATHERINE DAWKINS
(3)	CHRISTINE ELLEN FOX	Defendants	

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Mr Robert Levy QC and Mr Sebastian Prentis (instructed by Olephant Solicitors) for the Claimant
Mr David Guy (instructed by DKLM LLP) for the Second and Third Defendants

Hearing dates: 16-18 and 21 March and 9-13 and 16 May 2011
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Judgment

Mr Justice Newey : 

Introduction
1.	The proceedings before me were issued at the end of April 2008. The Claimant, Mr Theodore Soutzos, applied at the outset for injunctive relief, and on 1 May 2008 Warren J granted a freezing injunction against each of the three Defendants. The injunction, in particular, restrained the Second Defendant (Miss Fiona Dawkins) and the Third Defendant (Miss Christine Fox) from dealing with properties at 122 Uxbridge Road, Shepherds Bush, London W12 (“122 Uxbridge Road”), 10 Shepherds Bush Road, London W6 (“10 Shepherds Bush Road”), 57-61 West Wycombe Road, High Wycombe (“57-61 West Wycombe Road”) and 10 Wadsworth Road, Perivale (“10 Wadsworth Road”). Mr Soutzos gave the usual cross-undertaking as to damages.
2.	On 23 April 2010, following a trial, I dismissed Mr Soutzos’ claims against Miss Dawkins and Miss Fox. I also decided that Mr Soutzos’ cross-undertaking should be enforced and directed that there should be an inquiry as to damages.
3.	The issue before me now is what, if any, compensation should be awarded. Miss Dawkins and Miss Fox contend that the freezing injunction caused them very substantial loss and that they should therefore be awarded a large sum by way of compensation. Mr Soutzos, on the other hand, denies that there should be any award at all in favour of Miss Dawkins or Miss Fox.
The claims made by Miss Dawkins and Miss Fox
4.	The case advanced by Miss Dawkins and Miss Fox is, in brief summary, as follows. 
5.	Had it not been for the freezing injunction, Clydesdale Bank (“Clydesdale”) would, it is said, have made loans totalling £3.5 million to Miss Fox and a company she owned, 3i Developments Limited (“3iD”). That money would in part have been used to discharge debts to Lancashire Mortgage Corporation Limited (“LMC”) in respect of which Miss Fox and Miss Dawkins both bore liability. The loans would also have enabled 3iD to proceed with the purchase of some expensive machinery which was crucial to its plans. 
6.	As a result of the injunction, it is alleged, Clydesdale did not make the proposed loans. In consequence, Miss Dawkins remained liable on the indebtedness to LMC and Miss Fox continued to have to pay the high rate of interest which LMC charged. The loss of the Clydesdale loans also served to strangle Miss Fox’s fledgling business. That left Miss Fox having to bear debts in respect of which she had given guarantees for 3iD or which she had herself incurred in anticipation of the Clydesdale loans proceeding. It also meant that she was unable to service existing loans, with the result that the properties securing them were repossessed and sold. It had the result, too, that Miss Fox lost the income which 3iD would have generated, and, in the absence of that income, she had to borrow money from a friend. 
7.	In Miss Dawkins’ case, the injunction had (she contends) the additional consequence that she was unable to sell (to Miss Fox) some flats of which she was the joint owner and which have subsequently been repossessed. Miss Dawkins has, moreover, lost the £50,000 which Miss Fox was to pay her when 10 Wadsworth Road was transferred to Miss Fox, as it would have been had the Clydesdale loans been made.
8.	The sums which Miss Fox and Miss Dawkins claim are very large indeed. Miss Dawkins’ loss is put at £3,099,173 and Miss Fox’s at £5,188,268.42. The claims overlap to an extent, but the total loss is nevertheless alleged to be of the order of £6 million. That figure is nearly ten times larger than the loan which Mr Soutzos was originally seeking to recover.
Witnesses
9.	Miss Dawkins and Miss Fox each gave evidence. I expressed the view in the judgment I gave on 23 April 2010 (“the Judgment”) that I could not regard either of them as a reliable or even a truthful witness (see paragraph 19). I noted, among other things, that Miss Dawkins and Miss Fox would sometimes deny remembering the answers to questions that they were asked in cross-examination “as a way to avoid providing a substantive response” (paragraph 15) and that I did “not think that I was told anything like the whole truth” (paragraph 16). At this hearing, too, Miss Dawkins and Miss Fox professed themselves to be unable to answer questions that they could have been expected to respond to, and I am once again left with the strong feeling that I have not been told anything like the full story (for example, as to the inter-connections between Miss Dawkins, Miss Fox and the First Defendant, Mr Joseph Asombang). It seems to me that I must continue to treat evidence given by Miss Dawkins and Miss Fox with very great caution. I would add, more specifically, that I view Miss Dawkins’ evidence about “Miss Catherine Permalloo” very sceptically.
10.	The only other witnesses were two officers of HM Revenue and Customs, Mr Rohit Babla and Mr Nigel Waterfield. Both, I am confident, were truthful and reliable witnesses.
11.	The hearing bundles included a number of letters giving accounts of events. A notable example is a letter to Miss Fox dated 24 February 2010 in which a Mr Steve Williams of Clydesdale apparently refers to Clydesdale’s willingness to lend money in 2008. Another example is to be found in a letter which Mr Ali Ravanshad (as to whom, see paragraph 10 of the Judgment) wrote on behalf of Dandi Living Limited on 14 March 2011 confirming that 3iD had been commissioned to carry out certain works. It seems to me that, the authors of such letters not having given evidence, I can attach little or no weight to them except insofar as their contents are uncontroversial. Mr David Guy, who appears for Miss Dawkins and Miss Fox, pointed out that his clients had not had legal representation until shortly before the hearing began in March, but (a) they have had legal representation since then, (b) they appear to have had some assistance from solicitors at earlier stages, (c) both they and Mr Asombang (who was in court for all or most of this hearing) have had a good deal of previous experience of litigation (as I noted in paragraph 20 of the Judgment, they conducted the trial with considerable skill), (d) there is no evidence that the authors of the letters were not available to give oral evidence and (e) the simple fact is that there has been no opportunity for Mr Robert Levy QC (who appears for Mr Soutzos with Mr Sebastian Prentis) to explore what is said in the letters with their authors.
Factual history
12.	For relevant purposes, it is sufficient to pick up the story in 2007. I gave an account of earlier events in the Judgment (which has the neutral citation number [2010] EWHC 842 (Ch) and is reported at [2010] BPIR 960).
13.	At the beginning of 2007, Miss Dawkins was the sole owner of two flats at Morley House in Harrow (see paragraph 98 of the Judgment). She was also the registered proprietor of 122 Uxbridge Road, 10 Shepherds Bush Road and 10 Wadsworth Road. However, Miss Dawkins held the last of these on trust for Miss Fox (subject to, among other things, payment of a £50,000 fee to herself) and the others on trust for herself and Miss Fox in equal shares (see paragraphs 49, 76 and 96 of the Judgment). Miss Dawkins was additionally one of the proprietors of 57-61 West Wycombe Road, the other being Mr David Omurogie Junior Obaze (see paragraphs 77 and 78 of the Judgment).
14.	Apart from the Morley House flats, all these properties were mortgaged to Lancashire Mortgage Corporation Limited (“LMC”). 122 Uxbridge Road had been the subject of a re-mortgage with LMC (see paragraph 52 of the Judgment), while 10 Shepherds Bush Road, 10 Wadsworth Road and 57-61 West Wycombe Road had all been bought with funding from LMC (paragraphs 75, 77 and 91 of the Judgment). LMC’s security for the 10 Wadsworth Road lending extended to 122 Uxbridge Road, 10 Shepherds Bush Road and 57-61 West Wycombe Road as well as 10 Wadsworth Road itself.
15.	At the end of March 2007, Miss Fox left Faron Sutaria, the West London estate agents where she had been a director. She had given notice of resignation on 26 October 2006.
16.	3iD was incorporated on 27 June 2007. Miss Fox is both the sole director and the only shareholder. The plan, Miss Fox explained, was for the company to carry on business as a bespoke furniture manufacturer. Initially, however, more general building works were undertaken.
17.	Miss Fox had been using the name “3i Developments” before 3iD was incorporated. Such trading had generated well over £100,000 of receipts by the time 3iD came into being (as a result of which, it seems clear, Miss Fox should have registered for VAT on a personal basis). By the end of October 2007, total receipts (of 3iD and the predecessor business) amounted to about £650,000.
18.	Nonetheless, 3iD did not have a bank account of its own until September 2007, when an account for the company was opened with Barclays Bank. In the following month, an account was opened with National Westminster Bank in the name “Miss Christine Fox t/a 3i Developments”. Before these accounts were opened, Miss Dawkins’ accounts were used, and money continued to pass through her accounts even after 3iD had acquired an account of its own. When asked about sums due to 3iD which were deposited in an account of Miss Dawkins as late as December 2007, Miss Fox suggested that the customer in question had been used to paying money into that account. That, however, is not a satisfactory explanation since the relevant customer had paid money attributable to the same job into 3iD’s account with Barclays a couple of months previously. More generally, I find the use of Miss Dawkins’ accounts very puzzling, the more so once 3iD had accounts of its own.
19.	A linked puzzle relates to how Miss Fox and Miss Dawkins kept track of the state of account between them. If Miss Dawkins was handling large sums for Miss Fox or 3iD, it was surely desirable that some kind of record be maintained of the receipts and payments, especially as (a) receipts and payments did not necessarily correspond precisely and (b) transactions were often effected in cash. However, Miss Fox was adamant that no running account was maintained.
20.	3iD registered for VAT with effect from 1 December 2007. Miss Fox accepted in cross-examination that she should have registered 3iD earlier. It was only, it appears, after it had been registered for VAT that 3iD began issuing invoices for its work. The first invoices date from December 2007. 
21.	By now, Miss Fox had acquired the Morley House flats formerly owned by Miss Dawkins. In October 2007, receivers appointed by a mortgagee sold the flats at auction. The flats were bought by Miss Fox with funding of £850,000 from Derbyshire Building Society. 
22.	Receivers were also at this period appointed, by LMC, over 10 Wadsworth Road. As, however, Miss Fox explained in a witness statement in May 2008, “following a substantial payment [LMC] agreed to the reinstatement of the mortgage”.
23.	By October 2007, Miss Fox was seeking to re-mortgage 10 Wadsworth Road. To this end, a document headed “Christine Fox – Projects and liabilities” was supplied to a mortgage broker, Mr Malik. I said the following about this in the Judgment (in paragraph 18):
“Miss Fox said in a witness statement that this was ‘sent to [Mr Malik] on 11 October 2007 … in order that he could attempt to source finance for [her] to re-mortgage [10 Wadsworth Road]’ with a fax from Mr Asombang. Mr Asombang nonetheless claimed in cross-examination that he did not know who had created the ‘Projects and liabilities’ document and that he could not be sure that it was the document that Mr Malik was given. As regards Miss Fox, she said in cross-examination that she believed that she had created, and Mr Malik had been sent, the bottom half of the document; she asserted that she had not created the whole of the document (specifically, the upper part, which she agreed was inaccurate). She further suggested that she had cut-and-pasted from elsewhere some of the information in the part of the document for which she accepted responsibility. I am unable to accept either that the evidence which Mr Asombang and Miss Fox gave about the ‘Projects and liabilities’ document was correct or that Mr Asombang and Miss Fox believed it to be so.”
24.	At much the same time, a business plan (“the Business Plan”) for 3iD was prepared. Miss Fox gave evidence to the effect that the plan was supplied to Clydesdale, from which Miss Fox was seeking funding, in mid-December 2007. At first sight, this is hard to reconcile with a “Profit & Loss worksheet” which formed part of the plan. The “Profit & Loss worksheet” gave what were described as “Actual” figures for October, November and December 2007 and January 2008 and “Expected” figures for subsequent months. This suggests that the Business Plan dates from no earlier than February 2008, but Miss Fox said that the December and January figures had been entered as “Actual” by mistake, and I am prepared to assume that that is correct. Miss Fox’s account derives support from the fact that a “Cash flow forecast worksheet” gave “Actual” figures for only October and November 2007; the entries in respect of December 2007 and January 2008 were in the “Expected” columns.
25.	The Business Plan stated that the director and management of 3iD had “identified a demand for high end bespoke joinery to include kitchens, bedroom furniture and all aspects of joinery that can be tailor-made to individual specifications”. It was explained that the objective was “to provide a complete service from producing the initial drawings of proposed and existing plans with an In-house team of architects, undertaking extensions, loft conversions and refurbishment, all with an in-house team, manufacturing all joinery, designing and building kitchens via a specialist kitchen designer, and producing bathrooms and wardrobes in our own London factory”. To achieve its aims, the company intended “to purchase 18 state of the art computerised and fully automated machines” which “will cover all aspects of joinery”.
26.	The Business Plan gave the following information about “Current Contracts”:
“We have contracts in place worth over £4,000,000 and are committed to these contracts until October 2009. The contracts are to supply the joinery for a large project at 3-7 Fitz John’s Avenue in Hampstead, MW3 and another sizeable development in Kensington. They are high-end residential developments and we have been commissioned to provide all the kitchens, bedroom and bathroom furniture, including be-spoke wardrobes for each of the bedrooms; windows; doors; skirting, architraves and miscellaneous furnishings. The first contract is worth £2,500,000 to us and the second £1,500,000 to us. The profit from these two contracts is estimated at around 40% which equates to £1,600,000” (emphasis added).
The customers were named as Kensington International Limited (for the Hampstead contract) and “JLP Raven” (for the Kensington work). 3iD was stated to “have agreed the initial contract to commence works in March 08” (in the case of Hampstead) and “April 08” (in the case of Kensington). The Business Plan also referred to 3iD having a “guaranteed portfolio of contracts in place amounting to in excess of £4,000,000” (emphasis added).
27.	As already mentioned, the Business Plan included both a cash flow forecast and profit and loss figures. The cash flow forecast showed “Actual” cash sales of £125,128 and £122,508 in respectively October and November 2007 and “Expected” cash sales of £125,000 in December 2007, £155,000 in January 2008, £180,000 in February 2008 and £380,000 in March 2008. By September 2008, monthly cash sales were forecast to have risen to £755,000. Receipts were projected to amount to £5.715 million in the year from December 2007 to November 2008. As for the “Profit & Loss worksheet”, this envisaged that there would be losses every month until April 2008 (in amounts varying between £75,928 and £8,056), but that there would then be rapidly increasing profits.
28.	The “Actual” figures for October and November 2007 do not tally in all respects with other evidence. For example, receipts into 3iD’s bank accounts in November 2007 totalled only about £70,000, and it is not obvious that £47,970.62 of this figure was attributable to sales. (Miss Fox said that the £47,970.62, which was paid to 3iD by Montague Lambert, a firm of solicitors which often acted for one or more of the Defendants, was originally a loan but was subsequently treated as a payment on a job.) Even if the whole of the £70,000 odd is aggregated with a sum of £11,000 which is said to have been received in cash, the total is substantially less than the “Actual” figure for November cash sales of £122,508. The likelihood is, I think, that the figure given for cash sales in November 2007 was entered in the Business Plan without belief in its accuracy.
29.	Aside, however, from the accuracy of the October and November figures, it is clear that 3iD did not achieve the “Expected” levels of sales in the next months. There were no receipts at all into 3iD’s bank accounts in December 2007, and receipts into the bank accounts from sales in January, February and March of 2008 amounted to no more than £1,854.42, £110,000 and £3,699 respectively. Miss Fox said that sums totalling £142,630 had been received from sales in cash between December 2007 and March 2008, and two payments of £16,000 each into an account of Miss Dawkins in December 2007 were also attributed to 3iD. However, even allowing for these additional sums, sales were running far below the predicted levels, and 3iD will presumably have been generating losses rather larger than those envisaged in the Business Plan. 3iD’s VAT returns indicate even lower levels of turnover (the return for December 2007 recorded total sales at £35,744 and that for the first three months of 2008 total sales at £68,085), but Miss Fox sought to explain these figures on the basis that she had not thought it necessary to include sums received from contracts entered into before the company had become registered for VAT (from 1 December 2007).
30.	The £5.715 million forecast for receipts in the year from December 2007 to November 2008 can, moreover, be contrasted with a figure Miss Fox gave when applying for VAT registration. The application form submitted on 13 December 2007 estimated that 3iD’s taxable turnover in the next 12 months would be just £600,000. When asked about this in cross-examination, Miss Fox suggested that there might be a “missing nought”. That explanation might have been plausible if the application form had not contained other inaccuracies which cannot be accounted for in this way. For example, the date 3iD “first made taxable supplies” was given as 1 December 2007 (although the company had been trading since mid-2007), 3iD’s taxable turnover was said to be “below the current registration threshold (which was only £64,000), and Miss Fox answered “No” to a question asking whether she had been involved in “any other business in the UK … either as a sole proprietor, partner or director” in the last two years. On balance, I take the view that Miss Fox was knowingly giving Clydesdale and HM Revenue and Customs inconsistent turnover figures. The chances are that she exaggerated in both cases (upwards in one instance, downwards in the other).
31.	As for the “Current Contracts”, Miss Fox accepted in cross-examination that there were no actual “contracts in place” at the date of the Business Plan. Miss Fox said that she was confident of being given the work, but, even if that is right, it remains the case that the statements to that effect in the Business Plan were inaccurate, and Miss Fox will, I think, have been aware of the inaccuracies. Miss Fox also maintained that Clydesdale “knew exactly what was going on with those contracts every step of the way”, but I am afraid that I am not prepared to accept that when there is (a) no confirmation of that in the contemporary documentation and (b) no one from Clydesdale has given evidence.
32.	In the event, the Hampstead project ran into considerable difficulties. While Mayfair Property Developments Limited (which was the owner, or effective owner, of the property) appears to have begun work at 3 Fitzjohn’s Avenue in July 2007, the development for which planning permission had been given became unlawful as a result of the extent of the demolition that was carried out, and in October 2008 a fresh application for planning permission was made. At that point, it was estimated that, once the main construction works had been done, “a further £1,800,000 would be necessary to complete the project to a ‘finished’ condition”. At the beginning of 2010, however, the original contractor went into administration. In late 2010, full completion was apparently scheduled for July 2011.
33.	When listing her own assets in the Business Plan, Miss Fox put the value of 10 Wadsworth Road at £3.2 million. In contrast, DKLM, the solicitors acting for Miss Dawkins and Miss Fox, told Mr Soutzos’ solicitors in a letter in May 2008:
“in October/November 2007 the valuer for [LMC] informed our clients that in his view the property [i.e. 10 Wadsworth Road] subject to [Miss Fox’s] occupation of the building was:-
a.	Open market value circa £2.4M;
b.	Forced sale value circa £1.95M.”
34.	On 29 January 2008 Miss Dawkins entered into what was, on its face, a contract for the sale of 10 Wadsworth Road to a company called Heyville Limited (“Heyville”) for £1,850,000. Under the contract, Miss Dawkins acknowledged receipt of a “deposit” of £145,000. A separate contract allowed Miss Dawkins to obtain her release from the “sale” contract by repaying the £145,000 and “a fee for that borrowing calculated at the rate of £6,000 per calendar month”.
35.	Miss Fox and Miss Dawkins both maintained that the “sale” contract was meant to serve as security for a £145,000 debt which Miss Fox owed, and I am inclined to accept that that was the case. The contract will still, however, have represented an encumbrance on title to 10 Wadsworth Road.
36.	I found the evidence about the ownership of Heyville confusing. When giving evidence on 18 March, Miss Fox said that Mr Asombang had dealt with Mr Ravanshad in relation to the loan and that she could not remember whether she  had known at the time that she was borrowing from Mr Ravanshad. On 9 May, however, Miss Fox said that “Heyville was not a Ravanshad company” and that Ravanshad was rather “the catalyst”. Miss Fox said that she associated Heyville with Mr Franassovici (as to whom, see paragraph 92 of the Judgment). For her part, Miss Dawkins said that she did not know who was behind Heyville or, at least, that she could not remember having known.
37.	Also on 29 January 2008 Miss Fox acquired both 122 Uxbridge Road and 10 Shepherds Bush Road (in respect of each of which Law of Property Act receivers had been appointed) from Miss Dawkins with funding from Abbey National. The value of Miss Dawkins’ half-share in the properties (which was what, in substance, Miss Fox was buying) was calculated to be £741,500, but the purchase price was set at £906,000 so that the mortgage in favour of LMC was redeemed. The transaction is explained in more detail in paragraphs 99 and 100 of the Judgment.
38.	Shortly before this, on 24 January 2008, Mr Williams of Clydesdale had emailed Miss Fox to say that the requested facilities (viz. an “Investment Facility of £2.5m” for Miss Fox and an “Asset Finance Facility of £1m” for 3iD) had been “formally approved” by Clydesdale. Mr Williams proceeded to summarise “the main terms of both approvals”, but he noted that facility letters would be available in due course. The plan was for Miss Dawkins to transfer 10 Wadsworth Road into Miss Fox’s name at the point the property was mortgaged to Clydesdale.
39.	A facility letter in respect of the £2.5 million facility was issued on 4 March 2008. The offer was stated to incorporate standard terms and conditions. Mr Soutzos pressed for these to be disclosed, but they have not been. Miss Fox said in cross-examination that she had never received them, but that strikes me as most unlikely, the more so since Miss Fox acknowledged their receipt by countersigning the facility letter. At all events, I have not seen the terms and conditions. One of the consequences is that the definitions of a number of terms used in the facility letter are not available.
40.	The facility letter also provided for certain “Preconditions” to apply. These included the following:
i)	“A statement of your assets and liabilities in a form acceptable to us” (paragraph 2(a));
ii)	“You shall provide written confirmation that all statutory payments are up to date, examples of statutory payments are payroll tax, good and services tax VAT, compulsory superannuation, property rates / taxes or utility charges” (paragraph 3(e)); and
iii)	“A certificate of title from your solicitors or report on title from our solicitors (as specified by us) in respect of each property to be charged to us by way of standard security” (paragraph 3(h)).
41.	The facility letter contained, too, a number of undertakings, to be complied with “from the date of your acceptance of this letter” (which, in the event, was 7 March 2008). By clause 9, Miss Fox undertook to supply, among other things, the following:
“… (b)   promptly on becoming aware of them, details of any litigation, arbitration or administrative proceedings brought or threatened against any Relevant Person which, if adversely determined, would have a Material Adverse Effect;
… (d)   promptly on becoming aware of its occurrence, details of any Default and the steps (if any) being taken or proposed to be taken to remedy it”.
By clause 10.2, Miss Fox undertook that she would “not create or permit to subsist any Security over any of [her] assets or undertaking other than any Permitted Security”.
42.	“Relevant Person”, “Material Adverse Effect”, “Default” and “Security” all appear to be defined terms, but their definitions are not known. They were doubtless to be found in the standard terms and conditions.
43.	A draft certificate of title was prepared. This provided for Montague Lambert to confirm, among other things, that there were “no mortgages, charges or liens, legal or equitable, specific or floating, affecting the Property” and that there were “no agreements for sale, estate contracts, options, rights of pre-emption or similar matters affecting the Property the provisions of which remain to be observed or performed”. The draft also referred to a Land Registry search having been carried out as a result of which Clydesdale was to have priority until 23 April 2008.
44.	A draft “Property Undertaking”, which Montague Lambert were also to complete, provided for Montague Lambert to undertake to ensure that on completion they obtained “the discharge of any existing charge over the Property, or a solicitor’s undertaking to procure the discharge of any such charge”.
45.	The only document I have seen which could be said to be a “statement of [Miss Fox’s] assets and liabilities” (as to which, see paragraph 40(i) above) is a form dated 21 February which, I understand, Miss Fox completed for Clydesdale online. When filling in the form, Miss Fox made no reference to the Heyville liability even though (as Mr Guy accepted) it ought to have been disclosed. In my judgment, the omission was probably deliberate.
46.	In the “statement of assets and liabilities” (“the Statement of Assets”), Miss Fox gave her “Annual Net Income” as £80,000. In cross-examination, Miss Fox accepted that she did not in fact have an income of £80,000 a year; that, she said, “was what [she] wanted for the company to pay [her] that year”. Miss Fox asserted that Clydesdale “knew perfectly well what the situation was”, but I cannot accept that given the absence of corroborating evidence. The likelihood is, I think, that Miss Fox knowingly misrepresented her income.
47.	Miss Fox also in the Statement of Assets gave the value of 10 Wadsworth Road as £3.7 million. In cross-examination, Miss Fox said that, at the time, it was her honest opinion that, having regard to works that had been carried out at the property, it was worth £3.7 million. She also said:
“At one time speaking to the local agents there was a valuation of £3.7 on Wadsworth just on sales that were happening at that time.”
48.	I am unable, however, to accept that Miss Fox genuinely believed 10 Wadsworth Road to be worth as much as £3.7 million or, indeed, that there was ever “a valuation of £3.7”. Not only is no such valuation available (Miss Fox said that there “wasn’t anything to disclose”), but I am aware of no reference to the supposed valuation in the contemporary documentation. Moreover, (a) the property had been bought only about 18 months earlier for about £1.1 million, (b) Miss Fox had apparently been told in October/November 2007 that the open market value of the property was about £2.4 million (see paragraph 33 above), (c) the property was valued at £2 million in mid-2008 (see paragraph 92(ii) below) and (d) Miss Fox had an estate agency background. 
49.	On the other hand, Clydesdale was provided in June/July 2008 with one of the reports valuing 10 Wadsworth Road at £2 million (as to which, see paragraph 92(ii) below) and this did not cause it to alter its position. It wrote in a letter dated 8 July that its “position is unchanged in light of the valuation”.
50.	The facility letter for the £1 million facility has not come to light despite Mr Soutzos asking for disclosure of all correspondence with Clydesdale. Miss Fox said that she had only received the one facility letter, for the £2.5 million loan, but that cannot be right; there must have been a facility letter dealing with the £1 million. Mr Williams’ email of 24 January 2008 provides some indication of what it will have contained. The email listed the following conditions precedent and covenants as applying to the facility:
“Conditions Precedent
… 5.   Clear credit search on Christine Fox
6.	Opening Balance Sheet for 3i Development Limited ….
Covenants
1.   Quarterly Management Information to include P&L, Balance Sheet and current projects secured and underway …. 
4.   Interest cover of 200% for the year ending September 2008 followed by 300% for every subsequent year.”
51.	It is evident that Miss Fox and 3iD were not to be free to do whatever they wished with the proposed loans. The facility letter in respect of the £2.5 million loan required Miss Fox to “apply each Loan towards the purchase of 10 Wadsworth Road”. A letter from Clydesdale dated 22 May 2008 specified that the £2.5 million advance was to “redeem the current lending on the property” (estimated at £1.9 million) with £500,000 of the balance “to be injected … into 3i Developments and used as deposit on the machinery detailed in your business plan” and that the £1 million advance was to “purchase various items of CNC plant machinery as per Business plan". In a letter dated 18 June 2008, Clydesdale explained:
“ •   On drawdown of the initial mortgage sum £2,500,000 the Bank will release a sum required to redeem the current mortgage with [LMC] in the sum £1.9M - £2.0M.
•   The balance circa £0.5M - £0.6M will be held by the bank and then utilised in payment of the required deposit for the various items of equipment for which further purchase funding at £1.0M has previously been approved by Clydesdale Asset Finance.”
52.	Miss Fox was also during this period seeking funding from National Westminster Bank. On 17 March 2008 National Westminster Bank told Miss Fox in an email that facilities in a total sum of £1,836,050 had been agreed for the purchase of some eight properties, of all or most of which Mr Asombang or Miss Dawkins was an owner. The likelihood is that the £1,836,050 was intended to represent 70% or so of the properties’ purchase price: National Westminster Bank has said that the £1.836 million was “73% loan to value”, and Miss Dawkins gave evidence to the effect that Miss Fox would have been buying the flats at 57-61 West Wycombe Road, on which National Westminster Bank was to lend £177,450 per flat, for £250,000 each. The conditions were to include valuations of the properties, confirmation that the Clydesdale loan had been drawn and confirmation from Miss Fox’s accountant that her personal tax position was up-to-date.
53.	I find it hard to understand why Miss Fox was thinking of borrowing so much money from National Westminster Bank and harder still to see how she could have raised the balance of the purchase price of the properties. Miss Fox would have had enormous mortgage liabilities without taking on any more: these would have included debts of some £3.5 million to Clydesdale, £850,000 to Derbyshire Building Society, £1.111 million to Abbey National and more than £200,000 to Bank of Scotland. In January 2008, Miss Fox had borrowed an additional £32,500 from Bank of Scotland (on the security of a property she owned at 3 Rayner Court, Bamborough Gardens, London W12), and in February she had borrowed some £110,000 from LMC (on the security of 10 Wadsworth Road). She was, nevertheless, unable to meet her liabilities as they fell due. By 13 February, Miss Fox had made only one of the four mortgage payments due to Derbyshire Building Society, and the Society wrote to warn her that full repayment would be demanded if the arrears were not cleared. On 26 March, the Society made a formal demand for payment of £867,758. It appears that Miss Fox succeeded in paying the March and April mortgage instalments (from a 3iD account), but she remained behind with her payments. As regards Abbey National, Miss Fox duly made mortgage payments in February and March 2008, but payments then stopped. In particular, Miss Fox failed to pay the instalment due on 29 April. In April two payments from one of 3iD’s bank accounts (one a direct debit and the other a cheque) also went unpaid. On the footing that the £1.836 million represented “73% loan to value”, the total purchase price could be expected to have been some £680,000 more than the £1.836 million. There is no reason to suppose that Miss Fox had access to such funds. Whatever savings Miss Fox may formerly have had must have been exhausted.
54.	It is also noteworthy in this context that Miss Dawkins stated in a witness statement of 21 May 2008:
“Unfortunately [LMC] are threatening the Receivers such that I wish the opportunity to re-finance this property [i.e. 57-61 West Wycombe Road], alternative to sell the same ….”
Miss Dawkins made no reference to any agreement to sell 57-61 West Wycombe Road to Miss Fox.
55.	On 20 February 2008, 3iD placed an order with Homag U.K. Limited (“Homag”) for two machines costing, between them, £140,365 plus VAT. The acquisition was funded through Barclays Mercantile Business Finance Limited on a lease purchase basis. Miss Fox gave a guarantee.
56.	On 19 March 2008, Clydesdale’s solicitors confirmed in an email to Montague Lambert that “funds should be available within 48 hours of receipt” of, among other things, the certificate of title and property undertaking (as to which, see paragraphs 43 and 44 above). On 21 February, however, Mr Soutzos had applied for a restriction to be entered on the register in relation to, among other properties, 10 Shepherds Bush Road, 122 Uxbridge Road, 10 Wadsworth Road and 57-61 West Wycombe Road. On 1 May, as already mentioned, a freezing injunction was granted. Shortly afterwards, Miss Fox applied for the injunction to be varied so as to allow 10 Wadsworth Road to be transferred into her name and the Clydesdale loans to proceed. In support of her application, Miss Fox stated in a witness statement dated 23 June that she needed to “purchase plant and machinery and undertake the installation of dust extraction machinery the total cost of which … is £1,522,034 plus VAT”. She explained that the £3.5 million she wished to borrow from Clydesdale would be utilised as follows:
“3.2.1   	circa £1.93 million to redeem the [LMC] loan, and
3.2.2	circa £70,000 being the costs of transfer, to include SDLT [i.e. stamp duty land tax] and all other disbursements, and
3.2.3	£1,522,024 being the VAT exclusive price for the plant and machinery, [which can be released in tranches]. VAT will in effect be a cash flow issue. I will require to pay the VAT on the deposits but this will then be repaid in due course.”
In similar vein, Miss Fox stated in a witness statement dated 30 July 2009:
“any monies left over following the redemption of the mortgage to [LMC] were to be utilised in the purchase of plant machinery.”
57.	It is reasonable to infer that the £1,522,024 figure was attributable to the following:
i)	The purchase of 13 more items of machinery from Homag at a cost of £1,240,000 plus VAT;
ii)	The purchase of further machinery from John Penny Limited at a cost of £163,035 plus VAT; and
iii)	The purchase of extraction and heating systems from Air Plants Dust Extraction Limited (“Air Plants”). The total cost of this, excluding VAT, was £118,989.40. Air Plants raised an invoice for a deposit of £23,675.80 on 7 January 2008 and a stage payment invoice for £5,261.29 on 31 March. The balance of £105,811.46 (plus VAT) was invoiced on 30 April. Miss Fox explained in evidence that the other machinery was unusable without a dust extractor.
58.	So far as stamp duty land tax is concerned, Miss Fox said in cross-examination that no stamp duty land tax would in fact have been payable.
59.	As regards the LMC loan, it appears that the total cost of redeeming this would have been about £1.88 million in early June 2008. If, as seems to be the case, mortgage instalments were not being paid, the cost of redemption would have been somewhat smaller if redemption had taken place earlier. Supposing, for example, that the mortgage had been redeemed a month earlier (i.e. soon after the injunction was granted), mortgage instalments of something of the order of £25,000 could have been saved (though interest would instead have been payable to Clydesdale, albeit at a lower rate).
60.	Miss Fox said in cross-examination that she would have been able to pay off the arrears on her Derbyshire Building Society mortgage if the Clydesdale loans had been made. She also said that liability to Heyville would have ceased had the Clydesdale transaction been completed, on the basis, as I understand it, that Heyville would have been paid what it was owed. For her part, Miss Dawkins has said that she “was to have received £50,000.00 [i.e. the “fee in the sum of £50,000” for which provision was made in the trust deed relating to 10 Wadsworth Road] from the refinancing of this property”.
61.	Miss Fox continued to correspond with Clydesdale up to September 2008, but no loan was ultimately made. Miss Fox referred in her evidence to Clydesdale “pulling away from the deal” in mid-September because they were “not prepared to take a risk in this market”.
Legal principles
62.	Both sides referred me to Arnold J’s helpful survey of the relevant legal principles in Lilly Icos LLC v 8PM Chemists Ltd [2009] EWHC 1905 (Ch), [2010] FSR 4.
63.	It was not disputed that the burden of proving loss lies on Miss Dawkins and Miss Fox. It was also common ground that “but for” causation applies. It follows that it must be incumbent on Miss Dawkins and Miss Fox to prove that the losses they allege would not have occurred but for the injunction. On the other hand, Miss Dawkins and Miss Fox do not need to show that the injunction was the sole cause of a loss (see the Lilly Icos case, especially at paragraphs 32 and 37 of Arnold J’s judgment).
64.	Mr Guy sought to draw an analogy with Baker v Willoughby [1970] AC 467. In that case, the Claimant’s leg had been injured as a result of the Defendant’s negligence, but the leg subsequently had to be amputated after the Claimant had been shot in an armed robbery. It was argued that the Defendant could not be regarded as having caused an injury which would have occurred in any event, but the House of Lords decided otherwise. Mr Guy argued that similar principles would apply if, say, I concluded that the injunction had brought about a particular consequence but it would have happened anyway at a later date. The operative cause, he said, would be the injunction and I should ignore subsequent events.
65.	However, Baker v Willoughby was distinguished in Jobling v Associated Dairies Ltd [1982] AC 794 (by the House of Lords) and Heil v Rankin [2001] PIQR Q3 (by the Court of Appeal). In the latter case, Otton LJ observed (in paragraph 17) that in Jobling Lord Keith “was clear that the rule that he formulated, of ignoring the occurrence of a second tort when awarding damages against a first tortfeasor, could not be justified on any identifiable juristic basis, but rather was a just and practical solution to avoid the barrier to full compensation that would arise if the normal rules were applied to their full extent”. In the present case, there is no “second tort” to consider and no need to search to avoid a “barrier to full compensation”; the position is rather that Miss Dawkins and Miss Fox could be over-compensated if events subsequent to the grant of the injunction were not taken into account. In any case, I was not referred to any case in which the Baker v Willoughby approach has been applied in a non-tortious context. In my judgment, it would be wrong in principle in the present context for me to ignore the fact that an event would have occurred anyway. If, for example, it were clear both (a) that the injunction had strangled 3iD’s business and (b) that the business would anyway have failed later in the year, it could not be right to award compensation without regard to the latter fact. That would involve putting Miss Dawkins and Miss Fox in a better position than they would have been in had the injunction never been granted.
66.	Mr Guy placed particular reliance on the passage from Norris J’s decision in Les Laboratoires Servier v Apotex Inc [2008] EWHC 2347, [2009] FSR 3 which Arnold J quoted in paragraph 21 of his judgment in Lilly Icos. The passage in question (at paragraph 9 of Norris J’s judgment) reads as follows:
“Thirdly, whilst it is for Apotex to establish its loss by adducing the relevant evidence, I do not think I should be over eager in my scrutiny of that evidence or too ready to subject Apotex’ methodology to minute criticism. That is so for two reasons, quite apart from an acceptance of the proposition that the very nature of the exercise renders precision impossible. (a) Whilst, in order to obtain interlocutory relief, Servier will not have had to persuade Mann J. that it was easy to calculate Apotex' loss in the event of the injunction being wrongly granted, it will have had to persuade him that that task was easier than the calculation of its own loss in the event that the injunction was withheld. The passages I have cited from its skeleton argument and evidence show that it did so. Having obtained the injunction on that footing it does not now lie in Servier's mouth to say that the task is one of extreme complexity and that the court should adopt a cautious approach. Having emphasised at the interlocutory stage the relative ease of the process, it should not at the final stage emphasise the difficulty. (b) In the analogous context of the assessment of damages for patent infringement, in General Tire and Rubber Co v Firestone Tyre and Rubber Co Ltd (No.2) [1975] 1 WLR. 819 at 212 Lord Wilberforce said: 
‘There are two essential principles in valuing the claim: first, that the plaintiffs have the burden of proving their loss: secondly, that the defendants being wrongdoers, damages should be liberally assessed but that the object is to compensate the plaintiffs and not to punish the defendants.’
The principle of ‘liberal assessment’ seems to me equally applicable in the present context. Although a party who is granted interim relief but fails to establish it at trial is not strictly a ‘wrongdoer’, but rather one who has obtained an advantage upon consideration of a necessarily incomplete picture, he is to be treated as if he had made a promise not to prevent that which the injunction in fact prevents. There should as a matter of principle be a degree of symmetry between the process by which he obtained his relief (an approximate answer involving a limited consideration of the detailed merits) and that by which he compensates the subject of the injunction for having done so without legal right (especially where, as here, the paying party has declined to provide the fullest details of the sales and profits which it made during the period for which the injunction was in force).”
Mr Guy argued that I should likewise adopt a principle of “liberal assessment”.
67.	It seems to me, however, that the case before me is distinguishable from that with which Norris J was concerned. In the first place, it was no part of Mr Soutzos’ case when applying for the injunction he obtained that it would be easy to calculate the Defendants’ loss if the injunction proved to have been wrongly granted. The remarks Norris J made in paragraph 9(a) were apposite in the context of an application for the grant of an ordinary interlocutory injunction, where American Cyanamid principles apply. In the present case, in contrast, what was granted was a freezing injunction, and American Cyanamid was not in point. Secondly, Mr Soutzos (unlike the paying party in the Les Laboratoires Servier case) has not “declined to provide the fullest details of … sales and profits … made during the period for which the injunction was in force”; no one has suggested that he has any relevant documentation. Having regard, moreover, to (a) the fact that Mr Soutzos is not a “wrongdoer” and (b) the enormous sums claimed by Miss Dawkins and Miss Fox, it appears to me that Miss Dawkins and Miss Fox should be required to prove their loss without any particular allowance being made in their favour.
68.	The next point concerns whether I should assume that Miss Fox would have performed her legal obligations. Supposing, say, that she was under a duty to inform Clydesdale of a matter, should I proceed on the basis that she would in fact have done so?
69.	A short answer to this is that Mr Guy did not suggest otherwise. It was no part of his case that I should assume that Miss Fox would have allowed inaccuracies to go uncorrected. To the contrary, he accepted that I should proceed on the basis that Miss Fox would have corrected significant inaccuracies (though he added that a relatively small omission would have had no effect on Clydesdale’s decision to proceed).
70.	A related point concerns the principle of public policy associated with the Latin maxim ex turpi causa non oritur actio (no action can arise from an illegal or immoral act). In a contractual context, the principle can mean that a Claimant cannot recover “if in order to prove his rights under [the contract] he has to rely on his own illegal act” (see Archbolds (Freightage) Ltd v S Spanglett Ltd [1961] 1 QB 374). The position is similar as regards tortious claims. In Hewison v Meridian Shipping Services PTE Ltd [2002] EWCA 1821, [2003] ICR 766, a claim for loss of earnings failed where the Claimant could have achieved the earnings only by continuing to deceive his employer about his epilepsy. Clarke LJ, with whom Tuckey LJ agreed, said this:
“28 … It is common ground that there are cases in which public policy will prevent a claimant from recovering the whole of the damages which, but for the rule of public policy, he would otherwise have recovered. The principle can perhaps be stated as a variation of the maxim so that it reads ex turpi causa non oritur damnum, where the damnum is the loss which would have been recovered but for the relevant illegal or immoral act. A classic example is the principle that a person who makes his living from burglary cannot have damages assessed on the basis of what he would have earned from burglary but for the defendant's negligence.
29 To my mind the authorities support that approach. They seem to me to support the proposition that where a claimant has to rely upon his or her own unlawful act in order to establish the whole or part of his or her claim the claim will fail either wholly or in part …. In the present context the principle can be seen from the decision of this court in Hunter v Butler [1996] RTR 396, although it has to be said that the case does give rise to some difficulties of interpretation.
	…
33 … The principle applied by Hobhouse LJ is, as I see it, that stated at p 405b, namely: ‘If a plaintiff comes to court and asserts as part of her case that she would have committed criminal acts and bases her claim on such an assertion she cannot recover in a court of law on that basis.’ That appears to me to be substantially the same test as that adopted in the ex turpi causa non oritur actio cases, as stated in the passage from the judgment of Beldam LJ in the Clunis case [1998] QB 978, 986–987 quoted above.
34 I am not sure whether it is quite the same principle as that applied by Waite LJ but it does not seem to me necessary to consider that question further because, since Hirst LJ agreed with the judgment of Hobhouse LJ and since the principle just stated is part of the ratio decidendi of Hunter v Butler, we are bound to follow it.
…
36 … In my opinion Hobhouse LJ must have had in mind a case where the claimant bases his or her claim upon his or her unlawful act in a substantial way. It is not, however, in my opinion sufficient that he or she has been party to some collateral or insignificant illegality or unlawful act. Thus, … a claimant is entitled to be compensated for his loss of earnings even though he had in the past failed to disclose them to the Inland Revenue ….”
Likewise, in the Lilly Icos case Arnold J concluded (in paragraph 287) that “the court will not award compensation under a cross-undertaking for the loss sustained by an unlawful business or where the beneficiary of the cross-undertaking has to rely to a substantial extent upon his own illegality in order to establish the loss”.
71.	In Les Laboratoires Servier v Apotex Inc [2011] EWHC 730 (Pat), Arnold J considered what kinds of unlawfulness would engage the ex turpi causa principle. After an extensive review of the authorities, he said:
“92 The main conclusion which I draw from this survey of the cases cited to me is that they confirm that the application of the ex turpi causa rule depends on the circumstances of the case. Significant factors include the knowledge of the claimant at the relevant time, whether the illegality involved intentional or negligent conduct on the part of the claimant and whether the commission of the illegal act was induced by the defendant. It appears from dicta in a number of these cases that it may not be sufficient that the act was criminal if the offence was one of strict liability and the claimant was unaware of the relevant facts. Equally, mere negligence is unlikely to be enough in the circumstances of a claim for contribution or indemnity against another tortfeasor. 
93 In my judgment none of these authorities establishes that, in the case of acts which are tortious rather than criminal, the rule only applies if the acts involve dishonesty. Furthermore, I consider that such a limitation would not properly reflect the policy considerations which underlie the rule. I accept that there will be situations in which the tort is not sufficiently serious to engage the rule, but what degree of seriousness is sufficient will depend on the circumstances of the case. In my view the key factor in most cases is likely to be the claimant's state of knowledge at the time of committing the act in question. If the claimant knew the material facts, and particularly if he committed the act in question intentionally, then the rule is likely to apply.”
72.	In the present case, Mr Soutzos alleges that Miss Fox, to Miss Dawkins’ knowledge, made fraudulent misrepresentations to Clydesdale. Were it the case that, if the injunction had not been granted, Clydesdale would have lent the £3.5 million, but only because Miss Fox had made such fraudulent representations to the knowledge of Miss Dawkins, I should have thought that the ex turpi causa principle would be clearly in point; there would be quite a close analogy with Hewison v Meridian Shipping Services PTE Ltd. It seems to me, moreover, that any loan would, in the absence of positive evidence to the contrary, be assumed to have been induced by any fraudulent misrepresentation which was material (compare e.g. Chitty on Contracts, 30th edition, at paragraph 6-036).
73.	Mr Levy argued that the ex turpi causa principle would bar any claim by Miss Dawkins (as well as any claim by Miss Fox) even if Miss Dawkins had not been aware of fraudulent misrepresentations made by Miss Fox. The cases on which Mr Levy relied in support of this submission included Scholefield v Temper (1859) 4 De G. & J. 429, Topham v Duke of Portland (1863) 1 De G. J. & S. 517, Morley v Loughnan [1893] Ch 736 and Eddis v Chichester Constable [1969] 1 WLR 385. In Scholefield v Temper, a surety had been released on the strength of a fraud practised by the debtor. The creditor’s rights against the surety were restored, Lord Campbell LC commenting (at 433-434):
“I consider it to be an established principle that a person cannot avail himself of what has been obtained by the fraud of another, unless he not only is innocent of the fraud, but has given some valuable consideration.”
In Topham v Duke of Portland, which concerned fraud on a power, Turner LJ said (at 569) that he took it “to be clear, that no person, however innocent he may himself be, can, where there is no valuable consideration, derive a title under the fraud of another”. In Morley v Loughnan, an undue influence case, Wright J relied (at 757-758) on a passage from an earlier case in which Wilmot CJ had said, “Let the hand receiving [a gift] be ever so chaste, yet, if it comes through a polluted channel, the obligation of restitution will follow it”. In similar vein, Goff J referred in Eddis v Chichester Constable, when considering concealed fraud, to the rule “that no person however innocent would be allowed to keep what he had received under a title derived through the fraud of another” (see 390).
74.	While none of these cases is precisely in point, they do lend support to Mr Levy’s submission, and I did not understand Mr Guy to quarrel with it. Having regard both to the authorities and to the particular circumstances of this case, it seems to me that I should proceed on the basis that, if the ex turpi causa principle precludes a claim by Miss Fox, it also bars Miss Dawkins from claiming. Among other matters, I have in mind that (a) there is no question of Miss Dawkins having given any consideration, (b) the financial affairs of Miss Dawkins and Miss Fox (as well as Mr Asombang) are closely (and in ways which have not been fully explained) inter-connected and (c) the Courts are now tending to see the making of an award under the cross-undertaking as a matter for equity (see the Lilly Icos case at e.g. paragraphs 19 and 20).
Would Clydesdale have made the loans?
75.	A key question is whether Clydesdale would have lent the £3.5 million but for the injunction. I therefore turn to that.
76.	Mr Guy argued that the £3.5 million would have been lent. He relied, for example, on Clydesdale’s solicitors’ reference on 19 March 2008 to the funds being available within 48 hours of receipt of certain documents (see paragraph 56 above). Confirmation that Clydesdale was willing to make the loans was, Mr Guy submitted, to be found in its letter to Miss Fox dated 24 February 2010. That included this:
“A formal offer of funding had been issued and all conditions of approval had been satisfied with one exception, subject to the solicitors providing clean title on the property 10 Wadsworth Road, Perivale we were ready to release the funds. Because of the injunction Christine’s solicitor was unable to give clean report on title and this meant that the money could not be released and the Bank’s offer lapsed.”
77.	As I have already indicated, I do not think I can attach much weight to letters such as this one from Clydesdale (see paragraph 11 above). Moreover, some of the contemporary documentation suggests that the position was less simple than the letter indicates. For instance, a letter from Clydesdale dated 22 May 2008 referred to facilities having been agreed subject to “satisfaction with the Bank’s conditions precedent” (as well as to, among other things, “satisfaction with the legal paperwork with regard to the security over 10 Wadsworth Road”). Even so, I agree with Mr Guy that it appears that Clydesdale was envisaging making the loans.
78.	It is Mr Soutzos’ case, however, that the information with which Clydesdale had been supplied was deficient, both because some of it was inaccurate and because Miss Fox failed to reveal matters that ought to have been disclosed. I agree.
79.	In the first place, the Business Plan and Statement of Assets contained a number of misstatements. Aside from the value attributed to 10 Wadsworth Road, the Business Plan gave inaccurate figures for October and November 2007 (paragraph 28 above) and falsely claimed that there were “contracts in place” (paragraph 31 above), and the Statement of Assets contained the unfounded assertion that Miss Fox had an “Annual Net Income” of £80,000 (paragraph 46 above).
80.	The Statement of Assets was deficient, too, in failing to disclose Miss Fox’s liability to Heyville. That liability ought also, as it seems to me, to have been disclosed by reason of clause 10.2 of the facility letter relating to the £2.5 million loan. As mentioned above (paragraph 41), Miss Fox thereby undertook that she would “not create or permit to subsist any Security over any of [her] assets or undertaking other than any Permitted Security”. The Heyville agreement gave rise to such security.
81.	The likelihood is, I think, that there were further matters which Miss Fox should have disclosed to Clydesdale but did not. The facility letter for the £2.5 million loan had as a precondition that Miss Fox provided written confirmation that all statutory payments (including VAT) were up to date, and the chances are that the £1 million facility letter imposed a comparable requirement. The evidence indicates that both 3iD and Miss Fox personally had outstanding obligations in respect of VAT since both appear to have passed the registration threshold (viz. £64,000) before 3iD became registered (see paragraphs 17 and 20 above). In the circumstances, it would seem that Miss Fox ought not to have given the requisite confirmation (if it was one of the “conditions precedent” which remained to be satisfied) or, if she already had, to have put Clydesdale right. 
82.	Again, it may well be that it was incumbent on Miss Fox to inform Clydesdale of her financial difficulties, especially her mortgage arrears. As mentioned above (paragraphs 39-42), the facility letter for the £2.5 million loan contained provisions as to “Defaults” and threatened litigation against “Relevant Persons” which cannot be interpreted reliably in the absence of Clydesdale’s standard terms and conditions. They might easily have extended to matters relating to, say, the mortgage arrears.
83.	It is, moreover, very possible that Miss Fox was required to update Clydesdale on 3iD’s financial performance (for example, its failure to achieve the turnover anticipated in the Business Plan). The facility letter for the £1 million loan will presumably have contained provisions imposing conditions precedent and covenants along the lines mentioned in paragraph 50 above. While it is impossible to know with certainty without seeing it, the facility letter will presumably have contained obligations relating to 3iD’s financial circumstances.
84.	The Heyville agreement could also have given rise to another difficulty. I find it difficult to see how Montague Lambert could have completed the certificate of title and property undertaking which Clydesdale required (see paragraphs 43 and 44 above) without the debt to Heyville being discharged. How otherwise could Montague Lambert have, say, undertaken to ensure that they obtained “the discharge of any existing charge over the Property, or a solicitor’s undertaking to procure the discharge of any such charge” (in accordance with the property undertaking)? The mere fact that a Clydesdale charge could have acquired priority over the (unregistered) Heyville agreement would not obviously have excused Montague Lambert from ensuring that the agreement was discharged.
85.	Mr Guy argued that, if necessary, the Heyville liability could have been discharged when the Clydesdale loans were made. In this connection, he sought to demonstrate that the indebtedness to Heyville could have been met from the Clydesdale money. However, the calculations with which I was supplied by Mr Guy during closing submissions proceeded on the basis that only £1,240,000 remained to be spent on machines, but (a) Miss Fox herself referred to needing to utilise £1,522,024 of the Clydesdale loans to buy plant and machinery (see paragraph 56 above) and (b) the £1,240,000 figure ignores the items being purchased from John Penny Limited and Air Plants (see paragraph 57 above). Further, while the calculations state that the amount required to redeem the LMC mortgage “would have been approximately £75,000 less when we wanted to redeem in March 2008”, the saving would have been much smaller than this if redemption had occurred at about the time the injunction was granted: of the order of £25,000 less the interest which would have been payable to Clydesdale (see paragraph 59 above). An additional obstacle is to be found in the fact that Clydesdale appears to have intended that such of the £2.5 million loan as was not required to redeem the LMC mortgage should be “held by the bank and then utilised in payment of the required deposit for the various items of equipment” (see paragraph 51 above). It is significant, moreover, that there was no suggestion in the contemporary witness statements that the Clydesdale loans could or would be used to discharge the Heyville indebtedness. In all the circumstances, I have not been persuaded that the Heyville indebtedness (which will have risen to £163,000 by the time the injunction was granted) could have been discharged from any Clydesdale loan.
86.	Mr Guy submitted that Miss Fox’s failure to disclose the Heyville liability in the Statement of Assets was in any event a small error which would not have made any difference. More generally, he argued that when considering whether an inaccuracy was material I should remember that in mid-2008 there was a “totally different economic situation” in which documents were perhaps subjected to less scrutiny.
87.	While I see the point, I do not think I can assume that Clydesdale would have proceeded with the proposed loans if informed (as I am supposing it would have been – see paragraph 69 above) of the deficiencies in what it had previously been told. To the contrary, I should have thought that Clydesdale would probably have been deterred from proceeding if it had learned of the shortcomings in the Business Plan and Statement of Assets. I would guess (there being no direct evidence) that Miss Fox’s failure to disclose the Heyville agreement might have been a matter of particular concern, and especially so if, as looks to be the case, Miss Fox was not in a position to discharge her indebtedness to Heyville. Clydesdale could also have been expected to take a serious view of Miss Fox’s failure to comply with VAT requirements, of her mortgage arrears and of 3iD’s failure to achieve anything like the turnover forecast in the Business Plan. Clydesdale could be expected to have taken such matters the more seriously once it knew that 10 Wadsworth Road had been valued at only £2 million (i.e. rather less than even the £2.5 million loan).
88.	My overall conclusion, accordingly, is that Miss Dawkins and Miss Fox have not proved that Clydesdale would have lent the £3.5 million but for the injunction. That is of itself fatal to all the claims which Miss Dawkins and Miss Fox advance. It is fatal even as regards the loss which Miss Dawkins is alleged to have suffered as a result of Miss Fox’s failure to buy 57-61 West Wycombe Road since the National Westminster Bank funding which would have been used for this transaction was dependent on the Clydesdale loan having been concluded (see paragraph 52 above).
The application of the ex turpi causa principle
89.	The ex turpi causa principle gives rise, as I see it, to a further objection to the claims advanced by Miss Dawkins and Miss Fox. It follows from what I have said earlier in this judgment that I consider that (a) the information with which Clydesdale was supplied was deficient in a number of respects (see paragraphs 78-83 above), (b) such deficiencies were material (see paragraphs 86 and 87 above) and (c) at least some of the material deficiencies were deliberate or arose from Miss Fox making representations without belief in their accuracy (see especially paragraphs 28, 31, 45 and 46 above). Any loans from Clydesdale stood, accordingly, to have been induced by fraudulent misrepresentations. In the circumstances, I take the view that the ex turpi causa principle is applicable and serves to bar Miss Dawkins’ and Miss Fox’s claims.
The alleged losses
90.	While the conclusions I have already arrived at are sufficient to dispose of this matter, I shall comment briefly on the losses which Miss Dawkins and Miss Fox are alleged to have suffered in case the matter proceeds further.
Miss Fox’s alleged losses
91.	The losses which Miss Fox alleges can be summarised as follows:
i)	As a consequence of the injunction, Miss Fox “was unable to remortgage [10 Wadsworth Road] and thereafter to continue to make payments to [LMC]”. The upshot has been that Miss Fox has been left with a liability of £2,304,593 to LMC even after taking account of the proceeds of 10 Wadsworth Road’s sale. Miss Fox has also lost the equity of £300,000 which she says she acquired when 10 Wadsworth Road was bought in June 2006;
ii)	After taking account of the proceeds of sale of two of the flats at Morley House and the likely value of the third, Miss Fox has an outstanding liability to Derbyshire Building Society of about £550,000. She has also lost the equity of £350,000 which she says she acquired when she bought the flats in October 2007;
iii)	When Miss Fox acquired 122 Uxbridge Road and 10 Shepherds Bush Road in January 2008, the properties were worth about £375,000 more than the mortgage debt. As a result of “the absence of income from other sources which arose as a consequence of the injunction”, Miss Fox could not use the rental income to service the mortgage, but was “obliged” to use it elsewhere. Abbey National repossessed the properties and sold them for £441,000 less than it was owed;
iv)	Miss Fox had anticipated being in a position to draw an income of about £100,000 a year from 3iD. The injunction prevented her from doing so and led to the failure of the business. Miss Fox was left to bear a variety of debts in respect of which she had given guarantees for 3iD or which she had herself taken on for the purposes of the business. £300,000 is claimed for loss of income and some £467,000 for the various debts;
v)	The fact that she was not enjoying the anticipated income from 3iD also meant that she had to divert income from the Rayner Court property away from the mortgage instalments and that she had to borrow money from a friend, Mr Haluk Ogan. Sums of £12,346 and £68,485 are claimed here;
vi)	Miss Fox became liable to pay Bespoke Finance sums totalling £53,360 for procuring the offers of funding from Clydesdale and National Westminster Bank.
92.	Particular points to be made in relation to the alleged losses include these:
i)	Determining what (if any) equity in a property Miss Fox had lost would involve comparing the value of the relevant property with the debt secured on it in mid-2008 rather than at any earlier date. That there might have been equity of a particular amount in, say, 10 Wadsworth Road when it was acquired would not be material;
ii)	10 Wadsworth Road was valued at £2 million by R.J. Howell Associates Limited and Grant Mills Wood in reports dated respectively 26 June 2008 and 4 July 2008. On that basis, 10 Wadsworth Road was worth only about £100,000 more than the cost of redeeming the LMC mortgage (see paragraph 59 above) and, having regard to the Heyville loan, somewhat less than the total indebtedness secured on the property. However, I doubt whether Miss Fox can be said to have proved that the value of 10 Wadsworth Road was even as much as £2 million. The authors of the two valuation reports have not been called, and no other expert evidence as to the value of 10 Wadsworth Road has been adduced;
iii)	The evidence as to the value of the Morley House flats, 122 Uxbridge Road and 10 Shepherds Bush Road in mid-2008 is even less satisfactory. Once again, I do not have the benefit of expert evidence. With regard to the Morley House flats, valuers instructed by Business Lending Finance 1 Limited valued the flats in September 2007 at respectively £700,000 and £500,000, more than £450,000 in excess of the £742,000 Miss Fox paid for them. However, each valuation noted that a tenant had “been found” at a specified rental level, and it is not clear what impact this might have had on the valuations. It is, moreover, impossible for me to know how the value of the flats might have changed between September 2007 and May 2008. As for 122 Uxbridge Road and 10 Shepherds Bush Road, a half share in these was calculated to be worth £741,500 when Miss Fox acquired them from Miss Dawkins in January 2008 (see paragraph 37 above), and Abbey National lent Miss Fox £1.111 million on the security of the properties. However, I do not know how the £741,500 was arrived at, what factors weighed with Abbey National when it decided to make its loan or how the value of the properties might have changed by mid-2008. It is to be noted that the properties were sold for a total of £671,000 only about a year later; 
iv)	Crucially, Miss Fox’s claims proceed on the basis that, had the Clydesdale loans been made, 3iD would have been successful. I am, however, quite unable to say that that would have been the case. There is no expert evidence as to 3iD’s prospects. Further, I do not think I can attach any weight to the Business Plan’s predictions of profitability after April 2008, especially as (a) 3iD had not by then achieved the sales specified in the Business Plan and (b) the Hampstead project referred to in the Business Plan ran into considerable difficulties (see paragraphs 32 above). In any case, I can do no more than guess at the effects that the economic difficulties since the autumn of 2008 (in particular, those relating to construction and property) would have had on 3iD;
v)	Miss Fox’s evidence does not contain any real explanation of how the losses alleged in respect of the Morley House flats are said to have flowed from the injunction. It is significant in this context that the injunction never extended to the Morley House flats;
vi)	It is not clear from the documents I have seen that Bespoke Finance secured offers of funding complying with clause 1 of the agreement made between Miss Fox and Bespoke on 10 January 2008. Assuming, however, that Miss Fox did become contractually liable to Bespoke, that was not as a consequence of the injunction. Miss Fox would have been so liable whether or not the injunction had been granted.
93.	Overall, I can do no more than speculate as to whether Miss Fox would have been better off or worse off if the Clydesdale loans had been made. The loans would plainly have increased still further the debts for which Miss Fox was responsible and which needed to be serviced. Had they enabled 3iD to become as profitable as Miss Fox hoped it would be, the loans might nonetheless have proved worthwhile. As I have indicated, however, I am in no position to say how 3iD would have fared if the loans had proceeded. 
Miss Dawkins’ alleged losses
94.	The principal loss which Miss Dawkins is alleged to have suffered concerns her continuing liability to LMC on the mortgage which would have been redeemed had the Clydesdale loans been made. Aside, however, from that, the following losses are alleged:
i)	Had 10 Wadsworth Road been transferred to Miss Fox as planned, Miss Dawkins would have received the £50,000 fee promised to her in the trust deed relating to the property (see paragraph 96 of the Judgment);
ii)	But for the injunction, the three remaining flats at 57-61 West Wycombe Road would have been sold to Miss Fox for £250,000 each. After deduction of a mortgage debt of £190,000, Miss Dawkins and her co-owner, Mr Obaze, would have been left with £560,000. As it is, two of the flats have been sold for a total of only £185,037, and Miss Dawkins (and Mr Obaze) are still liable to LMC for £184,580. Assuming the third flat is worth £100,000, Miss Dawkins (and Mr Obaze) are worse off to the extent of £644,580 (i.e. £560,000 plus £184,580 less £100,000).
95.	The points to be made in relation to these alleged losses include these:
i)	It has not been proved that the £50,000 would have been paid if the Clydesdale loans had been concluded. It is apparent neither that Miss Fox would have been entitled to use Clydesdale money for this purpose, nor that any funds would have been available. Further, it is not evident that Miss Fox would otherwise have been in a position to make the payment. If, on the other hand, it had been established that Miss Fox would have paid the £50,000, her own claim would have fallen to be reduced to the same extent;
ii)	Miss Fox’s proposed acquisition of the flats at 57-61 West Wycombe Road from Miss Dawkins was to be largely funded by National Westminster Bank. As I have said above, however, I find it hard to understand why Miss Fox was thinking of borrowing money from National Westminster Bank as proposed and harder still to see how she could have raised the balance of the purchase price of the relevant properties (see paragraph 53 above). In any case, the proposed facilities from National Westminster Bank were dependent on the Clydesdale loan having been drawn (see paragraph 52 above), and I have not been persuaded that Clydesdale would have lent the £3.5 million had it not been for the injunction. Nor has it been established that Miss Fox could have complied with other requirements of National Westminster Bank (e.g. as to Miss Fox’s personal tax position (see paragraph 52 above);
iii)	The evidence as to the value of the flats at 57-61 West Wycombe Road in mid-2008 is unsatisfactory. It is apparent that three flats at the property were sold in April 2008 for £249,950. I do not think, however, that I would be justified in inferring that the remaining flats were also worth £249,950 each. I am in no position to say how those flats compared, in value or otherwise, with the flats that had been sold. It is noteworthy in this context that in a witness statement of 21 May 2008 Miss Dawkins referred to a “current valuation of circa £600,000.00”;
iv)	There is no evidence of any weight as to the value of the flat which has yet to be sold;
v)	Miss Dawkins’ share of any loss suffered in relation to 57-61 West Wycombe Road must be 50%. Had, therefore, I taken the view that Mr Soutzos should compensate Miss Dawkins for such loss, I would have awarded her half of the total loss.
Other matters
96.	I should perhaps comment on two further matters.
97.	First, the General Medical Council decided in the summer of last year that Mr Soutzos’ name should be removed from the Medical Register for misconduct which included dishonesty. Since, however, Mr Soutzos did not give any evidence in the present context, I do not think that his removal from the Medical Register is of any real significance in relation to the issues now before me.
98.	Secondly, Mr Levy argued that the ex turpi causa principle was applicable on the additional basis that 3iD’s business was not, and was never intended to be, run in a legal manner. I have not been persuaded of this. Whatever scope there may be for criticism of how its affairs have been conducted (e.g. as regards record-keeping and compliance with tax obligations), I do not consider that 3iD’s business is or was inherently unlawful or that its nature is otherwise such as to provide a further reason for the ex turpi causa principle being in point.
Conclusion
99.	I shall not order Mr Soutzos to make any payment to either Miss Dawkins or Miss Fox.