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	England and Wales High Court (King's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (King's Bench Division) Decisions >> Yousufi v Matharu (Rev1) [2025] EWHC 917 (KB) (14 April 2025) URL: https://www.bailii.org/ew/cases/EWHC/KB/2025/917.html Cite as: [2025] EWHC 917 (KB)

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IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		14 April 2025

This judgment was handed down remotely at 10.00am on 14 April 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Mr Justice Sweeting:

Introduction

1. This is an appeal from a decision of Deputy Master Marzec sitting in the King's Bench Division of the High Court of Justice on 20 October 2023, and against the resulting order dated 8 November 2023. The Appellant appeals with the permission of the single judge, Sir Stephen Stewart by order dated the 12th of June 2024. The claim arises from a business relationship between Abdul Razzaq Yousufi (the Appellant) and Raj Matharu (the Respondent). The Appellant appeals against the Deputy Master's refusal to grant permission to amend his Particulars of Claim and the consequential striking out of parts of his claim for damages for loss of business, loss of a chance and lost profits.
2. The Appellant's original claim included malicious falsehood, false imprisonment and intention to cause injury by unlawful means; the claim for malicious falsehood is no longer pursued. The Appellant now seeks damages for false imprisonment and special damages in respect of alleged business losses arising from an intention to injure, pleaded in the Amended Particulars of Claim as the tort of causing loss by unlawful means where the unlawful means is the tort of deceit. The allegation of false imprisonment did not feature in the appeal.

Background

3. The factual background, largely derived from the Appellant's pleaded case, may be summarised shortly. The parties were introduced in London in the 1990s and engaged in business together from around 2001 until approximately 2013. At the Respondent's instigation, they incorporated Premier Journeys Ltd in about 2002 for the Respondent's hotel interests, which operated until roughly 2005/2006. Following this, they continued with ad hoc projects, including the supply of precious stones by the Appellant. A trading account was established around 2003 and used in their joint commercial endeavours. Their business ventures between approximately 2003 and 2013 included trading gems, exporting crockery, and providing chauffeuring services. The Appellant claims that there was a deterioration in their relationship from about 2006. He contends that he nevertheless acted as the Respondent's agent in commercial matters until around 2013. Their cooperative relationship ended around early 2014, following a loan request from the Respondent which the Appellant refused.
4. The Appellant says that, from early 2016, he was involved on his own account in efforts to establish a Pakistani Super League cricket team named "Tribal Eagles". The proposed team was intended to compete in the 20/20 cricket league run by the Pakistani Cricket Board. The Appellant, drawing on his background as a well-known individual and charity volunteer in the Federally Administered Tribal Area of Pakistan, considered himself well-positioned to capitalise on the newly created Pakistani Super League franchise system. Throughout May and June 2016, the Appellant dedicated considerable time to business meetings focused on developing the Tribal Eagles, having already presented a detailed business plan to potential investors earlier in the year.
5. The central event giving rise to the claim occurred in July 2016 when the Respondent, as he admits, reported to the City of London Police that the Appellant had blackmailed him over many years. This led to the Appellant's arrest and detention. It is the Appellant's case that he had not blackmailed the Respondent, nor attempted to do so, and that the Respondent was aware at the time of making the police report and thereafter that this allegation was false. The Appellant asserts that the Respondent made the false accusation of blackmail with the intention of causing harm to him by interfering in the business opportunity represented by the embryonic Tribal Eagles investment.
6. It is alleged that the main investor, Mr Basar Ali, and other individuals involved in the Tribal Eagles project became aware of the Appellant's arrest on suspicion of blackmail. As a result, the Appellant was ostracised and his involvement in the project came to an end. Despite subsequent notification from the police in October 2016 that no further action would be taken, the Appellant claims that he was unable to recover his position within the Tribal Eagles venture.
7. By the time of his arrest in July 2016, the Appellant says that he had secured a signed agreement from Mr Ali for the purchase of a 40% shareholding in the Tribal Eagles for US$1,060,000. This investment would have been sufficient to allow the Tribal Eagles to commence operations with adequate capital and reserves. The Appellant's case is that, in line with the profitability of other Pakistani Super League teams, the Tribal Eagles would have generated profits, to his benefit, of not less than US$2 million within one year of commencing operations. The Appellant seeks to claim this sum, along with other losses, as damages resulting from the Respondent's alleged tortious conduct.

The Procedural History

8. The proceedings were issued on 11 July 2022. The Appellant relied on causes of action in malicious falsehood, false imprisonment and injury by unlawful means, The Respondent made an application dated 31 May 2023 for summary judgment on the Appellant's claim or, in the alternative, to strike out parts of it. This application relied on the grounds set out in CPR 24.3, asserting that the Appellant had no real prospect of succeeding on the respective claims or issues and that there was no compelling reason why the case or issue should be disposed of at trial. The Respondent also argued that there were no reasonable grounds for bringing the claim or parts of it.
9. Subsequently, the Appellant made an application dated 10 October 2023 for permission to amend his Particulars of Claim pursuant to CPR 17.1(2)(b). The proposed amendments, as set out in the draft Amended Particulars of Claim, withdrew the claim in malicious falsehood and sought to plead deceit as the unlawful means in the claim for the tort of causing loss by unlawful means. This might be regarded as involving one tort, deceit, being "nested" within another. In any event it required the tort of deceit to be made out as the unlawful means subject to the modification that in the tripartite setting of an intention to injure it would not be necessary to show that the party who was the object of the deceit suffered loss.
10. The Respondent's application for summary judgment/strike out and the Appellant's application for permission to amend, were heard together by Deputy Master Marzec on 20 October 2023.

The Deputy Master's Judgment

11. In her extempore judgment, the Deputy Master treated both the strike out and the application to amend as turning on "whether the claim for intention to injure was properly arguable and stood a real chance of success". She identified three reasons for her decision to disallow the application to amend and strike out parts of the claim: (1) that the amended claim did not properly plead elements of the cause of action, (2) that the Appellant's "case on causation" was fatally flawed, and (3) that in any event there would have been a novus actus interveniens in the form of "the publication by someone other than the Defendant to the investors in Pakistan".
12. She agreed with the Respondent's submission that it was necessary to plead that in making his report to the police, the Respondent intended that the police would act in such a way as would cause economic loss to the Appellant, and that this had not been pleaded.
13. As to causation she said:

"I agree with Mr Smith that the case on causation is fatally flawed. The only publication of the allegation by the Defendant is alleged to have been made to the City of London police. In the light of this, for the chain of causation to operate someone at the police would have had to have informed either Mr Ali of the allegation or informed some third-party intermediary of it with the result that ultimately Mr Ali and/or the other potential business partners in Pakistan found out about it. However, the police have a duty of confidentiality in respect of reports made to them. Fundamentally, since the only publication by the Defendant is alleged to have been to the police, unless the police leaked the report to a third party or parties, who then relayed the report to others leading Mr Ali to hear of it in Pakistan, the report by the Defendant was not the cause of the loss [...] However, it is not "highly probable" that the police would leak the report made to them, and it is not alleged they did so, and unless they did so the report to the police by the Defendant was not causative of the alleged loss."

14. In relation a break in the chain of causation (the "novus actus") the Deputy Master said:

"Furthermore, if the police had leaked the report, that would have been an intervening act which would have been the real cause for the loss. It would almost certainly have been an unlawful act for which the Defendant could not reasonably be held responsible."

The Amended Pleading

15. The material paragraphs of the Amended Particulars of Claim are as follows:

"55. It is averred that the further dissemination of these allegations was a natural and probable consequence of the Defendant making them, and that the Defendant either did or ought to have foreseen the same. In support of this contention, it is submitted that the Claimant is a well known individual in the Federally Administered Tribal Area and in the Pakistani diaspora community, with the consequence that it was highly probable that allegations of serious criminal conduct would become widely known in Pakistan and to persons in the British Pakistani community."

"81. Further to the immediately above, it is averred that the making of a false allegation, in the awareness that the allegation but not its false nature would be conveyed to the Mr Basar Ali and the other directing minds of the Tribal Eagles the Defendant has committed a deceit."

"83. It is averred that the Defendant, in procuring the arrest of the Claimant, and possessed of knowledge that the Claimant had commenced commercial discussions with the Tribal Eagles' directing minds must have intended that those operating the Tribal Eagles' franchise would come to learn of the fact and nature of the Claimant's arrest."

"85. Accordingly, the Claimant submits that the Defendant's tortious conduct, for the purposes of establishing injury by unlawful means against the Claimant, consists of the intentional, albeit indirect, deception of Mr Basar Ali and others engaged in the nascent Tribal Eagles deal alongside the Claimant."

"86. It is averred that the Defendant's purpose in making the false allegation of blackmail was to cause injury to the Claimant, by means of bringing about the Claimant's isolation form the Tribal Eagles project [...]."

16. Thus, the pleading set out a basis on which it was alleged to be probable that the investors would learn of the accusation without alleging any deliberate dissemination of information by the police and identified the deceit as arising from the fact that the respondent had made a deliberately false allegation rather than simply that an allegation had been made, which was of course true.

The Arguments

17. The Appellant, in his Grounds of Appeal dated 10 November 2023 and in oral argument, contended that the Deputy Master was wrong to refuse permission to amend and to strike out parts of his claim. He argued that the amended pleading correctly sets out a case in the tort of causing loss by unlawful means. The false accusation of blackmail made to the police by the Respondent, who knew it to be false, constituted unlawful means with the intention of causing loss to the Appellant, thereby interfering with the Appellant's business, and causing him loss.
18. Mr Richardson, on behalf of the Appellant, submitted that for the tort of deceit, the essential elements are a false representation, intention that the representee (in this case, the Pakistani investors) should act upon it, and that they did so act, leading to loss for the Appellant. He contended that the precise mechanism by which the representation (the blackmail allegation to the police) reached the putative investors was a matter of evidence and not a necessary element in pleading deceit. He submitted that deceit can constitute the unlawful means by which the tort is "activated" even where the transmission of the false representation is by a third or intermediate party (whether the police or some other third party) since the commission of the tort of deceit in this way has long been accepted. He relied upon a number of authorities to make good that proposition.
19. In Swift v Winterbotham (1873) LR 8 QB 244 at 253 the court observed:

"It is now well established that in order to enable a person injured by a false representation to sue for damages, it is not necessary that the representation should be made to the plaintiff directly; it is sufficient if the representation is made to a third person to be communicated to the plaintiff, or to be communicated to a class of persons of whom the plaintiff is one, or even if it is made to the public generally with a view to its being acted on, and the plaintiff as one of the public acts on it and suffers damage thereby."

20. The principle identified in Swift v Winterbotham thus broadens the scope of liability for deceit beyond direct communication to include scenarios where the representor either intends or expects the information to reach the claimant through another party or as part of a wider group.
21. Richardson v Silvester [1873] L R 9Q B 34, is also an example of actionable deceit where the false statement was not made directly to the person deceived, since in that case the representation was made by way of an untrue newspaper advertisement offering a farm for sale. Thus, a representation made to a wider audience, or through a public medium such as a newspaper, can still give rise to liability in deceit if a specific individual, as part of that audience, acts upon it and suffers loss. Similarly, in OMV Petrom SA v Glencore International AG [2017] EWCA Civ 195 buyers of oil recovered damages in deceit against dishonest traders who described their wares to a commission agent knowing that false information would be passed on.
22. The Appellant relied on OBG Ltd v Allan [2007] UKHL 21; [2008] 1 AC 1 and Secretary of State for Health and another v Servier Laboratories Ltd and others [2021] UKSC 24; [2022] AC 959 to support the argument that even an indirect communication, via a third party, could also ground the unlawful means tort. The Appellant drew attention to the example, given in Servier, of a false bomb threat to the British Transport Police intended to disrupt Heathrow, suggesting that even in these circumstances British Airways, if affected by the disruption, would likely have a claim against the defendant since in discussing the example Lord Hamblen did not consider that the involvement of the police as an intermediary in such circumstances would be an impediment to a claim succeeding.
23. The Supreme Court in Servier stated explicitly that the third element of the unlawful means tort, as explored in OBG, necessitates that the defendant's acts must have prevented the third party from doing something which affected the claimant, and affirmed that this requires dealings between the third party and the claimant. This "dealing requirement" thus acted as a necessary control mechanism on what might otherwise be a tort of unlimited width.
24. In the present case, the Appellant's skeleton argument referred to the Servier case as an "illuminating parallel" arguing that the blackmail report made by the Respondent was sufficient to prevent the potential investors from dealing with the Appellant, thus satisfying the 'dealing requirement' as interpreted following OBG and Servier. The Appellant contends that this was a paradigm example of the application of the principles set out in OBG rather than any departure from them.
25. The Appellant further argued that the intention of the Respondent was that the false allegation would be conveyed to the investors and acted upon, and that this intention, coupled with the fact that the investors did become aware of the allegation and ceased dealings with him, was sufficient to sustain the pleading. Mr Richardson suggested that the Deputy Master had placed undue emphasis on how the representation reached the investors, which was properly to be viewed as a question of reliance rather than causation at the pleading stage. He also relied on the presumption of inducement, arguing that if a misrepresentation is likely to affect the representee's decision, it is presumed to have done so unless the representor proves otherwise.
26. Mr Smith, on behalf of the Respondent, argued that the Deputy Master's decision was not wrong or unjust. He submitted that the Appellant's formulation of the law on causing loss by unlawful means by deceit was incorrect, asserting that in the three-party tort of causing loss by unlawful means, the deceit cannot be channelled through a chain in the same way as in a two-party tort of deceit. The unlawful act (deceit) must affect a third party's freedom to deal with the claimant. He relies on the uncontroversial proposition (see Paragraph 23-81 of the current edition of Clerks & Lindsell on Torts), that the unlawful means must be actionable by a third party or would be if the third party had suffered loss, and must be intended to cause loss to the claimant.
27. He referred to Lord Hoffmann's speech in OBG as setting out significant restrictions on the reach of the tort and the requirement for direct interference with the third party's freedom to deal. He submitted that the alleged interference must be with the investor's freedom to deal with the Appellant, and that a mere report to the police, without pleaded particulars of how this information reached them, could not constitute such direct interference. He argued that the third party must be the police on this analysis and that Appellant had not adequately pleaded that the Respondent intended the police to act in a way that would cause economic loss to the Appellant. He submitted that the Deputy Master had correctly identified the flaws in the Appellant's pleading, particularly concerning intention and causation. He sought to distinguish the Servier bomb hoax analogy, arguing that in that scenario, there was a clear nexus and a high probability that a report to the police would be passed on to Heathrow, which was not the case with a blackmail allegation to the police in London and its potential dissemination to investors in Pakistan. He observed that the Appellant had been careful not to positively assert that the police were the conduit because such a scenario was inherently implausible and without specific pleading of how the information was transmitted from the police to the investors in Pakistan, the claim was unsustainable.
28. He also raised the issue of intention; arguing that it was necessary to plead with more specificity the means by which it was alleged the Respondent intended to achieve the Appellant's ostracisation from the project. He suggested that simply making a false report to the police did not automatically equate to an intention to interfere with the investors' dealings with the Appellant so that the causal link and the intended means of achieving the loss needed to be clearly pleaded.

Discussion and Conclusions

29. Lord Hoffmann, in his speech in OBG, identified two forms of the unlawful means tort: (1) where the defendant induces a third party to act unlawfully against the claimant, and (2) where the defendant uses unlawful means against a third party with the intention of causing loss to the claimant. The present case appears to fall under the second category, with the alleged unlawful means being deceit perpetrated on the investors as the third party, with whom the Appellant had commercial dealings, with the intention of disrupting that relationship and causing loss to the Appellant.
30. The Deputy Master however appears to have treated the third party as the police and to have accepted the submission that it was necessary to plead that "in making his report the defendant intended that the police would act in such a way as would cause economic loss to the claimant". Although it is not discussed or analysed in the judgment the purpose of this submission on the Respondent's behalf was, as argued before me, to establish that the dealing requirement was not met so that the tort could not be made out, there being no actual or putative economic relationship between the Appellant and the police. That however overlooks the fact that the unlawful means relied upon was deceit and the third parties at whom the deceit was aimed were the investors.
31. The unlawful means must be such as to be actionable by the third party, or would have been actionable if the third party had suffered loss. Deceit, by its very nature, is an actionable wrong. The tort of deceit requires a false representation made knowingly or recklessly, with the intention that it should be acted upon by the claimant (or a class of persons including the claimant), and which is acted upon by the claimant to their detriment. In the context of an unlawful means tort, the deceit is practiced on a third party (in effect a nominal claimant) rather than the claimant themselves but with the intention to cause loss to the claimant. The Appellant's case is that the unlawful means employed by the Respondent was the tort of deceit practised on the investors, not the police. The fact that the representation in deceit may be made indirectly is established by authority (see above).
32. In the course of argument Mr Smith accepted that if a false allegation of blackmail on the part of the Appellant had been made directly to the investors, then the tort would be made out, subject to reliance and loss. The same would be true if the representation were made to a close family member or professional colleague of the investors with the intention, and in these examples, no doubt, the expectation, that the representation would be passed on. The analogy drawn by the Appellant with the false bomb threat in Servier is also instructive. However, the likelihood of onward transmission cannot, in my view, be determinative if the intention was that the representation should come to the attention of the investors, and it did in fact do so. That proposition can be tested by asking whether if the Appellant proved that a false accusation was made to the police with the intention that it should, by whatever means, come to the attention of the investors and that it did do so causing them, as intended, to disengage commercially with the Appellant, would the Appellant have made out his case on the unlawful means tort? I consider that the answer must be yes and would not require a proof of the specific means by which the investors became aware of the accusation, which might well not be known to the Appellant. It follows that if it did not require to be proved then neither would it require express pleading.
33. The Respondent relied heavily on the limitations of the unlawful means tort as articulated in OBG. but I am not persuaded that an indirect communication of a false representation, intended to and actually resulting in the investors ceasing to deal with the Appellant, falls outside its scope. The focus should be on whether the Respondent engaged in unlawful means (here, the pleaded tort of deceit) which interfered with the investors freedom to deal with the Appellant, causing the Appellant loss. The precise mechanism by which the investors became aware of the deceit is not a pleading requirement absent which the claim is unsustainable.
34. The Deputy Master's primary concern appears to have been that the Amended Particulars of Claim did not adequately explain how the alleged blackmail allegation, made by Appellant to the police, reached Mr Ali and the other Pakistani investors. The Deputy Master considered that a "leak" by the police was a necessary link in the chain of causation. She found nothing in the pleaded facts to suggest this was likely, and appeared to conclude as a matter of fact that it was not probable the police would leak the report of an offence. As the Appellant submitted, if the investors did become aware of and act upon the misrepresentation, the precise route by which this occurred is primarily a matter of evidence to be explored at trial. If it turned out not to be the police then that would not in itself undermine the Appellant's case, whilst equally it was too sanguine to assume that a "leak" by police officers or employees of the City of London force was out of the question.
35. At the pleading stage, the crucial questions in relation to the tort of deceit are whether a false representation was made with the requisite intention and whether the representee acted upon it. The manner in which the representation came to the attention of the representee is a matter that may be relevant to whether reliance in fact occurred and factual plausibility but there is no strict requirement to plead it. The Appellant has pleaded that the Respondent intended the information to reach the investors. Whether that intention was realised and how it was realised are matters to be established through evidence. The fact that the potential intermediary was the police does not, in my view, automatically render the pleading "fatally flawed".
36. It does not strike me that the matter which the Deputy Master was considering was essentially one of causation. The cause of action for deceit arises when the representation has reached the representee it is intended to reach and is relied on, it does not depend on the path it takes. The question is not whether the report by the Respondent caused the loss but whether the pleaded conduct amounts to deceit. In the context of the overall tort the deceit does not need to have caused loss to the representee. Questions of causation of loss therefore arise later in relation to the completed unlawful means tort.
37. As for novus actus interveniens, the Deputy Master considered that a disclosure of the allegation by the police would break the chain of causation as an unlawful act for which Respondent could not reasonably be held responsible. However, whether an act breaks the chain of causation is a question of fact, taking into account all the circumstances, including foreseeability and the deliberateness of the intervening act. Moreover, in this case the allegation is of the commission of an intentional tort which requires an intention to injure. In contrast to negligence the scope for the application of the doctrine of novus actus is extremely limited. On the pleaded case the very purpose of the Respondent's false report to the police was that the investors should get to hear of it. It was no part of the Appellant's case that the Respondent had to be held responsible for the actions of the police or indeed any third party who passed on a representation.
38. I conclude that the Deputy Master erred in placing such significant weight on the absence of a pleaded mechanism of communication of the representation. The Appellant has sought to plead the essential elements of the tort of deceit as the unlawful means employed by the Respondent, and has asserted that this deceit came to the attention of and operated on the investors as intended and caused loss. The lack of a detailed explanation of the precise intermediary steps does not, in my view, amount to a ground for a strike-out application. Blackmail is a serious allegation, which the Respondent accepts he made, that could foreseeably lead to police investigation, potential disruption of business activities, and damage to reputation, resulting in economic loss. These are matters best explored through evidence at trial.
39. For the reasons set out I consider that the Deputy Master may have taken too narrow a view of the pleaded case and the potential for the amendments to cure any deficiencies. The refusal of permission to amend would have the effect of stifling a potentially arguable claim at a preliminary stage.
40. The overriding objective of the Civil Procedure Rules is to deal with cases justly and at proportionate cost. This includes allowing amendments to pleadings where necessary to enable the real issues in dispute to be determined, so long as this can be done without causing injustice to the other party. The Respondent has not demonstrated that allowing the amendment would cause undue prejudice that could not be compensated by costs.
41. The Deputy Master's order striking out the claim is set aside, and I grant the Appellant's application for permission to amend his pleading. For the reasons stated, I will allow the appeal. I grant the Appellant permission to amend his Particulars of Claim in the form proposed. The amended Particulars of Claim shall be filed and served within 14 days of the date of this judgment. The Respondent shall have 28 days thereafter to file and serve an amended Defence, if so advised. I will consider submissions on costs in writing as I indicated I would at the hearing.