ABSTRACT

Given the fact that the subsequent dramatic fall in the value of Ferranti shares was caused by the disclosure of an earlier fraud practised on Ferranti by a third party the question is whether Smith is entitled to recover against Citibank the entire loss arising from the fraudulently induced transaction. Smith submits that the Court of Appeal adopted the wrong measure. Smith seeks to recover damages calculated on the basis of the price paid less the aggregate of subsequent realisations. Citibank contends that the loss attributable to the subsequent disclosure of the fraud by a third party is a misfortune risk and is irrecoverable. Citibank argues that the Court of Appeal adopted the correct measure.