Points Of Interest From The Autonomy Consequentials Judgment For Financial Institutions Involved In Defending Section 90A / Schedule 10A FSMA Shareholder Claims

The High Court has handed down a further judgment in the long‑running Autonomy litigation, dealing with consequential matters following Mr Justice Hildyard’s earlier liability and quantum decisions: ACL Netherlands BV & Ors v Sandelson (Re Consequential Matters) [2026] EWHC 691 (Ch).

By way of brief background, the Hewlett Packard group (HP) brought a US$5 billion civil fraud claim in connection with its 2012 acquisition of the UK software company, Autonomy Corporation plc (Autonomy). In 2022, two former directors of Autonomy, Michael Lynch (ex-CEO) and Sushovan Hussain (ex-CFO), were found liable under s.90A of the Financial Services and Markets Act 2000 (FSMA) (among other legal bases) for misleading statements in Autonomy's annual and quarterly reports (see our blog posts here, here and here). Subsequently, in 2025, the High Court determined that the claimants had lost approximately £646 million excluding interest on the basis that even if HP knew Autonomy's true accounting position, it would still have bought the company, albeit at a lower value.

The present judgment deals with the consequential matters arising out of the previous two judgments and also considers, and dismisses, the first defendant's (ie the Estate of Mr Lynch) request for permission to appeal based on four grounds.

Given this is the only s.90A FSMA case to go to trial, we have summarised below the key points from the judgment likely to be of interest to clients who are at risk of becoming involved in securities litigation. In particular, this judgment gives guidance on how the court will approach questions of non-sterling currency fluctuations, both when determining quantum and when assessing costs recoverability.

Consequential matters 

Currency issue 

A key feature of the underlying litigation is the "dog‑leg" nature of the FSMA claim. Under the statutory scheme, s.90A FSMA claims must be brought against an issuer by its shareholders. In this case, HP Bidco (a special-purpose acquisition vehicle incorporated by HP for the sole purpose of acquiring shares in Autonomy) brought a s.90A claim against Autonomy (the first claim). Autonomy (under the control of HP) accepted full liability, and then sought to recover in turn from the defendants as former directors of Autonomy (the second claim). 

With respect to the first claim, Autonomy admitted liability to HP Bidco in September 2014. The High Court went on to determine in its 2025 quantum judgment that HP Bidco's loss was c. £646 million, which the parties agreed was c. US$1 billion in dollar terms (US dollars being the currency in which Bidco felt its loss, though this was appealed).

The question before the High Court in the present judgment related to the quantification of the second claim (against the first defendant only, as the claim against the second defendant was settled). In particular, whether: (a) liability should be assessed by reference to the US dollars/sterling conversion rate at the date of judgment; or (b) as the first defendant contended, that its liability crystallised in September 2014 (when Autonomy admitted liability to HP Bidco), such that any currency fluctuations between September 2014 and the date of judgment were at Autonomy's risk, not the first defendant.

The High Court framed the question as whether the principle articulated by the House of Lords in The “Texaco Melbourne” [1994] 1 Lloyd’s Rep. 473, applied to the dog-leg nature of the second claim. It noted that the position is helpfully summarised in McGregor on Damages (22nd Ed) as follows:

“Once the currency in which the claimant’s loss is effectively felt has been identified, it only remains for the court to calculate that loss in that currency, generally using the breach date for the calculation, and following this by the necessary conversion into sterling as at the date of judgment; to this process therefore fluctuations in the currency of loss between breach and judgment can have no relevance.”

The first defendant argued that the second claim should be considered as an indemnity claim, where the first defendant was liable to reimburse Autonomy for its admitted first claim. They submitted that the risk of currency fluctuations after the date of admission/date of crystallisation (in respect of the first claim) and date of judgment (in respect of the second claim) should be borne by the claimants.

The court noted that this issue was not easy to determine. However, it held that while the second claim was similar to a claim of indemnity, it was nevertheless a claim for breach of duty. Accordingly, until determined by judgment, it remained the contingent obligation and duty of the first defendant to cover the actual expense to Autonomy, including the expense of acquiring sufficient dollars (as its functional currency). 

The above determination by the High Court may be relevant to those involved in securities class actions when assessing the defendant's potential liability if the functional currency for the loss is not sterling. 

Pre-judgment interest on losses 

It was common ground that, in relation to the FSMA claim, the court's statutory jurisdiction was to award simple interest on damages pursuant to section 35A of the Senior Courts Act 1981. The dispute between the parties was the proper basis to award interest in relation to the fraudulent misrepresentation claim. The claimants contended that compound interest should be awarded under the court's equitable jurisdiction, by characterising the misrepresentation claim as one to recover money obtained by fraud and as restitutionary in nature.

The High Court, following the Court of Appeal in Granville Technology Group Ltd v LG Display Co Ltd [2023] EWCA Civ 980, held that the claimants were only entitled to simple interest pursuant to section 35A of the Senior Courts Act 1981 as the misrepresentation claim in the current proceedings did not engage the court's equitable jurisdiction.

The court agreed with the first defendant that the claims were for damages for a bad bargain induced by fraud, not restitution of a fund. The court highlighted that compound interest is not awarded merely because the defendant has behaved badly or fraudulently. While equity does in certain circumstances award compound interest to strip a defendant of the benefit of using a specific fund obtained from the claimant, no such claim arose here. Accordingly, where (as here) no claim is pursued for compound interest at common law, interest will be limited to a discretionary award of simple interest. Quoting from the decision in Granville, the court clarified that English law has not gone as far as the Arbitration Act 1996, in making compound interest available in every case where a claimant is kept out of its money.

Costs 

While ultimately a matter for the costs judge, the court was invited by the first defendant to make certain observations about the recoverability of costs. The court's observations in relation to recoverability of the costs incurred by Choate (the claimants' US legal advisers) and costs associated with exchange rate risk, may be of interest to those involved in these types of proceedings, which often involve advisers who are not paid in sterling.

There was a dispute between the parties as to the recoverability of the fees incurred by the claimants' US legal advisers, Choate, as coordinating counsel, acting as an intermediary between the English law firm on record for the claimants, and the individuals at HP. Relevantly, Choate's fees were not included in the monthly cost reports filed by the parties. While the High Court refused to disallow the costs referable to Choate's intermediary role at this stage, it did observe that on the current evidence, it did not consider it right to oblige the first defendant to contribute to the undisclosed costs of Choate acting as further members of the claimants' already large English legal team.

In relation to exchange rate risks, the court disallowed recovery of any such costs for legal fees. In this case, most of the costs which the claimants sought to recover were billed by their English legal advisers in sterling, but were invoiced to the claimants by Choate in US dollars, which added substantial transaction exchange rate costs. The evidence before the court was that c. £3.3 million was incurred in connection with currency fluctuations in respect of invoices denominated in sterling. The court was referred to the Supreme Court's decision in Process & Industrial Development Limited v The Federal Republic of Nigeria [2025] UKSC 36, which held that unlike an award of damages, an order for costs is a discretionary remedy which does not seek to indemnify the winning party. Instead, a costs award is a statutorily authorised contributiontowards the costs incurred in litigation. The Supreme Court also held that it is consistent with the court's costs jurisdiction and with legal certainty that there be a general rule that an order for costs should be made in sterling or in the currency in which the solicitor has billed the client. The court does not need to consider what currency truly reflects the loss suffered by the receiving party.

Grounds of appeal 

The first defendant sought permission to appeal on four grounds: one relating to the liability judgment and three relating to the quantum judgment. The High Court refused permission on all grounds.

The first ground of appeal was in relation to the High Court's finding that for the purpose of the acquisition, HP was the controlling mind of HP Bidco, and that HP's reliance could be treated as HP Bidco's reliance. The first defendant submitted that HP and HP Bidco were separate legal entities and therefore there was no basis to find that reliance by one of them was to be treated as reliance by another. Further, the first defendant submitted that the High Court's reliance on the Court of Appeal's judgment in Abu Dhabi Investment Co v H Clarkson and Co [2008] EWCA Civ 699was misplaced. Specifically, the case did not address the circumstances in which one company can be treated as the controlling mind of another or where one company’s reliance can be treated as another company’s reliance.

The court stated that the corporate law principle of separate legal personality does not preclude a finding of fact that two separate legal entities have the same controlling mind. Further, the court observed that the Court of Appeal's decision in Abu Dhabi Investment Co supported the conclusion that the essential question is whether the relevant misrepresentations were intended to and did influence the controlling mind of the person which made the acquisition.

The first defendant's fourth ground of appeal related to the currency issue discussed above. In particular, it challenged the High Court's determination that in relation to the first claim, the currency in which loss was felt was US dollars. The first defendant argued that the High Court had not distinguished sufficiently between the currency of the claimant advancing the claim (namely HP Bidco), and the currency in which HP conducted its business.

The court refused permission to appeal, highlighting that the determination of the relevant currency which most appropriately reflects the recoverable loss is one of fact. As set out in the quantum judgment, although HP Bidco and HP were distinct entities, HP Bidco had no operations other than as the vehicle used by HP for the acquisition, and the two entities must be taken to have felt the loss in the same currency, namely US dollars.

The second and third grounds of appeal were in relation to the court's counterfactual analysis in the quantum judgment. In that judgment, the court had assessed what price HP would have paid for Autonomy had it known the true position, which required the court to determine the share price that would have prevailed absent the misleading statements and to assess the likely outcome of negotiations between the parties. The first defendant challenged the share price applied by the court and its broad-brush approach in determining the result of those negotiations to establish an agreed bid price. The court refused permission to appeal on both grounds, considering that neither raised an arguable error of law or principle.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.