Risk Reduction International Ltd (Appellant) v Absa Bank (Mauritius) Ltd (Respondent) (Mauritius)

Case summary

Case ID

JCPC/2025/0062

Jurisdiction

Mauritius

Parties

Appellant(s)

RISK REDUCTION INTERNATIONAL LTD

Respondent(s)

ABSA BANK (Mauritius) LTD

Issue

Did the courts below err in finding that the Appellant unreasonably failed to mitigate its loss? If the courts below were correct to find that the defendant unreasonably failed to mitigate its loss, did that failure arise: (1) on 31 January 2012, when the Appellant instructed the Respondent to reconvert the money in its account from US dollars into South African Rands (as the Commercial Division found), or (2) on 1 March 2012, owing to the Appellant’s failure to direct that the money in its account be converted into US dollars (as the Court of Civil Appeal found)?

Facts

This appeal arises from a claim for breach of contract brought by the Appellant, Risk Reduction International Limited (“Risk Reduction”), against the Respondent, ABSA Bank (Mauritius) Limited (formerly Barclays Bank) (“the Bank”). Risk Reduction had operated a bank account with the Bank since 2001. The claim is for losses sustained by Risk Reduction owing to the Bank’s failure to execute a foreign exchange conversion from South African Rands (“ZAR”) to US dollars (“USD”) pursuant to the instructions of Mr Frederick Wilhem August Lutzkie (“Mr Lutzkie”), the only signatory and person authorised to give instructions to the Bank to operate the account. On 15 September 2011, Mr Lutzkie instructed the Bank to convert money in Risk Reduction’s account from ZAR to USD at the rate of 7.32 ZAR per USD. On the same day, the Bank confirmed by email that it would proceed in accordance with Mr Lutzkie’s instructions. There followed various exchanges between the parties until 20 September 2011, when the Head of the Treasury Department at the Bank issued an instruction to keep any order from Risk Reduction on hold. On 31 January 2012, the Bank converted the ZAR in Risk Reduction’s account into USD at a rate of 7.80 ZAR per USD (apparently without prior authorisation). Mr Lutzkie subsequently instructed the Bank to reverse the conversion. In the following months, email exchanges between the parties revealed that the Bank was monitoring the exchange rate of the ZAR and updating Mr Lutzkie of market fluctuations, with a view to informing him when a target rate of 7.25 ZAR per USD might be achieved. This, however, never materialised. On 18 March 2015, the Bank requested Risk Reduction to close its account. On 17 June 2015, the Bank converted all the monies in Risk Reduction’s account from ZAR to USD at the then prevailing rate of 12.4835 ZAR per USD. Risk Reduction’s case is that the Bank’s failure to act pursuant to Mr Lutzkie’s instruction on 15 September 2011 constituted a breach of the banking contract between them. Risk Reduction claims damages in the sum of 10,534,278.07 USD, representing the difference between the amount it obtained on 17 June 2015 when the money in its account was converted at the rate of 12.4835 ZAR per USD (23,940,442.35 USD) and the amount it would have obtained if the Bank had complied with Mr Lutzkie’s instruction to convert the money at the rate of 7.32 ZAR per USD (34,474,720.42 USD). While the Bank was found to have committed a breach of contract both at first instance and on appeal, the courts differed as to their assessments of the level of damages payable. At first instance, the judge held that Risk Reduction had failed to mitigate its loss in January 2012 when Mr Lutzkie instructed the Bank to reverse the conversion of ZAR at the rate of 7.80 ZAR per USD. As such, the judge held that Risk Reduction was entitled to damages amounting to 1,669,243.05 USD. On appeal, the Court held that Risk Reduction should have further mitigated its loss by directing a conversion of ZAR into USD during the early months of 2012 (including after January). In calculating the award of damages, the Court found that a base rate of 7.50 ZAR per USD was appropriate based on the evidence. Thus, it ordered the Bank to pay damages to Risk Reduction in the (reduced) sum of 357,023.956 USD. Risk Reduction now seeks to appeal to the Judicial Committee of the Privy Council on the basis that the courts below reached perverse decisions in finding that Risk Reduction had unreasonably failed to mitigate its loss.

Date of issue

9 July 2025

Case origin

Appeal As of Right

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