IG Index Plc v 1. Max Leung-Cheun and Others

JurisdictionEngland & Wales
JudgeJudge Mackie
Judgment Date17 August 2011
Neutral Citation[2011] EWHC 2212 (QB)
CourtQueen's Bench Division
Docket NumberCase No: HQ09X01300
Date17 August 2011

[2011] EWHC 2212 (QB)



Royal Courts of Justice

Strand, London, WC2A 2LL


His Honour Judge Mackie QC

Case No: HQ09X01300

IG Index Plc
1. Max Leung-Cheun
2. Angela Leung-Cheun
3. Christine Leung-Cheun
4. Donald Leung Cheun
5. Brigitte Leung-Cheun

Mr D W Mayall (instructed by Martin Shepherd & Co) for the Claimant

Mr Max Mallin (instructed by Lawrence Stephens) for the Defendants

Hearing dates: 5, 6 and 7 July 2011

Judge Mackie QC:


The Claimant seeks £773,152.09, sums including contractual interest allegedly due, on spread bets placed by or on behalf of the Defendants. The transactions are not denied. The issue in this case is in effect the counterclaim. The Defendants claim damages, more than the sum sought by the Claimant, alleging that they have suffered loss as a result of the Claimant's alleged breaches of contract in failing to close out open bets within five business days of margin call. The main question is whether there were margin calls at all. The Defendants also claim damages because under some accounts they say bets were opened only because the Claimant failed to obtain from them the required deposit in advance.



The Claimant ("IG Index") is a company specialising in spread betting. The first Defendant was born in 1945 and worked in the IT Departments of several banks before retiring in 2004. He has been trading in shares and options since about 1980. In 2005 he started dealing with IG Index. In 2007 his wife Brigitte and children Christine, Donald and Angela, the second to fourth Defendants, also became clients of IG Index but their bets were run by Mr Leung-Cheun under powers of attorney. In time each client had two accounts all ten being run by Mr Leung-Chun. Mr Leung-Chun was a very demanding and active client of IG Index. While Mr Leung-Chun disagreed with the way his accounts were handled from time to time and IG Index apparently found him sometimes too demanding the relationship worked satisfactorily until September 2008 when market falls caused by the banking crisis led to the events in issue in this case.

Spread Betting


I am not the first Judge gratefully to adopt the explanation of spread betting set out in the judgment of Rix LJ in Spreadex Ltd v Battu [2005] EWCA Civ 855

"spread betting

[2] Spread betting is not so much or not merely a bet, although it can be described as such, as a form of contract for differences. It enables a customer to take a position on a market (or an event) for a very small stake. Thus if the Dow Jones index is, say, at 10,000, one can "buy" or "sell" the market at a spread around the index of, for the sake of example, 10 points either way, 9990 to 10010. If one buys, one is betting that the market will rise above 10010. If one sells, one is betting that the market will fall below 9990. If one buys and the market rises, one stands to gain £1 for every point that the index exceeds 10010. If one sells and the market falls, one stands to gain £1 for every point that the index drops below 9990. If, however, one calls the market wrong, then one will stand to lose £1 for every point that the index exceeds the spread point in the wrong direction. Thus if one sells at 10,000 with a sell spread point at 9990, one will make £1 for every point the market falls below 9990 and lose £1 for every point the market rises above 9990. Until the bet or "trade" is closed, the gains and losses are merely "running" gains or losses. They are real enough, but constantly changing with every change in the index, and have not yet been fixed. Closing the bet will fix the position, win or lose. Unlike a classic bet, the customer can of course lose more than his stake. Indeed, on the example given, of a sale spread point of 9990 when the market is at 10,000, if the market does not move an inch, the customer will lose £10 for every £1 staked. Nor, again unlike a classic bet, are his winnings fixed at the outset by an agreement on odds. In theory winnings based on rising markets are infinite (in practice of course they are not) and losses based on falling markets are limited only in so far as they cannot exceed the consequences of a fall in the index to zero.

[3] Normally, of course, to gain by £1 for every rise (or fall) of a single point in a stock market index such as the Dow Jones would take an investment of significantly more than £1. In effect, one's £1 bet commands a position in the market significantly greater than the stake. In other words, there is a large element of gearing in the trade, and the situation is correspondingly volatile. Where the market in question is itself in a volatile phase, the risks become even greater. Thus, if the Dow Jones is capable of moving within a range of 100 or 200 points in a single day, the customer can be £100 to £200 richer or poorer per £1 stake within a matter of hours of his trade. On a trade of £100, those figures become £10,000 to £20,000.

[4] The spread betting operator who accepts these trades does not bet against the customer, but lays off the trade elsewhere. Ultimately, I suspect, the trade is accumulated in some form of derivative transaction on a futures exchange, but I do not know. The operator, however, by laying off the bet elsewhere seeks to profit by means of the spread. The means by which it does that, and the terms on which it does that, however, are not a matter for the operator's customer: nor, in the present case, have the applicable terms been disclosed."

The counterclaim initially included a claim for damages for breach of the FSA Rules as set out in the Conduct of Business Source book. This claim was wisely dropped before trial so it is unnecessary to set out the detailed facts about the circumstances of the Defendants and the opening of the accounts.

Spread Betting Customer Agreement ("The Agreement")


Dealing between the parties was on the terms of the Agreement a document containing 31 Terms set out in 13 pages. After 1, an introduction, 2 deals with " the services we will provide in dealings between you and us", 3 with " Conflicts of interest", 4 with " Our charges and tax" and 5 with " Providing a quote".


5(4) provides as follows "If, before your offer to open or close a Bet is accepted, we become aware that one of the factors set out at Term 5(5) has not been satisfied at the time you offer to open or close a Bet, we reserve the right to reject your offer at the level quoted. If we have, nevertheless, already opened or closed a Bet prior to becoming aware that a factor set out in Term 5(5) has not been met we may, at our absolute discretion, either treat such a Bet as void from the outset or close it at our then prevailing price. However, we may, at our absolute discretion, allow you to open or, as the case may be, close the Bet in which case you will be bound by the opening or closure of such a Bet, notwithstanding that a factor in Term 5(5) was not satisfied.


5(5)(k) provides "when you offer to open a Binary Bet, or you offer to open a Spread Bet on a Deposit Account you must always have sufficient funds in the relevant account to cover your maximum potential loss on the relevant Bet.


Clause 6 deals with "Opening a Bet" and 6(4) provides "Each Bet opened by you will be binding on you, notwithstanding that by opening the Bet you may have exceeded any credit or other limit applicable to you or in respect of your dealings with us".


Clauses 7 to 13 are irrelevant to this case.


Clause 14 deals with Deposits and Margin and the relevant parts read as follows

" [1] From time to time we may require you to provide deposits and margin which may only be provided in the form of cleared funds in our bank account, unless, by separate written agreement, we accept other assets from you as collateral for a deposit or margin payment. If assets other than cash are accepted, we will be entitled to realise such assets, in circumstances as defined in the separate agreement. In the event that any applicable debit card authority or other paying agent declines to transfer funds to us for any reason whatsoever then we may, at our absolute discretion, treat any Bet entered into by us in reliance upon receipt of those funds as void from the outset or close it at our then prevailing price, and recover any losses arising from the voiding or closure of the Bet from you. We reserve the right to stipulate the method of payment to be used by you.

[2] In making any calculation of the deposit or margin that we require from you under this Term 14, we may, at our absolute discretion, have regard to your overall position with us including any of your net unrealised losses (i.e. losses on open positions).

[3] If a written demand is Communicated to you it will be deemed to have been made as soon as you are deemed to have received such notice in accordance with Term 13(10).


[6] Unless otherwise agreed by us on the business day on which you open a Bet, you will pay a deposit in respect of each Bet, which will be due and payable immediately upon opening the Bet. When you open a Bet the amount of deposit payable by you will be the amount which we notify to you (which will be set by us at our absolute discretion) or if we do not notify you of the amount:

(a) the amount of the Stake multiplied by the deposit factor specified in respect of that Bet in the Information Tables or as otherwise specified in advance to you by us; or

(b) In the absence of such specification:

(i) if the Bet is a Financial Bet, the amount of the Stake multiplied by 10% of the Opening Level of the Bet; or

(ii) if the Bet is a Binary Bet, or a Spread Bet under a Deposit Account, the maximum amount which you would be capable of losing in respect of the Bet at the time when you open the Bet taking into account any...

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2 cases
  • Aryeh Ehrentreu v IG Index Ltd
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 31 January 2018
    ...of fact applying common sense. They also accorded with the view of His Honour Judge Mackie QC (sitting as a High Court Judge) in IG Index v Leung Cheun [2011] EWHC 2212 (QB), albeit obiter, considering the same provisions in the respondent's Customer Agreement at [46] (cited by the judge wi......
  • IG Index Ltd v Aryeh Ehrentreu
    • United Kingdom
    • Queen's Bench Division
    • 24 November 2015
    ...application of the court's common sense'." 108 Mr Mayall refers to the observations of HHJ Mackie QC in IG Index plc v Leung-Cheun [2011] EWHC 2212 (QB) at paragraphs 43–46, where he considered both issues of causation and the duty to mitigate. The judge recorded the submissions of Mr Mayal......

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