Reliance on the advice of competent legal counsel, even if ultimately incorrect, establishes reasonable and probable cause, defeating a claim for malicious prosecution. Furthermore, damages under an injunction undertaking are limited to losses reasonably consequential to the injunction, excluding voluntary actions by the party.

Sir George Lowndes -

The suit out of which this appeal arises is the offshoot of a case which came before this Board and was decided adversely to the present respondents (the then appellants) in May 1924. The facts leading up to the litigation are fully set out in the report, Imperial Tobacco Co., of India, Ltd., v. Bonnan [1924] A. C. 755, for the purposes of the present appeal they may be summarized as follows :

The respondents a limited company incorporated in India, but to a certain extent apparently subordinate to the British American Tobacco Company, Ltd., in this country, who held some 80 per cent. of the Indian Company's shares, had been importing and selling Wills'Gold Flake cigarettes upon monopoly terms in India since 1910, and had no doubt built up an exceedingly valuable trade. In 1921 the appellant (Bonnan) purchased some millions of genuine Wills'Gold Make cigarettes from the British Army canteen authorities at a price which would enable him to undersell the respondents in the Indian market. He shipped a considerable quantity of these to India and offered them for sale in Bombay and Calcutta. He succeeded in disposing of his earlier consignments upon favourable terms, but subsequent arrivals were detained by the Indian Customs authorities at the instance of the respondents, who alleged that they were counterfeit. On 11th May 1922, after reference to the British American Tobacco Company in London, the respondents instituted a suit in the Calcutta High Court against the appellant, claiming to be entitled to restrain him from selling his cigarettes there, and on 22nd May a similar suit was instituted in Bombay. In both suits applications were made by the respondents for an interim injunction. The injunction was granted in the Calcutta suit on 11th May 1922; in the Bombay suit the appellant gave a formal undertaking to the Court not to sell. In both cases the respondents also gave what has been described as "the usual undertaking in damages," which their Lordships understand to mean an undertaking to make good to the appellant in each of these suits any damages which the Court might hold to have been reasonably consequential on the action taken by the respondent if ultimately held to have been unjustified.

The Calcutta suit was prosecuted by the respondents up to this Board, and was finally disposed of in May 1924, as above stated, it being held by their Lordships, in affirmance of the decrees of both Courts in India, that the appellants'cigarettes were genuine articles, lawfully acquired from the lawful manufactures, and that as such the appellant (Bonnan) had a right to sell them in India

The Bombay suit, which had been stayed pending the final decision of the Calcutta suit, was dismissed by consent in November 1924.

No proceedings were taken by the appellant either in Calcutta or Bombay to enforce the undertaking in damages given by the respondent, but on 21st January 1925, he instituted in the Calcutta High Court the suit out of which the present appeal arises, claiming from the respondents damages (amounting in all to over seven lakhs of rupees) on the allegation that the former proceedings were taken maliciously without reasonable or probable cause. The trial Judge (Pearson, J ) held that this had been established by the appellant; the Court of appeal held that it had not, and the main argument before their Lordships has turned on this difference of opinion, it being not admitted by the appellant that if the view taken by the appeal Court is right, his suit, as a substantive claim for damages, must necessarily fail. It had been contended in India that proof of malice and want of reasonable and probable cause was not of the essence of such a suit as that brought by the appellant, but this contention was not pressed before their Lordships.

When the first consignment of the appellant's cigarettes arrived in Calcutta in March 1922, the respondents seem to have consulted their local solicitors, who were evidently not