Adam Robert Giaquinto v ITI Capital Ltd (formerly “Walbrook Capital Markets Ltd” and “FXCM Securities Ltd”)
| Jurisdiction | England & Wales |
| Judge | Master Stevens |
| Judgment Date | 13 October 2023 |
| Neutral Citation | [2023] EWHC 2467 (KB) |
| Court | King's Bench Division |
| Docket Number | Case No: QB-2020-001291 |
[2023] EWHC 2467 (KB)
Master Stevens
Case No: QB-2020-001291
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mark James (instructed by iLaw) for the Claimants
Bobby Friedman (instructed by Rosenblatt) for the Defendant
Hearing dates: 7 March 2023 and 28 June 2023
Approved Judgment
This judgment was handed down remotely at 2pm on 13 th October2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
INTRODUCTION AND BACKGROUND TO THE APPLICATIONS
The claimants in this action are a mixture of corporate bodies and individuals that invested in an option trading strategy with the defendant's predecessor in title in 2014. The investments were unsuccessful, and the claimants lost everything. They allege that the defendant is liable for the losses due to breaches of contract and statutory duties, negligence and misrepresentation. There are also suggestions of dishonesty on the part of the defendant although the adequacy of that pleading is contested. The claim is pleaded in excess of £4M and is fully defended with the defendant maintaining the position that each of the claimants was a highly experienced and sophisticated investor.
On October 28 th, 2021, the defendant issued an application for security for costs against the corporate claimants only. There were difficulties obtaining a suitable listing so eventually it was passed to me, although not the Assigned Master, for a hearing. In fact, 3 hearings ensued, and I handed down a detailed judgment in favour of the defendant with neutral citation number [2022] EWHC 973 (QB). This judgment needs to be read alongside the previous one (“my first judgment”), where I reviewed the relevant authorities as to the nature of security that might be appropriate before setting out my decision. All references to “the claimants” in this judgment in the context of security-related correspondence and applications relate to the corporate claimants only.
It is important for me to directly reference paragraph 83 of my first judgment where I explained that the ATE policy that the claimants had offered at that time could be used by way of security for costs, if it was backed with suitable anti-avoidance provisions and there were provisions addressing problems of solvency and a direct payment mechanism to the defendant. Most ATE policies contain numerous exemption clauses, many of which relate to defaults in the conduct of the insured, and over which the defendant has no control. This is just one of the reasons why the inclusion of anti-avoidance provisions within the policy is regularly ordered by the court, if an ATE policy is to be accepted as suitable security, or partial security for costs. Such provisions provide comfort to a defendant who can then rely on the policy to pay out irrespective of the acts of the insured. It is usually necessary to also have a direct payment mechanism between the insurer and the defendant so that they can readily recover monies owed to them, rather than having to rely on the insured submitting a claim under the policy and paying monies over to the defendant after the policyholder has received them. Courts will also usually consider the issue of possible insolvency of the claimants and how to ensure that monies due to be paid out under an insurance policy are ringfenced for the purposes for which the policy was incepted i.e., they do not fall to be distributed amongst other creditors, such that a defendant may not receive the full amount due under the security ordered by the court. All of these issues were argued in front of me before I handed down my first judgment, hence my decision in the terms recited above.
Whilst the claimants in this application continue to submit that the solvency issue is of relatively limited concern in this case, the defendant disagrees. Any time for appeal of my first judgment has long since passed. The defendant has submitted to me in previous hearings that “ there is a strong likelihood that the corporate claimants are all insolvent. They have no business and no assets”. It is not contested that the second claimant is an investment club and nominee company, registered in the Isle of Man. Material contained within the first hearing bundle [at 15/240–241] demonstrated that the company is a vehicle to hold client monies only, and its funds are not proprietary funds belonging to the company itself. The other three corporate claimants all have dormant accounts, are nominee companies and none of them has more than £100 on their balance sheets. It was for these reasons that I previously required the claimants to address the “ problems of insolvency” when putting up adequate security.
The relevant insurance policy at the time of my first judgment was from BCR Legal Assist Ltd (“BCR”) although the provider was not actually named in that judgment. That policy had been the subject of extensive correspondence between the parties pre-hearing (see for example [30] and [31] of my first judgment), as the defendant had sought to negotiate detailed amendments to it, with some success by the time of the hearing. Indeed, I had noted at [35] of my first judgment that many points taken, even in the skeleton arguments, had significantly narrowed by the time of oral submissions. This factual context will become relevant in later sections of this judgment. Importantly, my first judgment did not specify that the requirements of solvency and direct payment mechanisms would need to be satisfied by means of a Deed of Indemnity. The authorities that had been placed before me demonstrated that a Deed could be a suitable mechanism, but my judgment did not mandate it, as I was aware that a Deed was not the only method by which the concerns I had identified, could be satisfied.
Following the handing down of my first judgment on 10 th May 2022, I requested that the parties draft an order dealing with consequential directions. The defendant supplied a draft order to the claimants on 11th May 2022 which was subsequently filed at court. That draft provided that:
“(1) Unless alternative security in the form described in paragraph 2 below is put in place at or before 4:00 PM [14 days from the date of the order], the Second Claimant, Third Claimant, Fourth Claimant and Seventh Claimant shall each give security for the Defendant's costs until the experts stage by each paying the sum of £64,800 each into the Court Funds Office, by 4:00 PM on [14 days from the date of the order].
(2) the alternative security referred to in paragraph 1 above shall consist of an after the event insurance policy (“the ATE Policy”), issued to the Claimants in the form described at paragraph 83 of the Judgment to include:
2.1 adverse costs cover of at least £100,000 for each Claimant to the Proceedings;
2.2 a suitable anti-avoidance endorsement in accordance with the Judgment; and
2.3 a suitable deed of indemnity directly from the insurer to the Defendant.
3. Unless the security or alternative security (as referred to in paragraphs 1 and 2 is given as ordered by the Claimant in question, in the time specified above, then in respect of that Claimant:
a. That Claimant's claim is struck out without further order, and
b. On production by the Defendant of evidence of default, there be judgment for the Defendant on that Claimant's claim without further order, with the Claimant to pay the Defendant's costs of its claim, to be the subject of detailed assessment if not agreed.”
Written submissions on post-judgment issues were submitted by both counsel on 12th May. Despite 4 pages of written submissions from the claimants, they did not raise an objection to the terms of the draft order which the defendant had submitted, save for the issue of the costs of the application itself and the amount of time to be allowed in which to provide the security.
Upon reviewing the draft order, the submissions and correspondence from the parties, I noted the insertion, within the draft order, of a requirement to supply a Deed of Indemnity, as well as a debarring order, should the requisite security not be provided within the time scale indicated. The debarring order provision had been advanced in the defendant's original N244 application but was not something that I expressly dealt with in my first judgment. I had indicated at [84] that only a brief amount of further time should be allowed for the claimants to arrange acceptable alternative security to a payment into court, but I had not actually specified a debarring order. I was naturally mindful of the listing and other delays that had been encountered since the defendant's application was first issued, and the need for the claim to be progressed and resolved as expeditiously as possible in accordance with the overriding objective, but the issue of a debarring order was a matter left for consequential directions.
Whilst the draft order supplied to me was therefore rather more prescriptive as to the security to be provided than my first judgment had mandated, the only relevant issue I was asked to determine following written submissions from both parties, as relevant to these applications, was the time to be allowed for the security to be put in place. I decided that 14 days was adequate and wrote to the parties on 30th May advising of this “in view of the lapse of time since judgment was handed down” and stating, “ As I understand it there...
To continue reading
Request your trial