Camarata Property Inc. v Credit Suisse Securities (Europe) Ltd

JurisdictionEngland & Wales
JudgeMR JUSTICE ANDREW SMITH,Mr Justice Andrew Smith,And
Judgment Date09 March 2011
Neutral Citation[2011] EWHC 479 (Comm)
Date09 March 2011
CourtQueen's Bench Division (Commercial Court)
Docket NumberCase No: 2009 FOLIO 940

[2011] EWHC 479 (Comm)




Before: Mr Justice Andrew Smith

Case No: 2009 FOLIO 940

Camarata Property Inc
Credit Suisse Securities (Europe) Ltd

FRANCIS TREGEAR QC AND ANDREW THOMAS (instructed by Thomas Cooper) for the Claimant

ADRIAN BELTRAMI QC and CATHERINE GIBAUD(instructed by Allen & Overy LLP) for the Defendant

Hearing dates: 18, 19, 20, 21 and 25 January 2011

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.


Mr Justice Andrew Smith :

Introduction On 25 July 2007 the claimant, Camerata Property Inc ("Camerata"), bought through Credit Suisse (Guernsey) Limited ("CSG") for US$12 million a "5-year Autoredemption Note in USD Bearish on Eur/USD" (the "Note") issued by Lehman Brothers Treasury Co BV (the "Issuer"). On 15 September 2008 Lehman Brothers Holdings Inc ("Lehman") and various subsidiaries of Lehman filed in the United States for chapter 11 bankruptcy protection, and on 8 October 2008 the Amsterdam District Court declared the Issuer to be bankrupt. Camerata have lost all or a significant part of the investment.


In or about June 2007 Camerata entered into an agreement with the defendant, Credit Suisse Securities (Europe) Ltd ("CSSE"), whereby they were to receive an investment "Advisory Service". Their advisor or "relationship manager" was Mr Petros Siakotos-Konstantinidis. Camerata do not complain in these proceedings about their dealings with CSSE whereby they came to buy the Note. Nor do they allege that after they had bought the Note CSSE were under a continuing duty to volunteer advice about the Note otherwise than by way of responding to their inquiries or requests for advice. Their complaint is that, after J P Morgan Chase on 16 March 2008 had bought Bear Stearns & Co Inc ("Bear Stearns") so as to rescue the bank, they, through Mr Charalambos Ventouris, sought advice from Mr Siakotos-Konstantinidis about their investments, including the Note, and received from him advice that was negligent and in breach of the contractual obligations of CSSE, but for which they would have sold the Note before Lehman failed.


Although there is no complaint in these proceedings about the circumstances in which Camerata acquired the Note, by a letter of 31 December 2010 Messrs Thomas Cooper, Camerata's solicitors, sent Messrs Allen & Overy, CSSE's solicitors, a draft pleading with a view to bringing new claims in which, as I understand it, Camerata allege that the Note and other investments made through CSSE were unsuitable for them. Mr Adrian Beltrami QC, who represented CSSE, invited me to refrain from exploring in this judgment matters which might be in issue in such proceedings, and I have sought to avoid doing so unnecessarily. However, it is necessary to set the background to the present claim, and to examine, in particular, Camerata's financial knowledge and experience and their attitude, and expressed attitude, towards adventurous investments: indeed, CSSE themselves rely upon these matters.

The parties


Camerata are a company incorporated in Belize in 2005. They are an investment vehicle owned by a Panamanian trust, the Frosio Foundation, whose sole beneficiary is Mr Ventouris. Their sole director is Dr Urs Lustenberger, a commercial lawyer practising in Zurich. Dr Lustenberger has acted for Mr Ventouris since the early 2000's, and he took his instructions in relation to Camerata from Mr Ventouris. He had no part in deciding what investments Camerata should make: that was done by Mr Ventouris alone.


Mr Ventouris, who is Greek, is a wealthy man. He is in his thirties and has shipping experience: he holds a Captain's B certificate and he is qualified as a Chief Officer of an ocean-going vessel. He studied for the degree of Master of Business Administration in Maritime Studies from Leicester University through a distance learning programme, which included some accountancy and economics.


Mr Ventouris' father founded a shipping business some fifty years ago and built it up from small beginnings. The business has now been divided between Mr Ventouris and other members of the family. Mr Ventouris manages bulk carriers: he once had a fleet of seven vessels, but has made sales and now owns only two. At the time of his dealings with Credit Suisse, he had funds of some $50 million for investment. They came from operating his ships and the sales from the fleet.


CSSE are in the Credit Suisse group of companies, and are a listed money market institution under the Financial Services and Markets Act, 2000. Their business includes arranging finance for clients in the international capital markets, providing financial advisory services and dealing in securities, derivatives and foreign exchange both as a principal and on behalf of others.


Mr Siakotos-Konstantinidis is employed by CSSE in the Private Banking division in London as a relationship manager. He has been employed in financial services since 1992, having worked first for Barclays Bank in Greece. He joined Credit Suisse's Private Banking division in 2003, and in 2007 he was promoted to director's level (the title of director indicating a rank of employee and not membership of the company board). Mr Siakotos-Konstantinidis was originally engaged by CSSE to "cover the Greek market" and most of his clients were Greek. During the period with which I am concerned, his assistant at CSSE was Mr Christopher Kelly.


Mr Siakotos-Konstantinidis has a particular involvement with investments by way of structured notes, that is to say notes whose value and return depend upon the performance of an underlying asset or underlying assets (such as shares in other companies, currencies or commodities). He described his role as "client-facing", by which he meant that he dealt with CSSE's clients and was not involved in Credit Suisse's own investments or in deciding what financial products or notes should be sold through Credit Suisse or which banks or other institutions should issue investments that Credit Suisse sold.


Mr Siakotos-Konstantinidis did not receive commission directly related to the amount of investments sold to CSSE's customers through him. However, when CSSE sold an investment issued by another institution, they received a commission from the issuer, and the performance of a unit within CSSE was measured in part by reference to how much commission was so earned.


I have referred to CSSE selling structured products. Credit Suisse adopted what they described as an "open architecture" approach when they constructed financial products: they meant by this that they structured the terms upon which a product should be offered to investors and, if it attracted interest, they invited tenders from suitable institutions and arranged for it to be issued by one that offered competitive terms. As a result, it would sometimes not be known who would issue a product until after the client had agreed to invest.

Mr Ventouris' first dealings with Credit Suisse


Although Camerata's complaint relates only to Mr. Ventouris' dealings with Mr. Siakotos-Konstantinidis after 16 March 2008, I must describe their earlier relationship: CSSE argue that it supports their contentions that they were not in breach of duty and that in any case Mr. Ventouris would not have sold the Note if given other advice by Mr Siakotos-Konstantinidis.


In 2005 Mr Ventouris was introduced to Mr Achilles Fokiades, who worked for Credit Suisse in Switzerland. In 2006 Mr Fokiades, who was then Mr Ventouris' relationship manager with Credit Suisse, told him that he could earn a better return than that paid on bank deposits without risking his capital. This conversation led to Mr Fokiades introducing Mr Ventouris to Mr Siakotos-Konstantinidis because of his knowledge of structured products.


Mr Ventouris first spoke with Mr Siakotos-Konstantinidis on 3 April 2006 in a conference telephone call arranged by Mr Fokiades. They had what Mr Ventouris described as (and I accept was) a brief discussion about a structured product which has been referred to as the "Index Based Note" issued by Credit Suisse. It was based upon the performance of three indices, the S&P (Standard & Poor's) 500 index, the Dow Jones Eurostoxx 50 index and the Nikkei 225 index. It paid quarterly floating coupons of 3 months LIBOR plus 3% pa during the life of the note. It was a three years note, but could be "called" at the end of any quarter by Credit Suisse paying the capital invested and the last quarter's coupon. The investment was not capital protected: less than the sum invested might be repaid if, during the lifetime of the note, any one or more of the three indices traded at or below its "barrier", which for each index was set at 60% of that index's "strike" level. In those circumstances, if upon maturity at least one of the indices was trading below its strike level, the amount for which the note was redeemed was reduced by the percentage by which upon maturity the worst performing index was below the strike level. Thus, the Index Based Note was designed for investors who considered that the three indices would not experience a severe bear market during the life of the note. I accept Mr Siakotos-Konstantinidis' evidence that he explained to Mr. Ventouris how the investment was structured.


On about 11 May 2006 Mr Ventouris invested $3 million in an Index Based Note. The commission on the sale was divided equally between Mr Fokiades' unit in Credit Suisse, Switzerland and Mr Siakotos-Konstantinidis' unit in CSSE, London.


In the course of the discussions leading to the...

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