Constantin Medien AG (Applicant/Claimant) v Bernard Ecclestone and Others (4) Alpha Prema UK Ltd and Others

JurisdictionEngland & Wales
JudgeMr Justice Vos
Judgment Date22 July 2013
Neutral Citation[2013] EWHC 2674 (Ch)
Date22 July 2013
CourtChancery Division
Docket NumberCase No: HC11CO2586

[2013] EWHC 2674 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

The Rolls Building

7 Rolls Buildings

Fetter Lane

London EC4A 1NL

Before:

Mr Justice Vos

Case No: HC11CO2586

Between:
Constantin Medien AG
Applicant/Claimant
and
(1) Bernard Ecclestone
(2) Stephen Mullens
(3) Bambino Holdings
Defendants
(4) Alpha Prema UK Limited
(5) Formula One World Championship Limited
(6) Formula One Asset Management Limited
(7) Formula One Management Limited
(8) Formula One Administration Limited
(9) CVC Capital Partners Limited
Respondents

Mr Philip Marshall QC, Mr David Blayney QC, and Mr James Mather (instructed by Peters & Peters) appeared for the Claimant

Mr Robert Miles QC and Mr Richard Hill QC (instructed by Herbert Smith Freehills) appeared for the 1 st Defendant, Mr Ecclestone

Mr Tom Smith (instructed by Hogan Lovells) appeared for the 2 nd Defendant

Mr Michael Bools QC (instructed by Edwards Wildman) appeared for the 3rd Defendant

Mr Charles Hollander QC and Mr Stephen Midwinter (instructed by Freshfields Bruckhaus Deringer) appeared for the 4th to 9th Respondents

Mr Justice Vos

Introduction

1

In this action, Constantin Medien AG (Constantin or the claimant) claims that Bayerische Landesbank (BLB) was induced by a bribe of some US$44 million (the payments) allegedly paid by Mr Bernard Ecclestone (Mr Ecclestone or the first defendant) and Bambino Holdings Limited (Bambino or the third defendant) to Dr Gerhard Gribkowsky (Dr Gribkowsky) to sell in late 2005 its 46.65 per cent stake in the F1 Group (FOG) for some US$828 million to a partnership run by CVC Capital Partners Limited (R9 or CVC) at an undervalue (the transaction). The transaction took place through Alpha Prema UK Limited (R4) and was, as I understand the position, completed on 31 March 2006.

2

It is alleged that Dr Gribkowsky was the Chief Risk Officer and a director of BLB at the relevant time and was responsible for matters relating to the sale of BLB's shares in FOG. Constantin claims also that, if BLB's stake had been sold at full value, it would have received a payment under certain sell-on rights that it held against BLB. It was, it says, entitled to 5 per cent of any proceeds that were recovered between US$ 1.0574 billion and US$ 1.1196 billion and to 10 per cent of any recovery over that latter figure.

3

Constantin's claims are brought under the German Civil Code including, in particular, section 826, which provides in part that:

"A person who, in a manner contrary to public policy, intentionally inflicts damage on another person is liable to the other person to make compensation for the damage."

4

Constantin alleges that the defendants knew of its interest in the sale price but that such knowledge, if it existed (as it is alleged to do) is not a necessary ingredient of its claim. Moreover, Constantin relies in support of its higher valuation of FOG on a refinancing which was concluded by CVC in late 2006 and completed in April 2007, implying what is said to be a strikingly higher valuation for FOG (the refinancing).

5

The defendants deny the alleged bribe, saying that the payments were made in response to threats by Dr Gribkowsky that he would create difficulties with the UK tax authorities concerning Mr Ecclestone's wife's (Mrs Ecclestone) trust arrangements with Bambino.

6

The defendants also contend that FOG was sold at its market value under the transaction, relying on developments in the FOG business after the transaction, including progress with what is known as the Concorde Agreement, which provides the terms on which Formula One teams participate in the Formula One Championship.

7

There are a number of applications by Constantin before me as follows: (1) an application for further disclosure against Mr Ecclestone under part 31.12 of the CPR, (2) an application for non-party disclosure against the CVC respondents (R4 and R9) under part 31.17 of the CPR, (3) an application for non-party disclosure against the FOG respondents (R5, R6, R7 and R8), also under part 31.17 of the CPR, (4) an application for an order for simultaneous exchange rather than sequential service of expert valuation evidence, and (5) an order permitting Constantin to call as a witness Mr Donald Mackenzie of CVC for cross-examination, pursuant to CPR part 33.5.

8

Mr Mackenzie has made statements in German proceedings which were the subject of Civil Evidence Act notices served by both Constantin and the defendants. In the course of the hearing before me, however, Constantin, through its leading counsel, Mr Philip Marshall QC, withdrew its Civil Evidence Act notice in respect of Mr Mackenzie's evidence.

9

In addition to those five matters, there is also before me an application by Bambino for an order requiring Constantin's expert evidence to be served within seven days, failing which Constantin should be debarred from relying upon expert evidence at all. The trial of this action is presently listed for a period of between 20 and 25 days to come on on 7 October 2013, i.e. in a little over two months' time, when the whole of August and September are, of course, taken up with the long vacation.

10

Accordingly, when the hearing before me began on Wednesday 18 July 2013 (this is for one day's hearing and one day's reading, which had of course already taken place before Wednesday 18 July 2013) I inquired how long the parties thought the applications would, in fact, take and I expressed the preliminary view that if all the disclosure sought were to be ordered the trial date would, in practice, inevitably be lost.

11

I said that the evidence seemed to me to show that the scale of documentation required a fairly major exercise that seemed most unlikely to be taken to a conclusion in a couple of weeks in the long vacation, and that third parties could not be forced to act, effectively, at break-neck speed.

12

I asked Mr Marshall whether his client, Constantin, wanted to pursue its applications for disclosure if it knew that doing so would be likely to mean that the trial would go off. I also told the parties that I had inquired of the Clerk of the Lists and established that it was inevitable if the trial did go off that it would not be relisted until late 2014 or early 2015. Mr Marshall responded by saying, on instructions last Wednesday, that his client nonetheless wished to proceed with the applications and would, if its applications were successful, accept that the trial should be adjourned. There have been further developments since then, to which I shall allude in a moment, which also have an effect on the prospective trial but, for the moment, suffice it to say that Mr Marshall also told me this morning, having considered the comments that were made on the last occasion, that his clients now take the view that 20 to 25 days is not an adequate estimate for this trial.

13

The defendants, on the other hand, took and take a diametrically-opposed view to that put forward by Constantin: they submit that Constantin has been guilty of wholly unreasonable delay in bringing its applications forward, that Constantin has known since December 2012 that the defendants were refusing to disclose documents belonging to FOG (and indeed to CVC) and it should, therefore, have applied at once if it wanted the disclosure now sought for a trial, long fixed to start in October 2013. The matter, say the defendants, has been hanging over their heads for years now. They are mostly individuals, and it is time for it to be resolved.

14

In the circumstances, I said before the argument began that I would decide nothing before hearing submissions, but that I wanted submissions on all issues from all counsel. It turned out that the estimate of one day plus one day's reading should have been two days plus one day's reading and, accordingly, I allocated today, Monday 22 July 2013, in place of the one-day pre-trial review that had been fixed for 29 July 2013 and I said that I would deal with all pre-trial matters if I formed the ultimate view that the trial could or should be retained.

15

Against that background, I shall now set out a brief chronology of matters that are relevant to the applications that I need to determine.

Chronological background

16

On 29 July 2011, Constantin filed its claim form. I shall not seek to set out the detail of the claim that is made in that document but it is perhaps important, in the light of the argument concerning the documents that are sought by way of disclosure, that I recite paragraphs 52 and 53 of the Particulars of Claim as follows:

"52. The sale of the [BLB] Holding to CVC was not preceded by the process of valuation and marketing that would normally precede the entry by a bank into a transaction of this kind. In particular, the steps that would have been normal for a bank in [BLB's] position to take would have included (a) the obtaining of a professional valuation, (b) the mandating of an investment bank or other professional advisor, and (c) the making of approaches to other potential buyers. None of these steps was taken by Dr Gribkowsky who instead excluded even [BLB's] own legal and mergers and acquisitions departments from the sale process.

53. The proceeds received by [BLB] were substantially lower than prior and subsequent indications as to the price [BLB] could reasonably have been expected to receive upon an arms' length sale after proper analysis and investigation. Moreover, the sale conflicted with [BLB's] previously stated policy of retaining [BLB's] holding at least until 2007. In particular:

53.1. In October 2001, KPMG valued SLEC...

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    • December 21, 2023
    ...in the case, which the third party should not have to understand in order to comply with the order: Constantin Medien AG v Ecclestone [2013] EWHC 2674 (Ch) at [67]); and vii) even if the test under CPR r 31.17(3) is satisfied, the court retains a discretion whether to make an order, in exe......
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    ...inspection.” 17 The requirements flowing from CPR 31.17 were conveniently summarised by Vos J in Constantin Medien AG v Ecclestone [2013] EWHC 2674 (Ch) as comprising: i) the threshold test of whether it has been shown that each of the documents in the category or the class of documents so......
  • National Crime Agency v Amir Azam
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    ...other than by appearing in person in circumstances where he was a fugitive. 43 The final case referred to by Mr Sutcliffe was Constantin Medien v Ecclestone [2013] EWHC 2674 (Ch), a decision of Vos J given orally on 22 July 2013. In his judgment Vos J dealt with a number of matters which ha......
  • William Andrew Tinkler v Stobart Group Ltd
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    ...it ought to order disclosure; Mitchell v News Group Newspapers [2014] EWHC 1885. 18 In Constantin Medien Ag v Ecclestone and others [2013] EWHC 2674 (Ch) Vos J (as he then was) set out a structured approach to be adopted by the Court. Broadly speaking, that involves a consideration of the ......
1 firm's commentaries
  • International Fraud & Asset Tracing (3rd Edition), England & Wales
    • United Kingdom
    • JD Supra United Kingdom
    • March 5, 2015
    ...ed, it does not automatically follow that non-party disclosure will be ordered. In Constantin Medien Ag v Ecclestone and others [2013] EWHC 2674 (Ch), Vos J asked the following additional questions: (i) whether the defi nition of the documents is suffi ciently clear and specifi c, so that no j......

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