Credit Agricole Corporation and Investment Bank v Papadimitriou

JurisdictionUK Non-devolved
JudgeLord Clarke,Lord Sumption
Judgment Date24 March 2015
Neutral Citation[2015] UKPC 13
Date24 March 2015
Docket NumberAppeal No 0023 of 2014
CourtPrivy Council
Crédit Agricole Corporation and Investment Bank
(Appellant)
and
Papadimitriou
(Respondent) (Gibraltar)

[2015] UKPC 13

before

Lord Neuberger

Lord Mance

Lord Clarke

Lord Sumption

Lord Toulson

Appeal No 0023 of 2014

Privy Council

From the Court of Appeal of Gibraltar

Appellant

Terence Mowschenson QC John Restano QC

(Instructed by Myers Fletcher & Gordon)

Respondent

Stephen Moverley Smith QC Charles Simpson

(Instructed by Bird & Bird LLP)

Heard on 20 October 2014

Lord Clarke
The parties
1

This is an appeal from an order of the Court of Appeal in Gibraltar (Sir Paul Kennedy P, Sir William Aldous JA and Sir Mark Potter JA) dated 5 December 2013 allowing the respondent's appeal from the order of Dudley CJ made on 27 February 2013 dismissing the respondent's claim. The Court of Appeal entered judgment for the respondent in the sum of US$9.8m but stayed execution of it pending an appeal to the Privy Council.

2

The claim was originally put in three ways before the Chief Justice. It was based upon dishonest assistance, knowing receipt and a proprietary right to the proceeds of sale of a collection of art deco furniture known as the Eileen Gray Furniture Collection ("the Collection"). All three bases of claim failed before the Chief Justice. The respondent did not appeal against the dismissal of the claim based on dishonest assistance or knowing receipt. She did however appeal against the judge's rejection of the proprietary claim. It was common ground that the appellant ("the Bank") was in possession of the proceeds of sale of the Collection which the respondent could trace into the hands of the Bank, and that her claim would succeed unless the Bank could show that it was a bona fide purchaser without notice of the proceeds of sale of the Collection which had been deposited with its branch in Gibraltar. The central issue in the appeal is whether the Bank was on constructive notice of impropriety and whether the Court of Appeal applied the correct legal test.

The facts
3

The facts can be taken from various sources, in particular from two judgments given by the Chief Justice and from the judgment of the Court of Appeal. The first judgment given by the Chief Justice was on a number of preliminary issues and was given on 11 November 2011. His second judgment was the judgment which led to the appeal to the Court of Appeal and the appeal to the Board. The facts are set out by Sir William Aldous in paras 11 to 15 of his judgment in the Court of Appeal, with which Sir Paul Kennedy and Sir Mark Potter agreed. In para 12 he set out verbatim paras 11 to 27 of the second judgment given by the Chief Justice, in which he set out the facts in detail. The facts are not in dispute.

4

Alexandros Michailidis ("Alexandros") was a wealthy man. He was married to Irene and they had two children, Despina Papadimitriou ("Despina") and Christo Michailidis ("Christo"). Although it appears that Christo had played a significant part in building up the Collection, the Chief Justice held in his first judgment, which was dated 11 November 2011, that the Collection was built up by Alexandros and Irene and that, on the death of Alexandros in 1995, property in the whole Collection became vested in Irene on the basis that she already owned a half share and the other half share passed to Irene on the death of Alexandros. Christo died as a result of a tragic accident in July 1999. Until his death, and at least since 1972, for very many years he had, as the Chief Justice put it, shared a home and life with Mr Robin Symes at 1/3 Seymour Walk in London SW10. Mr Symes continued to live there after the death of Christo.

5

In his first judgment the Chief Justice described the fate of the Collection shortly in this way. In the spring of 2000, Mr Symes sold the Collection for US$15m through an art deco art dealer called Robert Vallois, although, as Sir William Aldous observed, he lied about the price to a court in England, saying that it had only been sold for about US$4m. Of the total price of US$15m, the sum of US$4m was paid to a Panamanian company, Xoilan Trader Inc ("Xoilan"), and US$10.4m was paid to another Panamanian Company, Tradesk Limited ("Tradesk"). Of the US$10.4m, the sum of US$10.3m was paid into an account at the Bank through a Liechstenstein foundation called Pataco Foundation ("Pataco"). The monies were deposited in the Gibraltar branch of the Bank and credited to the account of Lombardi Corporation ("Lombardi"), which was a British Virgin Islands Company incorporated at the request of Mr Symes. With the deposit in Gibraltar serving as a guarantee, the Bank's London branch gave another Symes company, namely Robin Symes Limited ("RSL"), a facility for US$10.3m, which was drawn down and thereafter repaid in full in the sum of US$9,860,278.78 from the guarantee deposit held by Lombardi in Gibraltar. The balance was disbursed elsewhere for Mr Symes' purposes. All these transactions were part of a fraudulent scheme devised by Mr Symes.

6

When, in about the beginning of 2001, Christo's family found out about the sale of the Collection by Mr Symes, they took the view that he had no right to sell it. Proceedings were started in England, Greece and Gibraltar but, like Sir William Aldous, the Board can concentrate on the proceedings in Gibraltar. In about March 2004, the family discovered that part of the proceeds of sale of the Collection had been deposited with the Bank in Gibraltar. On 7 April 2004, proceedings were started against the Bank seeking payment of the amount deposited upon a number of grounds. Two main issues arose, both denied, namely whether the Collection was owned by the claimants and, if that was established, whether the Bank was liable to pay back the money.

7

In paras 8 and 9 of his judgment Sir William Aldous describes interlocutory skirmishing between the parties, including one before the Privy Council, which resulted in the two trials before the Chief Justice. In his first judgment, dated 11 November, the Chief Justice gave judgment on three preliminary issues. The first was ownership of the Collection. The original claimant was Irene, claiming as the Board understands it on her own behalf and/or as Alexandros' heir. In the course of the proceedings before the Chief Justice gave his first judgment, it was suggested that Christo may have owned the Collection and his administrators were joined as second and third claimants. The Chief Justice held that the Collection was owned by Alexandros and Irene and that upon his death his interest passed to Irene, whereafter the administrators of the estate were removed from the action, which continued in the name of Irene until she died, when she was replaced by Despina who is the present respondent. For the purposes of this appeal nothing turns on the various changes of claimant parties.

8

The Chief Justice held that the US$10.3m transferred to Lombardi's account with the Bank's Gibraltar branch was part of the proceeds of the Collection and that Mr Symes had failed to account for the proceeds of sale. The trial which led to this appeal took place before the Chief Justice between 19 and 29 June 2012 and judgment was given on 22 February 2013.

The judgment of the Chief Justice
9

As indicated above, the Chief Justice dismissed the claims in so far as they were based on alleged dishonest assistance and knowing assistance. There is no appeal on those issues, so that the Board is not concerned with them save in so far as they throw light on the question for decision, namely whether the Bank established that when it received the relevant monies it was a bona fide purchaser for value without notice.

10

The Chief Justice set out the facts in paras 11 to 27 of his judgment. They were reproduced in para 12 of the judgment of Sir William Aldous because they were not disputed in the Court of Appeal. Rather than attempt to summarise them, it is convenient to set them out again here because they are not in dispute. In his judgment, in which the Bank was referred to as CACI, the Chief Justice concluded as follows:

"11. In March 2000 Symes misappropriated the collection and sold it for US$15m. Also in March 2000 Mr Tavernier a Swiss lawyer, at the time and still, a non- executive board member of Credit Agricole (Switzerland) SA, (a distinct legal entity to CACI) introduced Symes to CACI. According to Mr Tavernier's witness statement tendered pursuant to a hearsay notice he made the introduction qua Symes' lawyer as Symes had informed him that he wished to set up a back to back facility in respect of US$10m which Symes was to receive.

12. On the 10 March 2000 Despina agreed to temporarily increase by US$3m (until 30 June 2000) her guarantee of RSL indebtedness to Citibank on top of the US$14m and US$1m guarantee she had already given.

13. At about that time Mr Tavernier introduced Symes to the then head of Private Banking of CACI London, Guillaume de la Borde Caumont ('Mr de la Borde Caumont'). A letter from Symes to Mr de la Borde Caumont dated 25th April 2000 shows that they met on that day and that Symes sent him an RSL catalogue for an exhibition held in New York.

14. On the 3 May 2000 Lombardi was incorporated with Mr Johann Jakob and Ms Nina Frittita both of Audina appointed as directors and with Audina as shareholder.

15. On the 4 May 2000 US$10.4m of the proceeds of sale of the Collection was paid into an account in the name of Tradesk at LGT bank Liechtenstein. On the 8 May 2000 the entire US$10.4m was withdrawn in cash and paid into an account in the name of Pataco, a Liechtenstein foundation acquired by Symes that spring.

16. On the 6 June 2000 CACI Gibraltar begun completing its Know Your Client ('KYC') procedures in relation to Lombardi and on the 7 June Alix de Monspey ('Ms de Monspey') an account manager at CACI London sent Ms Frittita account opening forms for Lombardi requesting that they...

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