FM Capital Partners Ltd v Frederic Marino
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Cockerill DBE,Cockerill J |
| Judgment Date | 28 March 2019 |
| Neutral Citation | [2019] EWHC 725 (Comm) |
| Docket Number | Case No: CL-2014-000863 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 28 March 2019 |
[2019] EWHC 725 (Comm)
THE HONOURABLE Mrs Justice Cockerill
Case No: CL-2014-000863
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Nathan Pillow QC & Anton Dudnikov (instructed by Hogan Lovells International LLP) for the Claimant
Laurence Emmett & James Fox (instructed by Cooke Young and Keidan LLP) for the Third Defendant
Written Submissions of February 2019
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.
On 12 December 2018 I heard arguments following on from the Consequentials judgment in this matter. One issue which arose was that of an account to be taken in relation to equitable compensation for dishonest assistance. I indicated that this should be taken by a Master, and a concern was raised that legal issues might arise which would render the taking of an account by a Master in the usual way either impractical or otherwise undesirable. One particular concern raised related to the application of the authority of Imageview v Jack [2009] 1 Lloyd's Rep. 436.
In order to deal with this concern, I ordered that a Schedule of Loss be served and responded to and any issues, including so far as necessary the Imageview issue, be referred to me on paper for determination, following which the taking of an account could be referred to a Master.
A Schedule of Loss was duly served; or to be more precise two schedules. By the first, which refers to what is now FMCP's primary case (“the First Basis”) — that FMCP is liable to LAP- the amount sought to be recovered is simply the full amount of the GAIN Ironfly Commissions, namely US$4,308,400. The alternative basis (“the Second Basis”) put forward is for US$1,897,490 and represents the amount by which the GAIN Ironfly Commissions exceeded the Note Advisory Fees received by FMCP.
I have now before me submissions from the parties on the Schedule of Loss. The issues which arise are:
i) Whether the First Basis is the appropriate basis for assessment;
ii) As regards the Second Basis whether LAP would have agreed to pay more fees, as alleged by FMCP or at all;
iii) Whether FMCP should give credit for sums recovered from Ms Sjøvaag, Mr Haggiagi and (if any are ever recovered) Mr Marino;
iv) The basis for an award of interest in relation to the equitable compensation for dishonest assistance;
v) Directions for the taking of an account.
Issues relating to the First Basis
The first point made is that Mr Ohmura argues that there has been no precise finding as to the basis of liability and FMCP has not set out a precise case as to LAP's cause of action against FMCP. It is said that, absent FMCP setting out a case as to the basis of the claim and how it falls to be quantified, it would not be appropriate for the Court to adopt this basis. I do not find this persuasive. I made a finding of liability as between Mr Ohmura and FMCP. The questions which remain now are as to quantum. I have determined, at trial, in the light of argument from the parties, that there would have been a liability on the part of FMCP to LAP. There seems to be no good reason why at this stage it should be necessary to determine exactly how FMCP's liability to LAP might have been argued.
On quantum it is said that the recovery of the full amount pursuant to the First Basis is inconsistent with paragraph 425 of the Main Judgment where I held that: “ I would therefore conclude that on the balance of probabilities FMCP did suffer some loss as a result of the various payments made to the Defendants; but that that loss was less than the full amount of those commissions.” I disagree with this submission. Paragraph 425 relates to what was then FMCP's primary case (loss to FMCP because it would otherwise have been paid the sums in question — see paragraph 412), but is now the Second Basis. That is how it was intended, and that is how it reads.
The third point made is the Imageview point: whether there is no requirement for LAP to give credit to FMCP for a notional increase in the fees that would have been payable to FMCP on the putatively higher fund balances because, on this hypothesis, FMCP was caused by Mr Marino to have (dishonestly) breached its duties to LAP, such that FMCP would not be entitled to any fees or commissions.
It is said for Mr Ohmura that if FMCP were liable to LAP, the quantum of FMCP's liability (and hence its claim against Mr Ohmura) would fall to be reduced by the additional management fees that LAP would have incurred if the amounts of the commissions had been left within LAP's funds. He argues that Imageview is distinguishable as encapsulating a rather different reality; in that there was no contract in that case which would have entitled the commission to be earned honestly, and here FMCP not only had a contract but there is no suggestion that it earned any commission dishonestly.
FMCP submits that the fees would not fall to be brought into account. It relies on Imageview at [16]–[24] and [47]–[51] and says that Mr Ohmura's argument relies on a misinterpretation of that case.
There is no question as to the principle in Imageview. The question is simply whether on the facts of this case it should be regarded as sufficiently analogous as to be applicable. I do not regard the position as being relevantly different in this case to the position in Imageview. In that case there was an agency contract. That is clear from Jacob LJ's judgment at 2(a)-(b) where he says:
“There was [a written contract] later, dated 3rd August 2004. It is agreed that the written contract reflected the July oral agreement. …The contract was for a 2 year term. Mr Jack was to pay Imageview 10% of his monthly salary if Imageview successfully made arrangements for him to sign with a UK club.”
Although the arrangement in that case was somewhat different — for a single percentage commission on the salary earned under the transaction and not for management fees-there was an agreed contractual structure for payment of a commission. The basis for that being held to be unavailable to Imageview was the same – the breach of fiduciary duty by the claimant, which breach can only have arisen through an individual negotiating an illegitimate payment. The difference is that the payment in Imageviewwent to the company, not to the individual. But given that essentially the same route to liability for breach of fiduciary duty exists, I conclude that there is no good reason why the same result would not follow.
Issues relating to the Second Basis
This renders any decision on the Second Basis academic, but I nonetheless consider it for completeness.
In relation to the Second Basis it is submitted for Mr Ohmura that I should conclude, in the context of my other findings in the Main Judgment, that LAP would not have agreed to FMCP receiving any more fees than it actually received. It is also submitted that it would follow, if further fees would have been paid to FMCP, that the net gain to FMCP would have been less than the amount of the fees (because for example a discretionary bonus to Mr Bessot might have been triggered).
FMCP submits that there is every reason to conclude (on the evidence and on the basis of the inherent probabilities) that LAP would have been prepared to pay FMCP a further amount by way of introducer's fees.
It is regrettable that owing to the multiplicity of other issues in play at the trial this point was not the subject of any specific evidence. I do see that there is a tension between the evidence on LAP's expressed desire to cut costs at an early stage of the negotiations with Mr Marino on the one hand and the fees which they ultimately agreed to on the other. I must however do the best I can with the evidence which emerged on the issues. Ultimately, weighing that evidence, the safest guide seems to be the evidence of LAP's position later in time, which is also the evidence of what LAP were prepared to pay in fact, as opposed to LAP's aspirations before FMCP came into existence. I therefore reach the view that it is probable that if a market standard introducer fee had been put in place for payment to FMCP, LAP would have sanctioned it. That conclusion appears to have a degree of commercial logic because in effect some of that fee would come back to LAP.
As for the question as to bonuses, there is simply no evidence on the basis of which I can conclude that the net gain from that single fee would have been affected by any bonus payment.
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