Frédéric Marino v FM Capital Partners Ltd

JurisdictionEngland & Wales
JudgeSir Jack Beatson,Lady Justice Simler DBE,Lord Justice Irwin
Judgment Date26 February 2020
Neutral Citation[2020] EWCA Civ 245
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: A4/2019/0005
Date26 February 2020

[2020] EWCA Civ 245

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

The Hon. Mrs Justice Cockerill

[2018] EWHC 1768 (Comm), [2018] EWHC 2905 (Comm)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Irwin

Lady Justice Simler DBE

and

Sir Jack Beatson

Case No: A4/2019/0005

Between:
Frédéric Marino
Appellant
and
FM Capital Partners Ltd
Respondent

Thomas West (of Richard Slade and Company) for the Appellant/First Defendant

Nathan Pillow QC (instructed by Hogan Lovells International LLP) for the Respondent/Claimant

Hearing date: 28 January 2020

Approved Judgment

Sir Jack Beatson

I. Overview

1

The appellant, Mr Frédéric Marino, was at the material times a director and Chief Executive Officer of the respondent, FM Capital Partners Ltd (“FMCP”). He appeals from the orders of Cockerill J following a trial in which she held that he and others are liable to FMCP for breach of fiduciary duty, dishonest assistance, and in respect of secret commissions and bribes. Claims by FMCP in conspiracy and knowing receipt failed. Mr Marino was ordered to pay FMCP US$ 17.35 million. One of his co-defendants, Mr Yoshiki Ohmura, whose role is described at [10] below, was ordered to pay FMCP US$15.75 million. Mr Ohmura also appealed, but his appeal, on the only grounds for which permission was granted, was made conditional upon him complying with conditions which he failed to do, and his appeal was dismissed: see [35] below.

2

Mr Aurélien Bessot, at the material time also a director of FMCP and its Chief Investment Officer, was another of Mr Marino's co-defendants, but before trial he entered into a global but confidential settlement with FMCP. Mr Bessot settled all FMCP's claims against him by a payment of some US$2.8 million, and those claims were stayed by an order dated 23 February 2016. The single issue in this appeal is whether, and if so how much, credit should be given by FMCP to Mr Marino for the sums FMCP received from Mr Bessot, “the recoveries issue”. FMCP has given credit for some 17% of the recoveries from Mr Bessot. Mr Marino's case is that it should have given credit to 100% or alternatively 80% of those recoveries.

3

The factual circumstances, the nature of FMCP's claims and the judge's decisions and the remedies in respect of the claims that succeeded are set out in two judgments. The first is a careful and detailed 602 paragraph “main judgment”, [2018] EWHC 1768 (Comm), handed down on 11 July 2018 after a nine day trial, hereafter “MJ”. The second is a 141 paragraph judgment on consequential matters including the recoveries issue, [2018] EWHC 2905 (Comm), hereafter “CJ”. It was handed down on 1 November 2018, following a hearing on 25 July and subsequent written submissions. The judge's orders that are material were made on 30 July (corrected under the slip rule on 15 August and 3 September) and 12 December (corrected under the slip rule on 17 December) 2018.

4

Mr Marino's case before this court adopted and tracked the written submissions made by Mr Emmett and Mr Fox on behalf of Mr Ohmura. It was submitted that the judge erred in accepting the proposition that a claimant has a choice as to how recoveries are to be appropriated provided that choice is not obviously unsustainable, which she held they were not in this case. This was because Court of Appeal authority 1 shows that it is for a claimant to show by evidence that a recovery is in respect of a cause of action which should not be credited so as to reduce the liability of another defendant. It was argued that, where a claimant has not put forward sufficient material to satisfy the civil burden of proof, the non-settling defendant should be credited with the full amount that the claimant received under the settlement.

5

FMCP's case is that, for both principled and practical reasons, the authorities relied on by Mr Marino, which pre-date the Civil Procedure Rules, do not apply to this case. First, the judgment entered was for restitution of the bribes and accounts of Mr Marino's profits rather than for compensatory damages. Secondly, in this case, see [15] – [16] below, case management directions were made for the claims to be tried in two separate trials, the second of which has yet to take place. Moreover, it is argued that the appeal is “moot” or “academic” because Mr Marino's bankruptcy means that his remaining liability will not be satisfied.

6

In sections II – V below I summarise the background to FMCP's claims; the circumstances giving rise to what I refer to as the recoveries issue, the judge's decision on the recoveries issue, and the rival submissions before this court. Section VI contains my discussion of the questions before the court and my conclusions.

II. The background

7

In view of the fullness of the judgments below and the narrowness of the sole remaining issue, the recoveries issue, it is only necessary to refer to other circumstances of the wider dispute by briefly summarising the highlights and cross-referring to the relevant passages in the earlier judgments.

8

FMCP is a UK company originally envisaged in a report prepared by Mr Marino (then at JP Morgan) in February 2009. The report recommended a restructuring of the investment portfolios of the Libya Africa Investment Portfolio (“LAP”), a Libyan sovereign wealth fund, the total assets of which were approximately US$ 5 billion. FMCP was incorporated on 3 July 2009 as a joint venture between the LAP, Mr Marino and Mr Bessot. The judge found that the plan was for Mr Marino and Mr Bessot to arrange structured product trades for part of the LAP's assets. By the beginning of 2014, FMCP was managing more than US$ 500 million of those assets. Before January 2014 when Mr Bessot left, LAP's share in FMCP was 55% and Messrs Marino and Bessot's shares were respectively 33% and 12%.

9

FMCP's claims arose as a result of breaches of duty owed to it by Messrs Marino, Bessot and others concerning its investments totalling nearly US$ 240 million in structured financial products offered by Bank Julius Baer & Co. (“Bank Baer”) 2 between mid-2009 and October 2011. 3 Messrs Marino and Bessot were the first and second defendants. The other two defendants were Ms Marit Sjøvaag, who was formerly Mr Marino's wife, and Mr Ohmura.

10

Mr Ohmura was an employee of Bank Baer and founded its investment arm GAM Structured Investments Ltd (“GAM”). He stopped working for the bank on 31 July 2009 but remained under contract to it until 30 August 2009. He subsequently set up as a trader on his own. He established Conquest Capital Limited, a Cayman Islands company (“Conquest Cayman”) soon after he stopped working for the bank/GAM, and he established Conquest Financial Partners AG, a Swiss company (“Conquest FP”) on 21 August 2009. Those entities were at all material times owned and controlled by him. On 22 October 2009 Messrs Ohmura and Marino established

Vesper AG and (see MJ§262) Mr Marino remained a co-owner of Vesper and Conquest Cayman until October 2010
11

FMCP's claims for conspiracy, dishonest assistance, bribery, breach of fiduciary duty, and knowing receipt arose from introductory commissions paid by Bank Baer and the banking counterparties to the first three defendants or for their benefit through entities they controlled. The total sum claimed by FMCP was some $83 million.

12

In broad terms, between August 2009 and 2011 Bank Baer/GAM paid introductory commissions of some $6.05 million to Ironfly International Ltd (“Ironfly”), a Seychelles company incorporated on 9 April 2009 owned by Mr Marino and Mr Bessot, and $2.4 million to Conquest FP, the Swiss company owned by Mr Ohmura. In turn, on 16 October 2009 Ironfly paid $625,000 to Conquest Cayman, the Cayman Islands company owned by Mr Ohmura. In that period FMCP entered into some 14 short term trades with banking counterparties. The banks which were counterparties to the trades in the structured products also paid introductory commissions totalling some $7.5 million to Conquest FP. In turn, out of the payments to it by Bank Baer/GAM and the counterparty banks, Conquest FP paid $4.8 million commission to Leopard Technology Ltd. (“Leopard”), a Seychelles company owned by Mr Marino and $3.39 million to Ironfly: MJ §§45–47. The judge found that the bribes paid by JB/GAM and later Conquest FP were received by or for the benefit of Mr Marino personally, despite having been routed (at his direction) through the Ironfly or Leopard bank accounts: CJ §60, referring to her findings in the main judgment.

13

In 2010 Mr Marino paid a total of $856,271 indirectly to Mr Ramadan Haggiagi, at the material times a non-executive director of FMCP, and from the spring of 2009 LAP's Head of Investment: MJ §§49, 267–274. Mr Haggiagi knew of the introducer's fee Mr Marino had received and about Mr Marino's payments to Ironfly. He approached Mr Marino and sought a payment for his own benefit, and Mr Marino paid him because he wanted to keep him “onside”: see MJ §§267, 272–274. It appears (see CJ §29) that proceedings were never issued against Mr Haggiagi.

14

LAP had been concerned about the management of its assets by FMCP since late 2011: see MJ §§51 – 53. Matters came to a head towards the end of August 2014. LAP complained to FMCP, stated that it had lost all confidence in Mr Marino, and asked FMCP to investigate its concerns: see MJ §54. By the beginning of September 2014, Mr Marino had been suspended and forensic accountants had been engaged. The circumstances leading to Mr Marino's dismissal on 3 November 2014 are summarised by the judge at MJ §§55 – 60. These proceedings were issued on 23 December 2014 and served on 19 February 2015.

15

I have stated that the trial before Cockerill J did not deal with all FMCP's claims. At a case management conference on 20 December 2016, Andrew Baker...

To continue reading

Request your trial
2 cases
  • Robert Gresham Gray v Global Energy Horizons Corporation
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 9 December 2020
    ...illuminating observations of Sir Jack Beatson (with whom Simler and Irwin LJJ agreed) in F M Capital Partners Ltd v Marino and Others [2020] EWCA Civ 245, [2020] 3 WLR 109 at [49] to [55]. Furthermore, in relation to Ground 1, we are anyway in “the realm of specific assets”, where the que......
  • Kea Investments Ltd v Eric John Watson
    • United Kingdom
    • Chancery Division
    • 19 July 2023
    ...may affect the calculation of compensation has been considered more recently by the Court of Appeal in FM Capital Partners Ltd v Marino [2021] QB 1. The question in that case was how recoveries under a settlement with another party (A) should be allocated in calculating the claims of the c......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT