G I Globinvestment Ltd v VP Fund Solutions (Luxembourg) SA
| Jurisdiction | England & Wales |
| Judge | Nicholas Vineall |
| Judgment Date | 19 July 2022 |
| Neutral Citation | [2022] EWHC 1872 (Comm) |
| Docket Number | Case No: CL-2020-000869 |
| Court | Queen's Bench Division (Commercial Court) |
and
[2022] EWHC 1872 (Comm)
Nicholas Vineall QC
Sitting As A Deputy Judge Of The High Court
Case No: CL-2020-000869
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Richard Blakeley (instructed by Cooke Young and Keidan) for the Applicants
Daniel Saoul QC and Ian McDonald (instructed by Milberg London LLP) for the Respondents
Hearing dates: 28 and 29 June 2022
Draft circulated to parties: 13 July 2022
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Nicholas Vineall QC SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Tuesday 19 July 2022 at 10:30.
Nicholas Vineall QC:
In this action some wealthy Italian investors seek to recover losses which they suffered when investments they had made into a fund, which I shall call the Skew Base Fund (D2), plummeted in value at the outset of the COVID pandemic. The Defendants are in various jurisdictions. Most have accepted the jurisdiction of this Court but two of them, D4, VP Fund Solutions (Luxembourg) SA, whom I shall call VP Lux, and D5, VP Fund Solutions (Liechtenstein) AG, whom I shall call VP Liecht, challenge jurisdiction. VP Liecht also seeks to set aside the Order of Butcher J of 10 June 2021 which granted the Claimants permission to serve the claim form out of the jurisdiction.
The only claim brought against VP Lux and VP Liecht is a claim brought by C1 and C2 which alleges an unlawful means conspiracy in which all the Defendants are said to have been conspirators.
BACKGROUND AND THE PARTIES' ROLES
C1 (“GIG”) is a company through which the di Montezemolo family invests its wealth. C2 (“MDM”) is Matteo Cordero di Montezemolo who is member of that family and is also the chairman, co-founder and CEO of a private equity firm with over $1bn under management. He is resident in England. C3 (“LDM”) is another member of the same family. A company called Emmediemme Tre SRL (“Emmediemme”) is a company wholly owned and controlled by MDM.
D1 (“XY”) is a company owned by D3, Mr Migani, through which Mr Migani gave the Claimants investment advice, including advice to invest in the Skew Base Fund. There are Advisory Agreements between XY and GIG and MDM. Mr Faleschini (D8) is the CFO of XY.
The Skew Base Fund has a general partner, D3 (“Skew Base GP”).
The Skew Base Fund is, according to the relevant offering documents, run by the investment fund business of VP Bank. It is an “Alternative Investment Fund” and as such its manager is styled an “Alternative Investment Fund Manager” or AIFM (“alternative” describing the nature of the investments, not the manager). VP Lux (D4) is the AIFM of the Skew Base Fund.
VP Liecht (D5) was the investment manager of the Skew Base Fund, engaged by VP Lux to perform the task of manging investments made by the fund.
There is evidence to suggest close links between VP Lux and VP Liecht: they are part of the same group and Mr Saoul QC, for the Claimants, showed me (without objection) the LinkedIn profile of Mr von Kymmel who was at one stage the Chairman of both VP Lux and VP Liecht.
The Skew Base Fund had various “compartments”, each with a different investment strategy and risk profile. The Claimants made some very successful investments into a real estate compartment of the Fund, but the investments which form the subject matter of the claim are those where a loss was made, and are as follows:
9.1. Emmediemme invested €10m in the HFPO Centaurus compartment, which was absorbed into the HFPO compartment in May 2018. I was told that HFPO stands for High Frequency Pricing Opportunity. The Fund's objective was “to generate a positive return by investing in structured products close their maturity on the secondary markets”. The Claimants say that in 2019 MDM elected for his entitlement to a dividend from Emmediemme to be satisfied by a transfer of the shares held by Emmediemme in the HFPO compartment to himself, by way of a dividend in specie.
9.2. In October 2018 GIG invested €27m in each of the Skew Base Fund's HFPO and MIN compartments. GIG then invested a further €5m in each of the HFPO and MIN compartments.
9.3. In October 2019 MDM invested US$1.5m in the Fund's MIN (USD) compartment.
The Claimants contend that when they invested into the Skew Base Fund they knew nothing more about the relationships between the various Defendants than I have set out above, and they say that it was represented to them by XY, Mr Migani and Mr Faleschini, and they believed, that the Skew Base Fund was entirely independent of XY, Mr Migani and Mr Faleschini.
The central point in the Claimants' cases is that they further contend, that in fact, but unknown to them when they invested:
11.1. there was a Tripartite Services Agreement between VP Liecht, VP Lux and a very recently incorporated Swiss company, D6, called Twinkle Capital SA (“Twinkle”), under which Twinkle was retained to provide “technological system and portfolio management services” for VP Liecht and VP Lux in return for substantial fees;
11.2. Twinkle was also retained directly by Skew Base GP (D3) under a services agreement;
11.3. Twinkle is 100% owned by Mr Migani;
11.4. Mr Migani is also the 100% owner of D9 and D10, Leader Logic Holding and Leader Logic AG, who were also retained under further services agreements by Skew Base GP;
11.5. in practice, Twinkle decided what investments would be made by the fund.
In terms of money flows the Claimants contend that:
12.1. between them they invested a little over €75m in the Skew Base Fund. Other investors will also have invested, but the total sums invested are not yet clear;
12.2. the Skew Base Fund paid total management fees of €22.5m to Skew Base GP;
12.3. of that €22.5m, Skew Base GP paid €5m direct to Twinkle under another “services agreement”; Skew Base GP paid €10m to the Leader Logic Defendants under another “services agreement”; and Skew Base GP paid VP Lux €7.5m under the AIFM Agreement;
12.4. of the €7.5m paid by Skew Base GP to VP Lux, €7m was paid out to Twinkle under the Tripartite Services Agreement;
12.5. so the upshot is that out of the total management fees of €22.5m, all but €500,000 ended up in the hands of entities 100% owned by Mr Migani.
The Claimants' claims
The Claimants say that, had they known that they were being advised by Mr Migani and XY to invest in an investment vehicle which was not independent of Mr Migani, they would not have invested in it.
The Claimants claim against XY, Mr Migani and Mr Faleschini in the tort of deceit. It is said they made a series of false representations as to the independence of XY (the “Independence Representations”) and a series of false representations about the nature and suitability of the Skew Base Funds as an investment for the Claimants (the “Investment Representations”).
The Claimants also claim against XY for breaches of the terms of the advisory agreements, breach of duties arising under COBS, and breach of fiduciary duty, and against Mr Migani for dishonest assistance in XY's breaches of fiduciary duty.
I express no view on the merits of those claims, which are the subject of strike out applications by the other defendants, but I note that the position of the VP Defendants in relation to those claims is simply that they do not know whether there is anything in the claims of deceit, breach of contract, breach of fiduciary duty and dishonest assistance brought against XY and Mr Migani.
The only claim advanced against the VP Defendants is a claim in unlawful means conspiracy. It is advanced against all ten Defendants. In the Amended Particulars of Claim (AmPOC) it is alleged that the Defendants combined or acted in concert with a common intention of maintaining the façade that the Skew Base Fund was independent of XY and managed by the VP Defendants without any connection to or involvement form XY or persons connected to the VP Defendants, and that pursuant to this combination the Defendants used unlawful means with the intention of injuring GIG and/or MDM. Paragraph 102 of the AmPOC pleads the facts from which it is said the combination is to be inferred, and paragraph 103 pleads the unlawful means, namely (a) the fraudulent Independence Representations (but not the Investment Representation), (b) the breaches of fiduciary duty by XY, and (c) the dishonest assistance by Mr Migani in facilitating XY's breaches of fiduciary duty. Under a heading “Intention to injure, causation, loss and damage”, paragraph 104 of the AmPOC alleges that the Defendants realised that by combining as they did
… they exposed GIG and MDM to harm or alternatively a risk of harm because GIG and MDM (i) engaged the services of XY without knowledge of the Connections [between Migani and the various defendants]; and/or (ii) were deprived of the benefit of independent investment advice prior to deciding whether to invest in the [fund], in circumstances where such investments stood to benefit the Defendants with directly or indirectly, through the payment of the [various payments received by the Defendants]. In the premises, it is to be inferred that the...
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