Magdalena Galliani (Deceased) v Juan Sartori
| Jurisdiction | England & Wales |
| Judge | Philip Marshall |
| Judgment Date | 21 December 2023 |
| Neutral Citation | [2023] EWHC 3306 (Comm) |
| Year | 2023 |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Claim No: LM-2023-000106 |
[2023] EWHC 3306 (Comm)
Philip Marshall KC
(sitting as a Deputy Judge of the High Court)
Claim No: LM-2023-000106
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
LONDON CIRCUIT COMMERCIAL COURT (KBD)
Royal Courts of Justice
Rolls Building, London, EC4A 1NL
Joshua Folkard (instructed by Stevens & Bolton LLP) for the Claimants
Joseph Steadman (instructed by Teacher Stern LLP) on behalf of the First Defendant
Hearing date: 24 October 2023
APPROVED JUDGMENT
This judgment was handed down remotely at 9 am on Thursday 21 st December 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives (see eg https://www.bailii.org/ew/cases/EWCA/Civ/2022/1169.html).
I direct that pursuant to CPR rule 39.9 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic
Philip Marshall KC
Philip Marshall KC:
Introduction
This judgment addresses two applications by the First Defendant, Mr. Sartori. The first seeks relief from sanction and an extension of time for filing an acknowledgment of service and the second seeks an order setting aside a default judgment.
There was a further application that the parties believed was before me, namely that of Mr. Emanuele Ferrero Ventimiglia for an order under CPR rule 19.12 that he be appointed to represent the estate of the First Claimant, who died on 1 June 2023. By this application he also sought a direction that steps taken in the proceedings during the incapacity of the First Claimant, Ms. Galliani, be deemed to be effective despite the absence of the appointment of a representative in accordance with the court rules. However, it transpires that this application had already been addressed on the papers, without argument, by HH Judge Pelling KC by an order dated 23 October 2023. Unfortunately the order only came to the attention of the parties after the hearing before me had concluded and after I had heard argument on the application. By his order HH Judge Pelling granted relief in the terms sought including a provision that “ No step taken by or behalf the First Claimant between the issue of the proceedings and her death shall be ineffective by reason of CPR, r.21.3(4)”.
At the time of making that order the learned Judge did not have the application to set aside default judgment before him. In particular he does not appear to have been informed of the potential effect of the granting of relief on the outstanding applications of Mr. Sartori. In these circumstances I permitted Mr. Sartori to make an application before me to vary the order of 23 October 2023 so as to prevent it having any negative effect on his applications. I did not understand the Claimants to object to this procedure, which seems to me to be expressly provided for by paragraph (4) of the order HH Judge Pelling (permitting an application to vary his order so long as it was made within 7 days of its service).
The Claim
The First Claimant, Ms. Galliani, was a resident of Italy. The Second Claimant, Mr. De Beaumont, lives in Egypt.
Mr Sartori is the founder and president of the Union Group of companies and a senator in Uruguay.
The Second Defendant, Union Group International Holdings Limited (“UGIH”) is a company incorporated in the British Virgin Islands.
The Third Defendant, Mr. Oscar Léon, lives in Uruguay and is alleged to have been a member of Mr Sartori's team managing businesses, called collectively, the Union Agriculture Group.
No statement of case has yet been served in respect of the claims made in these proceedings. However, in their letter of claim to Mr. Sartori, dated 2 February 2022, the Claimants' solicitors, Stevens & Bolton LLP, set out various details, which have been confirmed and expanded on in the second witness statement of a partner in that firm, Ms. Catherine Rose Penny. In summary the case presented in these documents is as follows.
It is alleged that Mr. Sartori founded a Peruvian company, Andean Power Generation Limited (“Andean”), to invest in hydropower construction projects in Peru.
It is said that Ms. Galliani's son, Mr. Ventimiglia, worked as an intern at Union Group (UK) LLP (“UGUK”), a Union Group company based in London. It is then said that in 2013 he was made aware of an opportunity to invest in Andean. The details of the opportunity were set out in a proposal document allegedly prepared in around May 2014 by Mr. Sartori and a Mr. Francisco Roque de Pinho (then a director in UGUK) on behalf of Union Energy Group Corp. (“UEG”), a company alleged to be owned by Mr. Sartori. The document is said to have included a statement that UGIH was to invest US$10,000,000 in Andean.
The Claimants invested in Andean, being issued with share certificates signed on 13 January 2015. Ms. Galliani acquired 200,000 common shares and 180,000 Class A preference shares at an aggregate cost of US$250,000. Mr De Beaumont acquired 300,000 common shares at a cost of US$105,000.
The Claimants allege that they were induced to invest in Andean in this way in reliance on various mispresentations said to have been made by Mr. Sartori or on his behalf. In the letter of claim it was asserted that “These representations were made in London through a UK entity [UGUK] on behalf of UEG”. The Claimants contend that the first set of misrepresentations were made in the proposal document and were as follows:
12.1 First, that the internal rate of return of the common shares in Andean would be at least 16% plus a cash yield of 12% per annum.
12.2 Secondly, if energy prices rose in Peru, the Peruvian government's power purchase agreements could be terminated and sold on the open market resulting in a possible internal rate of return of 24% per annum plus a yearly cash yield of 12%.
12.3 Thirdly, all class A preference shares were guaranteed to receive an annual cumulative preferential dividend at an annual rate of 10% of the issued share price (being US$1 per class A preference share).
A further representation is said to have been made in conversations with the Claimants and Mr. Ventimiglia and other investors, in particular during a telephone call with Ms. Galliani in about the summer of 2014. It is alleged that it was represented that the only way a lower internal rate of return would be achieved would be if the Peruvian government defaulted on its power purchase agreements, which was effectively impossible.
The letter of claim alleges that these representations were false and must have been known by Mr. Sartori to be false. However, no particulars are given of how this allegation, which is necessarily one of fraud, is to be substantiated.
The letter of claim goes on to contend that in the three years following purchase of their shares in Andean the Claimants received no or no satisfactory updates on the performance of the company and received neither the annual dividend nor cash yield that had been referred to. This is said to have been contrary to reasonable expectations and despite numerous requests. It is also alleged that the requirements for the Claimants to be invited to annual general meetings were not complied with. These allegations, however, do not appear to be the subject of any claim for relief in the proceedings.
It is next alleged that in WhatsApp messages sent by Mr. Sartori in November 2017 he gave the impression that Andean had gone bankrupt after a natural disaster and the value of any shareholding was lost. It is alleged that, despite this, there was an offer to purchase the Claimants' shares for US$14,000 conveyed by Mr. Léon and that this was followed by an increased offer in an email of 19 January 2018 in which he said “I have spoken to Juan [said to be a reference to Mr. Sartori] and we can offer to buy the shares in US$25,000 (sic)”. Both offers were rejected.
In the letter of claim there is then reference to the Claimants learning “through the market” that on about 30 October 2018 UGIH entered into a sale and purchase agreement with a company called Polaris Infrastructure Inc. (“Polaris”). It is said that pursuant to this agreement UGIH agreed to procure the transfer of the Claimants' shares and that, in the event it was unable to do so, the consideration it was due to receive from Polaris would be reduced in value by some US$500,000. This is relied on for the contention that Mr. Sartori was aware in late 2017 and early 2018 that the investment of the Claimants was in fact worth around US$500,000 and that the attempts to purchase their shares for US$14,000 and then US$25,000 was a “deceitful attempt by which to procure the Shares at a vast discount”.
The witness statement of Ms. Penny adds to what is said to have occured in connection with the sale and purchase agreement with Polaris. It is alleged that a redacted copy of the agreement was emailed to Mr. Ventimiglia and Mr. Amaury de Beaumont on 15 May 2019 by a Mr. Canadell, who the Claimants believe was a legal adviser to the Union Group and associate of or legal advisor to Mr. Sartori. It is said that this document obscured the clause setting out the adjustment to the consideration payable by Polaris in the event that the Claimants' shares could not be transferred. A further copy of the agreement was, however, obtained by Mr. Ventimiglia on 5 June 2019 which, although also partially redacted, included this clause.
The Claimants in fact sold their shares in Andean to Polaris Energy Peru Corp. for US$220,000 in around 15 April 2020. This is said to have given rise to a loss of US$135,000 on the amount invested. But this is not the amount sought to...
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...being entered prior to a default judgment being entered. At paragraph 31 of his judgment in Galliani and Anor. v. Sartori and Ors. [2023] EWHC 3306 (Comm) delivered on December 21 st 2023, Marshall KC, then sitting as a deputy Judge of the High Court, recognized that: “This was done to rem......