Maria Alessandra Foglia v The Family Officer Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Cockerill DBE,Mrs Justice Cockerill |
| Judgment Date | 22 March 2021 |
| Neutral Citation | [2021] EWHC 650 (Comm) |
| Date | 22 March 2021 |
| Docket Number | Case No: CL-2019-000526 |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 650 (Comm)
Mrs Justice Cockerill DBE
Case No: CL-2019-000526
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Paul Lowenstein QC and Philip Hinks (instructed by Fieldfisher) for the Applicant
Tiffany Scott QC (instructed by Withers LLP) for the Respondents
Hearing dates: 04 March 2021
Draft sent to Parties: 15 March 2021
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.
THE HONOURABLE Mrs Justice Cockerill DBE
Introduction
In July 2019, the Claimant (“ Mrs Foglia”) was the victim of a substantial fraud pursuant to which €15m was misappropriated from her account with a Cayman bank, CITCO Bank and Trust Company Ltd (“ CITCO”). The account in question is held on Mrs Foglia's behalf by a very substantial Italian fiduciary nominee company named Unione Fiduciaria (“ UF”). Someone impersonating an authorised signatory of UF gave fraudulent payment instructions to CITCO by telephone and later by fax. Those instructions directed CITCO to transfer €15m from Mrs Foglia's account to an English bank account held at Barclays Bank.
The instructions were honoured by CITCO and the transfer was made on 18 July 2019. The holder of the recipient bank account was the First Defendant (“ TFO”), a company wholly owned and controlled by the Fourth Defendant (“ Mr Cerri”).
Upon discovering the fraud, Mrs Foglia sought and obtained a series of non-party disclosure orders against various third parties and then as, facts emerged, a series of freezing orders and proprietary injunctions against the Defendants. With the assistance of those orders, which provide a striking illustration of the assistance which this Court is able to give to a defrauded party, she has so far successfully recovered the sum of €11,456,631 from the Defendants and from certain third party recipients of the proceeds of the fraud, leaving €3,543,368 (plus interest and costs) outstanding.
Mrs Foglia has brought this action against the Defendants advancing proprietary claims and claims in knowing receipt, dishonest assistance and unjust enrichment.
In the normal course of events such claims would proceed to trial. However by application notice dated 17 July 2020 (“ the Application”), Mrs Foglia seeks summary judgment against Mr Cerri, TFO and other companies owned and controlled by him, namely the Second and Fifth-Eighth Defendants (“ the Cerri Companies”). I will refer to these Respondents to the application compendiously as “Mr Cerri”. Mrs Foglia says that the evidence firmly implicates Mr Cerri in the fraud, such that he and his companies have no real prospect of successfully defending the claim.
The essence of the case is that not only was his company, TFO, the direct recipient of Mrs Foglia's misappropriated monies, but immediately after receipt he proceeded to cause TFO to make substantial payments of Mrs Foglia's monies for the benefit of himself, his companies and his wife. In addition Mrs Foglia says that there are facets of the surrounding circumstances which Mr Cerri simply cannot explain and which are only consistent with his responsibility for the fraud.
Mr Cerri strongly denies any involvement in or knowledge of the fraud. He says that he too is a victim of it. His case is, implicitly, that he has been “ set up” by the person or persons who carried out the fraud on Mrs Foglia. While he is unable to provide any positive explanation for how the moneys ended up in his account he says that the facts are most consistent with a hypothesis that the fraudsters are employees at or have inside information from UF or CITCO.
Mr Cerri says (in brief) that he believed the €15m received by TFO belonged to an Italian businessman named Mr Antonio Aloschi, and that the payments he caused TFO to make represented investments that he was making on Mr Aloschi's behalf pursuant to an agreement between them. He says that Mrs Foglia is unable to identify how Mr Cerri could have known details of her personal financial affairs, or those of Mr Aloschi, and how Mr Cerri had any of the information necessary to be in a position to engineer the payment of €15 million away from a bank account in the Cayman Islands.
With that brief introduction I turn to the nature of the application and the test which I have to apply, before proceeding to analyse the arguments in more detail.
Legal principles
CPR 24 sets out the Court's power to give summary judgment in respect of the whole or part of a claim if it considers that the defendant has no real prospect of successfully defending it and there is no other compelling reason why the claim should be disposed of at trial.
The classic statement of the test to be applied by the Court in determining whether a defendant has a real prospect of successfully defending a claim is that set out by Lewison J (as he then was) in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15] which has been approved by the Court of Appeal ( inter alia in AC Ward & Sons v Catlin (Five) Ltd [2009] EWCA Civ 1098 at [24]) and recited in countless applications at first instance. I need not reproduce it here.
In this case Mrs Foglia places particular emphasis on the latter part of the EasyAir summary, and in particular the adjuration to the court to “ grasp the nettle” in a suitable case. She points also to Calland v Financial Conduct Authority [2015] EWCA Civ 192, where Lewison LJ re-emphasised the need for the Court to carry out a “ critical examination of the raw material” in order to determine whether a claim has a real prospect of success, noting that “ the fact that some factual or legal questions may be disputed does not absolve the judge from her duty to make an assessment of the claimant's prospects of success” (at [28]–[29]).
This, of course, is a somewhat unusual application – an application for summary judgment in a fraud claim on the merits. As to this, the authorities (perhaps unsurprisingly) say that there is no bar to granting such an application, but that very considerable caution is required.
Thus, subject to being satisfied that the test in CPR 24.2 is met, there is no impediment to the Court granting summary judgment where dishonesty is alleged. Mrs Foglia produced examples of cases where this had been done, such as: Hanco ATM Systems Ltd v Cashbox ATM Systems Ltd [2007] EWHC 1599 (Ch), Global Metals AG v Colony Capital Ltd [2020] EWHC 3361 (QB) and Burns v Burns [2021] EWHC 75 (Ch). All of these are cases which turn on their facts and do not advance the matter.
As to caution, reference was made to the judgment of Mummery LJ at [4–18] of his judgment in Doncaster Pharmaceuticals Group Ltd v The Bolton Pharmaceutical Company 100 Ltd [2006] EWCA Civ 661 and in particular:
“[5] ….The decision-maker at trial will usually have a better grasp of the case as a whole, because of the added benefits of hearing the evidence tested, of receiving more developed submissions and of having more time in which to digest and reflect on the materials….
[17] It is well settled by the authorities that the Court should exercise caution in granting summary judgment in certain kinds of case. The classic instance is where there are conflicts of fact on relevant issues, which have to be resolved before a judgment can be given … A mini-trial on the facts conducted under CPR Part 24 without having gone through normal pre-trial procedures must be avoided, as it runs a real risk of producing summary injustice.
[18] In my judgment, the Court should also hesitate about making a final decision without a trial where, even though there is no obvious conflict of fact at the time of the application, reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case.”
The need to avoid a mini-trial at the interlocutory stage has also been recently emphasised by the Supreme Court in Okpabi v Royal Dutch Shell [2021] UKSC 3 at [21] (citing Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1 at [94–5]) and [102–114], albeit there in the context of a jurisdiction dispute.
Mr Cerri also emphasises the caution needed in relation to claims in fraud more generally by reference to:
i) The authorities on pleading, which establish that pleadings of fraud should be subjected to close scrutiny and state that it is not possible to infer dishonesty from facts that are equally consistent with honesty (including of course negligence): see JSC Bank of Moscow v Kekhman [2015] EWHC 3073 (Comm) at [15]–[22] referring to Three Rivers at [186] per Lord Millett. Mr Cerri says that here there are facts equally consistent with negligence and honesty as with dishonesty.
ii) Fiona Trust & Holding Corporation v Privalov [2010] EWHC 3199 (Comm) at [1438]–[1439] per Andrew Smith J, a passage which describes how more serious allegations require more cogent evidence, how fraud has per se to be regarded as less likely than honesty and how this impacts the balance of probabilities standard of proof in...
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