Medsted Associates Ltd v Canaccord Genuity Wealth (International) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Teare |
| Judgment Date | 20 July 2017 |
| Neutral Citation | [2017] EWHC 1815 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 20 July 2017 |
| Docket Number | Case No: CL-2015-000856 |
[2017] EWHC 1815 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, 7 Rolls Buildings
Fetter Lane, London EC4A 1NL
Mr. Justice Teare
Case No: CL-2015-000856
Paul Darling QC and Henry Byam-Cook (instructed by Memery Crystal LLP) for the Claimant
Hodge Malek QC, Matthew SlaterandRupert Coe (instructed by Devonshires Solicitors LLP) for the Defendant
Hearing dates: 12–15 and 19 June 2017
This case arises out of Mr. Vasileios Valasakis' business of introducing wealthy Greek citizens ("the clients") to an investment institution in return for a share of the commission and funding rebate payable by the clients to the institution on financial business transacted by the clients with the institution. Mr. Valasakis (through his BVI company, Medsted 1, the Claimant) formed a business relationship with Collins Stewart (the former name of the Defendant) in 2009 by which clients were introduced by Medsted to Collins Stewart and a share of the commission and funding rebate were paid by Collins Stewart to Medsted. But in 2010 Collins Stewart did business directly with one or more of the clients on terms which cut out Medsted from any right to claim its share of commission or funding rebate. Mr. Valasakis has sued Collins Stewart for the sums which would have been received had Collins Stewart adhered to the original business relationship. Collins Stewart say that the clients discovered the amount of commission and funding rebate being paid by Collins Stewart to Medsted and preferred to trade directly with Collins Stewart. Mr. Valasakis does not accept this and says that Collins Stewart set about to do business directly with the clients in breach of its agreement with Medsted.
The events in question took place between 7 and 8 years ago. There is a dispute as to whether the business relationship between the parties was on Medsted's terms of business or on Collins Stewart's terms of business. Evidence has been given about meetings between the parties but the age of the dispute inevitably means that the court's findings as to what happened will depend primarily upon the contemporaneous documents, the transcripts of telephone recordings and the probabilities.
Before narrating the events as evidenced by the contemporaneous documents and the telephone transcripts it is necessary to comment upon the witnesses.
Medsted is a company registered in the BVI. Mr. Valasakis is a beneficial owner to the extent of 65%. His business partner, Mr. Dedetsinas ("Marios") is a beneficial owner to the extent of the remaining 35%. Mr. Valasakis gave oral evidence. Marios did not. Mr. Hodge Malek QC, on behalf of Collins Stewart, submitted that Mr. Valasakis was a thoroughly dishonest and evasive witness. That would be an extreme view to take of his evidence. I accept that he was shown, in his evidence in this case, to be secretive. Thus it was not until his cross-examination that he disclosed the beneficial interests behind Medsted. Further, until he was required by this court (by order of Blair J.) in the week before the trial to disclose the identities of all sub-IBs (sub-introducing brokers) he had not done so. He had said in his witness statement that the sub-IBs did not have the necessary contacts or expertise to make the introductions directly to financial institutions. This was untrue, because the sub-IBs included himself and Marios. I also accept that the truth sometimes had to be extracted from him. Thus he was asked how Mr. Xenophontos, who brought four clients from MAN to Collins Stewart in 2008, was paid. Initially he said that he could not remember, he then suggested that he had been paid by MAN, before admitting that he had received payment as a sub-IB. All of these matters meant that he could not regarded as a reliable witness. They suggested to me that I should be cautious about accepting his evidence and that I should only do so when it is not in dispute or when it
is supported by contemporaneous documents or when it was consistent with the probabilities. I do not regard him as "a thoroughly dishonest and evasive witness" because he made admissions and often thought carefully about his answer with a view, it seemed to me, to giving an accurate answer, though perhaps sometimes he was thinking about what answer would assist his case.Marios did not give evidence. Mr. Malek submitted that the decision not to call him was a "cynical attempt to disadvantage the court" and that adverse inferences should be drawn. Mr. Malek pointed out that there was no medical evidence to explain Marios' absence, that Marios had a major role in dealing with clients and that his contribution would have been significant because there were at least 17 issues on which he could have assisted. There is force in this submission but when Mr. Valasakis was asked to explain why Marios had not given evidence it was apparent that Mr. Valasakis was very upset by the subject. Eventually, when he was able to speak, he described Marios, in effect, as a broken man. Mr. Malek accepted that his upset was genuine but suggested that it was the effect of a gruelling cross-examination being over. That is not the impression which I got. In these circumstances I am not persuaded that it would be appropriate, and might well be unfair, to draw adverse inferences from Marios' absence.
The Defendants called three witnesses, Mr. Justin Jouan (who was a stockbroker at Collins Stewart in Jersey), Mr. Steven Glover (another stockbroker at Collins Stewart who became head of stockbroking in Jersey on 1 January 2010) and Mr. Grahame Lovett (the chief executive officer of Collins Stewart's offshore business). Mr. Paul Darling QC, on behalf of the Claimant, submitted that Mr. Jouan and Mr. Glover had lied in their evidence to the court. Mr. Jouan accepted that he had made an untrue statement in an exchange with Marios on 16 June 2010 and that he had made an untrue statement about that exchange in his witness statement. Mr. Glover accepted in his evidence that lies had been told to Marios by Mr. Jouan but did not reveal that in his witness statement. Mr. Lovett also accepted that Mr. Jouan had lied. As a result Mr. Darling submitted that the Defendant's witnesses had "lost all credibility." As with Mr. Malek's submission, this would be an extreme view to take of the Defendant's witnesses. The lies told to Medsted in 2010 were part of a scheme to conceal from Medsted that Collins Stewart was dealing directly with clients of Medsted. This does not justify the telling of lies but explains why they were told. Although the concealment had been admitted in the Defence and in witness statements the lies had not been acknowledged. The fact that Mr. Jouan accepted in cross-examination that he had told an untruth in his witness statement (where he had effectively denied that he had lied to Marios) means that it would be unsafe to accept his evidence save where it is not in dispute, supported by contemporaneous documents or consistent with the probabilities. Mr. Glover did not reveal in his statement that lies had been told but no positive untruth in his statement was, I think, identified. So far as Mr. Lovett is concerned it was not, I think, suggested that he had lied. There does not appear to be the same need for caution when evaluating their evidence as there is when evaluating Mr. Jouan's evidence. However, having regard to the time which has elapsed since 2008–2010 the court is more likely to reach accurate conclusions about what happened if close regard is given to the contemporaneous documents rather than to recollections today of what was said then. There is a further reason for doing so with regard to the evidence of Mr. Lovett and Mr. Glover. Both allowed their evidence to be coloured by their belief that Collins Stewart never deals on the terms of third parties, notwithstanding that there is no contemporaneous email which ever stated that position to Medsted. This suggested that they were seeking to justify their case rather than seeking to remember what actually happened.
Mr. Darling criticised the Defendant's approach to disclosure and Mr. Malek criticised the Claimant's approach to disclosure. Each suggested that appropriate adverse inferences be drawn. Rather than recount each party's failings in the matter of disclosure before trial I shall bear the criticisms in mind when making my findings to the extent, if at all, such criticisms become relevant.
The events in question span the years 2008–2010. I shall attempt to set out the material events chronologically.
– The transfer of four MAN clients to the Defendant
In 2008 Mr. Valasakis, who had introduced four clients to MAN for the purpose of trading CFDs (contracts for differences), was looking for an alternative financial house to take over the role of MAN. He and Mr. Jason Xenophontos, the account executive at MAN, visited Jersey on 22 July 2008 to persuade Collins Stewart to take over the business. They met Mr. Lovett and Mr. Jouan in a boardroom, had drinks in a pub and then had lunch in a restaurant (though Mr. Lovett may not have gone to the pub).
Mr. Valasakis' evidence is that at the meeting there was a "high level" discussion as to whether Collins Stewart would be prepared to take on the business. There was no discussion of commercial terms though Mr. Valasakis raised the issue of an IB (introducing broker) agreement and a non-circumvention agreement. He thought Collins Stewart were keen to get the business.
Mr. Jouan's evidence is that the meeting was "basically a meet and greet". No notes were taken. Mr. Lovett expressed an interest in the business if it was commercially viable. Mr. Jouan said that Mr....
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