“With structured products, buyers can only assert their rights against the issuer. Hence, alongside the market risk, particular attention needs to be paid to issuer risk. You need therefore be aware that, as well as any potential loss you may incur due to a fall in the market value of the underlying, a total loss of your investment is possible if the issuer should default. Market makers, who in most cases are the issuers themselves, normally guarantee that structured products are tradable. Nonetheless, liquidity risks cannot be excluded.”
“Mr Siakotos-Konstantinidis, however, must have been aware that Camerata had stated in Credit Suisse's formal documentation that they did not wish to take risks with their investments. He could not have overlooked this when he completed the form. I can only conclude that he thought that he had a better understanding of his client's real wishes and objectives than they had formally stated, and so disregarded the formal statement of their position. He showed a similar attitude towards Credit Suisse's procedures in failing to read, or at least failing to read with any care, the forms that Camerata were required to complete. As I have said, he did not observe Credit Suisse's procedures for completing file notes of discussions with clients and so there is no record of his conversations with Mr Ventouris upon which Mr Siakotos-Konstantinidis relied to justify his indifference to Camerata's formal statements of their wishes. Indeed, as I shall explain, his assistant, Mr Kelly, asked Camerata to sign the client agreement in blank and to allow CSSE to complete it as they saw fit.”
“Mr Siakotos-Konstantinidis acknowledged that Mr Ventouris had not told him that he was looking for a return of 12-16%. He said that he stated his own perception of what Mr. Ventouris wished, so that Mr Ventouris could comment upon it. Mr Ventouris did not do so, and did not correct or question this "perception" of Mr Siakotos-Konstantinidis. However, he did not invest in the range of products that Mr Siakotos-Konstantinidis suggested but only in the Note. He said in evidence that this was recommended to him both by Mr Fokiades and by Mr Siakotos-Konstantinidis as an ultra-safe investment. He also said that Mr Siakotos-Konstantinidis advised that it was more conservative than the Enhanced Return Note (which had a higher coupon than the Note), and Mr Ventouris thought that, since the Enhanced Return Note was described as presenting capital risk only in a "catastrophic scenario", the Note would be extremely safe. Whatever precisely was said, I accept that Mr Ventouris was led to think that the investment was a safe one. I do not need to make further findings about this, and, because this might be the subject of a separate claim, I do not do so.”
“Mr. Siakotos-Konstantinidis replied that "Given the current dollar weakness", investment in the note "looks very compelling now".He reiterated the basic terms of the Note, and added an explanation about "the possibility of putting the capital at risk". Mr Ventouris also asked whether structure of the Note could be revised to pay a coupon on a quarterly basis. Mr Siakotos-Konstantinidis explained that capital would be at risk if the Euro/US$ exchange rate went above 1.5686.”
“When he was asked about this, Mr Siakotos-Konstantinidis said that he was repeating what had been alleged by another client who had invested with Lehman and who was making representations to Credit Suisse about his loss, and also that he was speculating about what might have happened. This evidence was not given in his witness statement, and there is nothing in the transcript of the conversation that lends support to the explanation that he was repeating, and perhaps building upon, the complaints of another client. On the other hand, the transcript does not indicate that he had any specific basis for what he was saying, and did not state clearly why Credit Suisse stopped using Lehman as counterparty. Moreover, it seems improbable that, during the difficult months before and after Lehman's collapse, Credit Suisse would have entrusted sensitive information of this kind to an employee of Mr Siakotos-Konstantinidis' status. I do not consider that his rather emotional comments on3 December 2008 provide satisfactory evidence to support this part of Camerata's case. For whatever reason, he told untruths against Credit Suisse, as he had about other matters in that conversation.”
“… we were merely making the observation that the loss in this case does not arise as a result of the unsuitability itself. As you are aware the loss arises as a result of the matters which we have pleaded in detail in our client’s Particulars of Claim.”
“C does not bring a claim in respect of the original recommendation made by Mr Siakotos-Konstantinidis to purchasethe Note…”
“While we acknowledge that the trial date is approaching, we consider that the disclosure given or to be given by both parties in relation to the existing issues regarding the Lehman Brothers Note mean that it is doubtful that either side would have to provide any further disclosure occasioned by this amendment. Similarly we do not believe that the amendment will give rise to any further witness evidence”
“Although there is no complaint in these proceedings about the circumstances in which Camerata acquired the Note, by a letter of31 December 2010 Messrs Thomas Cooper, Camerata's solicitors, sent Messrs Allen & Overy, CSSE's solicitors, a draft pleading with a view to bringing new claims in which, as I understand it, Camerata allege that the Note and other investments made through CSSE were unsuitable for them. Mr Adrian Beltrami QC, who represented CSSE, invited me to refrain from exploring in this judgment matters which might be in issue in such proceedings, and I have sought to avoid doing so unnecessarily. However, it is necessary to set the background to the present claim, and to examine, in particular, Camerata's financial knowledge and experience and their attitude, and expressed attitude, towards adventurous investments: indeed, CSSE themselves rely upon these matters.”
“111. There is no evidence that Mr Ventouris, either himself or through some vehicle entity, bought any structured products or other relevant investments from any of these banks, and, whatever the explanation for what Messrs Thomas Cooper wrote, I accept his evidence that he did not have discussions with them which provided him with any significant information or understanding about such products. 112. None of this persuades me that, when he dealt with CSSE, Mr Ventouris in fact had any relevant previous experience or that he had any technical understanding about how the market in structured products operated. However, the important question is what impression he gave Mr Siakotos-Konstantinidis and whether that impression was a reasonable one. As Mance J said in Bankers Trust International plc v PT Dharmala Sakti Sejahtera (No 2), [1996] CLC 518 at 531E-F: "A recipient holding himself out as able to understand and evaluate complicated proposals would be expected to be able to do so, whatever his actual abilities". 113. I conclude that Mr. Ventouris had no experience of structured products before he met Mr Siakotos-Konstantinidis. Mr. Siakotos-Konstantinidis had no reason to think otherwise, and this should have been clear to him if he had read CSG's account opening document or the completed Acceptance Booklet. Mr. Ventouris showed that he had limited technical knowledge about investments of the kind in which he and Camerata were investing and about investments generally. 114. That said, Mr Ventouris is clearly intelligent and financially astute, and Mr. Siakotos-Konstantinidis must have recognised this. He took a lively interest in investment, and showed himself willing and eager to ask about and to discuss products suggested to him by CSSE and others. He asked that CSSE provide him with graphs and other research information. He engaged in discussion with Mr Siakotos-Konstantinidis about market developments and the opportunities that they presented for investments. Mr. Siakotos-Konstantinidis could reasonably suppose that he understood the risks involved in the investments that he and Camerata made and other products that he discussed, including the risk that the investment would be lost if a counterparty defaulted, and that he would ask about any concerns that he had. He could also reasonably suppose that Mr. Ventouris understood that the enhanced returns that could be earned from structured products broadly reflected the risks associated with them.”
“My conclusions about Mr Ventouris' attitude to risk are these: when he started to deal with Mr Siakotos-Konstantinidis, he had no experience of risky investments, but, in the hope of higher returns, was willing to make investments which he knew might result in some limited loss to capital. To that extent he never limited himself to investments that were "absolutely secure". In the course of his dealings with Mr. Siakotos-Konstantinidis increasingly he became interested in, and attracted and excited by, more adventurous investments. This understandably and reasonably led Mr Siakotos-Konstantinidis to believe that he would contemplate running rather greater risks with his capital (and Camerata's funds) than the documentation completed by Camerata indicated. In fact, he never put any money into the most adventurous ideas that they discussed, and he would never seriously have contemplated any investment if he thought that there was any realistic chance that he would lose the whole or the greater part of his investment. He understood and accepted risks by way of market movements, but would not willingly have run the risk that any of the banks or institutions that he was dealing might default if he had thought this seriously possible.”
“[Mr Ventouris] was interested to hear Mr Siakotos-Konstantinidis' opinion about the markets and what would result from the market turbulence, and in that context that he asked how Mr Siakotos-Konstantinidis thought that his investments (and Camerata's investments) would fare. I do not accept that he presented his questions as enquiries made with a view to planning or making decisions about buying or selling investments in light of the answers. Further, Mr. Ventouris was acute enough and sufficiently well informed to know that counterparty default could jeopardise an investment, and, if he had been concerned about that, he would, as I conclude, have asked about the position expressly and specifically.”
“Further, the criticism of Mr Siakotos-Konstantinidis is to be assessed against his evidence that between March and September 2008, while he recognised that investors holding equity in institutions such as Lehman might have reason for concern, he did not think that any such institution would default or that those who held investments such as the Note were at risk of counterparty default. As I shall explain, I do not consider that Mr Siakotos-Konstantinidis has been shown to have been negligent, still less to have been grossly negligent, in taking that view about Lehman in particular or about institutions of their standing more generally. He fairly pointed out that Bear Stearns had not defaulted when they were sold to J P Morgan Chase. Again, the adviser might be at fault if he did not have in mind who issued the investment if the circumstances of the enquiry make it clear that the client is looking for an exhaustive assessment of all the risks involved in holding it. These were not the circumstances here.”
“232. None of these complaints is established. I have considered separately the various strands of argument presented by the parties, but, of course, the position is to be assessed taking them all into account. When this is done, in my judgment, Camerata have not shown that there were real grounds for doubting the creditworthiness of Lehman, still less that Mr Siakotos-Konstantinidis should have appreciated that there were and advised Mr Ventouris that there were. Camerata have not shown that Credit Suisse had stopped using Lehman as a counterparty because of real doubts about their creditworthiness, still less that Mr Siakotos-Konstantinidis should have known this. Camerata have not established that there were grounds to think that they should liquidate their investment in the Note. 233. The question, essentially, comes down to this: Mr Siakotos-Konstantinidis did not pass on to Mr Ventouris either reports that he had read suggesting that Lehman might follow the way of Bear Stearns or the other information upon which Camerata rely. If Mr Ventouris had asked specifically about counterparty risk in relation to the Note, Mr Siakotos-Konstantinidis would, I think, have been at fault, and negligent, unless he either told Mr Ventouris about press reports and other information that he had come across or told Mr Ventouris that he was not in a position to offer advice upon a more specialist question of that kind; but Mr Ventouris did not ask such questions. Even if he had done so, I would not have concluded that Mr Siakotos-Konstantinidis was grossly negligent. 234. Nor am I able to accept that, when he sought Mr Siakotos-Konstantinidis' views in the general terms that he did, Mr Ventouris was to be understood to be enquiring about risk of counterparty default. After all, Mr Ventouris had shown himself to be alert and perceptive of financial matters and actively interested in his investments, and Mr Siakotos-Konstantinidis could properly have expected him to ask specific questions if he was concerned about this. The nature of the questions, especially given the circumstances and context in which they were given, were, in my judgment, to be understood as an invitation for Mr Siakotos-Konstantinidis to give his opinion, or really just to give his impression, about whether the investments were "safe", and, although of course upon analysis, the "safety" of an investment of this kind depends in part upon counter-party risk, the enquiry did not call for a response that involved analysis of this kind. I would have reached the same conclusion even if Mr Ventouris had asked questions of the kind that he described in his oral evidence. I do not consider that Mr Siakotos-Konstantinidis was negligent, still less grossly negligent, because he did not assess counterparty risk when responding to questions of the kind that Mr Ventouris was asking, or because he did not pass on to Mr Ventouris reports that he had read or other information or speculation about Lehman, or because these matters were not reflected in the views that he expressed. 235. I therefore conclude that CSSE were not in breach of duty. Mr Siakotos-Konstantinidis' response to Mr Ventouris was one that a relationship manager in his position could properly give consistently with exercising the reasonable skill and care to be expected of him.”
“Whatever Mr Siakotos-Konstantinidis was asked by Mr Ventouris, Camerata have not shown that he should have said more than that (i) the credit rating agencies had reduced Lehman's ratings, but that they still gave Lehman "A" ratings and considered them to deserve Investment Grade ratings; (ii) that there had some increase in the CDS spreads of Lehman following the collapse of Bear Stearns; and (iii) that there was some speculation in the financial press, and that some analysts thought, that Lehman might lose their independence as Bear Stearns had done. There is no credible evidence, and I am not persuaded, that, had he been given such advice, Mr Ventouris would have arranged for the Note to be sold. Nor am I persuaded, if it be alleged, that, given advice or warnings of this kind, Mr Ventouris would have investigated the position further or sought further advice that would then have led to a sale of the Note. Specifically, I reject Mr Ventouris' evidence that he would have sold the investment in the Note had he been told that it "contained warnings about significant risks including … interest rate, price risk, liquidity risk, redemption risk and credit risk". That would, in my judgment, have come as no surprise to him.”
“The correct approach on applications by defendants is, in my judgment, as follows: i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman[2001] 1 All ER 91 ; ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel[2003] EWCA Civ 472 at [8] iii) In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10] v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5)[2001] EWCA Civ 550 ; vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where 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: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd[2007] FSR 63 ; vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd[2007] EWCA Civ 725 .”
“I start by considering what is the correct approach on a summary application of the nature of Mr. Richards's application at this early stage in the action when the pleadings show significant disputes of fact between the parties going to the existence and scope of the alleged duty of care. The correct approach is not in doubt: the court must be certain that the claim is bound to fail. Unless it is certain, the case is inappropriate for striking out (see Barrett v Enfield London Borough Council[2001] 2 AC 550 at p. 557 per Lord Browne-Wilkinson). Lord Browne-Wilkinson went on to add: “[I]n an area of the law which was uncertain and developing (such as the circumstances in which a person can be held liable in negligence for the exercise of a statutory duty or power) it is not normally appropriate to strike out. In my judgment it is of great importance that such development should be on the basis of actual facts found at trial not on hypothetical facts assumed (possibly wrongly) to be true for the purpose of the strike out.””
“when he started to deal with Mr Siakotos-Konstantinidis, he had no experience of risky investments, but, in the hope of higher returns, was willing to make investments which he knew might result in some limited loss to capital. To that extent he never limited himself to investments that were ‘absolutely secure’” and “This understandably and reasonably led Siakotos-Konstantinidis to believe that he would contemplate running rather greater risks with his capital (and Camerata's funds) than the documentation completed by Camerata indicated.”
“Mr. Siakotos-Konstantinidis could reasonably suppose that [Mr Ventouris] understood the risks involved in the investments that he and Camerata made and other products that he discussed, including the risk that the investment would be lost if a counterparty defaulted, and that he would ask about any concerns that he had. He could also reasonably suppose that Mr. Ventouris understood that the enhanced returns that could be earned from structured products broadly reflected the risks associated with them.”
“Actions for damages (1) A contravention by an authorised person of a rule is actionable at the suit of a private person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty. …. (5) ‘Private person’ has such meaning as may be prescribed.”
“Private person 3. - (1) In these Regulations, ‘private person’ means - (a) any individual, unless he suffers the loss in question in the course of carrying on - (i) any regulated activity; or (ii) any activity which would be a regulated activity apart from any exclusion made by article 72 of the Regulated Activities Order (overseas persons); and (b) any person who is not an individual, unless he suffers the loss in question in the course of carrying on business of any kind; but does not include a government, a local authority (in the United Kingdom or elsewhere) or an international organisation.”
“48. The Bank submits that Titan manifestly sustained the loss in the course of carrying out its business. The fact that Titan's business was not confined to or focused on investment business is not to the point. The regulations expressly refer to the carrying on of business of any kind. This expression should be, on the Bank's case, given a wide interpretation. 49. As regards the question of construction, Titan submits that, in the light of its legislative history, a much narrower interpretation of the regulation is appropriate. In further support of this submission, Titan relies on decisions with regard to different but allegedly analogous legislation and upon matters emerging from Hansard and other travaux preparatoires.”
“68. The overarching difficulty with treating those authorities as determining the meaning of "in the course of carrying on business of any kind" is that the phrase in the FSMA regulations is different from the phrase under consideration in these cases, namely "in the course of a business". It renders the additional words "of any kind" redundant. 69. There are various additional factors which contradict the submission made by Titan: i) The context is very different. The regulations seek to draw a distinction between natural and corporate persons and between regulated activity and other business. ii) The authorities cited above are concerned with consumer protection. The protective purpose of the regulations in contrast is to stem "strategic" claims against those conducting regulated activity (all the while preserving recourse to claims in tort or contract). iii) The phrase "in the course of business" has been held in a different context to justify construction "at their wide face value": Stevenson v Rogers[1999] QB 1028 . 70. I recognise that corporate entities who sustain losses as a result of the purchase of financial products will usually be in business of some kind. As the 1990 consultation paper states, charities and similar bodies are the more obvious exceptions. It follows that a wide interpretation of Regulation 3(1)(b) would exclude little in terms of liability of a regulated body. But I prefer the view that the words can properly be construed as having their wide meaning as contended for by the Bank.”
“The principle thus stated distinguishes between a duty to provide information for the purpose of enabling someone else to decide upon a course of action and a duty to advise someone as to what course of action he should take. If the duty is to advise whether or not a course of action should be taken, the adviser must take reasonable care to consider all the potential consequences of that course of action. If he is negligent, he will therefore be responsible for all the foreseeable loss which is a consequence of that course of action having been taken. If his duty is only to supply information, he must take reasonable care to ensure that the information is correct and, if he is negligent, will be responsible for all the foreseeable consequences of the information being wrong.”
“It may very well be, as has been convincingly argued (Watt, "The Danger and Deceit of the Rule in Henderson v. Henderson: A new approach to successive civil actions arising from the same factual matter," 19 Civil Justice Quarterly, (July 2000), page 287), that what is now taken to be the rule in Henderson v. Henderson, has diverged from the ruling which Wigram V.-C. made, which was addressed to res judicata. But Henderson v. Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in early proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party's conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice.”
“As the passages which I have emphasised indicate, Sir James Wigram did not consider that he was laying down a new principle, but rather that he was explaining the true extent of the existing plea of res judicata. Thus he was careful to limit what he was saying to cases which had proceeded to judgment, and not, as in the present case, to an out of court settlement. Later decisions have doubted the correctness of treating the principle as an application of the doctrine of res judicata, while describing it as an extension of the doctrine or analogous to it. In Barrow v. Bankside Members Agency Ltd. [1996] 1 W.L.R. 257, Sir Thomas Bingham M.R. explained that it is not based on the doctrine in a narrow sense, nor on the strict doctrines of issue or cause of action estoppel. As May L.J. observed in Manson v. Vooght[1999] B.P.I.R. 376 at p. 387, it is not concerned with cases where a court has decided the matter, but rather cases where the court has not decided the matter. But these various defences are all designed to serve the same purpose: to bring finality to litigation and avoid the oppression of subjecting a defendant unnecessarily to successive actions. While the exact relationship between the principle expounded by Sir James Wigram and the defences of res judicata and cause of action and issue estoppelmay be obscure, I am inclined to regard it as primarily an ancillary and salutary principle necessary to protect the integrity of those defences and prevent them from being deliberately or inadvertently circumvented.”
“i) Where A has brought an action against B, a later action against B or C may be struck out where the second action is an abuse of process. ii) A later action against B is much more likely to be held to be an abuse of process than a later action against C. iii) The burden of establishing abuse of process is on B or C or as the case may be. iv) It is wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. v) The question in every case is whether, applying a broad merits based approach, A's conduct is in all the circumstances an abuse of process. vi) The court will rarely find that the later action is an abuse of process unless the later action involves unjust harassment or oppression of B or C.”
“The rule in Henderson v. Henderson (1843) 3 Hare 100 is very well known. It requires the parties, when a matter becomes the subject of litigation between them in a court of competent jurisdiction, to bring their whole case before the court so that all aspects of it may be finally decided (subject, of course, to any appeal) once and for all. In the absence of special circumstances, the parties cannot return to the court to advance arguments, claims or defences which they could have put forward for decision on the first occasion but failed to raise. The rule is not based on the doctrine of res judicata in a narrow sense, nor even on any strict doctrine of issue or cause of action estoppel. It is a rule of public policy based on the desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on for ever and that a defendant should not be oppressed by successive suits when one would do. That is the abuse at which the rule is directed.”
“At page 263, the rule was described as a salutary one, and the court suggested that its application should not be circumscribed by unnecessarily restrictive rules.”