Camerata Property Inc v Credit Suisse Securities (Europe) Ltd

This is the third time that the Court has had to consider claims for damages against Credit Suisse by Camerata, an investment vehicle for Mr. Ventouris, a member of the Greek shipowning family, arising out of one or more structured notes purchased by Camerata from Credit Suisse prior to (and in one case after) the collapse of Lehman Brothers in September 2008. Andrew Smith J. dismissed a claim brought in relation to one such note, the Lehman note, in 2011, after a trial; see [2011] EWHC 479 (Comm). Flaux J. dismissed a further claim in respect of the Lehman note in 2012, after a summary judgment application; see [2012] EWHC 7 (Comm). Camerata has no further claim in respect of the Lehman note but has a claim in respect of three further notes. Credit Suisse had the opportunity to seek summary judgment in respect of this claim from Flaux J. but did not take it. Camerata’s pleading has been amended since the judgment of Flaux J. and Credit Suisse now applies for summary judgment in respect of it. (Strictly speaking Camerata requires permission to amend but the application for summary judgment has been argued upon the assumption that permission has been granted.)

Camerata claims that the three notes, the Multi-Index note (bought in August 2007 for US$ 8m.), the Bank note (bought in December 2007 for US$4m.) and the Restructured Bank note (bought in October 2008 for US$1.7m), were mis-sold in that they were not suitable for Camerata. A central feature of the claims is an allegation that Mr. Ventouris, in the shape of Camerata, was extremely averse to risk in that, at best, only low-risk investments were suitable for him and that all three notes, like the Lehman note, were of at least medium risk and so should not have been sold to him.

The claim before Andrew Smith J. had not been based upon the alleged mis-selling of the Lehman note in 2007 but on an alleged failure to give advice to Camerata in 2008 that Lehman was at risk of collapse. Camerata said that the note would have been sold had such advice been given. That claim failed because Andrew Smith J. held that Credit Suisse had not been negligent and because Camerata had failed to establish that the note would have been sold had the requisite advice been given; see the conclusion to the judgment of Andrew Smith J. at paragraph 243. Although Andrew Smith J. was aware that he was not dealing with a mis-selling claim he nevertheless had to “examine, in particular, Camerata’s financial knowledge and experience and their attitude, and expressed attitude, towards adventurous investments” (see paragraph 3).

The claim brought before Flaux J. was for the mis-selling of the Lehman note in 2007 but Flaux J. dismissed that claim because of the findings made by Andrew Smith J. At paragraph 88 of his judgment Flaux J. said:

“The reality is that, however Camerata's case on failure by Credit Suisse to advise it properly before the investment is formulated, it would involve Mr Ventouris seeking to give evidence that was contrary to the findings made after a full trial about his knowledge, experience and attitude to risk. I cannot see any court being prepared to accept such evidence at a second trial and Camerata has not advanced any coherent reason why the court should do so. Accordingly, quite apart from the fact that seeking to go behind those findings and contend that they were wrong would be a collateral attack on Andrew Smith J's judgment and an abuse of process (a matter to which I return below), it does not seem to me that the claim in respect of the Lehman Brothers Note has any real prospect of success.”

Mr. Beltrami QC, for Credit Suisse, submits that the claims in respect of the three further notes should be dismissed for the same reason. Mr. Hancock QC, counsel for Camerata, submits that such a course would not be appropriate.

In addition to the claim for mis-selling of the three notes there are three further claims, one alleging negligent mis-statement, another alleging that the purchase of one of the notes was not authorised and the third alleging that there was mis-management of Camerata’s investments. Credit Suisse seeks summary judgment in respect of these claims also.

The application for summary judgment is made on the basis that the claims of Camerata have no realistic prospect of success. There is no dispute as to the appropriate principles. They were set out by Flaux J. at paragraph 62 of his judgment in which he quoted a statement of those principles by Lewison J.

The correct approach to be adopted by the court in applications by a defendant for summary judgment under CPR Part 24 to dismiss a claim was summarised by Lewison J as he then was in Easyair Ltd v Opal Telecom Ltd[2009] EWHC 339 (Ch) as follows:

"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."

In essence the submission made by Mr. Beltrami on behalf of Credit Suisse is that the claims brought by Camerata in respect of the three further notes can have no realistic prospect of success because there is no realistic prospect that their factual foundation, namely, that Mr. Ventouris was extremely averse to risk, will be accepted by the court. His evidence in that regard has already been rejected by the court and there is no reason to suppose that another court would take a different view. In any event to seek to adduce evidence to that effect would be an abuse of process because it would amount to a collateral attack on the judgment of Andrew Smith J. Both of these submissions mirror the approach of Flaux J. Indeed, Mr. Beltrami submitted that the judgment of Flaux J. gives rise to an issue estoppel which prevents Camerata from succeeding on its claims.

In essence the submission made by Mr. Hancock on behalf of Camerata is that the findings made by Andrew Smith J. related to the case brought before him which focused upon advice given or not given in 2008 whereas the present case depends upon alleged mis-selling in 2007 (save in respect of the Restructured Bank note which was sold in October 2008). The issues will therefore be different, the evidence will therefore be different and therefore the findings may be different. In such circumstances summary judgment in favour of Credit Suisse would be inappropriate. Mr. Hancock says that no issue estoppel arises from Flaux J.’s judgment.

Andrew Smith J., after an extensive review of the evidence regarding Mr. Ventouris’ attitude to risky investments (see paragraphs 115-124 of his judgment) made the following finding in paragraph 125 of his judgment:

“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. ”

Before Flaux J. counsel for Camerata submitted that the issue of mis-selling raised in relation to the Lehman note

“was quite a different claim from that which Andrew Smith J. was concerned. That claim was underpinned by events between March and September 2008, Mr. Ventouris’ concerns at that time and what Mr. Siakotos-Konstantinidis had said at the meeting on 3 December 2008. [Counsel] submitted that nothing could be further from the questions raised in the present proceedings, which concern how Mr. Ventouris presented himself in 2007 as a new customer in the account opening documentation.” (paragraph 70 of Flaux J.’s judgment)

Flaux J. held at paragraph 76 that the findings of Andrew Smith J. in paragraph 125 of his judgment

“[were] not limited to 2008 but describe [Mr. Ventouris’] attitude from the outset of the relationship with Credit Suisse.”

There was no dispute that in order for a finding to give rise to an issue estoppel it had to have been an essential step in the reasoning of the court.

Mr. Hancock submitted orally that the finding by Flaux J. as to the temporal scope of the findings of Andrew Smith J. as to Mr. Ventouris’ attitude to risk did not give rise to an issue estoppel because the finding of Flaux J. was not essential to his decision. It was merely an “observation”. Furthermore, he said, just as Credit Suisse accepted that the findings of Andrew Smith J. did not give rise to an issue estoppel so Credit Suisse must accept that the findings of Flaux J. cannot give rise to an issue estoppel.

In my judgment the finding of Flaux J. as to the temporal scope of Andrew Smith J.’s findings was essential to his decision. Counsel for Camerata had taken as his “main point” the 2007/2008 point. Thus Flaux J. had to deal with it. He did so and he dismissed it in paragraph 88, the terms of which I have quoted in paragraph 4 above. The dismissal of the point was an essential step in the reasoning of Flaux J. because it enabled him to conclude that the claim in respect of the Lehman note which had been purchased in 2007 had no real prospect of success.

Flaux J. also observed in paragraph 88 (and in paragraph 120) that seeking to go behind the findings of Andrew Smith J. would be a collateral attack on those findings and so an abuse of process. However, Flaux J.’s decision to grant summary judgment was based upon his conclusion that the claim had no real prospect of success, rather than on abuse of process. Whilst there was also no basis for a claim for breach of statutory duty under section 150 of FSMA (see paragraphs 89-98) the reason why the claim in contract and tort had no real prospect of success was that set out in paragraph 88. Flaux J. did however go on to give a further reason for his decision, namely, that the loss on the Lehman Note was unforeseeable; see paragraphs 100-103. The fact that Flaux J. gave two reasons for his decision does not mean that his dismissal of the 2007/2008 point was not an essential step in his reasoning. It was an essential step in his reasoning which led to the first of his two reasons for concluding that the claim had no realistic prospect of success. Both reasons give rise to an issue estoppel though only one is relevant to the present case. Although I enquired during the course of argument whether the law on precedent and the determination of the ratio decidendi assisted on this matter I accept the submission of Mr. Beltrami that what is in issue in the present case is not the law on precedent which determines which decisions bind the court but the law of issue estoppel which determines which decisions bind the parties in subsequent actions.

Mr. Hancock’s further submission, that the decision of Flaux J. cannot give rise to an issue estoppel because Credit Suisse accepted that the finding of Andrew Smith J. as to Mr. Ventouris’ attitude to risk in 2007 did not give rise to an issue estoppel, is based upon the suggestion that Credit Suisse did not contend before Flaux J. that the judgment of Andrew Smith J. gave rise to an issue estoppel. However, whilst Flaux J. did not base his decision on an issue estoppel, I am unable to accept the suggestion that Credit Suisse did not rely upon an issue estoppel. In paragraph 59 of his judgment Flaux J. summarised Credit Suisse’s arguments as follows:

“The basis for Credit Suisse's application can be summarised as follows:

(1)

Even if the findings of Andrew Smith J do not strictly give rise to an issue estoppel between the parties (and its primary case is that they do), they are findings after a full trial between the same parties, so that there is no reason to conclude that a second action or trial would lead to a different outcome. In those circumstances, Credit Suisse submits that the court should strike out the pleaded allegations in relation to the Lehman Brothers Note, alternatively enter summary judgment dismissing those allegations.

(2)

That the present proceedings are an abuse of process because, even if the claim were arguable, it should have been included in the first action and no good reason has been shown why it was not. Credit Suisse submits that a party which consciously elects not to bring such a claim should not be allowed a second attempt once the first fails.”

Thus Flaux J. recorded that Credit Suisse’s primary case was that Andrew Smith J.’s findings gave rise to an issue estoppel, although such an argument does not appear to have been pursued on the summary judgment application and Flaux J. dealt only with the two arguments which he had summarised.

However, whilst issue estoppel may have been Credit Suisse’s primary case, I accept that it is difficult to see how there could have been an issue estoppel regarding the findings of Andrew Smith J. as to Mr. Ventouris’ attitude to risk in 2007 because any such finding was not essential to his conclusion that Credit Suisse was not liable to Camerata with regard to the alleged failure to give appropriate advice in 2008. That is presumably why a case on issue estoppel, despite being described as Credit Suisse’s primary case, was not advanced before Flaux J. in support of the summary judgment application.

Nevertheless, I am unable to accept that that circumstance disables Credit Suisse from relying upon an issue estoppel arising out of the judgment of Flaux J. with regard to his finding as to the temporal scope of the finding made by Andrew Smith J. as to Mr. Ventouris’ attitude to risk. The scope of those findings was argued out before Flaux J. and he made a clear finding that they extended to 2007. Since that finding was an essential step in Flaux J.’s reasoning Camerata is bound by it.

Camerata is therefore estopped from contending, as it sought to do before me, that Andrew Smith J.’s findings as to Mr. Ventouris’ attitude to risk did not extend to 2007.

Mr. Beltrami submitted, in the alternative, that it would be an abuse of process for Camerata to seek to challenge the conclusions of Flaux J. This is the form of abuse explained in Secretary of State v Bairstow [2003] EWCA 321 and to which Flaux J. adverted in paragraphs 88 and 120 of his judgment. In view of my decision on issue estoppel it is unnecessary for me to deal with this point.

The next question is what effect, if any, the estoppel has on the outcome of Credit Suisse’s application for summary judgment. The forensic position is unusual. Mr. Ventouris’ evidence as to his attitude to risk in 2007 and 2008 has been given to this court in the action before Andrew Smith J. and findings as to that evidence have been made. It is in those circumstances that the court has to consider whether there is a realistic prospect that Mr. Ventouris will establish that in 2007 he was extremely averse to risk or, alternatively, would accept only a low risk of loss. (In this respect his pleading is in the same terms as his pleading before Flaux J. and in almost the same terms as his pleading before Andrew Smith J).

Flaux J., having considered the findings of Andrew Smith J. as to Mr. Ventouris’ attitude to risk, concluded that Mr. Ventouris’ evidence that he was only interested in low risk investments was rejected; see paragraph 45 of his judgment. This conclusion is consistent with Andrew Smith J.’s finding in paragraph 119 of his judgment that Credit Suisse’s assessment that each of the investments made by Camerata “carried at least a medium risk” was reasonable and his rejection in paragraph 120 of his judgment of Mr. Ventouris’ evidence that “he failed to recognise that they presented some risk that he would lose part of his capital.”

In circumstances where Mr. Ventouris’ evidence has already been evaluated by this court and found not to support a case that he was extremely averse to risk or interested only in low risk investments there can be no realistic prospect that such a case could be established if he gave his evidence for a second time. There is no reason to suppose that Mr. Ventouris would give any different evidence in this action as to his attitude to risk. If he did so there can be no reasonable prospect that it would be accepted. This is, in essence, the same view that Flaux J. took in paragraph 88 of his judgment.

Whether or not Credit Suisse should recover summary judgment in respect of the alleged mis-selling of the three notes therefore depends upon whether Camerata’s claim has a realistic prospect of success in circumstances where there is no realistic prospect that Mr. Ventouris’ evidence as to his attitude to risk will be accepted but every prospect that the effect of Mr. Ventouris’ evidence as to his attitude to risk in 2007 will be found to have been as already found by Andrew Smith J.

The pleaded claim is that each of the notes carried at least a medium risk and was on that account unsuitable for Camerata. Does that case have a realistic prospect of success on the basis that Mr. Ventouris’ attitude to risk was as found by Andrew Smith J.? That depends upon whether Mr. Ventouris was willing to accept the degree of risk involved in the three notes.

Flaux J. had to answer this very question but in relation to the Lehman note. In so doing he noted the finding of Andrew Smith J. in paragraph 239:

“………..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. Nor, for example, do I accept his evidence that he would have done so if he had been told that "Credit Suisse received better terms from Lehman Brothers and placed investments with that bank even though it was not in its clients' best interests". ………”

On the basis of that and other findings Flaux J. was able to conclude as follows in paragraph 82 of his judgment:

“As I have already indicated, the judgment encompasses findings both as regards the risks associated with the Note and that, even on the most pessimistic advice Camerata was entitled to receive about Lehman Brothers and market conditions, Mr Ventouris would not have sold the Note. If he would not have sold the Note in 2008, it seems to me the position is an a fortiori one in 2007. Market conditions were more favourable then and the problems which Lehman Brothers would face in 2008 were not foreseeable. Any suggestion that Mr Ventouris would not have invested in the Note if given the warnings in 2007 which he said he should have been given in 2008 (but which the learned judge found would not have led him to sell in 2008) is unsustainable.”

It is to be noted that the finding by Andrew Smith J. that Mr. Ventouris would not have sold the Lehman note in 2008 was one of the two reasons why Andrew Smith J. rejected Camerata’s claim (see the conclusion at paragraph 243) and so gives rise to an estoppel.

Mr. Beltrami has submitted that “there is no principled basis to distinguish between the claim which has been advanced and those which are sought to be advanced” and that “no part of the proposed pleading suggests that there is any special feature about the terms of the three remaining Notes which distinguishes its mis-selling claims from that on the Lehman Note.” Similarly, in his “Final Note”, Mr. Beltrami submitted that the claims on the three other notes draw no distinction between different degrees of risk and that the unsuitability complaint in relation to all the notes is in the same terms, namely, that that they were all “medium risk”.

Mr. Hancock has submitted that “the relevant issue on the case as pleaded in relation to each of the Notes is whether the level of risk in relation to these particular Notes was relatively greater than the risk Camerata was prepared to run, and therefore whether, had Camerata appreciated the true level of risk, Camerata would have invested in the Notes. This will involve a precise analysis of the level of risk Camerata had appetite for, against the level of risk in fact represented by each Note. This is a crucial point not previously investigated. …………The case will not turn simply on a broad and general assessment of Camerata’s attitude and knowledge as an investor, such as is found in the background sections of Andrew Smith J.’s judgment………”

I accept that the case on suitability, in the light of the issue estoppel flowing from the judgment of Flaux J., depends upon showing that the level of risk associated with the other three notes was greater than the level of risk which, on the findings of Andrew Smith J., Mr. Ventouris was prepared to accept. If it was then the notes were unsuitable. However, if there is no distinction between the level of risk associated with the Lehman note and the level of risk associated with the three other notes then, since the unsuitability claim on the Lehman Note had no prospect of success (essentially because the level of risk associated with it did not exceed the level of risk acceptable to Mr. Ventouris when he bought it), it must follow that the unsuitability claim on the three other notes also has no prospect of success (for the same reason).

Camerata’s pleading does not appear to draw any distinction between the level of risk associated with the Lehman Note and the other three notes. In paragraph 36.4 of the amended pleading it is pleaded that each of the three notes “carried at least a medium risk”. This was the same allegation as had been made in respect of the Lehman Note in the unamended pleading at paragraph 36. There is therefore a cogent argument that the unsuitability claim in respect of the three further notes has no realistic prospect of success.

However, there was also an allegation (until the recent amendment) that Credit Suisse made remarks to the effect that the Multi-Index Note was less conservative, that is, more risky, than the Lehman Note (see paragraph 21(a) of the unamended pleading) and there still is an allegation that Credit Suisse advised that the Bank Note was less safe, that is, more risky, than the Lehman and Multi-Index Notes (see paragraph 33 of the amended pleading). It is therefore to be expected that evidence will be given at trial that Credit Suisse itself considered that the other three notes were more risky than the Lehman Note. If Credit Suisse in fact expressed such a view and was right to do so then it is possible that the risk on the other three notes might have exceeded the risk that Mr. Ventouris was prepared to accept. If so then it would not necessarily follow from the dismissal of the unsuitability claim on the Lehman Note that the unsuitability claim on the other three notes must also be dismissed. Evidence that the risk on the other three notes exceeded the risk on the Lehman Note would not be inconsistent with the pleaded case which is that each note carried “at least a medium risk”, not merely “a medium risk”.

Mr. Beltrami accepted that it was Camerata’s case that the Lehman Note was “the most conservative note” but submitted that it was therefore “plain” that Camerata could not run the same case on unsuitability in respect of the other three notes. I did not understand why that conclusion was “plain”. It seems to me that the case on suitability depends upon showing that the level of risk associated with the other three notes was greater than the level of risk on the Lehman Note which, on the findings of Andrew Smith J. and as explained by Flaux J., Mr. Ventouris was prepared to accept. If the level of risk was greater then the notes were unsuitable. The fact that Flaux J. found that “any suggestion that Mr Ventouris would not have invested in the [Lehman] Note if given the warnings in 2007 which he said he should have been given in 2008 (but which the learned judge found would not have led him to sell in 2008) is unsustainable” does not mean, in my judgment, that any suggestion that Mr. Ventouris would not have invested in the other three notes if he had been informed of their degree of risk is also unsustainable. On the contrary, if the risk on the other three notes was greater than on the Lehman Note, it is possible that it exceeded that which was acceptable to Mr. Ventouris with the result that the notes were unsuitable.

Mr. Beltrami’s submission that it was plain that Camerata could not run the same case on unsuitability in respect of the other three notes may have been based upon an argument that Mr. Ventouris could not complain that the other three notes were unsuitable if he had been advised by Credit Suisse that they were less safe than the Lehman Note and had nevertheless purchased them. However, I accept Mr. Hancock’s submission that it does not follow from the fact that Mr. Ventouris was advised that they were more risky that he appreciated the actual degree of risk entailed in those notes.

Mr. Hancock stressed that the claim before Andrew Smith J. was not in relation to the three other notes. He submitted, in particular and with emphasis, that the claim in respect of the other three notes “will involve a precise analysis of the level of risk Camerata had appetite for, against the level of risk in fact represented by each Note. This is a crucial point not previously investigated.” I accept that the level of risk represented by each of the three other notes, as opposed to the level of risk represented by the Lehman Note, has not been previously investigated. Whether the level of risk represented by the three other notes exceeds the level of risk acceptable to Mr. Ventouris remains to be decided. That question is not necessarily determined by the fate of the claim on the Lehman Note because it is the case of Camerata (as accepted by Credit Suisse, though not perhaps expressly or clearly pleaded by Camerata) that the risk on the three other notes was greater than the risk on the Lehman Note.

I recognise that Camerata’s claim in respect of the three other notes may be said to be unlikely to succeed. It is now four to five years since the notes were purchased. Despite that passage of time and the thought which has been given to advancing this claim no case has been pleaded which identifies why the degree of risk on the three other notes was materially greater than the degree of risk on the Lehman Note and which would therefore explain why they were not suitable for Camerata upon the assumption that Mr. Ventouris’ attitude to risk was as found by Andrew Smith J. This suggests that the claim is unlikely to succeed. But a defendant is not entitled to summary judgment merely because a claim is unlikely to succeed.

Having considered the opposing arguments I have concluded that the unsuitability claim on the three other notes has a realistic, albeit unlikely, prospect of success. It is not merely an arguable case but one which carries some degree of conviction because it is accepted that the case of Camerata is that the risk on the three other notes was greater than the risk on the Lehman Note and that such case is based upon Credit Suisse’s own views.

For these reasons I have concluded that I must dismiss Credit Suisse’s application for summary judgment on the unsuitability claim.

Mr. Beltrami submitted, first, that the alleged mis-statements were fraught with problems and had no viability. However, these are matters which must be determined at trial. He submitted, second, that the claim cannot survive the judgments of Andrew Smith J. and Flaux J. and must fail for the same reason that the unsuitability claim must fail. But that submission cannot survive my decision with regard to the unsuitability claim. I must therefore dismiss the application for summary judgment on the negligent mis-statement claim.

The complaint of Camerata is that authority was only given for the purchase of a US$5m. note. This is supported by the statement of Mr. Ventouris. In fact a US$8m. note was purchased. Credit Suisse says that this claim is so weak that it stands no realistic prospect of success. This is based upon the fact that Credit Suisse sent confirmation of the transaction in the sum of US$8m (dated 30 August 2007) and regular portfolio statements which specified the US$8m. investment. In addition coupon interest was paid on the investment by Credit Suisse from 8 September 2008 and loan interest was charged on the amount of the loan. The complaint that only US$5m. was authorised was first raised in August 2010 in Mr. Ventouris’ witness statement.

A realistic claim is one which carries some degree of conviction. In my judgment, where the confirmation of the transaction in the sum of US$8m. was sent in August 2007 and where coupon interest was paid on that sum from September 2008 but no complaint of a lack of authority was made until August 2010 it is very strongly arguable that such complaint does not carry any degree of conviction and that such complaint is fanciful. However, I was referred to Andrew Smith J.’s findings in paragraphs 70 and 74 that Dr. Lustenberger (the director of Camerata) did not read the monthly valuation statements and that Mr. Ventouris did not see the confirmation of the Lehman note in August 2007 or the monthly valuation statements. Whilst I was not referred to any evidence that Dr. Lustenberger and Mr. Ventouris did not see the confirmation of the Multi-Index Note or the portfolio statements the fact that the corresponding documents were not seen in relation to the Lehman note gives rise to the realistic possibility that such documents were not seen in relation to the Multi-Index note. It is true that Credit Suisse also relies on the payment of coupon interest to Camerata and the charging of loan interest by Camerata (and it is also to be noted that Mr. Ventouris was found to have taken an “active interest” in what he earned on fiduciary deposits, see paragraph 120 of Andrew Smith J.’s judgment) but given the striking findings by Andrew Smith J. as to the confirmation note and valuation statements not being seen it is possible, if unlikely, that Dr. Lustenberger and Mr. Ventouris did not appreciate the value of the note on which coupon interest was paid or the amount of the loan on which interest was charged.

Whilst I am very doubtful that the claim based on lack of authority will succeed I do not feel able to say, in the light of Andrew Smith J.’s findings, that it has no realistic prospect of success.

I have therefore decided not to give summary judgment in respect of this claim also.

In paragraph 36.6 of the Amended Particulars of Claim it is alleged that Credit Suisse was negligent in the management of Camerata’s portfolio in that (i) there was insufficient diversification, (ii) the use of leveraging heightened risk and increased the probability of significant capital loss and (iii) each of the investments was medium risk or higher and accordingly the portfolio was not a low risk portfolio.

Credit Suisse says that there is not and never has been an allegation of a duty to perform portfolio management services, that there is no evidence that Mr. Ventouris looked to Credit Suisse for diversification advice and that the allegations as to leverage are inconsistent with Mr. Ventouris’ own evidence which was accepted by Andrew Smith J.

It is true that the section of the pleading setting out Credit Suisse’s duties (paragraphs 17-25) does not expressly mention a duty to manage Camerata’s investments but the duty in fact alleged is arguably wide enough to incorporate such a duty and paragraphs 36 and 36.6 of the pleadings indicate that such a duty is intended to be alleged.

I was referred to Mr. Ventouris’ evidence and to paragraphs 22 and 123 of Andrew Smith J.’s judgment which refer to the matters discussed between Mr. Ventouris and Credit Suisse. It is said that the suggested claim “does not survive an encounter with Camerata’s own evidence.” I accept that there is no suggestion there that Mr. Ventouris looked to Credit Suisse for advice as to the balance of investments in his portfolio. But I am not persuaded that his evidence or Andrew Smith J.’s judgment are necessarily inconsistent with the suggested duty. Whilst the absence from his first statement of any reference to advice as to the balance of his investments may give grounds to cross-examine him if he asserts in a second statement that such advice was sought I do not consider that that makes it appropriate to say on this application that the suggested case has no realistic prospect of success.

I was also referred to paragraph 121 of Andrew Smith J.’s judgment which was said to be inconsistent with the complaint as to leverage. The complaint is that leverage “heightened the risk of the overall portfolio and increased the probability of significant capital loss”. Andrew Smith J. was not persuaded that the use of leverage made the investments more risky because he accepted Mr. Ventouris’ evidence that he could have financed the notes himself but used leverage because he did not want to use his other assets. Andrew Smith J. concluded that the risk involved depended upon the amount of the investment rather than upon how it was financed.

I agree that in the light of Andrew Smith J.’s finding, based on Mr. Ventouris’ own evidence, that Mr. Ventouris himself chose to use leverage rather than his own assets it is difficult to see how Mr. Ventouris can complain that he used leverage. But the finding was in relation to Mr. Ventouris’ attitude to risk. It was not made in the context of a complaint of mismanagement of the portfolio. Accordingly, whilst the complaint faces real difficulty I am not persuaded that it has no realistic prospect of success.

I have therefore decided not to give summary judgment in respect of this claim.

For the reasons I have endeavoured to express I have concluded that Credit Suisse’s application for summary judgment must be dismissed. The claims of Camerata may be unlikely to succeed but I am not persuaded that they have no realistic prospect of success.