Jinxin Inc v Aser Media PTE Limited & Ors.

In this action, the Claimant (“Jinxin”) makes a claim in deceit, and a related claim for unlawful means conspiracy, against the First, Second, Fifth, Sixth, Ninth and Tenth Defendants (“the Tort Defendants”) arising in respect of alleged misrepresentations fraudulently made which are said to have induced Jinxin to enter into a share purchase agreement dated 8th March 2016 (the “SPA”).

In September 2022, I heard a three-day case management conference. A number of applications were heard and disposed of during the CMC. There was however one application which was heard and on which I reserved judgment. That was the application made by the Second Defendant (“MPS LLC”) to strike out the claim made by Jinxin against MPS LLC; there is an alternative application for summary judgment dismissing the claim. This judgment is concerned with these applications.

Jinxin is a joint venture owned by two Chinese enterprises, Baofeng and Everbright.

Jinxin entered into the SPA for the acquisition of 65% of the shares in MPS, the holding company of the MPS Group, from the First to Eighth Defendants for the price of US$661,375,034. The sale was completed on 24th May 2016.

MPS LLC is a company incorporated in Florida, the majority of shares in which are owned by Mr Carlo Pozzali.

MPS LLC had acted as a company selling media rights in the Americas including rights in relation to Serie A, the premier Italian football league. From 2012, this function was taken over by MP & Silva Miami LLC (“MPS Miami”), following which MPS LLC acted only as a holding company. MPS LLC was a minority shareholder, as to 35%, in MPS Miami. The majority stake of 65% was held by MPS London.

MPS Miami represented the interests of the MPS Group in the Americas, where it acquired rights for various sports in the region such as basketball, soccer and tennis, and was involved in the onward sale of rights for Serie A. Neither MPS LLC nor MPS Miami were involved in the acquisition of Serie A rights or FIFA rights (at least it is not alleged that they were: paragraph 84(c) of the Re-Amended Particulars of Claim).

Under the SPA, MPS LLC was the vendor of 4,875 shares in MPS. However, MPS LLC became a shareholder in MPS only after the SPA had been executed pursuant to the “Reorganisation Plan” defined in the SPA and prior to its completion (paragraph 9 of the witness statement dated 29th July 2022 of Mr Richard Clayman of Kingsley Napley LLP, MPS LLC’s solicitors). This was evident from two group structures exhibited to Mr Clayman’s witness statement, the first being as at October 2015 and the second being the “New group structure (before closing of equity investment)”. There was a note at the bottom of the October 2015 group structure that “Carlo Pozzali will exchange its 35% ownership in [MPS Miami] for a 7.5% stake in MP and Silva Holding SA (Luxembourg) (see next page for envisaged group structure before closing of the equity stake investment in [MPS])”.

Prior to completion of the SPA, 7,500 class B shares in MPS were transferred to MPS LLC in exchange for its 35% interest in MPS Miami, which was transferred to MPS. Of the shares it received, MPS LLC sold 4,875 shares to Jinxin, with MPS LLC retaining 2,625 class B shares in MPS.

Therefore, as submitted by Ms Ruth den Besten, who appeared with Mr Nicholas Goodfellow on behalf of MPS LLC, MPS LLC’s involvement in the share sale to Jinxin was as a prospective vendor of shares acquired after exchange and by way of a share swap. This was accepted by Mr Adrian Beltrami KC (who appeared with Ms Anne Jeavons and Mr Nathaniel Bird on behalf of Jinxin) but Mr Beltrami KC added that MPS LLC received some US$49 million in exchange for its sale of 65% of its shares in MPS.

After the acquisition, MPS Miami was voluntarily dissolved and wound up following a resolution of its shareholders on 30th August 2017.

Following Jinxin’s acquisition of the MPS Group, the financial condition of the MPS Group deteriorated and the MPS Group eventually became insolvent.

Jinxin claims in deceit, contending that the Tort Defendants were guilty of fraudulent misrepresentations made to Jinxin which induced it to enter into the SPA. The alleged misrepresentations are said to have been made in writing, and were made expressly or by implication by the contents of certain “Sale Documents” (also described as “Vendor documents”) prepared by professional advisors in connection with and prior to the conclusion of the SPA. It is not alleged that any oral representations were made.

The Tort Defendants defend the claim by contending that the MPS Group’s financial condition was the result of mismanagement by Jinxin.

The alleged representations have been broadly summarised in the agreed List of Issues as follows:

Jinxin alleges that these representations were false in that these broadcasting and media rights were obtained by, and the MPS Group relied for their continuation and retention upon, bribes and other secret financial accommodations given to relevant decision-

Jinxin further alleges that the Tort Defendants had acted fraudulently in that they were aware that the representations were false, and intended the recipients of the Sale Documents, including Baofeng and Everbright, and Jinxin to rely on them and Jinxin did rely on those representations in that it would not have concluded the SPA but for the alleged representations. Jinxin seeks the rescission of the SPA or damages.

Jinxin also brings a claim against the Tort Defendants on the basis that the Tort Defendants conspired to injure Jinxin by unlawful means through the making of the alleged representations. The claim in conspiracy is therefore closely allied to the claim in deceit.

The Tort Defendants, including MPS LLC, defend the claims in full.

According to paragraphs 12-16 of the second witness statement dated 19th August 2022 of Mr Julian Copeman of Herbert Smith Freehills LLP, Jinxin’s solicitors, and I did not understand this to be in dispute, Mr Carlo Pozzali - who owns the majority of shares in MPS LLC - and Mr Riccardo Silva (the Ninth Defendant) and Mr Andrea Radrizzani (the Tenth Defendant) were the co-founders of the MPS Group. Mr Copeman also stated that Mr Pozzali formed part of MPS Management and was involved in the business and its development and that Mr Pozzali was “closely involved in the business of the MPS Group as a whole” (paragraph 16).

However, Mr Pozzali is not a named defendant to the action instituted by Jinxin and is not included amongst the Tort Defendants. I understand that Jinxin had named Mr Pozzali as a defendant on the claim form and initially pleaded its claim in deceit against Mr Pozzali personally, but Jinxin chose not to serve the proceedings on Mr Pozzali, and has now, following MPS LLC’s request by email on 6th July 2022 and by consent, removed him as a defendant to these proceedings.

This is a striking feature of the case in that the person who is alleged to have the guilty knowledge in respect of the allegations of deceit and conspiracy on behalf of MPS LLC is Mr Pozzali, and yet no claim is made against Mr Pozzali personally, even though such claims are made personally against the other two co-founders, the Ninth and Tenth Defendants. That said, I do not know the reason for the decision not to proceed with the suit against Mr Pozzali, although Ms den Besten invited me to infer that “it was because there was no faith ultimately in the claim being properly made against Mr Pozzali”. However, I do not consider that is a necessarily sure inference in circumstances where Jinxin is pursuing a claim against MPS LLC based on the alleged fraudulent knowledge of Mr Pozzali.

In its Re-Amended Particulars of Claim, Jinxin pleads that:

MPS LLC denies the claim and the allegations made against it. It is specifically denied by MPS LLC that the critical element of a claim in fraudulent misrepresentation, namely that MPS LLC made the alleged representations knowing the same to be false or otherwise recklessly, is or can be established.

MPS LLC’s application is for an order:

CPR rule 3.4 provides that:

“The court may strike out a statement of case if it appears to the court –

(a)

that the statement of case discloses no reasonable grounds for bringing or defending the claim;

(b)

that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings; or

(c)

that there has been a failure to comply with a rule, practice direction or court order.”

In Arcelormittal USA LLC v Ruia [2022] EWHC 1378 (Comm), Picken, J summarised the position in respect of a strike-out application at para. 29 as follows:

“As to strike-out applications, under CPR 3.4(2)(a), the Court may strike out a statement of case if it appears that it discloses no reasonable grounds for bringing the claim. When considering an application to strike out, the facts pleaded must be assumed to be true and evidence regarding the claims advanced in the statement of case is inadmissible (King at [27]; and Allsop v Banner Jones Limited [2021] EWCA Civ 7 at [7]); consideration of the application will be “confined to the coherence and validity of the claim as pleaded” (Josiya v British American Tobacco plc [2021] EWHC 1743 (QB)).”

However, I am conscious that, in the present case, the application is not only based on there being no reasonable grounds for bringing the claim, but also on an alleged failure to comply with a rule or practice direction in failing to particularise an adequate basis for alleging fraud.

Thus, CPR PD16, para 8.2 requires that a “claimant must specifically set out the following matters in his particulars of claim where he wishes to rely on them in support of his claim: (1) any allegation of fraud … (3) details of any misrepresentation … (5) notice or knowledge of a fact …”.

Similarly, the Commercial Court Guide at para. C1.3(c) provides that “(i) Full and specific details should be given of any allegation of fraud, dishonesty, malice or illegality; and (ii) where an inference of fraud or dishonesty is alleged, the facts on the basis of which the inference is alleged must be fully set out”.

These rules exist because an allegation of guilty knowledge - meaning knowledge that the representations intended to be relied on by the representor were untrue or that the representor was recklessly indifferent to its untruth - is a critical criterion of a claim in deceit. Of course, it is not the proof of guilty or fraudulent knowledge which is relevant in considering an application for a strike-out of a plea of fraud, but the question solely is whether the plea is properly made and particularised.

In Portland Stone Firms Limited v Barclays Bank plc [2018] EWHC 2341 (QB), at para. 31, Stuart-Smith, J said having regard to the CPR Part 16 Practice Direction and the Queen’s Bench Guide that:

“Where statements of case do not comply with these basic principles, the Court may require the Claimant to achieve compliance by striking out the offending

document and requiring service of a compliant one: see Tchenquiz v Grant Thornton [2015] EWHC 405(Comm) and Brown v AB [2018] EWHC 623 (QB). It has always been within the power of the Court to strike out either all or part of a pleading on the basis that it is vague, irrelevant, embarrassing or vexatious.”

In the present case, there is plainly a plea of deceit (fraudulent misrepresentation) against MPS LLC and Mr Pozzali, but no particulars of fraudulent knowledge against MPS LLC are pleaded other than by way of inference (see paragraphs 84 and 107 of the Re-Amended Particulars of Claim), except possibly in one instance (paragraph 111(a) of the Re-Amended Particulars of Claim).

In Three Rivers District Council v Governor and Company of the Bank of England [2001] UKHL 16; [2003] 2 AC 1, Lord Millett discussed the role of pleading particulars in connection with an inference of fraud and said at para. 184-189:

“184.

It is well established that fraud or dishonesty … must be distinctly alleged and as distinctly proved; that it must be sufficiently particularised; and that it is not sufficiently particularised if the facts pleaded are consistent with innocence

… This means that a plaintiff who alleges dishonesty must plead the facts, matters and circumstances relied on to show that the defendant was dishonest and not merely negligent, and that facts, matters and circumstances which are consistent with negligence do not do so.

185.

It is important to appreciate that there are two principles in play. The first is a matter of pleading. The function of pleadings is to give the party opposite sufficient notice of the case which is being made against him. If the pleader means “dishonestly” or “fraudulently”, it may not be enough to say “wilfully” or “recklessly”. Such language is equivocal …

186.

The second principle, which is quite distinct, is that an allegation of fraud or dishonesty must be sufficiently particularised, and that particulars of facts which are consistent with honesty are not sufficient. This is only partly a matter of pleading. It is also a matter of substance. As I have said, the defendant is entitled to know the case he has to meet. But since dishonesty is usually a matter of inference from primary facts, this involves knowing not only that he is alleged to have acted dishonestly, but also the primary facts which will be relied upon at trial to justify the inference. At trial the court will not normally allow proof of primary facts which have not been pleaded, and will not do so in a case of fraud. It is not open to the court to infer dishonesty from facts which have not been pleaded, or from facts which have been pleaded but are consistent with honesty. There must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must be both pleaded and proved …

189.

It is not, therefore, correct to say that if there is no specific allegation of dishonesty it is not open to the court to make a finding of dishonesty if the facts pleaded are consistent with honesty. If the particulars of dishonesty are insufficient, the defect cannot be cured by an unequivocal allegation of dishonesty. Such an allegation is effectively an unparticularised allegation of fraud …”

At para. 55, Lord Hope said:

“… As the Earl of Halsbury LC said in Bullivant v Attorney General for Victoria [1901] AC 196, 202, where it is intended that there be an allegation that a fraud has been committed, you must allege it and you must prove it. We are concerned at this stage with what must be alleged. A party is not entitled to a finding of fraud if the pleader does not allege fraud directly and the facts on which he relies are equivocal. So too with dishonesty. If there is no specific allegation of dishonesty, it is not open to the court to make a finding to that effect if the facts pleaded are consistent with conduct which is not dishonest such as negligence. As Millett LJ said in Armitage v Nurse [1998] Ch 241, 256g, it is not necessary to use the word “fraud” or “dishonesty” if the facts which make the conduct fraudulent are pleaded. But this will not do if language used is equivocal: Belmont Finance Corpn Ltd v Williams Furniture Ltd [1979] Ch 250, 268 per Buckley LJ. In that case it was unclear from the pleadings whether dishonesty was being alleged. As the facts referred to might have inferred dishonesty but were consistent with innocence, it was not to be presumed that the defendant had been dishonest. Of course, the allegation of fraud, dishonesty or bad faith must be supported by particulars. The other party is entitled to notice of the particulars on which the allegation is based. If they are not capable of supporting the allegation, the allegation itself may be struck out. But it is not a proper ground for striking out the allegation that the particulars may be found, after trial, to amount not to fraud, dishonesty or bad faith but to negligence.”

It might have been thought from reading Lord Millett’s judgment that the pleading of primary facts which are consistent with honest or non-fraudulent conduct is not sufficient for the purposes of a plea of fraud to be inferred from those primary facts. However, para. 189 of Lord Millett’s judgment indicates that a plea of fraud can be justified by way of an inference based on primary facts, which taken together demonstrate that fraud may be inferred, even if the primary facts are consistent with honesty as well as dishonesty. That said, if the primary facts which are pleaded taken together are consistent only with honest or non-fraudulent conduct, the plea may not be justified; but if an inference of fraud may be drawn from the primary facts pleaded, the plea should not be regarded as demurrable.

In JSC Bank of Moscow v Kekhman [2015] EWHC 3073 (Comm), Flaux, J explained Lord Millett’s judgment at para. 20:

“I agree with Mr Gourgey QC that this overstates what is required for a valid plea of fraud. The claimant does not have to plead primary facts which are only consistent with dishonesty. The correct test is whether or not, on the basis of the primary facts pleaded, an inference of dishonesty is more likely than one of innocence or negligence. As Lord Millett put it, there must be some fact “which tilts the balance and justifies an inference of dishonesty”. At the interlocutory stage, when the court is considering whether the plea of fraud is a proper one or whether to strike it out, the court is not concerned with whether the evidence at trial will or will not establish fraud but only with whether facts are pleaded which would justify the plea of fraud. If the plea is justified, then the case must go forward to trial and assessment of whether the evidence justifies the inference is

a matter for the trial judge. This is made absolutely clear in the passage from Lord Hope’s speech at [55]-[56] which I quoted above.”

This would suggest that, in order to justify a plea of fraud, the inference of dishonesty or fraud must be more likely than not having regard to the primary facts pleaded (see also Raja v McMillan [2020] EWHC 951 (Ch), para. 21-22).

That all said, there remains some flexibility in allowing an element of freedom to a claimant alleging fraud to plead its case with the evidence and information then available, given that there might be concerns that the evidence against the defendant will not be readily available, at least possibly until disclosure and the exchange of evidence.

Thus, in Portland Stone Firms Limited v Barclays Bank plc [2018] EWHC 2341 (QB), Stuart-Smith, J said at para. 27-29:

“27.

One of the features of claims involving fraud or deceit is the prospect that the Defendant will, if the underlying allegation is true, have tried to shroud his conduct in secrecy. This has routinely been addressed in cases involving allegations that a defendant has engaged in anti-competitive arrangements. In such cases, the Court adopts what is called a generous approach to pleadings. The approach was summarised by Flaux J in Bord Na Mona Horticultural Ltd & Anr v British Polythene Industries Plc [2012] EWHC 3346 (Comm) at [29] ff. Flaux J set out the principles in play as described by Sales J in Nokia Corporation v AU Optronics Corporation [2012] EWHC 731 (Ch) at [62]-[67], which included the existence of a tension between (a) the impulse to ensure that claims are fully and clearly pleaded, and (b) the impulse to ensure that justice is done and a claimant is not prevented by overly strict and demanding rules of pleading from introducing a claim which may prove to be properly made out at trial but may be shut out by the law of limitation if the claimant is to be forced to wait until he has full particulars before launching a claim. Sales J indicated that this tension was to be resolved by “allowing a measure of generosity in favour of a claimant.”

…

28.

These are salutary warnings and necessary protections for the Claimants, which I bear in mind. It is, however, to be remembered that the Court’s concern in these passages was in large measure based upon a lack of knowledge on the part of the Claimant before disclosure had been given. In the present case, the Defendants have given disclosure based upon wide-ranging search terms relating to multiple custodians. Although the Claimants submit that the Defendants’ disclosure is not complete, they have not identified any specific omissions or areas of default that would justify the Court in treating the Claimants as if they were still materially excluded from access to relevant disclosure for present purposes.

29.

In any event, if a case alleging fraud or deceit (or other intention) rests upon the drawing of inferences about a Defendant’s state of mind from other facts, those other facts must be clearly pleaded and must be such as could support the finding for which the Claimant contends. This is clear from numerous authorities: see Three Rivers District Council v The Governor and Company of Barclays of

England (No 3) [2003] 2 AC 1 at [55] per Lord Hope and [186] per Lord Millett. I endorse and adopt the statement of Flaux J in JSC Bank of Moscow v Kekhman [2015] EWHC 3073 (Comm) at [20] …”

Based on these decisions, the determination of an application for striking out a plea of fraud must take into account the following considerations:

These considerations apply equally to a claim for unlawful means conspiracy where the unlawful means are the alleged fraudulent misrepresentations (Grant and Mumford (ed.), Civil Fraud - Law, Practice and Procedure, (1st ed., 2018), para. 2-138).

CPR rule 24.2 provides that:

“The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if –

it considers that –

The approach the Court should take in considering an application for summary judgment is clear and was well summarised by Picken, J in Arcelormittal USA LLC v Ruia [2022] EWHC 1378 (Comm), at para. 25-28:

“25.

Accordingly, under CPR 24.2, the Court may give summary judgment against a claimant on the whole or part of a claim or on a particular issue if it considers that the claimant has no real prospect of succeeding on the claim or issue, and there is no other compelling reason why the case or issue should be disposed of at trial.

26.

The principles in relation to a defendant’s summary judgment application were set out in Easyair Ltd v Opal Telecom Limited [2009] EWHC 339 (Ch) at [15]. Those principles have been recited in many subsequent cases, including perhaps most recently by me in JJH Holdings Ltd v Microsoft [2022] EWHC 929 (Comm) at [11]:

“(i)

the Court must consider whether the claimant has a ‘realistic’ (as opposed to a ‘fanciful’) prospect of success; (ii) a 'realistic' claim is one that carries some degree of conviction, which means a claim that is more than merely arguable; (iii) in reaching its conclusion the Court must not conduct a 'mini-trial', albeit this does not mean that the Court must take at face value and without analysis everything that a claimant says in statements before the court; and (iv) the Court may have regard not only to the evidence before it, but also the evidence that can reasonably be expected to be available at trial. Furthermore, where a summary judgment application turns on a point of law and the Court has, to the extent necessary, before it ‘all the evidence necessary for the proper determination of the question,’ it ‘should grasp the nettle and decide it’ since the ends of justice are not served by allowing a case that is bad in law to proceed to trial.”

27.

As to (iv), the Court will “be cautious” in concluding, on the evidence, that there is no real prospect of success; it will bear in mind the potential for other evidence to be available at trial which is likely to bear on the issues and it will avoid conducting a mini-trial: King v Stiefel [2021] EWHC 1045 (Comm) at [21] (per Cockerill J).

28.

Furthermore, as Fraser J also recently put it in The Football Association Premier League Limited v PPLive Sports International Ltd [2022] EWHC 38 (Comm) at [25], on a summary judgment application the Court must “always be astute, and on its guard” to an applicant maintaining that particular issues are very straightforward and simple, and a respondent attempting to dress up a simple issue as very complicated and requiring a trial.”

With that approach in mind, I also note that if a claim in deceit is properly pleaded, it would be an unusual case for the Court to dismiss the claim by way of summary judgment, given the justification of any inference of fraudulent knowledge must be tested against the evidence, both documentary and oral evidence, at a trial.

Thus, in JD Wetherspoon plc v Harris [2013] EWHC 1088 (Ch); [2013] 1 WLR 3296, Sir Terence Etherton, C was concerned with an application for summary judgment after the exchange of witness statements and a trial to take place later that year, on the basis of a very substantial number of documents then available. The Chancellor said at para. 14:

“I do not consider that the summary judgment applications are, in principle, appropriate. They are based on a particular interpretation of facts which are in dispute and, not unusually in the case of allegations of fraud and dishonesty, on the inferences to be drawn from established facts. Mr Wardell accepted, and indeed asserted, that the alleged inferences which the claimant seeks to draw must be assessed in the light of all the documents. In the light of the substantial factual and documentary evidence in the present case and the matters which are in dispute, this is, to my mind, precisely the type of mini-trial of disputed facts on the documents for which the summary judgment procedure is inappropriate.”

That said, there may well be cases where, though the plea of fraud is properly particularised, it is clear that the allegation of fraud cannot be sustained in any circumstances so as to justify its dismissal summarily.

The essence of MPS LLC’s application to strike out or for summary judgment dismissing Jinxin’s claim against MPS LLC is that Jinxin’s case against MPS LLC relies on three matters in support of the inference of fraud:

Mr Beltrami KC on behalf of Jinxin pointed out that, having regard to paragraph 22 of Mr Clayman’s witness statement, MPS LLC is targeting its applications towards the plea as to MPS LLC’s knowledge of the falsity of the alleged representations and takes no issue - for the purposes of the strike-out and summary judgment applications - as to the making of the alleged representations, the alleged pervasiveness of the illegal and corrupt arrangements underpinning the Serie A and FIFA rights, the problems with the EBITDA figures presented to Jinxin, or the falsity of the alleged representations.

Mr Beltrami KC further submitted that, taking these three matters together, Jinxin has a sufficiently arguable case to go forward to trial that: (i) bribery and corruption pervaded (at least) the Serie A and FIFA assets, to such an extent that; (ii) it is a perfectly proper inference that those with knowledge of those assets must have been aware of it; and (iii) that Mr Pozzali’s position exposed him to such knowledge and awareness. Hence, it is argued, the allegation of dishonesty is properly advanced. Whether the evidence ultimately supports the inferred allegations of knowledge and dishonesty are matters for the trial judge.

I propose to address the applications having regard to the three matters on which Jinxin has based its pleading of fraudulent knowledge, as the parties’ submissions have focussed on these three matters, namely:

For this purpose, as the knowledge of MPS LLC is in issue, the individual whose knowledge is to be attributed to MPS LLC is that of Mr Pozzali. As mentioned above, I have been asked to assume such attribution can be made, although such attribution might be in issue if the matter were to progress to trial.

The pervasive nature of the illegal conduct / significance of the Serie A and FIFA rights

Jinxin pleads that the pervasive nature of the alleged illegal conduct in procuring the Serie A and FIFA rights as well as the significance of such rights to the MPS Group’s business were such that Mr Pozzali (and therefore MPS LLC) must have been aware of it. Accordingly, Jinxin relies on the pervasive nature of the alleged illegal conduct and the importance of these rights to the MPS Group’s business as a basis for inferring MPS LLC’s guilty knowledge.

Ms den Besten on behalf of MPS LLC submitted that:

Mr Beltrami KC on behalf of Jinxin submitted that:

In my view, the significance of the Serie A and FIFA rights to MPS’s business is a relevant background consideration, but of itself it cannot justify an inference of fraudulent knowledge. Plainly, MPS LLC would have understood the importance of

Mr Pozzali’s role

Jinxin pleads that Mr Pozzali’s role, as a shareholder in MPS and a person in senior management in the MPS Group, was such that he “must have been aware of” the allegedly unlawful conduct.

Ms den Besten on behalf of MPS LLC submitted that:

Mr Beltrami KC on behalf of Jinxin submitted that:

Paragraph 12(c) of Jinxin’s Re-Amended Particulars of Claim pleads that

“The business and operations of the MPS Group were managed principally by the individual tort Defendants and CP, namely by:

…

c.

CP as a founding member of the Group, as (through MPS LLC) a shareholder in MPS and as a director of MPS Miami. The same MPS Management Presentation said that CP “oversees group sales, acquisition and development strategy across the Americas, covering the USA, Canada, Latin America and the Caribbean”

This involves a general plea that Mr Pozzali was involved in the management of the business and operations of the MPS Group, but then this general plea is explained and narrowed by the plea of three specific roles on the part of Mr Pozzali, namely as a

In my judgment, none of these roles, without more, necessarily or probably afforded Mr Pozzali the means of acquiring actual knowledge of the alleged illegal conduct which led to the acquisition of the Serie A and FIFA rights. Given that such conduct would have been “opaque and secretive”, there is no reason why these roles would have made Mr Pozzali aware of such conduct in that:

The reference in paragraph 107 of the Re-Amended Particulars of Claim that Mr Pozzali had a “broad managerial role” merely cross-refers to paragraph 12(c) and adds nothing to what is pleaded in paragraph 107.

Jinxin also refers to other matters which are not pleaded. I do not consider that it is legitimate to consider such evidence in disposing of an application to strike out a statement of case, given the Court’s power to strike out is concerned with the adequacy of the statement of case and not with extraneous material unless referred to in the statements of case. Such evidence might well be material, however, to the application for summary judgment.

The additional material - the UBS presentation and the Allen & Overy LLP Vendor Due Diligence Report - indicates that Mr Pozzali was “part of the Board of Directors of the Group”. However, these documents do not identify any precise role which would have provided Mr Pozzali with the means of acquiring knowledge of the circumstances in which the Serie A and FIFA rights were acquired.

Jinxin also relies on the MPS Luxembourg Board Resolution dated 9th September 2014 which identified Mr Pozzali as a director of the MPS Group and that they “shall be kept at all times duly informed by the top management as to the main aspects and developments of the negotiations of each investment and shall give their availability to regularly receive information and discuss such issues”. There is no suggestion that the “top management” informed Mr Pozzali of the illegal conduct involved in acquiring the Serie A and FIFA rights.

Accordingly, even if it were legitimate for me to consider these unpleaded matters in disposing of the application for strike-out, I do not consider that they justify an inference of fraud. Indeed, as I think Mr Beltrami KC acknowledged, there was no evidence as to the status and responsibility of this “Board of Directors”; Mr Beltrami KC speculated it was “some form of overarching executive body” (and noted that there

However, there is yet another platform of Jinxin’s case based on an inference of fraud, namely the pleaded emails, to which I now turn.

The emails

Jinxin has pleaded reference to a number of emails in support of its case that MPS LLC had the requisite fraudulent knowledge, although it is accepted by Jinxin that none of these emails expressly demonstrate actual fraudulent knowledge.

Ms den Besten on behalf of MPS LLC submitted that:

Mr Beltrami KC on behalf of Jinxin submitted that:

I shall deal with each of these emails in turn.

The email dated 8th September 2014 reveals only that there was a concern about rumours of a possible merger between MPS and Infront Italy and its “closeness” between them because of such a mooted merger. Jinxin submitted that this email indicates that Mr Pozzali had an involvement or interest in the rights-in side of the MPS Group’s business, was kept informed of such matters, and had knowledge of the Serie A business. There is no allegation in paragraph 12(c) or any other part of the Re- Amended Particulars of Claim that Mr Pozzali had any involvement in the acquisition of the Serie A rights. The only pleaded involvement of Mr Pozzali in the business was that he was (a) one of the founders, although there is no explanation in the statement of case, how this translated into Mr Pozzali’s involvement (if any) in the acquisition of the Serie A rights, (b) he was a shareholder of MPS LLC who in turn was a shareholder in MPS, but the acquisition of this shareholding occurred only after the execution of the SPA in March 2016 (after the date of the email), and (c) he was a director of MPS Miami, but this company was involved only in the sale of Serie A rights in the Americas, not in their acquisition.

The email chain dated 30th-31st January 2016 sent by Mr Marinelli of UBS stated MPS’s belief in its ability to retain Serie A rights, but that provides no indication why Mr Pozzali might be aware of the circumstances in which the Serie A rights were acquired. If this email chain were indicative of wrongful conduct by Mr Pozzali, it should similarly reveal such wrongful conduct on the part of Mr Marinelli, but there is no allegation of such misconduct. The reference to the Milan investigation which is the subject of the Investigation Representations adds nothing to Mr Pozzali’s alleged involvement in the alleged illegal conduct in the acquisition of the Serie A rights; this is especially so as Mr Pozzali is not implicated in the Investigation Representations in the Re-Amended Particulars of Claim.

The email dated 22nd January 2016 refers only to Mr Marinelli providing an update on different bidders, in which a bidder (S) was noted to have made an indicative bid offer but with “3 major DD topics (Sirona agreements, Milan channel, entity holding Serie A rights)” which “have been discussed during a call yesterday”. At paragraph 99 of the Re-Amended Particulars of Claim, it is alleged by Jinxin that the Sirona Agreement was a means of transferring covert, corrupt and unlawful payments to and for the benefit of two individuals (Mr Dinos Deris and Mr Jérôme Valcke) and in order to enable MPS to secure sales rights to the FIFA World Cups. Although this email demonstrates an awareness on the part of Mr Pozzali of the Sirona agreement, it does not reveal or even hint at any knowledge on the part of Mr Pozzali of any wrongful conduct in the acquisition of such rights.

The email chain following the email dated 1st February 2016 from Mr Cappelletti to Mr Auletta which indicates that the EBITDA Representations were then thought to be untrue in that there was a reduced EBITDA of US$53,000,000, contrary to the business plan estimated an EBITDA for 2015-16 of approximately US$81,000,000. Mr Pozzali’s reaction was one of surprise or shock, and indicates an awareness that the EBITDA Representations were untrue or might have been untrue. I consider that this email represents evidence of Mr Pozzali’s direct knowledge of the truth value of the EBITDA Representations. Accordingly, in my judgment, there is a justified plea of fraud against MPS LLC in connection with the EBITDA Representations. The question then arises whether the claim based on the EBITDA Representations against MPS LLC should be

Having considered each of the bases of Jinxin’s pleas of fraud against MPS LLC separately, I will now draw together my conclusions on the assessment of the entirety of allegations of fraud made by Jinxin against MPS LLC.

Jinxin has pleaded a case of fraud against MPS LLC. There are two distinct allegations.

The first allegation concerns the Business Practices Representations and the Serie A Representations. Jinxin’s pleaded case is that MPS LLC, via Mr Pozzali, was aware that these alleged representations were untrue. Jinxin pleads at paragraphs 84, 85 and 107 of the Re-Amended Particulars of Claim that such knowledge is to be inferred based on (a) the significance of the Serie A and FIFA rights to MPS’s business and the pervasive nature of the alleged illegal conduct engaged in to acquire such rights, (b) Mr Pozzali’s role as a co-founder of the MPS Group, a shareholder of MPS through MPS LLC and a director of MPS Miami, and (c) the emails/email chains dated 8th September 2014, 22nd January 2016 and 30th-31st January 2016.

The role of Mr Pozzali, albeit described as a “broad managerial role”, was alleged to extend to the sale of the Serie A rights in the Americas. There is no express allegation in the Re-Amended Particulars of Claim that Mr Pozzali was involved in the acquisition of the Serie A and FIFA rights (see also paragraph 10(a)(4) of Mr Clayman’s second witness statement dated 2nd September 2022). No doubt Mr Pozzali was aware of the importance of these rights to MPS’s business, but this really does not advance the allegation of fraud against MPS LLC. There is no indication as to how Mr Pozzali’s role as a co-founder of the MPS Group demonstrated his knowledge of the falsity of the alleged representations. Further, MPS LLC’s shareholding in MPS was arranged only after the execution of the SPA. None of this suggests why Mr Pozzali and MPS LLC should have been aware of the alleged illegal conduct which resulted in the acquisition of the Serie A and FIFA rights by reason of his role within the MPS Group; there are no particular circumstances in addition to these roles occupied by Mr Pozzali which would elevate Mr Pozzali’s knowledge so as to justify a plea of fraud (ED&F Man Sugar Ltd v T&L Sugars Ltd [2016] EWHC 272 (Comm), para. 35; Arcelormittal USA LLC v Ruia [2020] EWHC 3349 (Comm), para 29-31; Arcelormittal USA LLC v Ruia [2022] EWHC 1378 (Comm), para. 59). Although the illegal conduct as alleged was pleaded to be pervasive, that does not mean that Mr Pozzali was privy to the knowledge of the illegal conduct especially as Mr Pozzali’s alleged role was alleged to relate to the sale of the rights in the Americas (as represented by his pleaded directorship of MPS Miami). Therefore, the pervasive nature of the alleged illegal conduct and Mr Pozzali’s pleaded role in the MPS Group of themselves do not justify the inference that Mr Pozzali, and MPS LLC, knew the circumstances in which the rights were acquired.

Further, the emails relied on by Jinxin do not on their own, or when read in connection with the alleged pervasive nature of the illegal conduct and Mr Pozzali’s pleaded role

Although Jinxin sought in argument to associate Mr Pozzali with the acquisition of such rights by reason of a supposed supervisory role within the MPS Group generally, the particulars relied on by Jinxin in the Re-Amended Particulars of Claim do not justify that inference. To this end, Jinxin relied on the UBS presentation, the Allen & Overy LLP Vendor Due Diligence Report and the MPS Luxembourg Board Resolution dated 9th September 2014 to bolster the inference of fraud. However, none of these documents justify such an inference. In any event, as these documents or their contents are not pleaded as part of the particulars of Jinxin’s case of fraud against MPS LLC, they cannot be relied upon by the Court in assessing the adequacy of the plea of fraud.

Therefore, I am not satisfied that an inference of fraud in respect of the first allegation (i.e. the pleas in paragraphs 84, 85, 107, 125 and 126 of the Re-Amended Particulars of Claim) can be justified by the above-mentioned primary facts pleaded by Jinxin, not least because they are likely to be more consistent with Mr Pozzali’s honesty, rather than with any fraudulent conduct. This is so when one takes into account each of the considerations referred to above alone or collectively.

In reaching this conclusion, I have also considered whether some indulgence should be extended to Jinxin in allowing its plea of fraud in circumstances where there might be further evidence becoming available during the course of the proceedings which justifies such a plea (there is a dispute on the evidence as to whether this was in effect a legitimate concern). However, in my judgment, any flexibility in this regard cannot overcome the inadequacy of the particulars of fraud pleaded in this case. The position might have been different had the balance not been tilted away from the plea of fraud, but had been evenly poised. In the present case, the balance is tilted against a case of fraud.

The second allegation made against MPS LLC relates to the EBITDA Representations and falls into a different category from the first allegation. The relevant particulars relied upon in support of MPS LLC, via Mr Pozzali, being aware of the falsity of the alleged representation is the email dated 1st February 2016. In that email, the EBITDA Representations were suggested, at least on one reading, to have been untrue, and Mr Pozzali was not only a party to the email, but also commented on the information about the reduced EBITDA of US$53,000,000 being at odds with the estimated EBITDA of US$81,000,000 (paragraphs 110-111 of the Re-Amended Particulars of Claim). In my judgment, this is plainly sufficient as a basis for the plea of fraud against MPS LLC.

This consideration also indicates that Jinxin has a real prospect of succeeding in its claim in respect of the EBITDA Representations. Ms den Besten sought to explain Mr Pozzali’s comments based on the figures being only a “worst case” scenario and his innocence of any allegation of fraud. That is a matter which may be upheld at trial, but it is not sufficient to permit the striking out of the plea or granting summary judgment dismissing the claim at this stage.

For the reasons explained above,

I am grateful to the parties’ counsel for their very helpful submissions and shall hear them as to the appropriate orders to be made.