Rechtsanwalt Dr Michael Jaffé & Anor v Greybull Capital LLP & Ors

There is some disagreement about the backdrop to the key meeting on 17 October 2016. The Claimants say that Wirecard had learnt of speculation about Monarch’s financial stability and in September 2016 took up Monarch’s offer of a face-to-face meeting in Munich. The Defendants accept a certain amount of this: that it was convened for the purpose of setting out Monarch’s business strategy “and financials” with a view to “encouraging Wirecard to put forward proposals…”.

The Defendants however see the meeting rather as part of Monarch taking steps to come off Project Drake now that Monarch was recapitalised and its immediate future seemed secure. This version paints it simply as one of numerous meetings with different card acquirers to discuss future terms of business.

On this again the answer has elements of both sides’ case. It was one of a series of meetings organised to seek competitive deals with a range of acquirers on the basis that now that there was a firmer financial footing Monarch could look to work with other acquirers who might offer better terms (and presumably drive Wirecard and Worldpay to be more generous in their terms). Preparation for the meeting was therefore conducted on the basis of preparing for a range of meetings, including those with companies who knew little of Monarch. But because Wirecard were not just any card acquirer this was a meeting that must have been key: as was acknowledged by Mr Bennett in his evidence “it’s important coming off Drake that we want them involved”.

The meeting had been fixed to take place in Munich on Monday 17 October 2016. There were apparently telephone calls as well as emails in the run up to the meeting.

On 11 October an exchange between Mr Hilz and Mr Bennett shows the meeting at that point shaping as a review of the position post Drake, and starting to look at potential new terms. The plan appeared to be to look at this over the next couple of months with the main issues for Wirecard being unsecured risk and processing volume for Wirecard. At this point there was no mention of any Greybull attendee. Mr Wexeler indicated that Monarch should be left in no doubt that the meeting would need to convey that “the reserve would have to be increased as a result”.

On 12 October 2016, Monarch sent a copy of the press release to Mr Hilz, which Mr Hilz forwarded to Wirecard’s directors and others identifying the “two most important points” as being 165 million GBP investment by Greybull Capital and Extension of the ATOL licence by 12 months.

Dr Käppner replied with comments, including saying that “For the meeting, I am particularly interested in the form and structure of the investment (the figures are different than what has been stated before). Are there any loan components or collateral here? The impacts on the business plan for the coming year. The planned securing of the unflown tickets. Specific forecasts for ticket sales. The identity of the other acquirers. Our current share of volume (there were covenants on this point in the contracts of 2014).”

Mr Bennett wrote to Mr Hilz “We had $10m (£8m) injected into the company on Monday this week as part of this overall funding package and we are receiving today a further $122m (£106m) into our accounts. The balance of the overall package will arrive in Jan 2017. We will give you more detail when we see you on Monday.”

Mr Bennett later confirmed (via sending a screenshot) that Monarch had received £122 million and asked, “Does this give you the comfort you need to resume passing us our funds?” Mr Hilz later confirmed processing would start again. Mr Ley congratulated him and noted “Liquidity issue resolved at Monarch”.

Shortly after this an Agenda was circulated by Wirecard for the meeting on 17 October. The first item on the agenda was:

“Facts around new Capital Placement

•

Gross Amount

•

Tranches paid and to be expected

•

Debt to Equity Conversion

•

Pattern of Finance of the Investment (Loan Components? Collaterals?) Current and future Shareholder Structure”

Other items on the agenda were 2017 Business Plan, post Drake ticket sales forecast, “Acquirer Structure 2017: Who will get on Board?” and “Wirecard’s Percentage of Monarch’s Processing Volume (Current/Plan 2017)”.

Mr Meyohas had not originally planned to attend and there was an issue as to how and why he came to be there and on whose behalf (solely on behalf of Monarch Holdings or also on behalf of Greybull). The answer to the question of how and when is that on 13 October he decided to come, as an email of that afternoon revealed. It was accepted for the Claimants that this was a realistic conclusion.

Later that day, Mr Swaffield told Dr Käppner that “Marc Meyohas, principal of our majority shareholder Greybull Capital and Chairman of the Monarch Holdings Board would like to come with us on Monday.” Dr Käppner forwarded Mr Swaffield’s email to Mr Ley, Mr Hilz and others (and Mr Hilz forwarded it to Mr von Knoop describing Mr Meyohas as attending in both capacities). On 14 October Mr Hilz wrote to Ms Petra Gommel listing those from Monarch due to attend the meeting including “Marc Meyohas (Chairman of the Board at Monarch Holding and Director at Greybull)”.

This leads to the question of on whose behalf Mr Meyohas attended. This can be cleared out of the way at this point, though by the end of trial it did not seem to be much in issue: he attended for both. It was quite apparent that Mr Meyohas wore two hats in this regard.

From late on 13 October serious preparation for card acquirer meetings began on both sides.

Having been asked by Mr Ley to draw up a proposal for doing business with Wirecard, Mr Hilz wrote to Dr Käppner saying:

“At this point in time, this is not very easy, because we will not have the decisive informational transparency regarding the business plan, cash planning, and a potential shareholder commitment until the meeting. What we could do is assume the best case so that we can advocate for an increase in the risk tranche and take up the consideration from a year ago to offer a part of the saved ATOL fee as a risk premium for us. It could look like this: …”

Mr Hilz sent Mr Ley a proposal for Monarch collateralisation in 2018, suggesting a £22m blank risk maximum. A range of other emails were exchanged on the Wirecard side, focussed on the figures, dealing with (for example) volume and collateral. It appears from these documents - and Mr Ley accepted in his evidence - that without additional collateral and/or an increase in the unsecured tranche, Wirecard would only be able to process a fraction of the current volume after it came off Project Drake.

On 14 October Mr Bikar sent a summary regarding Monarch’s position for the Wirecard Supervisory Board, referring to the anticipated meeting “in which we will thoroughly discuss the entire situation of the company again as well as the future conditions of our cooperation with Monarch”. Mr Wexeler adapted Mr Bikar’s email above and sent it to the Supervisory Board, adding that “The Executive Board…is of the opinion that the airline now has sufficient financial resources in order to maintain flight operations for at least one year”.

On 14 October Mr Ley was asking “What do they, including the shareholders, want from us on Monday given that the liquidity bottleneck has been resolved?” Dr Käppner responded explaining the lack of ATOL security and the increased exposure, adding: “we face the challenge of setting up a collateral model that is acceptable to all. There is also the difficult situation in Brexit times, with potentially rising oil prices and increased competition.”

The briefing note for the Wirecard Supervisory Board assumed the financial injection was from Greybull and posited Wirecard’s priorities for the meeting thus:

“Monarch Airlines receives a financial injection of a total of GBP 165 million from its shareholder Greybull Capital….we will thoroughly discuss the entire situation of the company again as well as the future conditions of our cooperation with Monarch Airlines. Important in this context is the type and amount of the collateralisation of the booked, but not yet flown, tickets starting on 01/01/2017…”

At the same time Monarch was preparing from its side. It appears that a meeting was held at Greybull’s offices on 13 October at which strategy as regards card acquirers (both Wirecard and others with lesser knowledge of the Monarch business), including a script and presentation, was discussed. It was following this that Mr Meyohas indicated that he would come virtually to some meetings, and live to Wirecard.

Mr Hancock circulated a key actions list covering presentations which were in draft referring to “Draft presentation to be used with CAs”. It deals also with “Process Overview” (who would be met, when, progress reports) and a script for the card acquirer meetings.

On 14 October the generic script discussed at Greybull/Monarch came through from Mr Hancock, being circulated to Mr Meyohas and Mr Swaffield amongst others. It said this:

“See below a slightly different script for use with key partners (e.g. card acquirers, lessors and hedge providers etc)

1.

Monarch has significantly strengthened its balance sheet and liquidity position by announcing its biggest investment in its near 50 year history. This investment will enable Monarch to continue its successful transformation and in particular its transition to its new fleet of up to 45 737-Max 8s due for delivery from 2018 onwards.

2.

Our shareholder has provided an equity investment of £118m and committed a further £45m in Q1 2017. The additional £45m in Q1 2017 is NOT required for working capital purposes and is being provided to strengthen the balance sheet and liquidity of the group. [This additional liquidity will facilitate the planned transition from Drake to standard card acquirer arrangements].

3.

Despite confusing press reports, Boeing have not provided equity or loans to Monarch.

4.

[If pushed for more clarity] Boeing have provided backstop financing in the unlikely event the S&LB market was not available as and when required. This was a requirement with the regulator as they wanted to be satisfied Monarch could finance the transition to a new fleet.

Can you ensure this consistent messaging is reflected in the communications being drafted for the card acquirers.”

None of the recipients made any substantive comments on this script, though Mr Swaffield plainly read and approved it: “Good….”. Like the Press Release the script was not full and frank, but told half the truth. It was slightly more forthcoming in terms of leaving open a disclosure of Boeing being involved in backstop financing; but it was not candid about the restructuring of the deal and the origins of the £165 million. Again however, as with the Press Release and Q&A, while it was wide open to misconstruction, it was not inaccurate. Boeing had not injected capital; nor had it financed or (directly) funded the Investment.

The communications being drafted plainly included a PowerPoint presentation (“the Presentation”). As to the content of this, what was available for me to see was a 35 page document called “Management Presentation: October 2016: Confidential”. Whether the exact version available in court was the one used for the Wirecard meeting was contentious and is addressed below.

The document was plainly an introduction from the start, designed to suit those with minimal knowledge of Monarch – thus explaining brand, markets and so forth. It explained the turnaround strategy from 2014 and financial performance before moving to how the evolution to an all-Boeing fleet would impact positively on earnings and cash. It indicated as part of this that “cost of transition is being supported by Boeing”. It outlined aspirational EBITDA growth and markets. It gave considerable detail on its engineering capabilities. In the final section entitled “Financial Overview” it set out a P&L Overview back to 2015 and at page 29 of the document, a Cash Flow Overview back to 2015. A footnote to the seventeenth of 25 lines in this spreadsheet “Shareholder Capital Infusion” was “Footnote 27”. This stated:

“Shareholders will secure this funding by monetising off balance sheet assets”

The meeting in Munich (“Meeting”) was attended by Mr Swaffield and Mr Bennett, who represented Monarch, and by Mr Meyohas. From Wirecard’s side, the meeting was attended by Mr Ley, Mr Hilz, Dr Käppner, Mr Bikar, Jörg Möller and two others.

The Meeting was conducted in English. This is obviously a point of some potential significance, given that the Claimants’ witnesses chose to give their witness statements in German and to give evidence before me fully through translators (i.e. not, as is quite often done, with the translators in reserve in case of need). That potential significance was taken relatively lightly by the Defendants, given the obvious facility which all the individuals who gave evidence had in comprehending and speaking English. Dr Käppner says “I cannot recall having any difficulty understanding what was being said in English or encountering any language barriers. I could follow and comprehend all of what was said.” Nonetheless the point as to first language must be borne in mind.

Dr Käppner says that, at the Meeting, Mr Meyohas made three representations, the essence of which is that the monies used for the recent recapitalisation of Monarch derived from Greybull and the “Greybull Investors”, and not from Boeing. The Claimants contend that he:

The Claimants say that the ultimate source of the monies invested into Monarch was so important that, if the representations had not been made and Wirecard had not believed that the funds invested into Monarch came from Greybull and the “Greybull Investors”, Wirecard would not have offered new terms at all.

Each side’s witness evidence broadly supported their case. At the same time there was a realistic acceptance that recollections were either absent or unreliable, and that “refreshment” from relevant sources was required.

Dealing first with the first part of the alleged representations (equity and the family pool):

For the Defendants the evidence was that what was said will indeed have referred to an equity injection, but they took issue with the contention that it was said to have come from Greybull or “family”. Mr Meyohas was emphatic that he “would have stuck to our agreed positioning on the matter, namely that the funds received by Monarch came by way of an equity injection from PJL”. He says he would not have said the money came from Greybull because, “I would have been acutely conscious of the different roles played by Greybull on the one hand and PJL on the other”.

Mr Swaffield says that he can “confidently state no suggestion made at any point by Mr Meyohas during the meeting that the reported £165 million of additional capital had been invested by Greybull or by the family investment pool” because he is “extremely careful at all times in meetings to ensure that only accurate, truthful statements are made” and that “had this suggestion been made by Mr Meyohas, I would certainly have remembered and would have taken steps to interrupt him and correct it, there and then”. Mr Bennett’s evidence was narrower; he was confident that there was no mention of funds coming from Mr Meyohas’ family.

Turning to the second part, the explicit representation regarding Boeing, Mr Meyohas says that he does not recall Wirecard “showing any concerns about the source of funds for Monarch’s recent investment” and that, if it had, Wirecard would have had to enter a non-disclosure agreement with Petrol Jersey and Boeing, before details about the Boeing investment could be revealed. He says that he does not recall making the representations the Claimants allege. He says, “If I had been asked for more detail about the source of funds, I would have stuck to our agreed positioning on the matter…”.

Mr Swaffield says he can recall “no interest on Wirecard’s part as to the source of Monarch’s further funds and frankly I would have been surprised if this was of concern to them”.

Mr Bennett says he has “no recollection of anyone at Wirecard raising a question about the source of our new capital injection at the meeting” and “no recollection of Mr Meyohas suggesting that the source of the money into Monarch (by which I assume Wirecard mean the source of all the money into Monarch) was from his own family, as alleged by Wirecard”.

Then we have the documentary record: Mr Hilz’s Note. The next day, Mr Hilz circulated among colleagues a summary of the Meeting. He wrote a detailed one and a half page summary. Mr Hilz explained the genesis of the note. He had taken a written note at the meeting. After the meeting he had had a short discussion with Mr Bikar only. He had then commenced writing up his note, a process which he completed the next day shortly before sending the email.

A part of that summary are the following bullet points which give rise to the representations alleged:

“- “The capital contributed to Monarch by Greybull Capital and the tranche of capital still to be contributed in January have full equity character. It does not include any loan components, interest or dividend distributions, a repayment plan or the like”…

- Boeing did not contribute capital to Monarch or provide capital to Greybull Capital in any way. The capital placed by Greybull Capital is derived entirely from the assets of Greybull’s owners (‘Family Investment Pool’).”

The email also covered the question of long term investment vs sale possibilities, expected EBITDA, new fleet and possible future cashback, ceasing to issue tickets via ATOL, expected processing volume and intended numbers of card acquirers, cash flow forecast and Wirecard “to do’s”.

Another attendee, Mr Brinkmann, thanked him for his “very good summary”. Another, Mr Möller, thanked Mr Hilz and added a comment of his own. Dr Käppner responded with a “few additions”, though none related to the representations in issue. Rather they were details on existing loans, EBITDA and available volumes for acquirers. It is common ground that other than as regards the alleged Representations the note has few errors, and those that there are, are trivial.

On 20 October Mr Meyohas emailed Mr Swaffield suggesting that he remove from the script the bullet point “that B provided no equity or debt” because it was “defensive and will eventually raise as many questions as it tries to answer”. Mr Swaffield agreed but said, “for the meetings this week it was a helpful point”.

On 25 October, Wirecard’s management board discussed “…the positive development regarding Monarch Airlines and internally are discussing the maximum amount of any unsecured risk that is necessary for further negotiations with Monarch”.

Following the Meeting, there were a considerable number of further emails and calls, and a further meeting, between Monarch and Wirecard, in which detailed financial information was provided by Monarch and negotiations conducted. Mr Bennett provided Mr Hilz with further information regarding Monarch’s future financial position. Monarch was also pursuing opportunities with other merchant acquirers and banks.

There was a single “continuation” meeting on 14 November 2016 between Wirecard (Dr Käppner, Mr Hilz and Mr Bikar) and Monarch (Mr Bennett, Mr Stansfield and Mr Fillbrook of Bank Brokers). Mr Bikar’s summary of it suggests a focus on Monarch’s financials, in particular their Business Plan and the planned future distribution of their acquisition volume between acquirers. Mr Bikar pasted in tables of figures from Monarch’s presentation.

On 15 November Mr Hilz emailed Mr Ley and others at Wirecard attaching an excel spreadsheet setting out his analysis of Wirecard’s blank risk with Monarch in 2016, and in four different scenarios for 2017 with particular focus on what the uncovered risk would be, assuming that there was no drop in income for Wirecard.

There was then an internal meeting at Wirecard on 16 November 2016 to discuss Monarch. Mr Hilz and Mr Bikar summarised that, saying,

“Today’s meeting represented the continuation of our meeting on 17/10/2016, which primarily concerned the capital contribution by the share-holder Greybull Capital ...

There is agreement that the future opportunities/risk profile of Monarch is to be assessed as favourable in view of the capital contribution of the shareholder, the consideration of the present medium-term (6-year) financial and income plan, the liquidity development, and the strategy concept.”

At this meeting and subsequently it would appear that the figures from the presentation, in particular the table in which footnote 27 appears, were the subject of discussion; this can be seen from their appearance in a round-up email and a calendar appointment.

Mr Hilz was at this point suggesting a proposal focussing on the income balanced against the risk - particularly the uncovered risk, assuming that there was no drop in income for Wirecard. Consequently, on 21 and 22 November 2016, Mr Hilz circulated draft proposals to others at Wirecard (including members of its Management Board) containing the core terms for the continuation of their relationship outside Project Drake, including £43m blank risk and 25% collateral.

The Management Board meetings then took place, as noted in an email of 22 November: “awaiting the final board approval at any moment”. Mr Ley was one of the members of the management board. There is evidence that the other members (Messrs Wexeler and von Knoop) were both copied into Mr Hilz’s note dated 18 October 2016 (as amended) as well as his over-view document dated 16 November 2016.

At 9.18am on 23 November 2016 Mr Hilz sent Monarch an offer to provide acquiring services in 2017. The core terms of the offer were for a minimum of 28% of Monarch’s gross aggregate Visa and Mastercard annual transaction volume with 25% cash collateral and unsecured risk limited to £43m plus a buffer of £15m on further terms.

There was on the documents an issue as to what was discussed during a call between Mr Stansfield and Mr Lingard of Monarch and Mr Hilz on 28 November. In the event this formed no real part of the arguments before me.

On 5 December 2016, Monarch put those core terms into a draft side letter. Following the circulation of drafts, the offer was put into legal effect through Side Letter 7, entered on 16 December 2016. As compared to the Project Drake terms, Side Letter 7 increased Wirecard’s contractual net unsecured exposure to unflown revenue from the previous maximum of £12m to a maximum of £43m (plus the buffer). However, its overall level of contractual net exposure remained below that under Side Letters 3 and 4. Clause 6.9 incorporated a mechanism for imposing collateral of 100% on Monarch, should the free cash position in any given month fall below 50% based on the figures provided by Monarch as to what their projected monthly Free Cash Schedule was. This reflected a concern evinced by Wirecard throughout the discussions.

Despite the sense in late 2016 that the injection of funds would set the company fair for the future, the underlying issues, exacerbated by Brexit, did not go away. In addition a rising oil price placed stress on the financials. By early September with the ATOL licensing window looming the CAA was making its concerns clear.

On 19 September 2017 Mr Hilz sent an email to colleagues at Wirecard (including Mr Ley) referring to difficulties Monarch was facing and said, “During their recent visit a few weeks ago, Monarch emphasised the long-term commitment of the shareholder and its capital contribution as ‘family money’, which is not comparable to the ‘intentions’ of a pure investment fund.”

Monarch tried to explore other routes to improve matters including via Boeing or a DTI loan, but met with no success.

Monarch and Monarch Holdings went into insolvent administration on 2 October 2017 and the former ceased to operate as a commercial airliner. The administrators reported that there would be no distribution to unsecured creditors.

On 8 October 2017, the Financial Times published an article under the headline “Boeing helped finance bailout of Monarch Airlines” saying that, “Although Andrew Swaffield, Monarch’s chief executive, said at the time that Monarch had funded a £165m bailout through an equity investment, much of the money came from Boeing, delivered through a complex release of equity embedded in the value of orders placed by Monarch for 30 new Boeing 737 MAX planes”. Three days later, the newspaper published a further article on that theme.

Mr Hilz sent an email to colleagues, including Dr Käppner and Mr Bikar, attaching an article from the aero.de website, which had picked up on the Financial Times reporting. The last sentence of that article read, “The Monarch case sheds a rare spotlight on the shadows behind the scenes of large aircraft deals, because the industry had previously assumed that Greybull Capital alone had carried out the cash injection in 2016…” Mr Hilz wrote that that last sentence was “interesting” as “Greybull always promised us that the money invested in Monarch was ‘family money’ and that a third party was not involved”.

By an agreement dated 6 April 2020, Wirecard assigned/confirmed the assignment of its interest in various claims to Technologies and the latter subsequently paid the former about €11.2m. There was a dispute as to whether that assignment encompassed this claim and whether the €11.2m should be deducted from Wirecard’s losses, but that had resolved by the time of trial.

Technologies went into insolvent administration in August 2020. Its insolvency administrator and Wirecard issued the claim in late December 2020, and served it in early January 2021. Wirecard waived its banking licence in December 2021 and went into liquidation in July 2022.

Meanwhile, Wirecard’s ultimate parent company, Wirecard AG, went into insolvency in 2020 with reports of it missing millions of Euros as a result of an alleged fraud. One of the vehicles of the alleged fraud was the Senjo group of companies, including Senjo Payments Europe S.A.. For present purposes no more need be said about this than that some of the senior executives of Wirecard, including Mr Ley, have been the subject of investigations. Some limited questioning of Mr Ley was done by reference to material relating to Wirecard’s financial troubles with a view to demonstrating a disregard for due diligence. Given the view which I formed of the material ignoring this distinct topic, I did not find it of assistance.

The claim was issued on 29 December 2020. The principal limitation period for filing a claim under German law expired on 31 December 2020. On 12 January 2021, letters serving the claim form were sent to Greybull and Mr Meyohas at Greybull’s registered office and were deemed served on 14 January.

The Particulars of Claim were filed and served on 28 January 2021. The Dfiled acknowledgements of service on 10 February. The by agreement Part 18 Responses were served in June 2021, with the Defence being filed at the end of July. The Reply follows at the end of November 2021.

The CCMC was held on 4 July 2022, and during the course of 2023 amended pleadings were served.

Nearly eight years had passed since the Meeting by the time this dispute came to trial. Against that background there is an obvious point as to the reliability of recollection – and as I have indicated the witnesses realistically accepted that their “unrefreshed” memories were either non-existent or unreliable. The parties are agreed that recollections can be fallible and that the court must have regard in particular to contemporaneous documentation, the parties’ motives and the inherent probabilities.

I was of course reminded by the Defendants that in a fraud case a claimant bears a heightened burden of proof in the sense that cogent evidence is required to overcome the inherent unlikelihood of what is alleged: see e.g. Rix LJ in The Kriti Palm at [259].

Reference was equally predictably made to the now classical passage in Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm), [2020] 1 CLC 428, at [22]:

“… the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”

The Claimants prayed in aid the following passage from Simetra Global Assets Ltd v Ikon Finance Ltd [2019] EWCA Civ 1413 [2019] 4 WLR 112 at [48]:

“In this regard I would say something about the importance of contemporary documents as a means of getting at the truth, not only of what was going on, but also as to the motivation and state of mind of those concerned. That applies to documents passing between the parties, but with even greater force to a party’s internal documents including e-mails and instant messaging. Those tend to be the documents where a witness’s guard is down and their true thoughts are plain to see. Indeed, it has become a commonplace of judgments in commercial cases where there is often extensive disclosure to emphasise the importance of the contemporary documents. Although this cannot be regarded as a rule of law, those documents are generally regarded as far more reliable than the oral evidence of witnesses, still less their demeanour while giving evidence….”

Reliance was also placed on Avonwick Holdings Ltd v Azitio Holdings Ltd [2020] EWHC 1844 (Comm) at [102] – [103], where the judge noted that a further reason to “attach particular weight to the documentary evidence” is where the factual evidence is given by persons not in their first language or through an interpreter, which can lead to difficulties in making any assessment of demeanour and which can give rise to issues where a witness looks evasive because of miscommunications.

Finally I drew the parties’ attention to the important lecture given by Popplewell LJ to COMBAR last year: “Judging Truth from Memory”. The Popplewell Lecture updates and expands upon the matters considered by the then Leggatt J in Gestmin. It deals with the value of recollection, the nature of the fact-finding exercise in commercial litigation, the science of memory and the problems which result from faulty encoding of memories.

Passages of particular interest (either to myself or the parties) include the following:

“10 ...determining what happened is not the only task. Commercial litigation often involves an inquiry into a witness’ state of mind. That state of mind may be an essential ingredient of the cause of action, as for example where claims are framed in constructive trust. But more generally, it matters what the witness knew, or believed, or was thinking or intended at a particular point in the narrative of events because that casts light on the events themselves. Fact-finding is concerned not only with what happened, but just as much with why it happened….

36.

…When we encode our memories we don’t photograph what is happening; we interpret what is happening, and that interpretation uses our schema. … So experience and expertise can make a big difference to what goes into our memory…. “We don’t see things as they are, but as we are"….

40.

The semantic memory can also corrupt a recollection by affecting it at the retrieval stage. Our beliefs, attitudes and approach, our worldview, our schema, changes over time. The recollection is affected by the schema at the time of retrieval, which may be different from that which applied at the time of the events in question…. As Leggatt J said in Gestmin “Memory is especially unreliable when it comes to recalling past beliefs. Our memories of past beliefs are revised to make them more consistent with our present beliefs.”…

52.

Further, encoding is often influenced by pride or wishful thinking. It is a common, although not universal, human tendency to want to portray our participation in events in a way which paints us in the best light. … it can also infect how witnesses pictures events to themselves when first encoding the memory…

55.

… contemporaneous documents… may be produced near the time, but they are produced after the memory has been encoded, and if there is an encoding fallibility, which there may be for all these different reasons, it infects the so called contemporaneous record every bit as much as other reasons for the fallibility of recollection which affect it at the storage and retrieval stage.

66.

One [other issue] is reconstruction from semantic memory. We assume that something happened because that is what we would expect to have happened. … our memories fill in gaps by reference to what we assume we would have done or would not have done. The witness will respond in cross-examination that they are sure that something did not occur because “I would never have done that”, or vice versa.

67.

The dangers here are several: things do not always happen as we expect them to, and may not have done so on this occasion. We are also applying our present semantic memory schema to our attitudes at a different time. A third is another common source of erroneous recollection, in my experience, which is, again, pride or wishful thinking. We like to suppose that we did or thought that which we now consider we ought to have done or thought.”

The resonances between this paper and the parties’ arguments were considerable.

The trial has been conducted over 12 hearing days (with 2 reading days) in an almost entirely co-operative and helpful spirit. There was excellent advocacy from junior counsel, who took entire responsibility for the German Law issues, both in cross examination and submissions. This enabled those issues to be very thoroughly thought through and particularly carefully and helpfully presented on both sides.

The Claimants called three witnesses of fact. The first was Dr Thomas Käppner, at the relevant time Head of Merchant Services at Wirecard. He attended the Meeting. Dr Käppner was a cautious, calm, somewhat defensive witness, but overall was doing his best to assist the Court.

Mr Burkhard Ley was called at the start of Week 2. Until the end of 2017, Mr Ley was CFO of Wirecard and sat on Wirecard’s Management Board; he was also CFO of Wirecard AG and sat on Wirecard AG’s Management Board. Mr Ley attended part of the Meeting.

The Claimants say that Mr Ley was the key decision-maker who relied upon the alleged Representations. He accepted that if he was not the sole person who made the decision that this case should be brought, he was integral to that decision. As such he was a key target of cross-examination – the more so because he remains under investigation by the Munich authorities in connection with the Wirecard fraud. There was some discussion/debate about the admittance of documents going to credit and as to the ambit of cross examination. I ruled that the documents be admitted, but that prior to the calling of Mr Ley the issue to which his credit was said to be relevant be stated clearly.

Mr Ley was a more dogmatic, confident witness once his concerns as to the ambit of questioning had been resolved by my directions, nodding his head emphatically to accompany his fluent answers. He tended also to make decisive hand gestures and to engage my eye fully when he was able to. Although, like the Claimants’ other witnesses, he chose to give evidence in German, his English was plainly very good – he slipped into it in relation to the mechanics of cross-examination.

He was the least satisfactory of the witnesses called. Even the Claimants conceded that he had a tendency not to listen carefully to the questions put. I found him very much focussed on his own vision and keen to give lengthy answers which did not answer the questions asked. Some of this appeared to be down to linguistic confusions (of the type alluded to in Avonwick) which ironically arose from a situation where Mr Ley was listening to both German and English versions of the question or where translations were slightly imperfect; but that was by no means always the case.

Often it was clear that he was simply determined to go where he would go and (as the Claimants again conceded) he did not focus on the questions as much as he should have done, giving the impression he preferred talking to listening. A simple example of his selective focus was his lack of clarity about whether or not he had been CFO of Wirecard Bank or only of Wirecard AG. His statement said he was CFO of Wirecard Bank; his opening salvo in cross-examination was to deny it. Whether or not he was, was immaterial. But it was revelatory that his first instinct was to blame the (non-existent) translator of his statement and that (one way or the other) he had not read all of his statement thoroughly.

Mr Martin Hilz was at the relevant time Team Lead of Merchant Boarding at Wirecard. Mr Hilz was one of the main points of contact between Wirecard and Monarch. He attended the Meeting, and as explained earlier, the following day emailed the key summary of it within Wirecard. He is said to have been instrumental in drawing up the proposals in November 2016 that culminated in SL7.

Mr Hilz was an excellent witness. He was a quietly spoken, thoughtful person who consistently gave the impression that he was trying to assist the court – and the mark of the extent to which this was the case was that not the slightest attempt was made by the Defendants to suggest otherwise. He was described by his opposite number, Mr Christopher Bennett, as being precise and “particularly careful and meticulous”, and that seemed very apt to describe him as a witness also. He listened carefully to questions and gave reflective, balanced answers. He was not shy of accepting appropriate assumptions. He was the antithesis of a partisan witness – notably in re-examination saying: “Let me try and word ... my answer in such a way that it can be acceptable to both parties.”. I have no hesitation in accepting the truthfulness of his evidence and his desire to help the Court, though I still have to evaluate its accuracy.

In respect of the Claimants’ witnesses two points fall to be made. Although the key meeting was one which was conducted in English and all of the witnesses either said in their statements, or made plain in their instinctive reaction to proceedings in Court, that they had very good command of the English language, all chose to give their oral evidence fully via interpreters. As the Avonwick case notes, it is inevitably less easy to assess such evidence. That is the more so where (as here) there is simultaneous translation - where the flow of questioning can sometimes mean that however good interpreters are translations are rushed and not fully accurate. This, as noted above, can lead to witnesses answering questions as translated which may not entirely capture the question asked, and may tend to make the witness seem evasive. I have borne these points in mind when assessing the evidence of these witnesses.

The Defendants called three witnesses of fact. The first was Mr Christopher Bennett, an accountant employed as Finance Director at Monarch from 2010, and Monarch group CFO from January 2016. He now has no link to Greybull. Mr Bennett attended the Meeting. Mr Bennett had worked quite closely with Mr Hilz, and there were some distinct similarities between them. He too was a quiet, thoughtful, precise witness. He gave evidence frankly and without any attempts at evasion of questions which might be thought uncomfortable. He consistently gave the impression that he was doing his best to assist the court. Like Mr Hilz I have no hesitation in accepting his evidence as honest and truthful. Because of their excellence as witnesses, it is between his recollection and that of Mr Hilz that the key clash of recollection occurs. Mr Bennett was very candid as to the limits of his positive recollection of details. He was however emphatic as to the key point: he was very sure that no untruths were told, for reasons which will be evaluated below.

Mr Marc Meyohas, the Fourth Defendant, was another of the Defendants important witnesses. He became a non-executive director of Monarch Holdings in 2015, and Chairman of the Board of Monarch Holdings in about August 2016. He is the person who is alleged to have made the Representations at the Meeting. Unsurprisingly therefore a robust challenge was made to Mr Meyohas’ credibility. Mr Morgan KC put to him a succession of points designed to show that he had on previous occasions been less than accurate or positively misleading in his business dealings with others, including in relation to his first meeting with Wirecard in 2014. This was followed up in closing by a submission that his evidence demonstrated that “he had little concern about engaging in conduct that a reasonable person would consider commercially unacceptable”.

In my assessment Mr Meyohas was plainly an intelligent, subtle, sophisticated man and resisted this binary characterisation. He was obviously sometimes exasperated by Mr Morgan’s attempt to force him into the straightjacket of “yes or no” answers to questions which he did not perceive as being properly answerable without a degree of shade or qualification. He manifested a degree of quiet amusement about a line of questioning as to inaccurate presentation of stories to the press or eluding press coverage by use of “dark arts”, plainly seeing this as a false analogy to the allegations in this case – a position with which I am in agreement. He was also plainly keen to anticipate questions he saw coming; consequently he sometimes answered the question which he saw coming three down the line, rather than the one asked. As such, he was not an entirely frank and open person and not an entirely satisfactory witness. But at the same time, he was generally courteous, extremely engaged and in my assessment overall honest in his approach to answering questions. I was persuaded that he was generally doing his best to assist the court. Having said that, my impression, in particular based on the approach to telling the CAA about Boeing was that he would be capable of telling a good lie in the context of his business dealings, if he felt one was really required. That impression was reinforced by the flavour of the 2014 exchange on Worldpay, though this was not an issue which was central and hence not fully explored.

The final factual witness was Mr Andrew Swaffield, MD of Monarch Airlines (from April 2014) and CEO of Monarch Holdings (from 26 June 2014). Like Mr Bennett, Mr Swaffield is not employed by or connected to Greybull. Mr Swaffield attended the Meeting and wrote a number of the emails which were most focussed upon in the course of evidence. Mr Swaffield’s evidence was perhaps the most capable of polarising views. The Claimants saw him as “partisan and unconvincing” while for the Defendants he was “compelling” – although at the same time there was a tacit acceptance that his approach was open to criticism. The impression he conveyed to me was that of a polite and earnest witness who was somewhat eager to avoid criticism. He often addressed me directly to explicitly convey his desire to assist the court or his regret if he had been mistaken or unclear. He occasionally struggled with holding focus on the question being asked, which could either be interpreted as evasiveness or as trying very hard to the point of asking for clarification of questions which struck him as ambiguous. Overall my impression was that he really did have an earnest desire to be clear, and that much of what was unfortunate in his evidence stemmed from over-anxiousness. This was reflective of the air of worry which was perceptible in some of his contemporaneous emails (see in particular the exchanges as to the Press release). I have concluded that he was generally doing his best throughout to provide his honest recollection and impressions, to the best of his ability.

Expert evidence was obtained in the disciplines of German Law and Forensic accountancy. Ultimately the expert issues at trial were very narrow and those of forensic accountancy were sensibly compromised without having to call the experts.

So far as German Law was concerned, there is no issue as to the expertise of either expert. The Claimants called Professor Elsing. He was careful, thoughtful and clear in expressing his views. It was suggested that he was speculating or overstating his case; while it is understandable that the point was put it rather appeared to me that he had a clear view on issues which were complicated or on which there was controversy and that he was endeavouring to assist the Court by providing his firm opinions on these topics.

The Defendants called Professor Grigoleit. He was equally careful, thoughtful and clear in his views, in which he maintained his disagreement with the views of Professor Elsing. What was clear from the examination of the experts (who were entirely respectful of each other) is that the main questions in issue are, to quote Professor Grigoleit, “just not covered clearly by the materials”.

In this case the misrepresentation case is really confined to two questions: making of the representations and reliance. That is because it was agreed that if the key representations were made, they were false and known to be so: indeed Mr Meyohas said that any statement that the funds originally came from the “family investment pool” would be “a grotesque lie”. On that basis there is an acceptance that the court would inevitably conclude that if the lie was told there was intention to mislead.

That however puts particular focus on the first question; it is necessary for the Claimants to establish that these representations were made. As I will consider further below, there are questions as to the clarity of what was said which feeds into the question of whether the alleged Representations were made. There is some law on clarity: namely that the representations need not have been made in the precise words alleged - but in order to succeed the Claimants must prove that a reasonable person would have understood the representations alleged to have been made: IFE Fund SA v Goldman Sachs International [2006] EWHC 2887 (Comm); [2007] 1 Lloyd’s Rep 264, at [50].

This issue was reflected in the way in which argument was ultimately focussed at trial. The majority of the Representations alleged derive from the following single bullet point in Mr Hilz’s note.

“Boeing did not contribute capital to Monarch or provide capital to Greybull Capital in any way. The capital placed by Greybull Capital is derived entirely from the assets of Greybull’s owners (“Family Investment Pool”).”

[Original German: “Boeing hat in keiner Weise Kapital in die Monarch eingebracht, oder Greybull Capital auf irgendeine Weise Kapital zur Verfügung gestellt. Das von Greybull Capital platzierte Kapital entstammt vollständig dem Vermögen der Greybull-Eigner (Family Investment Pool).”

The key aspects of the representations alleged are that that Mr Meyohas represented that the investment being made was:

There is also a further representation derived from the first bullet point that the investment was “equity” in nature (“full equity character” or “at risk shareholder capital”)). This was not really in issue at trial because there was plainly a sense in which that representation was true. The money which went directly into Monarch went in as equity as opposed to “loan components, interest or dividend distributions” (the dichotomy posed by bullet point 1 of Mr Hilz’s note).

Similarly the “From Greybull” aspect of the representations was not in primary focus as a distinct representation from the other two. As noted, it is clear that there was routine elision of Greybull and Petrol Jersey; and it was literally speaking true that the money which flowed into Monarch came from Greybull/Petrol Jersey. A representation as to Greybull “in the sense of no other party than Greybull or the Greybull Investors had financed or funded it” is not alleged to have been explicitly made, and the implicit sense is a reflection of the other two main alleged representations.

The core question was therefore really whether it was represented by Mr Meyohas that (i) the funds originated solely from Greybull’s investors (“Family Investment Pool”) and (ii) the funds did not originate from Boeing.

On whether these representations were made, at the heart of this question is the clash of recollections mentioned at the start of the judgment. That cannot simply be resolved on the basis of an assessment of the credibility of the witnesses. All agreed that their “unrefreshed” recollection was vestigial. And as I have made clear, there were very credible witnesses on both sides. I have no doubt the individual witnesses’ truths – in the sense of what they either do (now) recall or what they honestly think they recall - are simply different.

This presents a number of difficult issues around the science of memory. One of them was raised by the Claimants as to Mr Bennett’s transparently honest evidence that he was sure that if Mr Meyohas had lied in the meeting, he would have remembered feeling “really uncomfortable”. The Claimants’ submission on this (by reference to the Popplewell Lecture) is “that is not how memory works. Because he saw himself as a man of integrity, Mr Bennett was all the more unlikely to encode, store and retrieve a picture of himself sitting silently through a meeting at which Mr Meyohas had lied (even though there was nothing he could realistically be expected to have done).”

One way of resolving this would be to say that the documentary record, in the form of Mr Hilz's note, trumps other sources. That is what the Claimants urge – citing Gestmin and the fallibility of recollection. There is obviously a fairly powerful “classic Gestmin” case to be made as follows:

However that is an argument which, as I pointed out in closing, neglects to take into account the possibility (again highlighted by the Popplewell Lecture) of a faulty impression or recollection being encoded at a very early stage and recorded in that document.

Ultimately therefore the document can be taken as the basis for a compelling argument; but it itself must be tested against the facts in the full context. That context includes considering what was common to both parties in terms of knowledge, but also what (if anything) the parties were each focussing on which did not get communicated to the other side, which might affect both encoding and recording or which might affect how Mr Meyohas expressed himself.

A number of facets therefore need to be considered in order to cover the documents, the motives and the inherent probabilities. In particular:

This was not in issue between the parties and was not something on which any findings were sought by either party. However it was a fundamental building block for Monarch to re-approach Wirecard and other potential acquirers. While the detail of how it was reached is already set out above, it is worth recapping what it achieved in a “before and after” sense.

The starting point is not controversial. Prior to the Boeing deal Monarch was in all sorts of trouble, with the dual blow of Drake being ended and the ATOL Licence revoked. The CAA was adamant that it needed to see a very significant injunction of capital.

The deal as finally concluded was as follows:

The nature of the deal was therefore that Petrol Jersey would be the direct injector of over £160 million into Monarch. While only £10 million was in any real sense Petrol Jersey/Greybull money the money did not come into Monarch direct from Boeing – it went into Monarch from Petrol Jersey. Boeing took no equity in Monarch; for Boeing if the deal went well it was a zero sum game – they got back the same money without having to find a new buyer. And the net result for Monarch was that Monarch went from being strikingly undercapitalised to being fairly comfortably funded – just as the CAA required.

This covers quite a lot of ground: whether Wirecard’s representatives were interested in the fundamentals and/or whose money had been used to make the Investment and whether that money was family money or came from Boeing. It can be broken down into three points: attention to fundamentals, the value of “family” and interest in source of funds.

When it comes to interest in the fundamentals the evidence is clear and was not seriously in issue. Of course Wirecard was very interested in the financial position of Monarch. It monitored it and responded to it. And it took a fairly hard-nosed approach in dealing with it. It is fair to say that Wirecard adopted a commercial approach to the terms it offered Monarch even under Mantegazza family ownership because of the real risk of insolvency. Wirecard had generally obtained security / collateral from Monarch to mitigate between 85% - 90% of Wirecard’s blank risk. Mr Bennett did not feel that Wirecard was generous: his evidence was that the terms Wirecard offered to Monarch while under Mantegazza family ownership “were (to my mind) very onerous commercial terms.”

On the second point, the case as to the subjective importance to Wirecard of “family” was not in my judgment made out. The case advanced by Wirecard was in my judgment over-emphatic on the subject of the importance of family ownership and under-emphatic on the subject of the importance of the financial fundamentals. Wirecard did not include this feature in their risk manuals or risk assessments – so it was not a formal part of the assessment, as might be expected of a material point. No-one ever bottomed out what was meant by “family” in the Greybull context. On any analysis what Mr Meyohas said about family was vague. It appears that Mr Ley never enquired as to who the family members were, or what their resources were.

What I conclude that there was (for Mr Ley at least) a value to family ownership, that it was very much a limited one, given to a certain type of family ownership (like that of the Mantegazza family) is borne out by the passing reference to family ownership in the original onboarding document. It was a narrow, rather specific value. It appears to have been something in the mind of Mr Ley only and even there it was not a broad feeling about family per se. It was largely to do with deep pockets (re-emphasising the importance of fundamentals) and also about the kind of reputational factor which would not be applicable to all families. The Mantegazzas were well known to be behind Monarch; and to the Mantegazzas, reputation was important. Therefore they might (as they did) steady the ship more readily and for longer in a difficult market than purely commercial investors. It is also fair to say that Mr Ley’s evidence did suggest that the warmth to this particular family ownership was to some extent down to Mr Rawlinson, the Mantegazza’s CEO.

Thus I conclude that the Wirecard value for family ownership was there for Mantegazza ownership, might have been there for other similar ownership, but even where it did exist, that value was a peripheral thing, a small extra comfort factor.

I also conclude that whether or not the airline was “family owned” was not a material factor in Wirecard’s assessment of risk and its willingness to continue to do business with Monarch after the sale. There is no sign of it impacting the terms prior to the Meeting. The diligent Mr Hilz did not note it down in his analysis of risk. There is no evidence of Monarch being cut favourable breaks because of it. As the Defendants noted in closing, when Monarch was in desperate financial difficulty in August 2014, Wirecard refused to release €5.48 million that was due to it. In September of the same year Dr Käppner agreed that it was not a question of trust in Greybull or the Mantegazza family: “…at that point in time it wasn’t so much about trust, it was far more about getting the best negotiations and terms and ensuring the deal could be carried out without a grounding”.

Having said that, the evidence broadly supported the Claimants’ case as to their being to some extent interested in whether Greybull was prepared to put its hand in its pocket. That can be seen from the contemporaneous documents, at least around 7 October 2016.

Starting first with the broader picture I accept that Monarch anticipated that Wirecard would be interested in where the money had come from. That is consistent with the approach of the PR advisers. It is consistent with the fact that on 12 October 2016, Mr Bennett had promised that Wirecard would get “more detail” about the Investment at the Meeting.

I also accept that Greybull was aware that presenting the deal as one with a significant contribution from Greybull/Petrol Jersey was going to be well regarded by commentators and stakeholders alike.

But at the same time on the evidence I conclude that Greybull/Mr Meyohas had no reason to think that the precise source of funding was of significant interest to Wirecard as at the time of the Meeting. There had been no specific request in advance. It had not been tabled as an agenda item. Mr Swaffield gave unchallenged evidence that the Monarch team thought that all Wirecard was interested in was that this was unencumbered capital coming into Monarch. That is substantially echoed in Wirecard’s own internal correspondence in terms of what they were focussing on. It was not suggested to any of the Defendants’ witnesses that they knew that the source of the funds was important to Wirecard. Consistently with this, Mr Hilz could not recall having explained to Mr Meyohas or Monarch that it was or might be a matter of importance to Wirecard.

The chronological run suggests strongly that by the time of the Meeting Wirecard’s main focus had moved off concerns about Monarch’s viability; the injection of capital was enough for that. See for example Mr Ley’s “What do they, including the shareholders, want from us on Monday given that the liquidity bottleneck has been resolved?” Perhaps even more telling was the freeing up of funds as soon as the cash injection hit the Monarch accounts.

As noted above the exchanges show focus on the figures, dealing with (for example) volume and collateral – where to pitch the risk maxima. Dr Käppner was interested in the form and structure of the investment – but the factors he identified (seen in his email and in the agenda) were not the ultimate source of the funds but whether it included loan components or collateral. In other words, he wanted to know whether this was real solid injection of funds in the company, or fancy footwork on the figures. I conclude that the predominant interest of Wirecard going into the meeting was these financial factors. There was also an interest in whether control had moved from Greybull elsewhere. Mr Hilz was not challenged on his evidence that Wirecard wanted “to exclude the possibility that another entity (aside from Greybull) would have significant control of Monarch”. This ties in with “Current and future Shareholder Structure and Acquirer Structure 2017” items on the agenda.

It is also clear that there was a concern about losing the share it had had of the Monarch business, with Monarch looking to meet other potential acquirers: Dr Käppner specifically referenced the potential for covenants to secure this. While the Claimants relied in closing on Mr Meyohas evidence that “new terms would be needed to keep the relationship going” the timeline reflects that Monarch were not coming to the table as a suppliant; rather Wirecard was forced to contemplate the possibility of losing revenue to others as Monarch looked a more attractive business partner.

There is evidence of some interest in the precise source of the funds, but it was by no means, on the documents, a point of major interest. There was interest around the 7 October, but it had dropped away by the time of the Meeting. This is consistent with the fact that the question does not appear on Wirecard’s agenda, whether directed to funds originating from Greybull or from Boeing, or both.

Aside from the Note and the necessarily less than perfectly reliable recollections of those present, there are two sources for what was likely to be said. The first is the “script” which had been worked on for the acquirer meetings generally. While not designed explicitly for this meeting and while primarily targeted at acquirers with less knowledge of Monarch than Wirecard had, it represents the intentions of the Monarch/Greybull team – and more than that, it will have been material which was close to the surface of their minds and therefore likely to roll out as part of any verbal presentation or response to questioning. This is the more so since it was designed to go with the Presentation, which was used.

What of course is contentious about the script and the presentation is the concept of “monetising off-balance sheet assets” – the vanilla way to telegraph the nature of the deal without mentioning Boeing.

The Claimants points out that the “monetising” phrase was not part of the script for acquirers (as opposed to potential purchasers) and so there was no explicit plan to say it. But Mr Bennett was clear that by the time he did the presentations there had been an agreement that he could use this phrase. While it was suggested that this reflected a later agreement, the coincidence between this and the wording of footnote 27 suggests that by the time the presentation with that footnote in was deployed this was the agreed response.

This of course brings us to the question of whether footnote 27 was in the presentation which Wirecard saw. This was not in issue until part way through the trial. It had been agreed that the Presentation as I saw it (with footnote 27) was the presentation used. However part way through the trial that concession was at least in part qualified.

Ultimately the position was summarised in the Claimants’ closing submissions as follows:

“the claimants wish to make clear that they no longer run a positive case that the [Presentation] was the presentation given at the Meeting. There is no proper evidential basis to assert that. The documentary material strongly suggests that the [Presentation] was not the presentation given at the Meeting on 17 October 2016. The [Presentation] was the 6 year plan that Mr Bennett said on 18 October he would send, said on 25 October was being updated, said on 27 October he would “follow up with as soon as I can” and was last modified on 2 November.

.. That said, the claimants do not intend mid-trial to resile from the admissions made in their reply. If the defendants continue to assert, in particular, that the presentation given at the Meeting contained footnote 27 …, the claimants will be bound by their admissions not to challenge those assertions.”

The Defendants did continue so to assert, and therefore the concession stands. Further, while I entirely understand the scrupulousness not to allow me to proceed on what might have been a false basis which motivated this qualification, I would in any event conclude that the Presentation was in all material respects that which I have seen. There may have been small tweaks to isolated figures. But the important point remains: the relevant footnote had been used in Monarch’s standard presentation since early September 2016 (for example in the draft EasyJet presentation of 1 September). I am satisfied that it would have been incorporated into whichever version of the presentation was used. That was the tenor of Mr Bennett’s evidence: he said that if the exact same presentation was not used at the meeting, it would have been something very similar with the same numbers. There was not a bespoke presentation for Wirecard to different effect.

As it happens, the relevance of the point is not central in that I am not satisfied that there was detailed discussion in the Meeting of the Presentation to the extent of dealing specifically with Footnote 27 or that Wirecard got to the bottom of the footnote at that time. The important point is that it was there as a prompt. That being the case, if questions were asked, there is a strong likelihood that this would have driven the answer.

As for the wording around “family” I accept that the word “family” was probably used - in some form. I do not consider that Mr Hilz would have included that unless he had heard it. And, as the Claimants submitted, Mr Meyohas was plainly prone to try to humanise Greybull’s investment business away from the “vulture fund” characterisation by referencing the family components of the business. That is consistent with Mr Meyohas’ evidence where he described Greybull as investing “capital on behalf of multiple families” and “manging or advising on family capital” and his acceptance that he had historically used expressions such as “family office” “family capital”, “family funds” and “family backing”.

That does not of course deal with the key point, whether it was said that the whole of the investment was from Greybull family investors and that none of it came from Boeing.

The Defendants’ witnesses agreed that if Mr Meyohas had said in terms that Boeing had nothing to do with it that would have been false. That raises the question of how likely he was to do that. I conclude that it is inherently unlikely on the facts of this case. Had it been the case that the Boeing question would have been a left field question, it would be plausible that such a thing might be said – surprise prompts loose words. But this was a situation where the Greybull/Monarch team had spent quite a lot of time thinking about what they could and could not say with a view to achieving a narrative which kept Boeing’s involvement as off camera as possible, but which was also not inaccurate. They had lived through the intense email exchanges surrounding the Press Release. They had anticipated that questions might be asked about Boeing. It follows that Mr Meyohas was not likely to be flustered into misspeaking or going too far.

Then there is the question of what Mr Meyohas would think it gained him to lie. As I have concluded, Mr Meyohas might lie if he regarded it as necessary or really worthwhile. Was there a reason for him to think this was the case? Essentially for the reasons I have given regarding knowledge of Wirecard’s views I conclude there was no such reason. If it was (subjectively) important to Wirecard, this had not crossed the line. So far as Mr Meyohas knew, portraying a picture of supportive shareholders would gain him nothing more than good publicity.

The probabilities therefore are that if asked, Mr Meyohas would have stayed within the ambit of the “script” which had been discussed. It also seemed to me, based on Mr Meyohas’ performance as a witness, that he was more likely to provide a subtly nuanced answer which was open to optimistic misinterpretation than he was to provide an unambiguously wrong answer which was open to being contradicted by those accompanying him.

This dovetails neatly into the question of motive. This is obviously not an area of solid fact and accordingly not one on which I place any real weight. However as was submitted orally, it is an interesting check against the competing narratives to ask both what would have happened if certain things had been said, and also whether Mr Meyohas had a motive for telling the lie contended for which is central to the case.

The first set of questions to ask are those repeatedly posed in cross-examination of the Defendants’ witnesses. The point being put to those witnesses was that if (as Wirecard contended) the question as to source of the funding was asked Mr Meyohas had no alternative but to lie:

“Q….if you're asked about whether the money came from Boeing, what are your options? ... Number 1, … Mr Meyohas could have said, "Yes, it comes from Boeing". He's not going to do that because of confidentiality, is he?

A. No.

Q. Let's think of another option. He could have said, "We need an NDA between you and Boeing before we can tell you anything about it". That's going to give the game away, isn't it? … if you had suggested that, it would be obvious that the money was coming from Boeing?

A. Yes, but then Boeing would have had to be happy to say that.

Q. Which it may not have been?

A. Yeah.

Q. The third option is to say, "Money didn't come from Boeing, it comes from the family investment pool". Now, that's not true, is it?

A.

It's not true that the money came from the family investment pool, no.”

But that breakdown of the possibilities is not exhaustive. It was well open to Mr Meyohas to finesse matters by reference to the Presentation: he could not say in terms what had happened, but he could point to the “monetising” phrase and the phrase describing Boeing assistance. He could invoke the wording of the Kleinman article.

The second is the “what if?” about what Messrs Swaffield and Bennett would have done if Mr Meyohas had lied. As for the evidence of the Monarch/Greybull witnesses while I do accept the force of the Claimants’ submission as to the subconscious tendency to encode the version of reality which we wish had happened or which places us in the best light, I am nonetheless persuaded that the thrust of Mr Bennett’s and Mr Swaffield’s evidence as to the counterfactual is correct.

If Mr Meyohas had made a representation as to Boeing involvement which was a plain lie it is probably right that they would not have overtly called him out on it. Mr Morgan’s point “you wouldn’t want to embarrass your boss” is a valid one. In addition overt disunity would not be a good sales pitch at a time when the Monarch team were trying to sell Monarch as a really good risk. However, that is not the end of the story. It was quite easy for one or the other to have quietly clarified during the meeting – for example by reference to the Presentation - or suggested a follow up clarification after the meeting. I do not believe that, having discussed the delicate line which could safely and properly be trodden, one or other of them (particularly Mr Bennett, who had an obvious way in via the figures) would not have done something to realign.

I therefore do not need to reach a conclusion on the very difficult question of whether if they did not do this they would remember the lie. I see force in the evidence of those witnesses that they are sure they would have remembered if Mr Meyohas had lied and that they either would have said something or would have recalled it. I believe that they both believe that. However the capacity of the memory to overwrite that which we do not want to believe is profound.

As for the motive question raised by the Defendants in closing, the question is this: given the findings I have made (e.g. as to what Greybull/Monarch did not know about Wirecard’s internal discussions) what was the point of lying? In order to give the answer which Wirecard believes was given, it is common ground that Mr Meyohas would have had to lie. If (as I have found) he did not know that Wirecard attached any great importance to this point, I accept the submission that there would be no reason for him to infer it; the important point was that Monarch was being put into a stable financial position. Why then would he tell a lie which would (on his information) have no significance?

Nor was it the case that Mr Meyohas would have any reason to go beyond what was necessary to maintain Boeing confidentiality. There was no reason to try positively to play down Boeing’s involvement beyond what was being said openly. It was not as if Boeing involvement was shameful. On the contrary it was something of a coup. As Mr Meyohas put it: “It’s something that given a choice we would have loved to shout about…”

The counterfactual analysis therefore does not really assist the Claimants as much as they would suggest.

I conclude that Wirecard did not ask in terms about the original source of the funds. The problem for Wirecard is this: unless they specifically asked this exact question, the script which Greybull/Monarch were planning to use very carefully did not go there.

One therefore needs to look for a sign that Wirecard was gearing up to ask about this aspect. There is no such evidence. Although the documentary record shows interest by Wirecard in more details of the transaction, and that source was discussed around 7 October, as the date of the meeting approached there is no sign of Wirecard preparing themselves to ask this question. The evidence shows an interest in other facets – in particular debt components and the like.

The evidence relied on as to Wirecard’s supposed interest in ownership is fairly distant – and relates to ownership, not to the particulars of cash injections. Nor is the conclusion which Wirecard invited – that they sought Mr Meyohas attendance to grill him on this, one which is sustained on the evidence.

Part of the problem here is the very short distance which lies between the Representations alleged, which would be false, and an accurate but potentially ambiguous phrasing of the facts.

This was evident in the position as to equity: the position is essentially driven by whether one focusses on the ultimate source or not. If Mr Meyohas spoke of equity going into Monarch this was correct – Monarch did not borrow money, it received a cash injection.

That equity did, in absolute mechanical terms come from Petrol Jersey (i.e. the Greybull investors SPV). But those investors did not personally provide that money, save as to the £10 million. Equally there was no direct cash injection from Boeing.

If one looks at what Monarch was planning to say and compares it to Mr Hilz’s note the scope for misunderstanding, by anyone who had focussed on Mr Wexeler’s digest of the reports as opposed to Mr Kleinman’s article, becomes very apparent:

I am not persuaded on the balance of probabilities that the Representations pleaded were made.

Against the background my conclusions as to what (on the balance of probabilities) was said and not said are as follows:

I conclude that Mr Meyohas said something very close indeed to the script which had been discussed. As to Boeing what was said was essentially the scripted wording.

As to the alleged representation that the money came entirely from a “family investment pool”, I do not accept (despite the terms of the original German note) that these exact words were used. Part of the reasons for my conclusions are based on Mr Meyohas’ evidence, but part also on what appears the oddity of the language. Part of this has to do with what Greybull was – a group of family offices working in concert. I both accept and agree with Mr Meyohas’ evidence that it would be an odd phrase which (wrongly) suggested the investments of a single family: “Family investment pool to me doesn’t mean anything… It would describe all the different investments of a family”.

At the same time I conclude that Mr Meyohas said something about family. A question was probably asked, as it has been on first meeting, about where Greybull’s money came from. Mr Meyohas’ answers on this were close to the Hilz formulation:

Consistently with this, Mr Ley said: “The origin of the family investment pool as being equity when I was there was discussed very briefly, I believe, in a very brief introductory statement by Mr Meyohas.”

It follows that I conclude that Mr Hilz’s record is in the critical respect (entirely innocently) inaccurate. Mr Hilz was reconstructing what was said in his second language from handwritten notes which were necessarily incomplete. It was a fairly lengthy meeting. The Note is not the live transcription with which we have been blessed at trial. It is a reinterpretation of his manuscript notes which he took at the time. The format of the note suggests that those manuscript notes were sketchy and not word for word.

The positioning of this issue also suggests that this was not the main focus of interest. There is scope for “Chinese whispers” both in the taking of a note and in its interpretation, particularly when there is discussion immediately afterwards. While the natural tendency is to imagine a note written up later in the same day or the next morning is as good as a transcript the evidence on the fall off of memory in the immediate aftermath of an event is clear and clearly collated in the speech of Popplewell LJ.

It is likely that coming to the meeting with Wirecard’s discussed agenda in his mind Mr Hilz encoded and interpreted what was said in a way which deviated slightly but significantly from what was said and that in recording his recollections that small but significant deviation from accuracy became entrenched.

It follows from the conclusions above that the case on making of the Representations fails.

The parties are at odds on the question of the applicable law, with the Claimants contending for English Law and the Defendants (with an eye on the possible limitation argument under German Law) for German Law. They do however agree as to much of the framework for this dispute.

Thus they agree that:

As it is necessary to identify a single law, Article 4(1) focuses on the place where the damage occurred. Accordingly neither the event giving rise to the damage nor the place where the indirect consequences of the event giving rise to the damage are designed to form the focus of the enquiry.

As noted in Dicey, Morris & Collins on the Conflict of Laws (16th edn., inc. Supplement) at 35-024:

“The distinctions between the place of damage and the place of the event giving rise to damage, and between direct and indirect damages, follow closely the scheme established by the European Court in interpreting the concept of “harmful event” in what is now Art 7(2) of the recast Brussels I Regulation and that jurisprudence is likely to assist in interpreting Art. 4(1) of the Rome II Regulation in difficult cases.”

This approach is reflected in authorities such as: Erste Group Bank SA v JSC “VMZ Red October” [2015] EWCA Civ 379, [2015] 1 CLC 706 at [90]-[92] and FM Capital Partners v Marino [2018] EWHC 1768 (Comm), at [485]-[486].

Looking at the potentially relevant authorities, the focus is on where “the direct and immediate” damage occurred: AMT Futures Ltd v Marzillier mbH [2017] UKSC 13, [2018] AC 439 at [15].

“The CJEU has ruled on the correct approach to article 5(3). It has interpreted the phrase “the place where the harmful event occurred” … as “the place where the event giving rise to the damage, and entailing tortious... liability, directly produced its harmful effect upon the person who is the immediate victim of the event” and thus not the place where an indirect victim, … suffered financial loss as a result: and …, where a victim suffered harm in one member state and consequential financial loss in another, as referring to the place where the initial damage occurred… The focus … is thus on where the direct and immediate damage occurred.”

As Christopher Clarke LJ had said in the same case [2015] EWCA Civ 143, [2015] QB 699 at [54], the question may be posed as follows:

“(i)

what is the place where the event giving rise to the damage…directly produced its harmful effects…(the Dumez France case [1990] ECR I-49); or (ii) where was the actual damage which elsewhere can be felt or the initial damage suffered (the Marinari case [1996] QB 217); or (iii) what was the place where the damage which can be attributed to the harmful event…by a direct and causal link (the Reunion Europenne case [2000] QB 690) was sustained…”

Sir Geoffrey Vos MR, in Kwok v UBS [2023] EWCA Civ 222, [2023] 1 WLR 1984 (a Lugano case, not a Rome II case) indicated that the search for a unifying thread can be delusive noting (at [46]) that: “It is, in my judgment, dangerous to seek to define the test for where damage occurs in a wide range of financial loss cases, because they are likely to be so fact dependent”.

Having said that there is some guidance to be gained from the authorities, if sometimes in a somewhat negative sense:

In the present case, the facts indubitably present more than one possibility. So far as Germany is concerned:

On the England side there is:

Overall – and despite the clear and careful arguments advanced for the Claimants, I conclude that the preferable analysis is that the applicable law is German Law. There are many immediate factors linking the case to Germany both in terms of direction, causation and ultimate feeling of the loss. By contrast Wirecard is forced to rely on the effects of Side Letter 7. But Side Letter 7 did not immediately cause Wirecard damage and would not inevitably do so. It took a further contingency (administration) and the application of the relevant rules to manifest the chargebacks. The links to England are too derivative (described by the Claimants in closing as manifesting at “the fourth and fifth stages” of the analysis) and too poorly evidenced.

In terms of direct damage, damage occurred when those misrepresentations took effect in the minds of those attending the meeting in Germany and were subsequently relied upon. The alleged key decisions were said to have been taken at the November meeting of Wirecard’s Management Board; and this seems to have taken place in Germany. The direct links to Germany are simply much stronger than any links to this jurisdiction.

The damage therefore occurred in Germany, and under the general rule in Art 4 of Rome II, the applicable law is German law.

Once the question of applicable law is determined in favour of German Law, an issue arises as to causation/reliance. The Claimants seek to rely on approaches under German law which potentially ease their case on reliance.

The experts agree that the notion of “conditio sine qua non” (or “but for” causation) is the primary basis for determining causality in German Law:

“According to this doctrine, a circumstantial aspect or a conduct is a relevant cause of a certain injury or damage, if the damage would not have occurred without it”.

The experts agree that the burden of proof is, as a general rule, on the claimant under German Law. The parties have also agreed that the standard of proof is governed by the law of England & Wales.

There were two main issues between the experts on causation under German Law:

Ultimately however the real fight was on the former issue, as the Claimants sensibly did not press the prima facie evidence argument. On that I will simply record that:

Focussing then on the live issue of the reversal of the burden of proof, the issue was really about whether a general rule could be spelled out of the cases, or whether everything turned on the facts of the case. Professor Grigoleit summed up the present state of German law on these issues in his report as follows:

“Neither statutory law nor the established case law provides for a general rule facilitating proof in all misrepresentation or deceit cases. Rather, a generally reliable case law basis for a facilitation of proof can only be established if it is obvious according to the circumstances of the case that, from the ex ante perspective of the claimant, it would have been objectively only reasonable for him to make a different decision and that any reasonable decision would have avoided the damages.”

In this respect there was not a huge distance between the experts. Professor Elsing agreed that “The legal nature of this relaxation as a genuine reversal of the burden of proof or a mere prima facie evidence has not yet been finally clarified”. Where the experts parted company was that he was of the view that where (it is contended) the defendant made a positive misrepresentation in face-to-face contractual negotiations the German courts would hold that it is for the defendant to disprove causation. This aligned with the view adopted by Professor Grigoleit some 25 years ago when, as a doctoral candidate, he attempted to systematise the cases. Then he concluded that on the predominant view, the Court “assumes a reversal of the burden of demonstration and proof with regard to the causality characteristic for the claim for damages from culpa in contrahendo” and similarly “with regard to the tortious liability for deception”.

I should make clear that both experts were plainly intelligent, thoughtful people doing their very best to assist the court. My impression, having listed to and considered their evidence, was that but for the demands of the case they would have seen the answer as being along the lines of “in theory this is what should probably happen, but in practice, much will turn on the facts and the Court’s instinct to palm tree justice”. Their disagreement was simply an attempt to help me do my job, namely to decide what I think a German court would probably decide in this case.

There was considerable discussion of a range of authorities within the reports, as both had done an extremely diligent job. While there was within the trial timetable very limited time to test views on the authorities and only a very few were looked at live, the expert reports provided a very sound base for looking further at the main cases. In summary:

The Claimants submitted that:

Ultimately I largely prefer the arguments of the Defendants on this point. This is not an easy issue to decide, particularly when the analysis is complicated by the fact that I am operating under a hybrid of German causation rules combined with English standard of proof. That is to my mind a relevant consideration because it is apparent that in many cases where the reversal operates the standard of proof is very high – in some cases as high as 90%. One can entirely see why a presumption may be particularly attractive in a case where otherwise the standard of proof is so high.

One thing which is clear is that the cases do not speak with one voice. They do not establish that there is principle which should be applied to require a reversal of the burden of proof in cases such as this. The various cases were simply examples of a reversal of the burden of proof being applied, or not applied. Professor Grigoleit did, as Mr Mundy submitted, sound rather despairing when he decried the authorities as “all this mess the German courts have made with...the evidentiary rules”. But he was exactly right when he said: “You cannot...make a clear systematic distinction between the application of the different doctrines and different contexts.”

Doing the best I can I have some sympathy with Professor Elsing’s view that a positive false declaration is generally judged more strictly than a breach of a duty of disclosure. However, I would consider that this is likely to be very fact specific and certainly there was no real authority to support the point; the commentary authority he relied upon had nothing to do with causation, but simply made the point that while the question of whether there was a duty to speak was complex, it was clear that deliberately telling an untruth was clearly not permissible. My own instinct that there is something in this may well be driven by the kind of factors which I have discussed in Loreley Financing (Jersey) No 30 Limited v Credit Suisse Securities (Europe) Limited and others [2023] EWHC 2759 (Comm) in particular at [424].

I do not consider that there is anything to support Professor Elsing’s theory that there would generally be a reversal of the burden of proof in face to face representation cases: this was just an idea advanced by Professor Elsing, as he accepted in the course of Mr Elias’s focussed cross-examination and it was not urged on me in closing by the Claimants.

My conclusion is that:

Accordingly there is no reversal of the burden of proof, the burden remains on the Claimants and the applicable test for reliance is the “but for” causation test.

Given my conclusion on applicable law I will deal primarily with the issue on the basis of the German Law test. I will then deal briefly with the position as a matter of English Law. In the light of the conclusion on the issue of German Law on causation, it will be no surprise to any reader to discover that the question of applicable law ultimately makes no difference.

The Claimants here seek findings that:

The Defendants made a determined attack on the reliance case – both as to form and substance. Attention was drawn to the changes which the case had undergone, namely that in the original pleading the reliance pleaded was agreement to Side Letter 7 without any focus on how and by whom - and that when pressed the answer to that question was via a single decision taken by Mr Ley; whereas the final case was a complex one, involving the Management Board process.

While the troubled development of a case is not by any means necessarily a sign that the case is not good, it is worth examining the pleaded mechanics against which the evidence has to be weighed. Here:

There is therefore a pleaded case which stretches over a considerable period after the Meeting and covers a range of things – far from the “short and direct causal chain” which the Claimants say exists. This is not impossible but that structure requires careful consideration as regards each of these alleged decisions. The Claimants did not in closing really analyse the inducement case by reference to the pleaded case, preferring a broad brush focus on materiality of the “powerful signals” conveyed by the representations as to confidence and willingness to support (a la Mantegazza) in the future. This was a case which dovetailed more easily with the reverse burden of proof approach, which I have rejected.

I will start by acknowledging the point made by the Claimants as to the evidence given by their witnesses. All of them said, and broadly maintained, that the Representations were important to their decision-making process. But in context (and particularly bearing in mind the hindsight/lack of concrete recollection element which was not merely obvious but manifest on the evidence) that evidence cannot be enough to establish materiality or reliance.

That is the more so when not only is the background that which I have explained earlier, as to Wirecard’s focus on fundamentals, but also that evidence itself has a considerable degree of variation. Thus:

It is therefore necessary to “walk through” events after any Representations were made and evaluate whether the decisions alleged were caused (in the “but for” (alternatively the “real and substantial”) sense) by them.

The first “decision” is the immediate one: to continue negotiations. As the Defendants submitted, this is a somewhat elusive concept – a reliance on the representation simply to continue negotiations could not be said to require a decision of the Management Board. What is more, it does not fit with the timeline, which indicates that there was no question over negotiations continuing. This was particularly clear from the final part of Mr Hilz’s email which indicates as a given that discussions would continue: “TO DO: Shortly, Monarch will submit all relevant documents to us for a detailed overall view in order to assess the development and forecast and to be able to evaluate our risk appetite and to continue to negotiate the collateralisation modalities in 2017 (premium model). In this context, we will also receive yesterday’s company presentation, among other things.”

Decision 1 can therefore be rejected.

The second point which comes from the immediate aftermath of the meeting is one which goes to the overarching materiality point and to the alleged decisions to offer terms and to enter into SL7 (Decisions 2 and 3). The Defendants described this as “the dog that did not bark”. While that is probably going a little far, I accept that this is a point of some significance. As is clear from the material which covers the earlier part of the relationship Wirecard’s personnel were thorough and careful. Where they regarded even a small matter as being of some significance, they recorded discussions on it and outcomes. Where they wanted clarity they sought it – for example the questions asked of Mr Swaffield after the 7 October conversation. If the sources of the funds were regarded as material it would probably be expected that Mr Ley at least (who had no great trust in Greybull and in particular Mr Meyohas) would want to rely on more than an elusive phrase (from Mr Meyohas) in a meeting he could only partly attend (it will be recalled that he left part way through the Meeting).

In fact, as is apparent from the factual section above, there was no mention of the alleged Representations in the internal discussions at Wirecard following the Meeting. Wirecard’s focus was on Monarch’s financials and free cash. Wirecard thought it was completely protected in any event: the Management Board thought prior to the Meeting that the cash injection of $122m was enough to keep Monarch flying for at least another year (see Mr Wexeler’s email on 14 October “Overall, we assume that the GBP 122 million already paid in will ensure that Monarch Airlines’ flight operations are ensured for at least one year” and Mr Ley’s “the liquidity bottleneck has been resolved”). What the parties negotiated and signed up to in the form of SL7 was an agreement which terminated automatically after that deemed safe year unless extended (cl. 7.1 and 5). And again in line with the Wirecard’s eye to fundamentals, by cl. 6.9 Wirecard could increase the required collateral up to 100% if Monarch’s free cash fell too low.

Also there was no nailing down of the point. At times (see Side Letter 5) Wirecard insisted on representations being formally recorded in a contractual format. Similarly with Side Letter 6 there was a provision made for how cash released was to be used. With the alleged representations relied on none of this was done. When the time came to draft the contract, although there were lawyers involved, the precedents of Side Letters 5 and 6 were not followed.

Further, all in all the “mood music” is not that of concern over this point. The question had not been put on the Agenda for the Meeting. Mr Hilz did not pick the specific point out as being more than an item (albeit one of the important items) within a meeting summary in an email. No-one picked him up on the apparent inconsistency with the Sky News report. No-one suggested getting it in writing even by email. The matter just formed part of the continuum of negotiations – part of an email which ended up “TO DO: ….”. That gives the appearance of it being interesting, but not significant.

The absence of any discussion or nailing down might have less significance if there was almost no time lag – if the decision relied on were 17 or 18 October; but the decisions relied on are (at earliest) 22-23 November – over a month later. That is the pleaded date, though in reality the detailed negotiations were not concluded until 15 December 2016 and a draft of SL7 was not produced until 5 December. It therefore follows that Decision 3 might (and probably ought to) be said to occur then. In all that time, with all the exchanges which went on in the interim (over 200 items within the chronological bundle) the absence of any follow up on this strongly suggests that it was not a matter of importance.

In particular the Management Board Meeting of 25 October 2016 does not indicate that this was even discussed, still less that it is was a matter of any significance. The Agenda for that meeting includes Monarch (no mention of shareholders investment) and the Minutes focus only on credit risk: “The participants discussed the positive development of Monarch Airlines and agreed internally on the maximum amount of any unsecured risk required for further contract negotiations with the customer.”

Then there is the question of silence on Footnote 27. The documentary record after the meeting shows that Wirecard had the Presentation. They clearly went through parts of it with a fine-tooth comb. I find, given their general diligence, that they would have read the whole document carefully in this period. That was Mr Hilz’s evidence, which I accept. He said that the Management Presentation was discussed amongst colleagues, including Messrs Bikar, Käppner, Wexeler and Ley in “many, many meetings around the table” and that he himself “definitely went through it carefully, of course”. That was consistent with Mr Ley’s evidence which in fact went further: “someone who’s an expert in airlines” would have “worked through this type of PowerPoint presentation. They would have shared it amongst themselves, checked it, counter-checked it, and sat down in a committee to discuss it”.

Wirecard would therefore have seen and thought about Footnote 27. I reject the submission of the Claimants that this would have been something that would have been missed in this rather more thorough review (compared to that which was possible in the Meeting). The analogy with the fact that Mr Meyohas and Mr Swaffield did not spot the point when preparing their witness statements is a false one. Wirecard at this stage say that it was auditing the material it had on Monarch with a view to drafting new contractual terms. Anything important would have been seen, by this diligent, specialist team. If not understood, questions would have been asked. But no questions resulted, nor wasthere any reflection of this in discussions or terms. In fact, with the specialists involved, as Mr Ley says there were, the significance of the footnote would, in my judgment have been appreciated.

Mr Bennett said:

“it should have been obvious to anyone with airline experience from the fact that the Boeing deal was prominently mentioned in the Financial Overview and the size of the capital injection, that there was some kind of discount or incentive involved from the airline manufacturer in order to get the deal done or a sale and leaseback or both”.

This was not challenged, and the evidence of Dr Käppner and Mr Hilz which recognised the concept of monetising discounts using sale and leaseback, and the obvious link to the Boeing deal, tended to support it.

Against this background, the second and third “decisions” relied upon can sensibly be taken together. The conclusion is that the Claimants’ case, that reliance was placed on any representations by Mr Meyohas on 17 October when any decisions were taken on 22/23 November is not supported by the documentary record, nor by the inherent probabilities of the situation.

First, there is no record of the matter even being discussed, and the prior exchanges evaluated above do not compel a conclusion that it must have been. There is no briefing document or exchange of briefing emails on the subject. There is no Board Agenda or Board Minutes for the meeting supposedly held on 22/23 November. There is no Board pack containing relevant papers on the basis of which the Board could make a decision.

Second, there is no evidence that any of the members of Wirecard’s Supervisory Board were ever informed of the alleged Representations (though there is evidence that members were informed of the Kleinman/Sky News article). This is not insignificant given that the evidence discloses other sources for members of the Board either to believe that the funds were direct from Greybull or to have an appreciation of Boeing’s real role. As can be seen there had been a degree of elision of the position of Greybull and Petrol Jersey, and there had been ample press coverage drawing on Monarch’s own press releases.

Third, there is nothing to show what decisions (if any) were actually made by the Board, or on what basis those decisions were taken. The procedure to be followed appears to have been one in accordance with Annex 10.2 of the Supervisory Board’s Rules of Procedure.

I therefore have no difficulty in concluding that the Claimants cannot establish that any Representations were a “but for” (German Law) or a real and substantial (English Law) cause of any of the decisions relied upon.

Even in the terms posed by the Claimants as to “powerful signals” and materiality I would not accept the case on reliance, in the light of the conclusion I have reached as to the relative weights given by Wirecard to fundamentals and issues such as “family”; as well as the very evident lack of trust in Greybull from the primary decisionmaker, Mr Ley. The original source of the money was plainly a matter of interest to various people. But the degree of that interest varied. The CAA had indicated the strongest signs of assigning importance to this - doubtless because of the implications for restoring the licence against the background of the press interest. It can be seen that they actively pressed for “skin in the game” from Greybull.

But none of that was known to Wirecard. Nor did Wirecard take the same approach. The evidence from it is of interest, in the sense of curiosity. The root source of funds was doubtless something Wirecard would like to know - as the exchanges between Mr Hilz and Dr Käppner make clear. As I have found, some minor comfort would be gained from it. But whether or not the Representations were made, the evidence on balance of importance, materiality and causativeness to Wirecard generally (and Mr Ley in particular) is not there; the balance of the evidence points to “solvent for a year” and securing the appropriate share of business as the important considerations for Wirecard.

Further, to the extent necessary I would consider that the evidence either does not engage or rebuts any presumption (whether of German Law or the potential evidential presumption under English Law (Footnote: ³)). I accept the Defendants’ submission that this is not a case where there is an absence of evidence or the evidence is so evenly balanced that is necessary to have recourse to the burden of proof. As indicated, I conclude on the evidence that any Representations were not material. In any event on the evidence a combination of the lack of overt nexus between any Representations and the pleaded decisions, the background to the meeting (including Wirecard’s previous commercial behaviour), the timeline post meeting and the lack of any real evidence of the Board Meeting relied upon would be sufficient to establish that any presumption was rebutted.

Finally, though this is not necessary to reach the conclusion above, and is noted simply as an additional matter: much of Wirecard’s case was addressed to the misleading impression given by earlier matters, such as the Kleinman article, the press release and the Q&A document. This dovetailed with Wirecard’s evidence that they were thinking along the lines set out in Mr Hilz’s note before the Meeting. Mr Hilz’s evidence was that before the meeting he believed that Greybull was the owner of Monarch and that it was the source of the investment. Likewise Mr Ley said that “in the run up [to the Meeting] it was already the understanding that it was capital from Greybull” and Dr Käppner said that prior to the Meeting he assumed that the funds were from Greybull because he had seen Monarch’s press release. If Wirecard’s misapprehension were based on other sources of information (such as their prior assumptions or Monarch’s press release), there would on the evidence be no reliance on what is alleged to have been said during the Meeting – unless it were sufficiently important to have been specifically fact checked – which I have concluded it was not.

Accordingly if (contrary to the conclusion above) the pleaded Representations were made they did not induce Wirecard to agree to SL7 and they were not a conditio sine qua non of Wirecard’s agreement to SL7.

I also consider that this conclusion is consistent with Wirecard’s reaction on Monarch’s failure. Mr Hilz raised his understanding in the email quoted above, but there was no chorus of shock, or statements suggesting that Wirecard would have avoided being involved if something different had been said.

The limitation issue therefore does not arise and can be dealt with fairly shortly. The Defendants contend that as a matter of German Law the claim is time barred.

It is common ground that the Claim Form was issued within the German limitation period which expired on 31 December 2020. It is also common ground that the Particulars of Claim were served on 14 January 2020. The issue is simply whether either the Claim Form was sufficiently particularised to meet the German Law test or whether if not 14 January 2021 was a date within the permissible period under German Law for serving the claim.

Again the German Law experts were able to set out a very considerable amount of common ground to narrow the issue to this point:

For present purposes (the position is reserved in case of an appeal) it is agreed that German law governs when the time period for both filing, and serving, the claim ends. (Footnote: ⁴)

The starting point therefore is that the test is one of functional equivalency. Not every detail needs to be identical: “In order to do justice to the diversity of legal systems, neither complete uniformity of the designation nor of the legal content is required. It is sufficient for the essential features to be identical.” Functional equivalency has to take into account what is regarded as necessary in England, as that is the forum. German rules and authorities take into account a number of forum specific procedural matters.

My ultimate task is to decide what the likely outcome would be on this question before a German Court (see for example Foxton J in Banca Intesa Sanpaolo v Comune de Venezia [2022] EWHC 2586 (Comm) at [121] quoting CC Proceeds Inc v Bishopsgate Investment Trust plc [1999] CLC 417, 424-425). Where it is a case of (ex hypothesi) a fraud I do not regard it as remotely likely that court would regard the claim as time barred when (i) the document is good enough in England to stop time running (ii) the difference between what might arguably be required and what was produced is so small and derives from procedural factors in the forum. In my judgment a decision that a claim was time barred based on so slight a distinction would sit very ill with any judge. Further, the approach of the German Court in the German Court of Justice decision of 17 April 2002 is instructive, and supports that conclusion. In that case the German courts held that serving a Swiss payment order is the functional equivalent of serving a German payment order for limitation purposes because it serves the purposes of the German limitation provision which is to suspend the limitation period in circumstances where the claimant has manifested an intention to prosecute the claim and the debtor has been warned the claimant has that intention. It said: “[T]he decisive factor is the creditor’s intention aimed at award and enforcement, which is expressed in a procedural or litigation-like act of legal prosecution.”

Similarly the OLG Frankfurt judgment of 11 December 2015 provides support for a constructive, rather than overanalytical, approach. In that case the Court recognised a claim brought in Argentina as suspending the limitation period, even though the Argentinian statement of claim was ambiguously drafted. The Court did not rigorously compare the Argentinian statement of claim against the requirements of s.253 of the GCCP, but rather looked to the substance of the proceedings in Argentina to decide whether the claim there covered the same subject matter as the claim before it. The court considered the “meaning and purpose” (i.e. the function) of s.204, para.1, no.1 of the German Civil Code and concluded that those “clearly speak in favour” of treating the Argentinian proceedings as functionally equivalent to German proceedings, because “the creditor’s intention to take legal action is manifested in the filing of the action” and the bringing of the proceedings “leaves the debtor in no doubt as to its seriousness”.

Here one can easily see a real basis for functional equivalence. Professor Grigoleit accepted that the question a German court would ask is whether what is written on the claim form is sufficient to enable the Defendants to distinguish this claim from others and sufficient to enable the Defendants to make a decision whether to defend the claim. It is clear that the Claim Form here did just that.

Thus I conclude without any difficulty that if there were a claim against Greybull and/or Mr Meyohas it would not be barred by the German law of limitation.

Given the fact that the experts narrowed the ground to one single point, and on the basis of my finding above that point is doubly hypothetical, this issue may be dealt with very briefly indeed.

The Claimants claim loss in the sum of £11,819,723 (as revised following discussions and agreements on some points in issue). The only remaining issue is whether, in the counter-factual scenario that Wirecard had not offered new terms to Monarch under SL7, Monarch would have agreed to terminate the contractual relations between them by 1 January 2017 and Wirecard would have returned its security prior to 2 October 2017. In such a case, Wirecard would have suffered loss in that counterfactual scenario, and such loss would fall to be deducted from its actual loss as suffered.

It is common ground that Wirecard would have been exposed to £1,597,397 in chargeback claims on Monarch going into administration, even if Wirecard and Monarch had not entered Side Letter 7. Essentially the Defendants say that loss should be reduced by that £1,597,397, while the Claimants say either that the loss would have been covered by collateral of £4.4m or that it should be reduced by only £1,277,918 (on the basis that only 80% of the chargebacks would have materialised).

Were the point to arise, the Claimants position as to security appears on balance to be correct. Even if Wirecard or Monarch/FAV had given notice to terminate the agreements immediately after the Meeting on 17 October 2016, the terms of those agreements meant that they would not have terminated until 17 March 2017. The collateral would therefore not have been returned before Monarch went into administration on 2 October 2017. That is because under both agreements, the collateral held by Wirecard was to be returned “nine (9) months after termination” of the contractual relationship.

For the reasons given above the Claimants’ claim fails. In summary: