Camerata Property Inc v Credit Suisse Securities (Europe) Ltd

On a summary judgment application, the court may rely on findings made after a full trial where the pleaded case would require evidence inconsistent with those findings. A claim has no realistic prospect of success where the claimant cannot coherently overcome those findings. A later claim is not automatically an abuse merely because it could have been brought earlier. Abuse requires a broad, merits-based assessment of whether the later proceedings misuse the court’s process, including consideration of oppression or vexation. A corporate investment company carrying on business is not a “private person” under regulation 3(1)(b) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001. Loss caused solely by an unforeseeable issuer default may also defeat a claim based on negligent investment advice.

Camerata sought damages from Credit Suisse concerning its investment in a Lehman Brothers note. In earlier proceedings between the same parties, Andrew Smith J dismissed a claim concerning advice given during 2008 about Lehman Brothers’ creditworthiness and the possibility of selling the note.

Camerata then brought a separate claim alleging that the note was unsuitable when recommended and purchased in 2007. Credit Suisse applied under CPR Part 3.4 and CPR Part 24 to strike out or obtain summary judgment on that part of the claim, relying on the earlier findings, issue estoppel, abuse of process, causation and the statutory meaning of “private person”.

1. Summary judgment. The claim concerning the Lehman Brothers note had no real prospect of success. The earlier judgment found that Mr Ventouris understood that structured products involved risks, would contemplate some loss, knew that counterparty default could jeopardise an investment, and would not have sold the note even if warned about specified risks. A case that depended on evidence contradicting those findings could not realistically succeed.
2. The earlier findings did not strictly create an issue estoppel because the first judgment had deliberately avoided determining matters intended for a possible later claim. Nevertheless, attempting to contradict findings made after a full trial would be a collateral attack and an abuse of process.
3. The statutory-duty claim failed independently. Section 150 of the Financial Services and Markets Act 2000 permits an action by a “private person”. Regulation 3(1)(b) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 excludes a non-individual who suffers loss in the course of carrying on business of any kind. Camerata was an investment company carrying on business and therefore could not sue under section 150.
4. The statutory obligations under COB and COBS did not materially widen the pleaded contractual and tortious case. They faced the same evidential and causation difficulties.
5. In principle, where advice concerns whether to enter a transaction, the adviser may be responsible for foreseeable loss caused by entering it. Here, however, the only actual loss arose from Lehman Brothers’ unforeseeable bankruptcy. Without that default, the note would have redeemed at a profit. That provided an additional reason why the claim had no real prospect of success.
6. The later proceedings were not, merely because they could have been brought in the first action, necessarily an abuse. Applying the broad merits-based approach in Johnson v Gore Wood, Credit Suisse had known before the first trial that Camerata intended to pursue a separate suitability claim and had not sought a case-management decision to have it determined earlier. The abuse argument therefore supplied no distinct ground beyond the successful summary judgment application.
7. Order. Credit Suisse was granted summary judgment dismissing Camerata’s claim concerning the Lehman Brothers note.

First-instance decision. No appellate history is stated in the judgment.