Camerata Property Inc v Credit Suisse Securities (Europe) Ltd

The defendant's application for relief under CPR Part 3.4 (strike out) or, alternatively, summary judgment under CPR Part 24 to dismiss the claimant's claim in respect of a Lehman Brothers autoredemption note was granted. The court applied the Part 24 "realistic prospect" test and concluded the claimant's claim had no real prospect of success.

Key legal principles and grounds:

• Where a claimant seeks to re-run issues that have been the subject of full findings in earlier proceedings between the same parties, those findings are highly persuasive and may make a later claim unsustainable.
• CPR Part 24 requires the court to assess whether a claimant has a realistic (not fanciful) prospect of success; the court must take account of evidence already available and that which can reasonably be expected at trial.
• Causation principles (as explained in SAAMCO) mean a claimant cannot recover losses caused by unforeseeable issuer default where, but for that default, the investment would have produced a profit.
• A statutory claim under section 150 FSMA requires the claimant to be a "private person" within the meaning of the Regulations; an investment company carrying on business is excluded.

Material subsidiary findings supporting dismissal included: the prior detailed findings of Andrew Smith J about Mr Ventouris' knowledge, experience and attitude to risk (which undermined any contention he would have declined the investment if differently advised), that there were no real grounds to doubt Lehman's creditworthiness prior to collapse, and that the claimant was not a "private person" for FSMA s150 purposes (following the reasoning in Titan Steel Wheels).

Background and parties: Camerata Property Inc (claimant) is an investment company owned by a Panamanian trust; Credit Suisse Securities (Europe) Ltd (defendant) acted as adviser and dealer for structured products purchased by Camerata. The application before Flaux J sought strike out under CPR Part 3.4 or summary judgment under CPR Part 24 dismissing the claimant's pleaded claim concerning the Lehman Brothers autoredemption Note.

Procedural posture: The application arose after a full trial between the same parties before Andrew Smith J ([2011] EWHC 479 (Comm)), in which Camerata's earlier action concerning the Note was dismissed. The present proceedings advanced a different pleaded case alleging mis‑selling/unsuitability of the Note at the time of purchase and breaches of contract, negligence and statutory duties (COB/COBS and FSMA s150).

Nature of relief sought in this application: the defendant applied for the paragraphs of the Particulars of Claim relating to the Lehman Brothers Note to be struck out or, alternatively, for summary judgment dismissing that claim.

Issues identified by the court:

• whether the prior judgment produced issue estoppel or otherwise rendered the later claim unsustainable;
• whether pursuing the claim in a second action amounted to an abuse of process;
• whether the claimant had a realistic prospect of success on the merits under the Part 24 test;
• whether a statutory claim under s150 FSMA could be maintained by this claimant (the "private person" issue); and
• causation/foreseeability of loss (the effect of issuer default) including SAAMCO principles.

Court's reasoning and conclusions: The court emphasised the Part 24 approach: a realistic (not fanciful) prospect of success is required and the court must consider evidence reasonably expected at trial. The judge relied heavily on the prior findings of Andrew Smith J about the claimant's and Mr Ventouris' knowledge, experience and attitude to risk (noting that those findings were made after a full trial). Those findings undermined any realistic prospect that the claimant would have declined the investment if given different advice in 2007 or would have sold during 2008. The court concluded that the loss resulted from the unforeseeable issuer default (Lehman's collapse) and that, but for that default, the Note would have auto‑redeemed at a profit; SAAMCO causation principles supported that conclusion. The court also held that Camerata was not a "private person" under the Rights of Action Regulations and therefore could not sustain a s150 FSMA claim (following Titan Steel Wheels). On abuse of process, the judge applied the broad, merits‑based Henderson/Henderson and Johnson v Gore Wood principles and found that while bringing the claim in a second action was open to criticism for late pleading, it was not in itself an abuse; however, attempting to re‑litigate or go behind the prior findings would be a collateral attack and abusive. Taking the matters together, the court concluded the Lehman Note claim had no real prospect of success and entered summary judgment dismissing that part of the claim.

Wider context: the judgment illustrates caution in striking out claims but confirms that where detailed findings after trial undermine the factual basis of a subsequent claim, summary dismissal is appropriate. It also confirms the narrow scope to recover under FSMA s150 for corporate investors as construed in Titan Steel Wheels.

Summary judgment was entered for the defendant dismissing the claimant's claim in respect of the Lehman Brothers Note. The court concluded the claim had no real prospect of success because prior trial findings about the claimant's knowledge and attitude to risk undermined any assertion that different advice would have prevented the loss; the loss was caused by unforeseeable issuer default; and the claimant could not bring a s150 FSMA claim as it was not a "private person" under the Regulations.