GI Globinvestment Limited & Ors v Federico Faleschini & Ors

On strike out or reverse summary judgment, the question is whether the pleaded case has realistic, rather than fanciful, prospects of success. A conspirator may join an existing conspiracy after earlier unlawful acts, provided the alleged common design extends to conduct in which that defendant knowingly participates. Liability is not confined to necessary participants, and not every conspirator must personally commit the unlawful acts. Where concealment and the deprivation of independent advice continue after investment, loss may extend beyond the original investment decision. Representations about future conduct or opinion may contain representations of present intention and may continue to operate until the transaction or relationship ends. Whether a representation remains operative is fact-sensitive.

The claimants alleged that financial advice from XY ERS UK Limited was falsely presented as independent and conflict-free, although the Skew Base Fund was connected with the adviser and entities controlled by Daniele Migani. They claimed deceit and unlawful means conspiracy against several defendants.

Federico Faleschini and the Leader Logic defendants applied to strike out the claims or obtain reverse summary judgment. They argued that the Leader Logic defendants joined too late to participate in the alleged conspiracy or cause the claimed loss, and that Faleschini could not have known the relevant facts when the representations were made. The central issues were whether the claims had realistic prospects of success, whether the representations could be continuing representations, and whether the pleaded evidence raised triable issues.

1. Applications. The strike out and reverse summary judgment applications were dismissed, except in relation to the abandoned negligent misrepresentation claim, on which the defendants were entitled to judgment and an order.
2. Leader Logic defendants. A late joiner may be liable for conspiracy. The relevant question is the scope of the alleged common design and whether the defendant knowingly participated in it. The claimants’ case was capable of extending beyond procuring the investments to maintaining the concealment and extracting payments until the investments could no longer be redeemed. That gave the Leader Logic defendants a realistic prospect of being found to have joined and participated in the conspiracy.
3. A conspirator need not be a necessary participant, and need not personally use all or any of the unlawful means. The authorities left the boundary between active and passive participation fact-sensitive and insufficiently settled for the case to be characterised as fanciful. The documentary evidence also provided some support for the pleaded case.
4. Loss. It was realistically arguable that the relevant loss was not limited to secret profits or losses suffered before the defendants joined. If the conspiracy deprived the claimants of independent advice and prevented them from exiting their investments, damages could extend to the position in which they would have been had the conspiracy not occurred. Damages for conspiracy are at large where conspiracy and pecuniary loss are established.
5. Faleschini. A representation concerning independence could constitute a representation of fact, including an implied representation of present intention. The pleaded evidence gave rise to a realistic case that Faleschini knew of plans to establish a captive investment vehicle, knew that XY UK held itself out as independent, and knew facts capable of making the representations false.
6. A representation may continue to operate after entry into a contract where the surrounding facts support that conclusion. The alleged representations were made to induce the claimants to seek and act on investment advice. It was realistically arguable that they continued throughout the advisory relationship and while the claimants retained investments, creating a duty to correct them if circumstances changed.
7. The court was required to assess Faleschini individually, while also considering how his alleged conduct fitted into the wider case concerning the relationships between the defendants. The court was not confined exclusively to the pleaded case where the evidence disclosed reasonable grounds for a fuller investigation at trial.
8. The claims by the individual claimants were not struck out. The pleading was sufficiently arguable that representations made to a family-office representative were conveyed to MDM. LDM’s deceit claim was also arguable because his reliance and loss could arise from investments in other products made on the basis of the alleged independence representations.