Athena Capital Fund Sicav-Fis SCA & Ors v Secretariat of State of the Holy See

Contract-based declarations may be granted where they reflect agreed contractual provisions and serve the interests of finality, but the court should remain cautious about declarations whose practical purpose is unclear or whose breadth is disproportionate.

A declaration of good faith requires the court to decide whether the relevant conduct met that standard on the evidence. A party may fall below the standard through communications that are materially misleading or insufficiently frank, even where broader allegations of fraud, dishonesty or conspiracy are not established. Findings on good faith do not themselves determine liability on an unpleaded or untried cause of action.

The claimants sought 31 declarations concerning a 2018 transaction by which the Secretariat of State of the Holy See acquired control of companies indirectly owning 60 Sloane Avenue, London. The declarations were principally derived from a Framework Agreement, a Sale and Purchase Agreement, a Letter of Authority and a Comfort Letter.

The State resisted the declarations and alleged, among other matters, that the claimants had acted dishonestly, had participated in a conspiracy with the State’s agent, and had misrepresented the property’s value. The central issues were whether the contractual and related declarations should be made, and whether the claimants had acted in good faith.

1. Contract-based declarations. Declarations derived from the Framework Agreement, the SPA and related documents were granted, subject to wording that followed the contractual provisions as closely as possible. The court had reservations about their utility, but considered finality and the parties’ journey through the litigation relevant.
2. Opportunity to assess. Declaration (17), derived from Framework Agreement clause 4.1(a), was made in qualified form: the parties had agreed that the State had had the opportunity to carry out relevant assessments and assumptions. The declaration did not amount to a broader finding about the truth of every implied factual premise.
3. Good faith. The issue was whether the claimants acted in good faith, not whether they owed duties of good faith, whether reliance existed, or whether the State had a cause of action. The claimants’ description of the property as worth £275 million, without adequate elaboration and in the context of the available valuation material, was not frank and was misleading. Declarations (21) and (26) were therefore refused. Declaration (25) was granted only to the extent that it recorded the claimants’ satisfaction with the transaction documents, without the words “in good faith”.
4. Other declarations. Declarations concerning the validity, enforceability and binding effect of the Framework Agreement, the SPA and Msgr Perlasca’s authority were granted. A qualified wide negative declaration concerning civil liability was also granted, subject to concise final wording. The court stressed that this did not encourage such declarations in other cases without good reason, and did not determine any separate claim for fraud, conspiracy or other liability.

First instance judgment. The judgment records that earlier English courts held that the claim for declarations was suitable to be tried, but gives no citation for those decisions.