Court Allows Claims of Deceit and Conspiracy to Proceed in GI Globinvestment Case

Citation: [2024] EWHC 481 (Comm)
Judgment on

Introduction

The recent judgment in the case of GI Globinvestment Limited & Ors v Federico Faleschini & Ors [2024] EWHC 481 (Comm) offers a comprehensive examination of several legal principles pertinent to actions in deceit, conspiracy, and the nature of continuing representations. The Commercial Court, presided by Mrs Justice Cockerill, dismissed the strike-out applications brought by the Eighth Defendant, Mr Faleschini, and the Ninth and Tenth Defendants (the “LL Defendants”), save for the issue of negligent misrepresentation against Mr Faleschini.

Key Facts

The case centered around substantial investments made by GI Globinvestment Limited (“GIG”) and its associated claimants in the Skew Base Fund, based on financial advice allegedly provided by XY UK, a company owned by Mr Migani. The claimants, including well-known Italian businessmen MDM and LDM, contended they were defrauded under the belief of receiving independent and conflict-free financial advice from XY UK. The alleged deceit involved concealed relationships between XY UK, the Skew Base Fund, and related entities. The authenticity of service agreements involving the LL Defendants and their receipt of substantial payments from the Skew Base Fund were also under scrutiny. Claims in deceit and conspiracy were brought forward, contending that the investments collapsed during the Covid-19 market turbulence, leading to significant losses for the claimants.

The court closely examined several legal principles:

  1. Deceit and Fraudulent Misrepresentation: It was acknowledged that a representation concerning future or opinion often carries implied representations concerning current facts or the knowledge of the representor. The court employed principles from cases such as Edgington v Fitzmaurice (1885) and Ludsin v Eco3 Capital (2013), affirming that false representations of intent at the time they were made can constitute actionable deceit.

  2. Continuing Representations: Referencing authorities such as Gross v Lewis Hillman (1970) and Concept Oil v En-Gin Production (2013), the court highlighted the notion that representations, especially in the context of advice, may continue to affect the representee’s decision-making throughout the relationship, extending past the point of contract formation.

  3. Conspiracy: The judgment reaffirmed that participation in a conspiracy does not require the employment of unlawful means directly by the participant. Drawing from cases like Kuwait Oil Tanker v Al-Bader (No.3) (2000) and FM Capital Partners v Marino (2018), the court underscored that liability in conspiracy may extend to those who become involved at any stage, as long as they are aware of and actively support the unlawful purpose.

  4. Loss in Conspiracy: It was also recognized that damages in a conspiracy are “at large,” entitling the claimant to be restored to the position they would have been in had the conspiracy not taken place, based on the court’s analysis of Bank of Tokyo Mitsubishi UFJ v Baskan Gida (2009) and Capital for Enterprise Fund v Bibby Financial Services (2015).

Outcomes

The court concluded that the applications for strike-out and/or reverse summary judgment against Mr Faleschini and the LL Defendants must fail, meaning that the claims have sufficient substance to proceed to a full trial. This decision was rooted in the determination that the claims were not speculative or fanciful, and the alleged involvement of Mr Faleschini and the LL Defendants in the fraudulent scheme required further examination at trial.

The exceptions were the negligent misrepresentation claim against Mr Faleschini, which was not pursued by the claimants and thus was struck out, and the claim by LDM, where the court found the argument regarding LDM’s lack of direct investment in the Skew Base Fund to be logical but nevertheless arguable for deceit based on the advice he received for other investments.

Conclusion

In summary, Mrs Justice Cockerill’s judgment in GI Globinvestment Limited & Ors v Federico Faleschini & Ors is pivotal in understanding the application of legal principles surrounding fraudulent misrepresentation, continuation of representations, and conspiracy, particularly in financial investment contexts. The case presents an archetype where purported financial independence and impartiality in investing are juxtaposed against allegations of intertwining corporate relationships and undisclosed financial gains, warranting deeper investigation at trial. The upcoming trial will likely shed further light on the circumstances in which senior company officers and related corporate entities might be implicated in fraudulent schemes.