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High Court awards summary judgment in substantial banking fraud

April 06, 2021

In a complex banking-tech fraud case, the High Court has granted a summary judgment on the merits. In Foglia v Family Officer Ltd & Ors [2021] EWHC 650 (Comm). Mrs Justice Cockerill found the Defendant’s account could not explain all of the circumstances, and while certain points might be arguable, they were far from likely or compelling.

Facts

Monies were held by a fiduciary service with a Cayman bank, on behalf of the Claimant, an Italian national. Someone impersonating an authorised signatory of the fiduciary company gave fraudulent payment instructions to the Cayman Bank. The bank transferred EUR 15 million from the Claimant’s account to an account held by a company owned by the Defendant, Mr Cerri, a businessman operating in the fiduciary market.

Mr Cerri rapidly made a series of substantial payments from his company’s account, of which he had sole control, to companies and individuals connected with him, and to third parties in satisfaction of debts owed by Mr Cerri.

The Claimant, on becoming aware of the fraud, sought to identify the recipients of the proceeds and prevent the dissipation of her monies. Obtaining a series of freezing orders, proprietary injunctions and Norwich Pharmacal orders, she collected significant evidence as to Mr Cerri’s use of a burner phone, and accounts associated with that phone, allowing her to trace and recover EUR 11.5 million.

Considerations of the Court

The Court found that Mr Cerri had “no positive case which even theoretically explains the facts” of his implicit claims that he had been framed by the actual perpetrator. This finding was not completed “on the basis of assessing conflicts of fact”, but rather “on the basis of testing Mr Cerri’s evidence against contemporaneous factual documents, common ground and logic.” Cockerill J noted her approach was permissible under ED & F Man Liquid Products v Patel [2003] EWCA Civ 472.

A submission by Defendant’s counsel, that Mr Cerri’s fiduciary position and absence of history as a fraudster meant the relevant standard of proof was effectively the criminal standard, was dismissed.

Key Takeaways

Mrs Justice Cockerill noted that it was highly unusual for a claim such as this to be decided summarily, however Mr Cerri’s chance of success at trial was ”truly fanciful as opposed to real".

The Claimant’s rapid action, and use of phone and email data, obtained by way of the various orders, showcased the strength and speed of the English High Court as a venue to resolve cases of fraud.