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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Medsted Associates Ltd v Canaccord Genuity Wealth (International) Ltd [2017] EWHC 1815 (Comm) (20 July 2017) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2017/1815.html Cite as: [2018] WLR 314, [2018] 1 WLR 314, [2017] EWHC 1815 (Comm), [2017] WLR(D) 500

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Rolls Building, 7 Rolls Buildings Fetter Lane, London EC4A 1NL
		20/07/2017

Mr. Justice Teare :

1. This case arises out of Mr. Vasileios Valasakis' business of introducing wealthy Greek citizens ("the clients") to an investment institution in return for a share of the commission and funding rebate payable by the clients to the institution on financial business transacted by the clients with the institution. Mr. Valasakis (through his BVI company, Medsted^[1], the Claimant) formed a business relationship with Collins Stewart (the former name of the Defendant) in 2009 by which clients were introduced by Medsted to Collins Stewart and a share of the commission and funding rebate were paid by Collins Stewart to Medsted. But in 2010 Collins Stewart did business directly with one or more of the clients on terms which cut out Medsted from any right to claim its share of commission or funding rebate. Mr. Valasakis has sued Collins Stewart for the sums which would have been received had Collins Stewart adhered to the original business relationship. Collins Stewart say that the clients discovered the amount of commission and funding rebate being paid by Collins Stewart to Medsted and preferred to trade directly with Collins Stewart. Mr. Valasakis does not accept this and says that Collins Stewart set about to do business directly with the clients in breach of its agreement with Medsted.
2. The events in question took place between 7 and 8 years ago. There is a dispute as to whether the business relationship between the parties was on Medsted's terms of business or on Collins Stewart's terms of business. Evidence has been given about meetings between the parties but the age of the dispute inevitably means that the court's findings as to what happened will depend primarily upon the contemporaneous documents, the transcripts of telephone recordings and the probabilities.
3. Before narrating the events as evidenced by the contemporaneous documents and the telephone transcripts it is necessary to comment upon the witnesses.
4. Medsted is a company registered in the BVI. Mr. Valasakis is a beneficial owner to the extent of 65%. His business partner, Mr. Dedetsinas ("Marios") is a beneficial owner to the extent of the remaining 35%. Mr. Valasakis gave oral evidence. Marios did not. Mr. Hodge Malek QC, on behalf of Collins Stewart, submitted that Mr. Valasakis was a thoroughly dishonest and evasive witness. That would be an extreme view to take of his evidence. I accept that he was shown, in his evidence in this case, to be secretive. Thus it was not until his cross-examination that he disclosed the beneficial interests behind Medsted. Further, until he was required by this court (by order of Blair J.) in the week before the trial to disclose the identities of all sub-IBs (sub-introducing brokers) he had not done so. He had said in his witness statement that the sub-IBs did not have the necessary contacts or expertise to make the introductions directly to financial institutions. This was untrue, because the sub-IBs included himself and Marios. I also accept that the truth sometimes had to be extracted from him. Thus he was asked how Mr. Xenophontos, who brought four clients from MAN to Collins Stewart in 2008, was paid. Initially he said that he could not remember, he then suggested that he had been paid by MAN, before admitting that he had received payment as a sub-IB. All of these matters meant that he could not regarded as a reliable witness. They suggested to me that I should be cautious about accepting his evidence and that I should only do so when it is not in dispute or when it is supported by contemporaneous documents or when it was consistent with the probabilities. I do not regard him as "a thoroughly dishonest and evasive witness" because he made admissions and often thought carefully about his answer with a view, it seemed to me, to giving an accurate answer, though perhaps sometimes he was thinking about what answer would assist his case.
5. Marios did not give evidence. Mr. Malek submitted that the decision not to call him was a "cynical attempt to disadvantage the court" and that adverse inferences should be drawn. Mr. Malek pointed out that there was no medical evidence to explain Marios' absence, that Marios had a major role in dealing with clients and that his contribution would have been significant because there were at least 17 issues on which he could have assisted. There is force in this submission but when Mr. Valasakis was asked to explain why Marios had not given evidence it was apparent that Mr. Valasakis was very upset by the subject. Eventually, when he was able to speak, he described Marios, in effect, as a broken man. Mr. Malek accepted that his upset was genuine but suggested that it was the effect of a gruelling cross-examination being over. That is not the impression which I got. In these circumstances I am not persuaded that it would be appropriate, and might well be unfair, to draw adverse inferences from Marios' absence.
6. The Defendants called three witnesses, Mr. Justin Jouan (who was a stockbroker at Collins Stewart in Jersey), Mr. Steven Glover (another stockbroker at Collins Stewart who became head of stockbroking in Jersey on 1 January 2010) and Mr. Grahame Lovett (the chief executive officer of Collins Stewart's offshore business). Mr. Paul Darling QC, on behalf of the Claimant, submitted that Mr. Jouan and Mr. Glover had lied in their evidence to the court. Mr. Jouan accepted that he had made an untrue statement in an exchange with Marios on 16 June 2010 and that he had made an untrue statement about that exchange in his witness statement. Mr. Glover accepted in his evidence that lies had been told to Marios by Mr. Jouan but did not reveal that in his witness statement. Mr. Lovett also accepted that Mr. Jouan had lied. As a result Mr. Darling submitted that the Defendant's witnesses had "lost all credibility." As with Mr. Malek's submission, this would be an extreme view to take of the Defendant's witnesses. The lies told to Medsted in 2010 were part of a scheme to conceal from Medsted that Collins Stewart was dealing directly with clients of Medsted. This does not justify the telling of lies but explains why they were told. Although the concealment had been admitted in the Defence and in witness statements the lies had not been acknowledged. The fact that Mr. Jouan accepted in cross-examination that he had told an untruth in his witness statement (where he had effectively denied that he had lied to Marios) means that it would be unsafe to accept his evidence save where it is not in dispute, supported by contemporaneous documents or consistent with the probabilities. Mr. Glover did not reveal in his statement that lies had been told but no positive untruth in his statement was, I think, identified. So far as Mr. Lovett is concerned it was not, I think, suggested that he had lied. There does not appear to be the same need for caution when evaluating their evidence as there is when evaluating Mr. Jouan's evidence. However, having regard to the time which has elapsed since 2008-2010 the court is more likely to reach accurate conclusions about what happened if close regard is given to the contemporaneous documents rather than to recollections today of what was said then. There is a further reason for doing so with regard to the evidence of Mr. Lovett and Mr. Glover. Both allowed their evidence to be coloured by their belief that Collins Stewart never deals on the terms of third parties, notwithstanding that there is no contemporaneous email which ever stated that position to Medsted. This suggested that they were seeking to justify their case rather than seeking to remember what actually happened.
7. Mr. Darling criticised the Defendant's approach to disclosure and Mr. Malek criticised the Claimant's approach to disclosure. Each suggested that appropriate adverse inferences be drawn. Rather than recount each party's failings in the matter of disclosure before trial I shall bear the criticisms in mind when making my findings to the extent, if at all, such criticisms become relevant.
8. The events in question span the years 2008-2010. I shall attempt to set out the material events chronologically.

2008 – The transfer of four MAN clients to the Defendant

9. In 2008 Mr. Valasakis, who had introduced four clients to MAN for the purpose of trading CFDs (contracts for differences), was looking for an alternative financial house to take over the role of MAN. He and Mr. Jason Xenophontos, the account executive at MAN, visited Jersey on 22 July 2008 to persuade Collins Stewart to take over the business. They met Mr. Lovett and Mr. Jouan in a boardroom, had drinks in a pub and then had lunch in a restaurant (though Mr. Lovett may not have gone to the pub).
10. Mr. Valasakis' evidence is that at the meeting there was a "high level" discussion as to whether Collins Stewart would be prepared to take on the business. There was no discussion of commercial terms though Mr. Valasakis raised the issue of an IB (introducing broker) agreement and a non-circumvention agreement. He thought Collins Stewart were keen to get the business.
11. Mr. Jouan's evidence is that the meeting was "basically a meet and greet". No notes were taken. Mr. Lovett expressed an interest in the business if it was commercially viable. Mr. Jouan said that Mr. Lovett mentioned that they would only take on the business if the clients "posted adequate margin" (to cover Collins Stewart's exposure to the first-tier provider of CFDs) and that Mr. Valasakis said that this would not be a problem.
12. Mr. Lovett's evidence is that he explained that the ability to post margin was a "very important consideration" and that Mr. Xenophontos had replied that margin had never been a problem. He was interested to know the terms on which MAN were operating and Mr. Xenophontos agreed to send them. He said they talked about "headline issues".
13. There is therefore agreement between Mr. Valasakis and Mr. Lovett that the meeting was "high level" and concerned "headline issues".
14. An email sent by Mr. Valasakis to Mr. Lovett on 24 July 2008 referred to the meeting and noted:

"As agreed, I attach here a draft IB Agreement and the NCA/NDA. Both need rewriting since they were drafted before Mifid was in effect. I believe your compliance could use both as a basis for a new draft…………."

15. The attached IB agreement was on the form of ODL, a finance house with whom Mr. Valasakis had been dealing. The NCA/NDA (non-circumvention/non-disclosure agreement) which was attached also appeared to be one which had been used in the past. This email is contemporaneous evidence that it had been agreed at the meeting that Mr. Valasakis would provide a draft IB agreement and NCA/NDA to the Defendant. It is therefore more likely than not Mr. Valasakis raised the subject of these agreements in the meeting on 22 July 2008.
16. On 25 July 2008 Mr. Xenophontos provided Collins Stewart with details of the charges paid by the clients. There was a commission of 0.7% of which 0.25% was rebated (paid) to Medsted and a financing charge of 6.2% of which 4.5% was rebated (paid) to Medsted. It is therefore more likely than not that at the meeting on 22 July 2008 Mr. Lovett expressed an interest to know the terms on which MAN were operating and that Mr. Xenophontos agreed to send them.
17. On 12 August 2008 the four MAN clients were transferred to Collins Stewart. In late August Mr. Xenophontos attended a further meeting in Jersey when rates were discussed.
18. On 9 September 2008 the Claimant sent an Invoice to the Defendant in respect of business executed in August 2008.
19. On 16 October 2008 Mr. Jouan referred to the meeting in Jersey:

"When we recently met with Grahame and Jason we did discuss that Collins Stewart would require a "lump" sum on deposit with Collins Stewart for each of your clients' accounts. This has never materialised, although each client is very prompt on paying the necessary margin……………I ask you again to ask each client to send some extra cover to be held by Collins Stewart so should there ever be a problem with a payment we have enough cash here to make the payment."

20. This email, albeit sent almost 3 months after the Jersey meeting, corroborates the evidence of Mr. Lovett and Mr. Jouan that the subject of margins was mentioned. It is therefore more likely than not that their recollection that this topic was raised is correct.
21. It is convenient at this point to resolve Issue 5 in the case, namely, whether the parties agreed orally at the meeting on 22 July 2008 that the Claimant would cause its clients, on demand by the Defendant, to post additional margin and that if the Claimant could not do so the Defendant could terminate the agreement with the Claimant. Whilst the subject of margins was mentioned an agreement to this effect is not suggested by the contemporaneous documents. If there had been such an agreement in terms which were intended to be enforceable it is more probable than not that Mr. Lovett or Mr. Jouan would have recorded the agreement in an email shortly after the meeting and in any event before trading commenced. Mr. Jouan, in his email dated 16 October 2008, referred to discussions, not to an agreement. I therefore do not find that the suggested agreement was reached though, as I have already said, there probably was discussion about the need for a margin to be provided. Issue 5 also raises the question whether at the meeting on 22 July 2008 there was an agreement that the clients would be informed of the charging structure, namely, the sub-division as between the Claimant, the first-tier provider and the Defendant, of the charges levied by on the clients. This is not supported by the contemporaneous documents (or by the witness statements) and so I do not find that the suggested agreement was reached.
22. In late 2008 Mr. Valasakis and Mr. Jouan discussed the possibility of further clients being introduced. The later events show that this further business was agreed upon. It is this further business which has given rise to the present claim.

2009 – The new business between Medsted and Collins Stewart

23. The first new client introduced to Collins Stewart was Mr. Alexis Komninos. He provided a margin on or about 11 or 12 May 2009 and on 13 May 2009 Mr. Valasakis asked Mr. Jouan to send a draft IB agreement and a draft NCA/NDA. He asked whether he should send one for review. Mr. Jouan replied "yes please".
24. On the same day the two spoke on the telephone. Mr. Jouan asked whether the clients knew that they were being charged 6.2 %. Mr. Valasakis replied that they did. Mr. Valasakis said that that it was important that the clients were not told what Dresdner (a first-tier provider of CFDs) was charging and Mr. Jouan replied that he would not do that. Mr. Valasakis said that the "high" commission was being charged because it was not only the Claimant that was getting paid but also other IBs.

"The operation is structured. Medsted is in the middle, Medsted has IBs, so Medsted pays the IBs and the IBs bring the customers….there are two or three layers after us."

25. On 15 May 2009 Mr. Valasakis sent by email to Mr. Jouan a note on "the commission split between Medsted and its SubIBs" and a draft IB agreement. Mr. Jouan had agreed to these being sent on 13 May 2009.
26. The note was headed "Commission Proposal to Collins Stewart (CS)". The note included the following:

"Medsted's clients are either Brokers that have a large client base or Securities Firms and other entities that have retail and institutional brokers on their payroll (all called IBs). Medsted gets paid by the overseas firms and then in turn pays its subIBs and the third parties that provided the clients.

With this business model the commissions are split between various parties.

We propose to keep the same commissions we were charging in 2008 when we operated through MAN.

Client paid 0.7% commission and Euribor + 6.2% Financing ……….

Medsted was charged by MAN: 0.45% Commission and Financing Euribor + 1.7%.

To get this business ………Medsted pays handsomely its subIBs.

Usually on the Commissions Medsted rebates: 0.10% (subIB A: 0.10%, subIB B: 0.05%.

Usually on the Financing Medsted rebates: 3.7% (subIB A: 3%, sub IB B 0.70%)."

27. The attached IB Agreement was headed "Introducing Agreement between Collins Stewart and Medstet Associates Limited (Medsted)." It provided for a commencement date of 25 January 2009, for English law to govern and for the agreement to be subject to the jurisdiction of the English courts. The following provisions are to be noted:

"The following terms outline the agreement between the parties whereby Medsted is responsible for introducing clients to Collins Stewart Limited trading as COLLINS STEWART (CS). CS will execute separate agreements with these clients.

Medsted acknowledges that it is not an employee of CS and has no power or authority to enter into agreement on CS's behalf.

We set out below the terms that will apply to transactions with customers which you introduce to us. We will enter into customer agreements that will govern our relationship with such customers. We will not provide investment advice to you or to such customers. We are regulated by the FSA and the services that we provide will be subject to its rules.

Commencement

This agreement will commence on the 25^th January 2009.

Solicitation

Medsted agrees that, after the cessation of this agreement, for a period of eighteen months it will not approach or solicit any customer or client of CS, except clients that Medsted has introduced to CS. Likewise, CS will not approach, try to solicit or propose to continue trading (unless clients continue to trade by their free will) with CS any client introduced by Medsted for a period of eighteen months after the cessation of this agreement.

Commission

CS will pay Medsted a commission and funding rebate in relation to CFDs or any other product placed with CS by customers introduced by Medsted to CS. Such payments will be made monthly in arrears. The following outlines the commercial terms of the agreement:

Clients will pay 45 b.p. inclusive exchange fees plus your split

For long positions clients will pay 170 b.p. over 1 month local currency LIBOR plus your split

For short positions clients will receive 200 b.p. under 1 month local currency LIBID less your split

Any off exchange crosses where the client is charged commission the exchange fees and sales taxes will be calculated and split 50/50 between CS and Medsted.

CS will continue to pay Medsted commission and funding rebates from the customers that Medsted introduced to CS for a period of three years after the cessation of this agreement.

Termination

1. The term of this agreement is 3 years from the commencement date.

2. The agreement can be terminated by either party giving 90 days notice after the term of the agreement."

28. By deducting the 45 b.p. or basis points (ie 0.45%) from the total commission of 0.7% in the Commission Proposal it can be calculated that the rate payable to Medsted was 0.25%; the 0.45% covers the amount paid to the first-tier provider of CFDs and the amount retained by Collins Stewart. Similarly, by deducting the 170 b.p. or basis points (ie 1.7%) from the total financing cost of 6.2% in the Commission Proposal it can be calculated that the rate payable to Medsted in respect of financing was 4.5%; the 1.7% covers the amount paid to the first-tier provider and the amount retained by Collin Stewart. Medsted's share of the financing charge was regarded by Collins Stewart as unusually high given that Medsted was not bearing any of the financial risk.
29. On 19 May 2009 Marios sent to Mr. Jouan a "daily report" setting out the amounts to be charged to Mr. Komninos and the shares of those charges taken by the first-tier provider, Collins Stewart and Medsted.
30. Thereafter further clients were introduced in May and June 2009.
31. On 11 June 2009 Medsted sent the first invoice to Mr. Jouan in respect of business executed in May 2009 through Collins Stewart.
32. On 17 June 2009 preparations were made for a meeting in Athens which never took place. An email from Mr. Valasakis said the signing of the "Medsted-Collins Stewart IB agreement" was on the agenda. He noted that he had sent Mr. Jouan a copy. Instead of the meeting a telephone call took place on 19 June 2009 between Mr. Valasakis, Mr. Lovett and Mr. Jouan. They discussed whether it was possible to use a first-tier provider other than Dresdner.
33. At some stage the Clamant provided the Defendant with another, and amended, copy of the IB agreement. It is not clear when it was sent to the Defendant. But it seems that it must have been on or before 30 July 2009 because on that date Mr. Lovett forwarded a copy of it to the Defendant's Head of Legal and Compliance asking her to "have a quick look and I am sure you will tell me to throw it in the bin." He asked for a copy of the Defendant's Introducer Agreement ("IA").
34. Further clients were introduced in July, August and October 2009.
35. On 21 October 2009 Mr. Jouan provided Mr. Valasakis with a copy of the Defendant's IA in preparation for a lunch meeting the next day at Coq d'Argent in London. Mr. Valasakis was asked to review it because Mr. Lovett wished to discuss it. It provided for the law of Guernsey to apply and for disputes to be resolved by the courts of Guernsey. Either party could terminate "these arrangements" by giving "immediate written notice". There was no non-circumvention clause.
36. Mr. Valasakis' evidence about the lunch in his witness statement was that he met Mr. Lovett and Mr. Jouan. They discussed the volume of business being done. Mr. Valasakis asked Mr. Lovett if he would sign the Medsted IB agreement and Mr. Lovett said "take a look at ours". Mr. Valasakis was provided with a copy of the Collins Stewart form which he put in his pocket. He then asked Mr. Lovett about a non-circumvention agreement and Mr. Lovett replied that such a document was not needed because Collins Stewart would never cut a business partner out of his fees. Mr. Lovett then asked about the total charges levied on the clients and whether they were happy to pay at that level. Mr. Valasakis replied that the level was fine and that a number of the clients had paid similar rates before and often paid higher rates in Greece.
37. Mr. Lovett's evidence in his witness statement was that he gave Mr. Valasakis a copy of Collins Stewarts' IA agreement which he put in his pocket without reading. He said that Collins Stewart would only do business on those terms and that Mr. Valasakis was "fine with that". But he also said that Mr. Valasakis gave him a copy of Medsted's terms which he put in his pocket. He recalled saying that he would sign a non-circumvention agreement and accepted, in his oral evidence, that he said that Collins Stewart would not cut a business partner out if its fees. He said that in the discussion about rates Mr. Valasakis assured him that the clients knew what Collins Stewart were charging and what Medsted were charging. He said that they also discussed the importance of having "an adequate buffer" and that Mr. Valasakis replied that that would not be a problem. Mr. Lovett said he left the meeting thinking that he had "an agreement on the important point of buffer".
38. Mr. Jouan's evidence in his witness statement was that Mr. Lovett did most of the talking. He recalled him saying that Collins Stewart would only operate on its own terms and that rates and the need for a buffer were discussed. When cross-examined he agreed that there had been an exchange of terms.
39. Apart from an email dated 23 October 2009 from Mr. Valasakis thanking Mr. Lovett for the lunch there is no record of this meeting.
40. It is common ground that Mr. Lovett and Mr. Valasakis exchanged copies of their companies' respective terms. It appears that the copy of Collins Stewart's terms handed over had been signed by Mr. Lovett and dated 20 October 2009. But Mr. Lovett's evidence that he said that Collins Stewart would only deal on its own terms and that Mr. Valasakis was "fine with that" (evidenced by, he said in cross-examination, there being no objection) is not likely to be right. First, it does not fit with Mr. Valasakis handing Mr. Lovett a copy of Medsted's terms. Second, no such agreement was confirmed by email after the meeting. Third, when Mr. Lovett referred to the question of terms in a much later email dated 26 April 2010 he made no reference to the suggested agreement at the restaurant in October 2009.
41. It is also common ground that there was a discussion about a non-circumvention agreement. Mr. Lovett said he would not sign one, adding that Collins Stewart would not cut out a business partner from its fees.
42. The question of fees was discussed. However, Mr. Lovett says that he enquired whether the clients were aware, not merely of the total charge, but of the respective shares of Collins Stewart and Medsted and that Mr. Valasakis said they were. I have carefully considered this question because it is understandable that Mr. Lovett might be concerned to be assured that the clients knew that Collins Stewart were only keeping a small part of the gross fees paid by the clients. However, it is clear that Mr. Valasakis did not wish the clients to know of the split. He had made this known to Mr. Jouan on 13 May 2009. It is therefore unlikely that he said in October 2009 that they had been told of the split. I have concluded that it is more probable than not that there was no discussion about making the split known to the clients in October 2009.
43. It is likely that there was some discussion about margin or buffer (because it is known that Collins Stewart was concerned about this, had raised it in Jersey in 2008 and had referred to the subject in emails). However, it is unlikely that any enforceable agreement was reached on the subject because no attempt was made by Mr. Lovett or by Mr. Jouan to record the terms of any such agreement after the meeting.
44. In early November 2009 Mr. Jouan and Mr. Glover met Mr. Valasakis and Marios in Greece. The object of the visit was to meet the clients. They did so and met, in particular, Mr. Komninos. An email from Mr. Jouan dated 10 November 2009 suggests that he was impressed by the wealth of the clients.

2010 – The events leading to the end of the business relationship

45. On 5 February 2010 Zoe Smart of Collins Stewart sent to Mr. Valasakis a "position Statement" from Commerzbank. It was copied to Mr. Alexis Komninos. One of the columns in the statement was headed "Funding" and listed certain figures from which it was possible (I was told) to calculate the commission rate charged by Commerzbank. Very shortly afterwards Marios emailed Mr. Jouan instructing him not to send a statement to Mr. Komninos or any other client. He explained that he did not want the clients to know what the first-tier provider was charging. On the same day Mr. Valasakis also emailed Zoe Smart saying that she should be careful not to send Mr. Komninos any statements which showed Collins Stewart's charges.
46. At about this time Mr. Jouan and Mr. Glover decided to visit Athens again. On 3 March 2010 Mr. Jouan spoke to Mr. Komninos by telephone about the proposed trip. Mr. Jouan asked Mr. Komninos whether Mr. Komninos was "going to include Marios and Vasileios". He suggested to Mr. Komninos that they did not need to be invited or involved. Mr. Komninos agreed and asked that any business they did should "stay between you and me". Mr. Jouan agreed and said that Mr. Valasakis and Marios would not "know a thing". The transcript of the call suggests that they had in mind business involving Ioannis Panagiotopoulos, another of the clients who appears to have been introduced by Mr. Komninos (and referred to in the case as "Ioannis").
47. The visit to Athens took place between 8 and 11 March 2010 when Mr. Glover and Mr. Jouan met clients with Mr. Valasakis and Marios. There was no evidence of any meetings at which Mr. Valasakis and Marios were absent though Mr. Glover and Mr. Jouan did cancel dinner with them on the first day.
48. On 15 April 2010 there was a telephone call between Mr. Jouan and Mr. Komninos lasting almost half an hour (26 minutes and 4 seconds). Mr. Jouan called Mr. Komninos and said that he had been speaking with Ioannis who asked him about the level of charges. Mr. Komninos said that Ioannis had spoken to him on the same subject. Both Mr. Jouan and Mr. Komninos appreciated they were in a difficult position. They did not want to lose the business of Ioannis ("he's a very good client"). Mr. Jouan suggested that new accounts be opened with other company names which would be kept separately. Mr. Komninos would be the introducer and Mr. Valasakis and Marios would never know about it. Mr. Jouan said he did not want to go behind them "but we're not, it feels like we're not going behind their backs because these guys won't pay the rates that they want to pay. So it's not as though, it's not as though they're missing out out on the accounts because these guys won't pay the rates anyway." Mr. Komninos said he would speak to Ioannis and shortly afterwards Ioannis telephoned Mr. Jouan. He said that he was really upset with Marios about the amount he was being charged. Mr. Jouan said that Collins Stewart were charging what they had been told to charge. The conversation ended with Ioannis agreeing to open an account with Collins Stewart. Mr. Jouan then had another long call with Mr. Komninos (almost 20 minutes). Mr. Jouan said that he had "sorted everything out". Mr. Komninos said that he had sought to persuade Medsted to reduce their charges but they had refused and had blamed Collins Stewart. They discussed the new arrangements (which were to be beneficial both to Mr. Komninos and Collins Stewart) and Mr. Komninos repeated that Marios and Mr. Valasakis should not find out about the new arrangements.
49. On 21 April 2010 Mr. Valasakis asked Mr. Glover by email whether Mr. Lovett had approved the IB and NCA agreements. On 27 April 2010 Mr. Glover replied saying that "as previously advised we are unable to sign the agreements in their current format." That was probably a reference to what had been said in Athens. Mr. Glover referred to Collins Stewart's terms which had been given to Mr. Valasakis and asked for Mr. Valasakis' comments.
50. On 28 April 2010 Mr. Jouan was involved in arranging an IB agreement, not with Medsted, but with Mr. Komninos who, Mr. Jouan said in an internal email, "will be introducing plenty of business to us once the agreement is signed."
51. On 29 April 2010 Mr. Valasakis emailed Mr. Glover, it would appear in reply to Mr. Glover's email of 27 April 2009, saying that Medsted will sign Collins Stewart's form of agreement subject to one correction. He added that "it is the NC that needs to be signed together with your IA agreement for the obvious reasons we discussed in Athens. Any suggestions ?"
52. It appears that Marios signed a copy of Collins Stewart's terms on 30 April 2010 (with manuscript amendments to two clauses, clause 4 and 6.1.) It was kept on Medsted's files. It was not sent to Collins Stewart (as recorded by a manuscript note which states that Collins Stewart have no record of it being "produced or received).
53. Mr. Komninos then started to introduce clients to Collins Stewart who opened accounts with them. Collins Stewart also opened new accounts for Mr. Komninos and for Ioannis. Medsted was not informed of these accounts. Hiding Mr. Komninos' new account from Marios required Mr. Jouan to delete a reference to it in a schedule sent to Marios on 2 June 2010, saying that he had "crossed off a new CFD account internally at Collins Stewart." On the same day Mr. Jouan told Marios that "Alex [Mr.Komninos] has gone very quiet ….do you think he is doing something elsewhere or just sitting back for the minute." When cross-examined he accepted that this was dishonest.
54. On 11 June 2010 the first-tier provider, Crédit Agricole Cheuvreux, informed Collins Stewart that the portfolio was one of high risk and that the margin should increase from the current 20% to 50%. Mr. Jouan passed on that information to Mr. Komninos on the same day but he did not pass it on to Medsted.
55. On 16 June 2010 Marios asked Mr. Jouan by email whether Mr. Komninos had opened another account with Crédit Agricole. Mr. Jouan replied "No. Do you think he has gone direct to them?" Mr. Jouan, when cross-examined, accepted that this was a lie though in his witness statement he had said that his reply to Marios was truthful. Mr. Jouan spoke to Mr. Komninos and told him that he, Mr. Jouan, had been asked whether Mr. Komninos had an account and that he had replied that he did not. Mr. Komninos said that Medsted had thought they could "trick me and the other people forever."
56. On 22 June 2010 Mr. Jouan emailed Marios saying that Cheuvreux had raised their CFD positions "overnight" to 50%. He set out the amount of margin required, over £1m, but omitted reference to any of the new accounts. Marios responded that day in relation to each account saying that positions would be reduced in consequence. Also that day Collins Stewart paid the required sums to Cheuvreux.
57. There was then a telephone call between Mr. Lovett, Mr. Jouan, Mr. Glover, Mr.Valasakis and Marios. Mr. Lovett made reference to the increase in margin from 20% to 50% which, he said, presented problems. He referred to the need for cash at short notice, something to which he had referred "when we first started the relationship". As a result of pressure on Collins Stewart he said that he wished to terminate the relationship. He accepted that this was "not your doing" and "it's not our doing….it's just the way the market is." Mr. Lovett said the relationship could continue for 3 months so that Medsted could find "homes for clients." Mr. Valasakis responded by suggesting that "legally we keep our relationship. We terminate the clients but we keep our legal relationship…because down the road you never know". He then mentioned the agreement which Marios had signed and which was sent back to Collins Stewart. (The latter part of that statement appears to be wrong because no such agreement was found at Collins Stewart.). Mr. Glover commented that "that's in place, we can leave that in place. Yes absolutely."
58. Medsted continued to invoice Collins Stewart in respect of trades on accounts introduced by Medsted and of which they were aware. The last payment was made in August 2011. The total sum paid by Collins Stewart to Medsted between May 2009 and July 2011 was €942,294. Medsted's claim in this action is for an account of the sums of further commission to which it would, on its case, have been entitled in respect of the business which Collins Stewart did with Mr. Komninos and Ioannis (and others) but which had not been disclosed to Medsted.

The issues

59. Counsel agreed a number of issues for the court to resolve in deciding this case. I have already determined Issue 5 (see paragraph 21 above). I shall now determine the other issues.

The first and second issues

60. The first issue is whether the express terms of the parties' agreement contained the terms of the Medsted IB sent by Medsted to Collins Stewart on 15 May 2009. The second issue is whether the parties reached agreement on the terms of Collins Stewart's IA on 30 April 2010. The two issues can be considered together.
61. In essence Mr. Darling submitted that Medsted's terms were agreed by conduct. After 15 May 2009 Medsted introduced 16 clients to Collins Stewart between May 2009 and March 2010. Collins Stewart concluded customer agreements with the clients. The clients placed CFDs and other products with Collins Stewart who then paid the agreed share of the commission and funding rebate to Medsted. It was submitted that there was no other explanation for the parties performing in this way other than that there was an agreement in place between them on the terms of Medsted's IB agreement. In essence Mr. Malek submitted that Medsted's terms were repeatedly rejected by Collins Stewart and that on 30 April 2010 Medsted signed Collins Stewart's terms.
62. In resolving this issue it is to be borne in mind that the question of what terms have been agreed is to be determined objectively. There was, perhaps inevitably, evidence about the parties' subjective views but they cannot assist and are irrelevant.
63. Medsted's IB form of agreement together with the Commission Proposal were sent on 15 May 2009 just after the first client, Mr. Komninos, had been introduced and was ready to start trading. Mr. Vasiliakis had said on 13 May 2009 that he would send one "for review". On 15 May 2009, when sending it, he asked that it be looked at. It would appear, objectively, that Mr. Valasakis was making clear his willingness to contract on the terms of his IB agreement.
64. Chitty on Contracts 32^nd ed. at para. 2-029 states that "conduct will only amount to acceptance if it is clear that the offeree's alleged act of acceptance was done with the intention (ascertained in accordance with the objective principle) of accepting the offer". Formation and Variation of Contracts by Cartwright at para. 3-35 states that the conduct must communicate the offeree's "unequivocal assent to the terms of the offer." The question is whether the conduct can "only be explained" on the assumption that the offer is being accepted. "In practice, however, such a contract may often be found not only as a result of the acceptance by means of the offeree's conduct, but by the conduct of both parties, from whose mutual dealings it can be inferred that they have both agreed to proceed on the terms which are in fact evidenced by their dealings, without needing to identify separately the offer and the acceptance."
65. There is much to be said for the submission that Medsted's offer to contract on the terms of its IB agreement was accepted by Collins Stewart's conduct in dealing with the clients who had been introduced and in paying Medsted commission and funding rebate in respect of the introductions. The first invoice was provided by the Claimant on 11 June 2009 and was paid on 30 June 2009. Further invoices were supplied at monthly intervals thereafter and paid shortly afterwards.
66. Two points are taken against this submission. First, it is said that there was insufficient correlation between the terms of the IB agreement and Collins Stewart's conduct because the commission paid did not wholly correlate with the proposed commission. An analysis by Mr. Glover of all the commissions and funding rebates paid showed that only 10.39% were charged at 0.7% and only 71.39% incurred finance charges at 6.20% (0.7% and 6.20% being the rates set out in the Commission proposal). Mr. Vasiliakis accepted in evidence that the rates had been "varied". He said that the rates proposed on 15 May 2009 had only been a "road map". However, the rates charged until 18 or 19 August 2009 were at the proposed rates. Thereafter they varied, according to Mr. Darling's submission (though I was not referred to any evidence on this), as a function of the parties adapting their contract by way of a course of dealings as new clients were introduced. In my judgment the correlation between the terms of the IB agreement and the conduct of Collins Stewart in making monthly payments of commission and funding rebates was sufficiently close to justify an inference (assessed objectively) that Collins Stewart had agreed to do business on the terms of Medsted's IB agreement. Collins Stewart could have said on or about 15 May 2009, but did not, that trading on a third party's terms was unacceptable to them. Instead they accepted the clients introduced by Medsted and paid the commission and funding rebates in the manner contemplated by the IB agreement without any protest.
67. The second point taken against Mr. Darling's submission is that the IB agreement contemplated that both parties would sign it. Neither had done so. It was submitted that this gave Collins Stewart "the right to sign before being bound", which right had not been waived. Reliance was placed on the decision in Oceanografia SA v DSND Subsea AS (The Botnica) [2007] 1 AER (Comm) 28. In that case there was a provision in a charterparty that the offer of the vessel was "subject to the signing of mutually agreeable contract terms and conditions". It was held by Aikens J. that the proper construction of that provision was that there was no binding contract to charter the vessel until both parties had signed all the contract terms that had to be agreed; see paragraphs 78-84 of the judgment. There is no comparable term in the IB agreement in this case. The IB agreement merely has a space for two signatures headed "signed on behalf of ….". I do not consider that a mere provision for signature confers a right to sign before being bound.
68. There are other matters to be considered. On 17 June 2009 Mr. Valasakis, when preparing for a meeting (which in the event did not take place) said in an email to Mr. Jouan that on the agenda would be "signing the Medsted-Collins Stewart IB agreement". This communication could mean that Mr. Valasakis did not consider that an agreement had been reached. But it is also explicable on the basis that he wanted the assurance of a signed contract, notwithstanding that there might already be in existence a contract as a result of the parties' conduct. But whatever opinion is to be attributed to Mr. Valasakis his subjective understanding of the position is irrelevant. Of course his request to put "the signing" of the agreement on the agenda is an objective fact communicated to Collins Stewart. But I do not regard the request as being inconsistent with Collins Stewart having accepted the IB agreement by their conduct. Contracts are often signed after the contractual relationship between the parties has been formed by their conduct.
69. In July 2009 Medsted sent Collins Stewart a further copy of the IB agreement but with an amendment providing as follows: "CS and Medstet may agree to give some customers special commission and financing rates; these rates and the splits will be agreed between the two parties and the customer and will become an integral addendum to this agreement." This amendment might well explain the circumstance that after mid-August 2009 not all commissions and finance rebates were consistent with the original rates. In all other respects the IB agreement was the same. I do not regard this amended IB agreement as being inconsistent with Medsted's case. Further clients were introduced in July, August and October 2009 and Collins Stewart continued to pay commission and finance rebates but sometimes at revised rates. That is conduct from which the court can infer, objectively, that Collins Stewart had accepted the amended form of IB agreement. Of course, it is known that Mr. Lovett wished to "throw [the amended agreement] in the bin" but nobody at Collins Stewart informed Medsted that it was not acceptable. On the contrary they did business with Medsted without a word of objection to Medsted's IB agreement.
70. By 5 October 2009 the Claimant had introduced eight clients and had rendered five monthly invoices for commission and funding rebates and the Defendant had paid €41,111.63 against those invoices. This conduct is cogent evidence that by this time the Defendant had accepted the Claimant's IB agreement by the business it did with the Claimant. I have considered whether there is any other explanation for the parties doing the business they did other than that there was an agreement in place between them on the terms of the Claimant's IB agreement and I do not consider that there is.
71. It was not until 21 October 2009 that Collins Stewart mentioned their own form of IA agreement. Mr. Lovett gave Mr. Valasakis a copy of it over lunch at Coq d'Argent on 22 October 2009. Mr. Valasakis gave Mr. Lovett another copy of his terms. Each put the other's terms in his pocket. The most than can be said about this event is that each side impliedly expressed a preference for contracting on its own terms.
72. Had this exchange of terms taken place at the outset of the parties' relationship it would have indicated that there was no agreement on terms. But it took place after the parties had been doing business together for 5 months in circumstances where Medsted had provided a copy of its terms, thereby indicating that it wished to contract on those terms, and where Collins Stewart's conduct in doing business thereafter with Medsted was only explicable on the basis that it had accepted those terms. In those circumstances the request that Mr. Valasakis review Collins Stewart's terms by email on 21 October 2009 and the provision of another copy (signed by Mr. Lovett) on 22 October 2009 were, when assessed objectively, a request that Mr. Valasakis consider doing business on Collins Stewart's terms. That offer was not accepted by Mr. Valasakis at the Coq d'Argent.
73. The subject of signing the IB (and NCA) agreement was again mentioned during one or both of the Athens trips in November 2009 and March 2010. It is likely that Mr. Valasakis was informed that this was a matter for Mr. Lovett. That is because on 21 April 2010 Mr. Valasakis emailed Mr. Glover by email in the following terms: "To follow up on your visit we had discussed the IB and the NCA agreement for Medsted. Did you manage to get Grahame for his approval ? I have it on my to do list and is still pending!"
74. On 29 April 2010, having been asked for his comments on Collins Stewart's form of agreement, Mr. Valasakis told Mr. Glover by email that Medsted would sign Collins Stewart's form of agreement. Marios did so on 30 April 2010, signing the copy which had already been signed by Mr. Lovett. This copy was never sent to Collins Stewart and so the fact of the signature on 30 April 2010 was never communicated to Collins Stewart. However, Mr. Valasakis' statement to Mr. Glover that "Medsted will sign it" shows that Medsted had agreed, to the knowledge of Collins Stewart, to do business on Collins Stewart's terms. This appears to found a cogent argument that as from 29 April 2010 Medsted had agreed that its business with Collins Stewart would be on the terms of the latter's terms of business.
75. In opposition to this conclusion Mr. Darling submitted that the email of 29 April 2010 must be read as a whole, including the words: "It is the NC that needs to be signed together with your IA agreement and for the obvious reasons we discussed in Athens. Any suggestions ?" Mr. Darling submitted that Mr. Valasakis' statement that the agreement would be signed was "expressly subject to the parties also concluding a non-circumvention agreement".
76. The words of the email must be understood in their context. That context was that Medsted had protection from circumvention in the form of an agreement (the existence of which is common ground) that Collins Stewart would inform Medsted of the business it did with the clients (see paragraph 86 bellow). Looked at objectively the parties had been trading on the basis that Medsted had protection from circumvention since May 2009. It is therefore to be expected that Mr. Valasakis, if he was to accept Collins Stewart's terms, would also want a non-circumvention agreement. In that context it seems to me that the words "together with" connote an intention that his agreement to Collins Stewart's terms was subject to or conditional upon Collins Stewart agreeing a non-circumvention agreement. Collins Stewart must have appreciated that a non-circumvention agreement was important to Mr. Valasakis. It had been discussed in Jersey in July 2008, in London in October 2009 at the Coq d'Argent and probably in Athens in March 2010. Mr. Lovett accepted in cross-examination that Valasakis considered it critical. I therefore accept Mr. Darling's submission that, read as a whole, Mr. Valasakis was only assenting to Collins Stewart's IA agreement on the basis that a non-circumvention agreement was also signed.
77. Accordingly, since no non-circumvention agreement was signed, the business conducted by the parties remained on Medsted's terms.
78. It only remains to mention Mr. Malek's reliance upon what Mr. Valasakis said in the "termination" call of 22 June 2010, namely, that "we have signed an IB. You have signed an IB. Marios signed it on behalf of Medsted." Such words evidence an understanding that Collins Stewart's terms had been agreed. However, what Mr. Valasakis said on 22 June 2010 cannot be used to interpret what Mr. Valasakis had written on 29 April 2010. The meaning of the email of 29 April 2010 cannot be one thing on that day and something different on 22 June 2010; cf Whitworth Street Estates v Miller [1970] AC 583 at p.603 per Lord Reid. What he said on 22 June 2010 could form the basis of an estoppel if Collins Stewart had relied to its detriment upon what Mr. Valasakis said. But no such estoppel was alleged. The parties' relationship was coming to an end.

Issue 3

79. The third issue is whether it was an express or implied term of the parties' agreement that to the extent that the parties had not agreed a specific commission or rebate rate payable to the Claimant with regard to particular types of trading or other business placed by the introduced clients with the Defendant, the Defendant would pay a reasonable rate of commission or rebate to the Claimant for such trading or other business ?
80. There is no real dispute about this issue. It was agreed that unless there was a specific agreement applicable to the particular trade the Defendant had to pay a reasonable rate of commission or rebate to the Claimant.

Issue 4

81. The fourth issue is whether it was an express or implied term of the parties' agreement that Collins Stewart would not prevent Medsted from earning commission or rebate by dealing directly with Medsted's clients or sub-IBs ? Alternatively, did the parties agree orally on 22 October 2009 or on or about 8 March 2010 that Collins Stewart would not circumvent Medsted by dealing directly with Medsted's clients or sub-IBs with regard to the placement of CFDs or other business with Collins Stewart ?
82. In the light of my findings on Issue 1 and Issue 2 the parties were bound by the clause entitled "Solicitation" in Medstet's terms, which was said to be a form of non-circumvention agreement.
83. A non-circumvention agreement such as that which Mr. Valasakis entered into in 2006 and which he forwarded to Collins Stewart on 24 July 2008 expressly prevents the parties from circumventing, avoiding or by-passing each other with a view to avoiding the payment of commission. The "solicitation" clause in Medsted's terms provided on 15 May 2009 is expressed differently but covers similar, though not perhaps identical, ground. Mr. Valasakis was, it seems, content with it as a form of non-circumvention agreement. It was no doubt because of the difference in wording that Mr. Darling in his closing submissions referred to the "express non-solicitation/non-circumvention obligation in the contract". Mr. Malek made no submissions concerning any differences between the non-solicitation clause in the contract and a non-circumvention agreement such as that which had been provided in 2008.
84. The literal meaning of the "solicitation" clause is that Collins Stewart promises not to approach, solicit or propose to continue trading with any client introduced by Medsted (unless the client continues to trade by their free will) "for a period of eighteen months after cessation of this agreement". It was submitted by Mr. Darling that on its true construction this term prohibited Collins Stewart from soliciting or proposing to trade with Medsted's clients not only in the eighteen months following the cessation but also during the term of the agreement. That was said to be a "natural adjunct to the nature of the parties' relationship." This submission was not, I think, opposed; see paragraph 50 of Mr. Malek's opening skeleton argument and paragraphs 206-216 of his closing submissions. In support of Mr. Darling's submission it can be said that if the parties agreed that Collins Stewart could not solicit or propose trading with Medsted's clients in the eighteen months following the cessation of the agreement they must also have agreed that Collins Stewart could not do so during the term of the agreement. It would not make any business sense for them to be free to do so and so the latter obligation must be implied as part and parcel of the express obligation in order to give it business efficacy.
85. There is, however, as it seems to me, an argument against Mr. Darling's submission. Medsted's terms of agreement expressly contemplated that Collins Stewart would enter trading agreements with the clients introduced by Medsted. The parties envisaged that the clients would place orders with Collins Stewart for financial transactions, in particular, CFDs, on which commission and funding rebates would be charged. The terms of agreement therefore contemplated trading between Collins Stewart and the clients during the term of the agreement. Accordingly, it would be inappropriate to construe the "solicitation" clause as forbidding Collins Stewart from soliciting or proposing to trade with clients during the term of the agreement. It prevented them from doing so for a period of 18 months after termination unless the clients chose to do so of their own free will.
86. However, the essential nature of Medsted's complaint against Collins Stewart is that Collins Stewart traded with clients introduced by Medsted without informing Medsted and so prevented Medsted from claiming commission and funding rebate in respect of such secret trading. It was common ground that the parties' agreement, on either party's case, imposed an obligation on Collins Stewart to disclose on a regular basis all trading information of the introduced clients so that Medsted could calculate the commission and rebate due to it; see the List of Issues, Common Ground. A failure to comply with this obligation would enable Collins Stewart to circumvent Medsted's right to commission and rebate. Thus the obligation to disclose trading with clients introduced by Medsted was, in effect, a non-circumvention agreement. This was so regardless of whose terms of business were agreed. This is reflected in the discussion at Coq d'Argent when the parties addressed the question over lunch in October 2009. Mr. Valasakis asked about a non-circumvention agreement and Mr. Lovett said Collins Stewart would not cut out a business partner from its commission.
87. Thus, whatever terms applied to the parties' relationship there was, in effect, a non-circumvention agreement.

Issue 6

88. The sixth issue is whether it was an implied term of the parties' agreement that (i) Medsted would not mislead the clients as to the division, as between themselves, the first-tier provider and Collins Stewart, of the charges levied on the clients or (ii) Medsted would not rely on the confidentiality obligations of Collins Stewart , if any, in relation to that division, to mislead the clients ?
89. Agency has been defined by Bowstead and Reynolds on Agency 20^th ed. paragraph 1-001 as the fiduciary relationship which exists between two persons, one of whom expressly or impliedly manifests assent that the other should act on his behalf so as to effect his relations with third parties, and the other of whom similarly manifests assent so to act or so acts pursuant to the manifestation. Medsted was not given permission by the clients to affect their legal relations with Collins Stewart. The clients' legal relations with Collins Stewart were affected by the clients entering into a contract with Collins Stewart. Medsted did not enter in such a contract on their behalf. However, Bowstead and Reynolds on Agency also states in paragraph 1-001 that a person may have the same fiduciary relationship with a principal where he acts on behalf of that principal but has no authority to affect the principal's relations with third parties. This subject is dealt with at paragraph 1-019 where an example of such a fiduciary relationship is given, namely, the introducing agent who makes no contacts but introduces parties desirous of contracting and leaves them to contract by themselves. Such a person is not an agent in the fullest sense but can owe fiduciary duties. An example to which I was referred was that of the loan broker in Hurstanger v Wilson [2007] 1 WLR 2351 at paragraphs 33-44 per Tuckey LJ (though not all loan brokers are fiduciaries; see Commercial First Business Limited v Pickup and Vernon [2017] CTLC 1). A further example is that of the credit broker in McWilliam v Norton Finance [2015] 1 All ER (Comm) 1026 where the applicable law was discussed and explained by Tomlinson LJ at paragraphs 32-56. From his judgment the following statements of principle are to be noted. This form of agency is not the paradigm. The fiduciary duty arises from equity and will be found to exist where the "principal" reposes trust and confidence in the "agent"; see paragraph 40. Thus the facts and circumstances of the present case must be examined to see whether the clients reposed trust and confidence in Medsted.
90. The clients were wealthy Greek citizens. It is likely that they were experienced investors. Mr. Valasakis described them as having significant holdings in public companies in Greece but lacking liquidity. He described CFDs as a solution to their lack of liquidity. The clients could not deal with a first-tier provider of CFDs and so the role of the broker, such as Medsted, was to introduce them to a regulated financial institution, such as Collins Stewart, who could deal with a first-tier provider of CFDs. There was no other evidence of the relationship between the clients and Medsted. The clients were not paying a commission to Medsted and so must have assumed that Medsted was receiving payment from the financial institution. Mr. Valasakis said that the clients do not usually know the details of the amounts charged by the first-tier provider or the amounts payable by the regulated financial institution to the introducing broker.
91. A fiduciary duty has been described as one of loyalty; see Arklow Investments Limited v Maclean [2000] 1 WLR 594 where Henry J, giving the advice of the Judicial Committee of the Privy Council, said at p.598:

"It encapsulates a situation where one person is in a relationship with another which gives rise to a legitimate expectation, which equity will recognise, that the fiduciary will not utilise his or her position in such a way which is adverse to the interests of the principal. "

92. This explanation was followed by Tomlinson LJ. in McWilliam v Norton Finance [2015] 1 All ER (Comm) 1026 at paragraph 42. As was stated in Bristol and West Building Society v Mothew [1998] Ch.1 at p.18 per Millett LJ:

"A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. "

93. There is no evidence of any advice or recommendation which Medsted gave to the clients. But it is to be inferred that Medsted at least impliedly represented to them that the terms offered by Collins Stewart were competitive.
94. The clients, by relying upon Medsted to introduce them to Collins Stewart, were vulnerable to any disloyalty by Medsted and reliant on its good faith; cf McWilliam v Norton Finance [2015] 1 All ER (Comm) 1026 at paragraph 46. I consider that the clients reposed trust and confidence in Medsted.
95. In my judgment the relationship between Medsted and the clients was a fiduciary one. Mr. Valasakis, whilst denying that he was an agent, accepted when cross-examined that Medsted had a duty to be honest and to act in good faith towards its clients, a duty not to mislead them, a duty to fair and transparent with them and a duty to act in their best interests. Such duties are those of a fiduciary.
96. There is no evidence that Medsted informed its clients that it would be rewarded by a share of the commission and funding rebates paid by the clients to Collins Stewart. However, it is improbable that they thought Medsted was providing its service of introducing them to Collins Stewart for nothing and so they probably assumed that Medsted was being rewarded by a share of the commission and funding rebates paid by the clients to Collins Stewart. But it is clear that the clients were unaware of the quantum of Medsted's reward. Mr. Valasakis made it clear to Mr. Jouan on 13 May 2009 when speaking by telephone that the clients must not be told what the charges of the first-tier provider were. On 5 February 2010 Marios made it clear to Mr. Jouan that Mr. Komninos should not be told what the first-tier provider was charging and Mr. Valasakis told Zoe Smart that Mr. Komninos should not be told what Collins Stewart was charging. But in April 2010 it appears that Mr. Komninos and Ioannis learnt something of those charges, though it is not clear precisely what or from whom. It is clear that they did not learn of those charges from Medsted. It is also clear that they were angry with what they had learnt.
97. Medsted's failure to inform its clients of how the commission and funding rebate were split between the first-tier provider, Collins Stewart and Medsted was, in my judgment a breach of its fiduciary duty to its clients. By failing to inform them of the split Medsted placed itself in a position where its duty to its clients and its own interest might conflict. Such conduct would only escape being a breach of its duty to its client if the clients had given their informed consent to the arrangement. Whilst the clients may have known or appreciated that Medsted was being rewarded with a share of the commission and funding rebate they were unaware of its quantum. Any consent was therefore not informed; cf McWilliam v Norton Finance [2015] 1 All ER (Comm) 1026 at paragraph 51.
98. Of course, the mere fact that Medsted owed a fiduciary duty to the clients does not mean that any breach of that fiduciary duty was a breach of the contract between Medsted and Collins Stewart. To overcome that difficulty it was submitted that it was an implied term of the agreement between Medsted and Collins Stewart that Medsted would not mislead its clients as to the split of commission and funding rebate between the first-tier provider, Collins Stewart and Medsted. Mr. Malek submitted that such a term is to be implied upon the basis of the test explained in Marks and Spencer v BNP Paribas [2016] AC 742. In that case the Supreme Court explained that a term will only be implied into a contract if without it the contract lacked business efficacy (which means that without it the contract would lack commercial or practical coherence) or so obvious that it went without saying; see paragraph 21 per Lord Neuberger, Lord Sumption and Lord Hodge. Although the two tests are alternatives it would be a rare case where only one was satisfied.
99. There was little argument before me on this matter. Mr. Malek said the term was to be implied. Mr. Darling took two points. First, he said such a term was not necessary in circumstances where Mr. Valasakis said in cross-examination that Collins Stewart was entitled to tell the clients the split if they asked. However, I very much doubt that was Mr. Vasialkis' view at the time. His conversation with Mr. Jouan on 13 May 2009 contained no hint of a suggestion that if asked Collins Stewart could tell the clients the split. Second, he said it was not necessary for a term to be implied into the contract that Medsted perform its fiduciary obligations to its clients. The contract worked "perfectly well" without such a term.
100. It seems to me arguable that in the absence of a term that Medsted would not mislead it clients as to the division or split of the commission and funding rebate, the contract between Medsted and Collins Stewart would lack business efficacy for, without it, Medsted would be free to give their clients misleading information as to split of the commission and funding rebate which, if discovered, might well imperil the continuance of the business relationship between the clients and Collins Stewart which it was the purpose of the introducing contract to foster. Put another way, if an officious bystander had asked Medsted and Collins Stewart whether Medsted was free to mislead its clients as to the split they would have replied, "of course not". However, there is no evidence that Medsted did mislead the clients. When asked by Ioannis Mr. Valasakis refused to provide the split. But it is clear that Medsted's careful refusal to tell the clients the split was a breach of their fiduciary duty to their clients. The relevant question therefore is whether it was an implied term of the agreement between Medsted and Collins Stewart that Medsted would disclose to its clients the split, which was its duty as fiduciary to disclose.
101. Leaving aside the discussion which in fact took place on 13 May 2009 between Mr. Valasakis and Mr. Jouan it is arguable that unless one implies a term that Medsted was obliged to disclose the split to its clients the contract between Medsted and Collins Stewart would lack business efficacy for, without it, Medsted would be free to withold information as to the split which would imperil the continuance of the business relationship between the clients and Collins Stewart which it was the purpose of the introducing contract to foster. Put another way, if an officious bystander had asked Medsted and Collins Stewart whether Medsted was free to withhold the split from its clients they would have replied, "of course not".
102. But it is also necessary to consider the relevance, if any of the discussion between Mr. Valasakis and Mr. Jouan on 13 May 2009 which I have summarised earlier in this judgment. Mr. Jouan asked whether the clients were happy with the rates being charged (because they were in excess of what Collins Stewart would charge). Mr. Valasakis replied that they were and there is no reason to doubt that answer. Mr. Valasakis then said that the "important thing" was that the clients should not be told what the first-tier provider was charging. Mr. Jouan replied that he "would not to do that". He would just tell the clients what the charges were. He did not reply "it is obvious that you must tell them". It could be said that that conversation runs contrary to the suggested implied term. Against that it could be argued that this discussion was part of the negotiations and on orthodox principles should not be taken into account. Implication is a matter for objective analysis and does not depend upon the actual intention of the parties. But in response it could be said that the parties had reached a clear agreement as to how the contract should operate in practice and that it makes no sense to imply a term contrary to that agreement. Bearing in mind the advice of Lord Steyn that the principle by which terms are to be implied should be sparingly and cautiously used (see Equitable Life Assurance Society v Hyman [2002] 1 AC 408 at p.459 I have reached the conclusion, in the light of the agreement reached on 13 May 2009, that the term should not be implied.
103. For the same reason I do not consider that the alternative term (that Medsted would not rely upon on the confidentiality obligations of Collins Stewart) should be implied.

Issue 7

104. The seventh issue is whether Collins Stewart terminated the parties' agreement orally by telephone on 22 June 2010?
105. It is clear from the transcript of the call that Mr. Lovett wished to terminate the relationship between Collins Stewart and Medsted but was content for there to be a period of 3 months during which the relationship continued so that Medsted had an opportunity to find another financial institution to take the place of Collins Stewart. It is also clear that Mr. Valasakis wished to "terminate the clients" but to preserve the relationship between Medsted and Collins Stewart.
106. Many points were canvassed under this issue (depending on whose terms had been agreed) but the issue can be resolved quite shortly. Mr. Valasakis said in his statement that he is not the type of person to "fight the inevitable; there is no point kicking a dead horse to come back to the race". In fact no new clients were introduced after June 2010 and I therefore infer from the conduct of the parties that it was accepted by them that the relationship between them would terminate after a period. In the event that period lasted until August 2011 with Mr. Valasakis receiving his agreed commission and funding rebates on trades by the clients of which he was aware.

Issue 8

107. The eighth issue is whether certain clients, those numbered 17-26 and 28-29 in an Appendix to the List of Issues, were clients introduced to the Defendant by the Claimant, for the purposes of the parties' agreement ?.
108. The clients in question fall into a number of categories. First, there are corporate clients beneficially owned by Mr. Komninos or Ioannis (and his family). Second, there are individuals introduced by Mr. Komninos. Third, there are corporate clients introduced by Mr. Komninos but which do not appear to beneficially owned by him.

Corporate clients beneficially owned by Mr. Komninos

109. There appear to be two of these: client no.20, Karnlow Investments Limited and client no. 26, Magestic Investments Limited.
110. Client 20 is Karnlow Investments Limited. There is no dispute that this company is beneficially owned by Mr. Komninos, having been incorporated in February 2011. Karnlow opened an account with Collins Stewart on 20 June 2011. Mr. Malek submitted that Medsted was not the effective cause of the introduction of Karnlow; Mr. Komninos was. It appears to be the case that Karnlow was introduced by Mr. Komninos in or about June 2011. But, in the light of (i) the discussions between Mr. Jouan and Mr. Komninos in May 2010 during which Mr. Jouan suggested the use of corporate vehicles to keep trading secret from Medsted and (ii) the evidence that Mr. Komninos used his personal account and Karnlow's account interchangeably it is more probable than not that Karnlow's account was a means by which Mr. Komninos and Collins Stewart could continue to do business (at reduced rates) without Medsted being informed and, therefore, without Collins Stewart having to pay a share of the commission and funding rebate agreed to be paid to Medsted in respect of business done by Collins Stewart with clients introduced by Medsted to Collins Stewart.
111. Client 26 is Magestic Investments Limited. It is common ground that Magestic is beneficially owned by Mr. Komninos. He wanted to use Magestic to introduce clients directly to Collins Stewart. A contract was set up in April 2011 to enable that to happen. New clients were introduced by Mr. Komninos and commission was paid to Magestic. There was no evidence that Mr. Komninos was using Magestic as a corporate vehicle to trade on his own account. Rather, he was using Magestic as a corporate vehicle to introduce clients to Collins Stewart. Had he introduced them through Medsted those clients would have been regarded as having been introduced through Medsted. But they were not so introduced.

Corporate clients beneficially owned by Ioannis

112. There were several of these: client 17, Tantony Forex Limited, client 18, Derbycon Limited, client 19, Lipati Shipping Company Limited and client 22, Hardam Portfolio Corporation.
113. Client 17 is Tantony Forex Limited. Ioannis and his father were directors of Tantony Forex. They signed the resolution to open the account with Collins Stewart. The management shares in Tantony Forex were owned by Tantony Capital as at 10 February 2010. Documents from the "Panama Papers" indicate that in 2015 Ioannis and members of his family were shareholders in Tantony Capital. It is more probable than not that Tantony Forex was at all material times closely connected with Ioannis and his family. Tantony Forex's account with Collins Stewart was opened on 2 or 3 June 2010. Shortly before that on 15 May 2010 Mr. Jouan had agreed with Mr. Komninos that Ioannis would open new accounts with Collins Stewart and that Medsted would not find out about them. It is more probable than not that Tantony Forex's account was a means by which Ioannis, who had been introduced to Collins Stewart by Medsted via Mr. Komninos, could continue to do business with Collins Stewart (at reduced rates) without Medsted being informed and, therefore, without Collins Stewart having to pay a share of the commission and funding rebate to Medsted. Mr. Malek said that Tantony Forex was a "family" investment fund and that the entire family had not been introduced. I was not persuaded that Tantony Forex could be distinguished in this way. Ioannis and his father had admittedly been introduced.
114. Client 18 is Derbycon Limited. Mr. Valasakis gave evidence that Ioannis told him that Derbycon was one of the corporate vehicles he used to trade with Collins Stewart. Mr. Glover gave evidence that Collins Stewart had no record of a company of that name on its system. Although Mr. Glover accepted that his evidence about the various corporate vehicles was not "entirely reliable" it is unlikely that he is mistaken when saying that Collins Stewart's records contained no record of a company with the name of Derbycon. I therefore consider that it is more likely than not that Ioannis did not use Derbycon to trade with Collins Stewart, notwithstanding that he was probably connected with Derbycon.
115. Client 19 is Lipati Shipping Company Limited. There was evidence that this company was beneficially owned by Ioannis (or his father). Mr. Malek's submission was that Medsted did not introduce Lipati and that in any event the account was opened on 24 June 2010 "post termination". As with Tantony Forex it is more probable than not that this company was used by Ioannis and Collins Stewart as a way of doing business without informing Medsted and so avoiding the need to pay commission and rebate to Medsted on business done by Ioannis. I do not consider that the fact that the account was opened on 24 June 2010 assists Collins Stewart. The contractual relationship between the parties did not end on 22 June 2010 but continued until August 2011. In any event Medsted's IB agreement (which governed the relationship between the parties) provided that Collins Stewart would continue to pay Medsted commission and funding rebate from the clients introduced by Medsted for a period of three years after the cessation of the agreement. However, it may be that no business was done in the name of Lipati. The evidence of Mr. Glover was that although an account was opened in the name of this company no business was in fact done.
116. Client 22 was Hardam Portfolio Corporation. It is more likely than not that this company was beneficially owned by Ioannis (and his family). There is evidence that Ioannis was the signatory to the account and that the sources of the funds were existing accounts of Tantony Forex. There is also evidence that his father and sister had a beneficial interest but that Ioannis had authority to give instructions. The account was opened in 14 October 2010. As with Tantony Forex it is more probable than not that Hardam's account was a means by which Ioannis, who had been introduced to Collins Stewart by Medsted via Mr. Komninos, could continue to do business with Collins Stewart (at reduced rates) without Medsted being informed and, therefore, without Collins Stewart having to pay a share of the commission and funding rebate to Medsted.

Individuals introduced by Mr. Komninos

117. There were several of these: client 21, Mr. Liakopoulos, client 28, Mr. Markopoulos and client 29, Mr. Seriatos.
118. Each of these clients was introduced to Collins Stewart by Mr. Komninos after the latter learnt of the split of fees and did not wish to pay Medsted. Mr. Markopoulos was introduced on or about 21 May 2010 (when funds were received), Mr. Seriatos' account was opened on 30 June 2010 and Mr. Liakopoulos' account was opened on 1 October 2010. There is no evidence that any of the individuals was a nominee for Mr. Komninos. Had they been introduced to Collins Stewart by Mr. Komninos as a sub-IB via Medsted Collins Stewart would have been bound to pay a share of the commission and funding rebate (payable by them to Collins Stewart) to Medsted. But it appears that they were introduced to Collins Stewart by Mr. Komninos directly.

Corporate clients introduced by Mr. Komninos (but not beneficially owned by him)

119. There were three of these; client 23, Eurocapital Bitex AD, client 24, Dominant Finance AD and client 25, Fayette Holdings SA.
120. Client 23 was Eurocapital Bitex AD. It is common ground that this company was introduced by Mr. Komninos. An account was opened on 19 April 2011. There is evidence that Eurocapital is a publicly traded Bulgarian real estate and telecommunications company with a major shareholder, Dominant Finance AD. There was evidence that Mr. Komninos was the company secretary of Dominant and that he was also the company secretary of Eurocapital (as from October 2014). There was, it seemed to me, no compelling reason to infer that Mr. Komninos was the beneficial owner of Eurocapital or that he was using Eurocapital to trade on his own account. Mr. Darling submitted that Eurocapital should be treated as a client introduced by Medsted because it was introduced by Mr. Komninos, a sub-IB of Medsted. If Mr. Komninos as a sub-IB had introduced Eurocapital through Medsted then Eurocapital would have been regarded as having been introduced by Medsted. But that did not happen. Mr. Komninos dealt directly with Collins Stewart. Thus, in the absence of there being good reason to infer that Eurocapital was being used by Mr. Komninos as his corporate vehicle (as was the case with Karnlow) there is no reason to regard Eurocapital as having been introduced by Medsted.
121. Client 24 is Dominant Finance AD. It is again common ground that this company was introduced by Mr. Komninos and that an account was opened on 19 April 2011. Again there is evidence that Dominant is a publicly quoted company and that Mr. Komninos was its company secretary. But as with Eurocapital there does not appear to me to be good reason to regard Dominant as having been introduced by Medsted.
122. Client 25 is Fayette Holdings SA. It is common ground that Fayette was introduced by Mr. Komninos. An account was opened on 22 November 2010. Fayette is a company incorporated in the Marshall Islands on 5 March 2007. There is no evidence that Mr. Komninos was its beneficial owner and that he was using it as his corporate vehicle for trading on his own account. There does not appear to be a good reason to regard Fayette as having been introduced by Medsted.
123. Accordingly, my conclusion on issue 8 is that of clients numbered 17-29 only those numbered 17, 19, 20 and 22 were clients introduced to Collins Stewart by Medsted for the purposes of the parties' agreement.
124. In reaching the above conclusions I have noted, but not accepted, Mr. Darling's submission at paragraphs 112-113 of his Closing Submissions that clients introduced by Mr. Komninos at a time when Collins Stewart knew that Mr. Komninos was a sub-IB should be regarded as clients introduced by Medsted. Clients introduced by Mr. Komninos after that time were introduced expressly on the basis that they were not being introduced on behalf of Medsted.
125. Mention was made in the course of evidence about a company called Velti plc. However, there was no cogent evidence that Velti plc had been a client introduced by or on behalf of Medsted.

Issue 9

126. The ninth issue is whether Medsted is entitled to an account of the commission and funding rebate payable to Medsted by Collins Stewart as a debt in respect of the secret trading done by clients nos. 1-29. In the light of my findings on issue 8 this issue arises with regard to clients nos.1-16, 17,19, 20 and 22.
127. This, together with issues 10 and 11, is the crux of the case and determines whether Medsted is entitled to any financial relief in respect of the events which have occurred.
128. Medsted seeks payment of commission and funding rebates at the rates stated by Marios in his emails dated 20 and 21 April 2010 (and payment at a reasonable rate in respect of any trading not covered by those emails). Medsted's agreed share of the commission and funding rebate was only payable as a debt once Collins Stewart received the commission and funding rebate from the clients. However, once Mr. Komninos and Ioannis learnt of the charges levied by the first-tier provider, and hence the high level of commission charged over and above that, they refused to do business with Collins Stewart at the rates Marios requested Collins Stewart to charge. Mr. Komninos and Ioannis appeared to have learnt of this on or about 15 April 2010 when they discussed the matter with Mr. Jouan. Thereafter it appears that they refused to deal with Collins Stewart on the terms required by Medsted. Accordingly, in my judgment, Medsted has no claim in debt to its share of the commission and funding rebates requested by Marios (or at a reasonable rate in respect of other trading) in respect of the secret trading because such commission and rebates were never received by Collins Stewart. There is therefore no purpose in ordering an account in respect of debt.

Issue 10

129. The tenth issue is whether Collins Stewart acted in breach of contract by trading secretly with clients 1-16, 17,19,20 and 22 and if so whether Medsted is entitled to an order for the damages caused by that breach to be assessed ?
130. Collins Stewart accepted that it was obliged to disclose to the Claimant on a regular basis all trading information of the introduced clients so that the Claimant could calculate the commission and rebate due to it. Collins Stewart failed to do that. Mr. Jouan expressed his willingness to exclude Medsted and to keep Medsted ignorant of trades involving Ioannis on 3 March 2010 when speaking to Mr. Komninos before a trip to Greece. On 15 April 2010 Mr. Jouan proposed to Mr. Komninos a scheme whereby new accounts could be opened in company names of which Medsted would not be told. Thereafter new accounts were opened for Mr. Komninos and Ioannis of which Medsted was not told. Thus it was that in breach of its agreement with Medsted Collins Stewart did not inform Medsted of all the trades done by introduced clients.
131. The crucial question is whether that breach of contract caused Medsted to suffer loss. Mr. Darling submitted that it did because if Mr. Komninos and Ioannis had not traded with Collins Stewart directly, and behind Medsted's back, the clients would have continued to trade. Mr. Malek submitted that no loss was caused by the breach because the cause of the loss was the clients' decision to stop trading with Collins Stewart through Medsted. This submission mirrored Mr. Jouan's own justification for his actions when speaking to Mr. Komninos on 15 April 2010 ("we're not going behind their backs because these guys won't pay the rates that they want to pay").
132. Medsted suffered loss when trades were done "behind its back" with introduced clients; it was disabled from exercising its right to commission and funding rebate on such trades. There were, in my judgment, two causes of that loss. First, there was the decision of Mr. Komninos and Ioannis to stop trading with Collins Stewart through Medsted. Second, there was Collins Stewart's willingness to find a means of continuing to do business with Mr. Komninos and Ioannis. To achieve that end Mr. Jouan, having expressed his willingness on 3 March 2010 to keep Medsted in the dark, proposed on 15 April 2010 the use of corporate identities to ensure that Medsted did not learn of future trades. Thus the actions of Collins Stewart in breach of its agreement with Medsted were a cause of Medsted's loss.
133. However, Mr. Malek submitted (at paragraph 382(8) of his Closing Submissions) that Medsted cannot claim either as debt or damages those charges which amount to secret commission as between Medsted and its clients. In response Mr. Darling submitted that the relationship between the clients and Medsted was irrelevant to the contract between Medsted and Collins Stewart; put another way, he said that the clients were strangers to the contract between Medsted and Collins Stewart.
134. On the one hand, given that secret commissions are "objectionable as they inevitably tend to undermine trust in the commercial world" (see FHR European Ventures LLP v Cedar Capital Partners [2014] UKSC 45 per Lord Neuberger at paragraph 45), it can be said that the court should not assist Medsted to recover its secret commission. On the other hand, Collins Stewart agreed to pay commission to Medsted, knowing (see Mr. Jouan's telephone call with Mr. Valasakis on 13 May 2009 and the emails sent by Mr. Valasakis and Marios on 5 February 2010) that the split was to be kept secret from the clients. In those circumstances it may be said that Collins Stewart cannot take the benefit of the objectionable secret commission of which it was aware.
135. The competing policy arguments were identified by counsel but the court was given little guidance as to how the conflict should be resolved. There is authority for the proposition that the remedy of damages can be denied on the grounds of policy, namely that damages cannot be claimed where the root of the damage was the claimant's own wrong; see Weld-Blundell v Stephens [1920] AC 956 at p.976 (although the decision in that case can also be explained on the basis of causation, see the discussion in McGreror on Damages 19^th ed at paragraph 8-207). In my judgment the court should not assist Medsted to profit from its own breach of fiduciary duty to its clients. Were it to grant Medsted judgment for substantial damages to be assessed it would be doing so. For this reason the court cannot give such judgment. Medsted is only entitled to nominal damages for Collins Stewart's breach of contract.
136. Had the court granted judgment for substantial damages to be assessed the assessment of Medsted's loss would have to take into account the sums payable to the sub-IBs by Medsted; otherwise the damages would be assessed in a greater sum that Medsted's actual loss. In circumstances where Medsted paid its sub-IBs "handsomely" the actual loss may in fact have been proved to be quite modest.

Issue 11

137. The eleventh issue is whether Medsted is entitled to a restitutionary award or quantum meruit to be assessed in respect of the trading of the introduced clients. The basis of this claim is said to be that such an award may be made where an agent provides services without a contract being in place with the principal or where the parties' contract does not cover the trading in question. However, if one assumes that Medsted were able to show that Collins Stewart had been unjustly enriched at the expense of Medsted (a subject not explored in the case) the court could not make the award or quantum meruit for the same reason that it cannot give judgment for damages to be assessed.

Conclusion

138. Medsted's business of introducing clients to Collins Stewart without informing the clients of the charges levied by the first-tier provider and the amount of commission and rebate being charged in addition was in breach of its fiduciary duty to its clients. When the clients learnt of those matters they no longer wished to do business with Collins Stewart on the terms which had been agreed with Medsted. Collins Stewart was anxious to keep the business and succeeded in so doing by devising a scheme where Collins Stewart traded with the clients at reduced rates and without Medsted being informed. That was in breach of Collins Stewart's contract with Medsted which breach was a cause of loss to Medsted. However, since the root of such damage was Medsted's breach of fiduciary duty to its own clients, Medsted is only entitled to nominal damages for such breach. Further, in circumstances where the commission and rebates earned by Collins Stewart when trading directly with the clients did not include any commission or rebate for Medsted there can be no claim in debt by Medsted against Collins Stewart. Finally, if Medsted had a claim in restitution or for a quantum meruit such claim would fail for the same reason that the claim for substantial damages failed.

Note 1   Sometimes referred to as Medstet. I have used Medsted for consistency.     [Back]