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England and Wales High Court (Commercial Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Jinxin Inc v Aser Media PTE Ltd & Ors [2022] EWHC 2988 (Comm) (25 November 2022) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2022/2988.html Cite as: [2022] EWHC 2988 (Comm) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
| JINXIN INC |
Claimant |
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| - and - |
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| (1) ASER MEDIA PTE LIMITED (2) MEDIA PARTNERS AND SILVA, LLC (3) SU HYEON CHO (4) LARA VANJAK (5) MARCO AULETTA (6) RICCARDO SILVA HOLDING DESIGNATED ACTIVITY COMPANY (7) ROBERTO DALMIGLIO (8) FONG LEE YUH (9) RICCARDO SILVA (10) ANDREA RADRIZZANI |
Defendants |
____________________
Ruth den Besten and Nicholas Goodfellow (instructed by Kingsley Napley LLP) for the
Second Defendant
Hearing date: 22nd September 2022
____________________
Crown Copyright ©
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and released to The National Archives. The date and time for hand- down is deemed to be 25 November 2022 at 10:30am.
Peter MacDonald Eggers KC :
Introduction
Jinxin's claims
(1) The Business Practice Representations concerning the honesty, legality and lawfulness of the conduct of the MPS Group business, including as to the absence of bribery, corruption or similar misconduct.
(2) The Serie A Representations that the MPS Group had won the Serie A rights as a result of its long-standing and legitimate relationship with the Italian League and that the MPS Group's Management were confident that the rights would be renewed in 2017 and beyond.
(3) The Investigation Representations as to the limited nature of a criminal investigation then being conducted in respect of the Ninth Defendant (Mr Riccardo Silva) and its irrelevance to the business of the MPS Group.
(4) The EBITDA Representations concerning the truth, material accuracy and completeness of the financial information, including EBITDA forecasts, provided to Baofeng, Everbright and Jinxin.
The allegations made by Jinxin against MPS LLC
(1) Mr Pozzali's knowledge is to be attributed to MPS LLC (paragraph 7). For the purposes of the present application, I have been asked to assume that that is the case, although such attribution might be in issue at trial.
(2) The business and operations of the MPS Group were managed principally by Mr Silva, Mr Radrizzani, Mr Auletta and Mr Pozzali. As regards Mr Pozzali, it is alleged that the MPS Group was managed by Mr Pozzali as "a founding member of the Group, as (through MPS LLC) a shareholder in MPS and as a director of MPS Miami", and that in a Management Presentation provided on 29th January 2016 to DealGlobe Ltd (who had been retained to provide advice on behalf of the purchasing consortium) it was said that Mr Pozzali "oversees group sales, acquisition and development strategy across the Americas, covering the USA, Canada, Latin America and the Caribbean" (paragraph 12).
(3) The Vendor documents were prepared and provided for the purpose of facilitating the sale of the Sale Shares with the knowledge and with the actual, implied or ostensible authority and approval of at least MPS LLC and Mr Pozzali (paragraphs 15-16).
(4) Each of the Tort Defendants - including MPS LLC - made the various alleged express and implied representations (paragraphs 20-40).
(5) The Business Practices Representations and Serie A Representations were false (paragraphs 41-86). It is not suggested that MPS LLC or Mr Pozzali were personally involved in the obtaining of Serie A rights unlawfully or wrongfully. At paragraphs 84-85, Jinxin pleads as follows (referring to Mr Silva as "RS", Mr Radrizzani as "AR", Mr Pozzali as "CP", Mr Marco Auletta, the Fifth Defendant, as "MA", and Daniele Cappelletti, a member of Group management, Group Head of M&A, Deputy Managing Director, Asia, as "DC"):
"84. By reason of both the pervasive nature of the conduct described above and the overwhelming significance of the Serie A business to the Group, Jinxin infers that each of the tort Defendants and CP, being shareholders and/or persons in senior Management roles, must have been aware of it. Further, and without prejudice to the foregoing
c. CP: he was a co-founding partner of the Group, with a broad managerial role as described at paragraph 12(c) above. He was involved in the rights-out sale of the Serie A business in the United States and Latin America. He, together with MA, was copied in on an email exchange between RS and AR, on 8 September 2014, concerning rumours about the closeness between the Group and Infront Italy. Jinxin infers that he (and hence MPS LLC) must have been similarly aware of the true nature of the arrangements concerning the Serie A business
85. Further, given the reliance upon unlawful arrangements in order to secure the Serie A rights, RS, RSHL, AR, Aser, CP, MPS LLC and MA can have had no genuine belief in the asserted confidence of renewal of the Serie A rights in the future. The unlawful nature of the basis on which the Group won the Serie A rights meant that it was at all times susceptible to
public exposure, whether by law enforcement agencies and/or private parties. This was even more acute at the time of the Acquisition, in view of the Milan investigation that was then ongoing. In addition to the matters pleaded above, Jinxin relies upon, inter alia, an email chain between, inter alios, Mr Marinelli of UBS and RS, AR, CP, MA, and DC dated 30-31 January 2016, concerning a call with one of the other bidders, referred to as 'S', to discuss S's concerns about the potential loss by the Group of Serie A. Mr Marinelli advised that the 'commercial team' should "stress our belief in the ability to retain Serie A" and "clarify that the discussions is on the commercial issues around Serie A and we WIL NOT (sic) discuss the investigation." It is clear from this email chain that the parties to it were aware of the potential impact of the Milan investigation upon the Group's ability to win the Serie A rights in the future."
(6) The Investigation Representations were false (paragraphs 87-90). However, it is not specifically alleged that MPS LLC or Mr Pozzali were aware that the Investigation Representations were false.
(7) The Business Practices Representations were false (paragraphs 91-106). No allegation is made that MPS LLC or Mr Pozzali was involved in the unlawful or wrongful acquisition of the FIFA Rights. At paragraph 107, Jinxin goes on to plead that:
"107. By reason of the pervasive nature of the conduct described above (including as described in relation to Serie A) and the significance of the FIFA business to the Group, Jinxin infers that each of the tort Defendants and CP, being shareholders and/or persons in senior Management roles, must have been aware of it. Further, and without prejudice to the foregoing
b. Jinxin further relies upon the following which indicate both a specific awareness of the FIFA business and the fact that this was something which was openly discussed between and understood by (at least) RS and AR
vii. An email from Mr Marinelli to RS, AR, CP, and MA dated 22 January 2016 providing an update on different bidders, in which a bidder identified as 'S' was noted to have made an indicative bid offer but with "3 major DD topics (Sirona agreements, Milan channel, entity holding Serie A rights)" which "have been discussed during a call yesterday."
c. CP: he was a co-founding partner of the Group, with a broad managerial role as described at paragraph 12(c) above. He was involved in the rights-out sale of the Serie A business in the United States and Latin America. He, together with MA, was copied in on the email exchange with Mr Marinelli on 22 January 2016 described at paragraph 107 (b)(vii) above. Jinxin infers that he (and hence MPS LLC) must have been
similarly aware of the true nature of the arrangements concerning the FIFA rights."
(8) The EBITDA Representations were false (paragraphs 110-113). At paragraphs 110-111, Jinxin pleads the following:
"110. In an email dated 1 February 2016 from DC to MA, DC identified "some commercial and operating issues that might have a significant impact on corporate profit in relation to the estimates in the current Business Plan." Whereas the current business plan estimated an EBITDA for 2015-16 of approximately US$81,000,000, there were the following issues [there followed a description of those issues, including issues with Euro 2016 Hong Kong, the Football Association of Malaysia, the FA Cup Hong Kong, the Football League in Thailand, and Opex]
f. An overall worst case scenario that would reduce the 2015-16 EBITDA from US$81,000,000 to US$53,000,000.
111. MA subsequently amended DC's email to remove reference to the Opex issue and to amend the impact of the remaining issues, concluding that the worst case scenario was a reduction in EBITDA to US$58,000,000 but that a more realistic scenario could result in US$72,000,000. MA sent his version of the email to RS, AR, CP and DC. In the subsequent email chain:
a. CP said, "I can't believe what I'm reading. Either we are crazy or something isn't working and I would like to know what."
(9) Jinxin was induced by and relied on the alleged representations and is entitled to rescission of the SPA or damages, including the sum paid for the acquired shares in MPS of US$661,375,034 (paragraphs 114-132).
The test for striking out a statement of case and for summary judgment
(1) Striking out the claim in deceit and unlawful means conspiracy against MPS LLC pursuant to CPR rule 3.4.
(2) Alternatively, granting summary judgment dismissing Jinxin's claim against MPS LLC pursuant to CPR rule 24.2.
Striking out a statement of case
"The court may strike out a statement of case if it appears to the court
(a) that the statement of case discloses no reasonable grounds for bringing or defending the claim;
(b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings; or
(c) that there has been a failure to comply with a rule, practice direction or court order."
"As to strike-out applications, under CPR 3.4(2)(a), the Court may strike out a statement of case if it appears that it discloses no reasonable grounds for bringing the claim. When considering an application to strike out, the facts pleaded must be assumed to be true and evidence regarding the claims advanced in the statement of case is inadmissible (King at [27]; and Allsop v Banner Jones Limited [2021] EWCA Civ 7 at [7]); consideration of the application will be "confined to the coherence and validity of the claim as pleaded" (Josiya v British American Tobacco plc [2021] EWHC 1743 (QB))."
"Where statements of case do not comply with these basic principles, the Court may require the Claimant to achieve compliance by striking out the offending
document and requiring service of a compliant one: see Tchenquiz v Grant Thornton [2015] EWHC 405(Comm) and Brown v AB [2018] EWHC 623 (QB). It has always been within the power of the Court to strike out either all or part of a pleading on the basis that it is vague, irrelevant, embarrassing or vexatious."
"184. It is well established that fraud or dishonesty must be distinctly alleged and as distinctly proved; that it must be sufficiently particularised; and that it is not sufficiently particularised if the facts pleaded are consistent with innocence
This means that a plaintiff who alleges dishonesty must plead the facts, matters and circumstances relied on to show that the defendant was dishonest and not merely negligent, and that facts, matters and circumstances which are consistent with negligence do not do so.
185. It is important to appreciate that there are two principles in play. The first is a matter of pleading. The function of pleadings is to give the party opposite sufficient notice of the case which is being made against him. If the pleader means "dishonestly" or "fraudulently", it may not be enough to say "wilfully" or "recklessly". Such language is equivocal
186. The second principle, which is quite distinct, is that an allegation of fraud or dishonesty must be sufficiently particularised, and that particulars of facts which are consistent with honesty are not sufficient. This is only partly a matter of pleading. It is also a matter of substance. As I have said, the defendant is entitled to know the case he has to meet. But since dishonesty is usually a matter of inference from primary facts, this involves knowing not only that he is alleged to have acted dishonestly, but also the primary facts which will be relied upon at trial to justify the inference. At trial the court will not normally allow proof of primary facts which have not been pleaded, and will not do so in a case of fraud. It is not open to the court to infer dishonesty from facts which have not been pleaded, or from facts which have been pleaded but are consistent with honesty. There must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must be both pleaded and proved
189. It is not, therefore, correct to say that if there is no specific allegation of dishonesty it is not open to the court to make a finding of dishonesty if the facts pleaded are consistent with honesty. If the particulars of dishonesty are insufficient, the defect cannot be cured by an unequivocal allegation of dishonesty. Such an allegation is effectively an unparticularised allegation of fraud "
" As the Earl of Halsbury LC said in Bullivant v Attorney General for Victoria [1901] AC 196, 202, where it is intended that there be an allegation that a fraud has been committed, you must allege it and you must prove it. We are concerned at this stage with what must be alleged. A party is not entitled to a finding of fraud if the pleader does not allege fraud directly and the facts on which he relies are equivocal. So too with dishonesty. If there is no specific allegation of dishonesty, it is not open to the court to make a finding to that effect if the facts pleaded are consistent with conduct which is not dishonest such as negligence. As Millett LJ said in Armitage v Nurse [1998] Ch 241, 256g, it is not necessary to use the word "fraud" or "dishonesty" if the facts which make the conduct fraudulent are pleaded. But this will not do if language used is equivocal: Belmont Finance Corpn Ltd v Williams Furniture Ltd [1979] Ch 250, 268 per Buckley LJ. In that case it was unclear from the pleadings whether dishonesty was being alleged. As the facts referred to might have inferred dishonesty but were consistent with innocence, it was not to be presumed that the defendant had been dishonest. Of course, the allegation of fraud, dishonesty or bad faith must be supported by particulars. The other party is entitled to notice of the particulars on which the allegation is based. If they are not capable of supporting the allegation, the allegation itself may be struck out. But it is not a proper ground for striking out the allegation that the particulars may be found, after trial, to amount not to fraud, dishonesty or bad faith but to negligence."
"I agree with Mr Gourgey QC that this overstates what is required for a valid plea of fraud. The claimant does not have to plead primary facts which are only consistent with dishonesty. The correct test is whether or not, on the basis of the primary facts pleaded, an inference of dishonesty is more likely than one of innocence or negligence. As Lord Millett put it, there must be some fact "which tilts the balance and justifies an inference of dishonesty". At the interlocutory stage, when the court is considering whether the plea of fraud is a proper one or whether to strike it out, the court is not concerned with whether the evidence at trial will or will not establish fraud but only with whether facts are pleaded which would justify the plea of fraud. If the plea is justified, then the case must go forward to trial and assessment of whether the evidence justifies the inference is a matter for the trial judge. This is made absolutely clear in the passage from Lord Hope's speech at [55]-[56] which I quoted above."
"27. One of the features of claims involving fraud or deceit is the prospect that the Defendant will, if the underlying allegation is true, have tried to shroud his conduct in secrecy. This has routinely been addressed in cases involving allegations that a defendant has engaged in anti-competitive arrangements. In such cases, the Court adopts what is called a generous approach to pleadings. The approach was summarised by Flaux J in Bord Na Mona Horticultural Ltd & Anr v British Polythene Industries Plc [2012] EWHC 3346 (Comm) at [29] ff. Flaux J set out the principles in play as described by Sales J in Nokia Corporation v AU Optronics Corporation [2012] EWHC 731 (Ch) at [62]-[67], which included the existence of a tension between (a) the impulse to ensure that claims are fully and clearly pleaded, and (b) the impulse to ensure that justice is done and a claimant is not prevented by overly strict and demanding rules of pleading from introducing a claim which may prove to be properly made out at trial but may be shut out by the law of limitation if the claimant is to be forced to wait until he has full particulars before launching a claim. Sales J indicated that this tension was to be resolved by "allowing a measure of generosity in favour of a claimant."
28. These are salutary warnings and necessary protections for the Claimants, which I bear in mind. It is, however, to be remembered that the Court's concern in these passages was in large measure based upon a lack of knowledge on the part of the Claimant before disclosure had been given. In the present case, the Defendants have given disclosure based upon wide-ranging search terms relating to multiple custodians. Although the Claimants submit that the Defendants' disclosure is not complete, they have not identified any specific omissions or areas of default that would justify the Court in treating the Claimants as if they were still materially excluded from access to relevant disclosure for present purposes.
29. In any event, if a case alleging fraud or deceit (or other intention) rests upon the drawing of inferences about a Defendant's state of mind from other facts, those other facts must be clearly pleaded and must be such as could support the finding for which the Claimant contends. This is clear from numerous authorities: see Three Rivers District Council v The Governor and Company of Barclays of
England (No 3) [2003] 2 AC 1 at [55] per Lord Hope and [186] per Lord Millett. I endorse and adopt the statement of Flaux J in JSC Bank of Moscow v Kekhman [2015] EWHC 3073 (Comm) at [20] "
(1) It is incumbent on a party alleging fraud to plead sufficient particulars of knowledge that the alleged representation was untrue.
(2) The particulars may be of direct knowledge, for example a written communication demonstrating that the representor had the requisite guilty knowledge.
(3) In the absence of particulars of direct knowledge, the party pleading fraud may have to resort to an inference to be drawn from a primary fact or a number of primary facts. All such primary facts upon which an inference of fraud is to be drawn must be pleaded.
(4) Whether the allegation of fraud can be justified by reference to an inference of fraudulent knowledge based on primary facts depends on the Court being able to conclude that the inference of fraud is itself justified, assuming those facts are true and can be proved. Flaux, J said that an inference of fraud must be more likely than an inference of honest conduct; the primary fact(s) must "tilt the balance" and justify an inference of fraud. It is simply a question of whether, if established, the primary facts properly justify the inference of fraud, as opposed to innocent conduct. During his oral argument, I think Mr Beltrami KC suggested one should not be drawn into assessing probabilities and ask simply whether the inference of fraud is justified. I agree that is the ultimate question to be considered when determining the adequacy of the plea of fraud. In considering the primary facts from which the inference of fraud is said to be drawn, one must consider whether those facts, each taken alone or collectively, are not only capable of giving rise to an inference of fraud but also whether any inference of innocent conduct may be drawn and, if so, the Court must then have regard to the comparative strength of each of those competing inferences.
(5) In considering whether or not to strike out an allegation because it discloses no reasonable grounds for bringing the claim or because it contains insufficient particulars (and so in failing to comply with the requirements of the CPR Part 16 Practice Direction or the Commercial Court Guide), the Court should assume that the facts as pleaded are true.
(6) Further, the Court should adopt a generous approach to the party alleging fraud in the pleading of fraud and the particulars in support of that plea having regard to the fact that that party may not have access to all of the information and documents which pertain to the allegation. However, such generosity should not circumvent the requirements of pleading fraud and supportive particulars, but should be exercised, for example, where the issue whether the plea of fraud is justified is evenly balanced.
Summary judgment
"The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if
(a) it considers that
(i) that claimant has no real prospect of succeeding on the claim or issue
(b) there is no other compelling reason why the case or issue should be disposed of at a trial."
"25. Accordingly, under CPR 24.2, the Court may give summary judgment against a claimant on the whole or part of a claim or on a particular issue if it considers that the claimant has no real prospect of succeeding on the claim or issue, and there is no other compelling reason why the case or issue should be disposed of at trial.
26. The principles in relation to a defendant's summary judgment application were set out in Easyair Ltd v Opal Telecom Limited [2009] EWHC 339 (Ch) at [15]. Those principles have been recited in many subsequent cases, including perhaps most recently by me in JJH Holdings Ltd v Microsoft [2022] EWHC 929 (Comm) at [11]:
"(i) the Court must consider whether the claimant has a 'realistic' (as opposed to a 'fanciful') prospect of success; (ii) a 'realistic' claim is one that carries some degree of conviction, which means a claim that is more than merely arguable; (iii) in reaching its conclusion the Court must not conduct a 'mini-trial', albeit this does not mean that the Court must take at face value and without analysis everything that a claimant says in statements before the court; and (iv) the Court may have regard not only to the evidence before it, but also the evidence that can reasonably be expected to be available at trial. Furthermore, where a summary judgment application turns on a point of law and the Court has, to the extent necessary, before it 'all the evidence necessary for the proper determination of the question,' it 'should grasp the nettle and decide it' since the ends of justice are not served by allowing a case that is bad in law to proceed to trial."
27. As to (iv), the Court will "be cautious" in concluding, on the evidence, that there is no real prospect of success; it will bear in mind the potential for other evidence to be available at trial which is likely to bear on the issues and it will avoid conducting a mini-trial: King v Stiefel [2021] EWHC 1045 (Comm) at [21] (per Cockerill J).
28. Furthermore, as Fraser J also recently put it in The Football Association Premier League Limited v PPLive Sports International Ltd [2022] EWHC 38 (Comm) at [25], on a summary judgment application the Court must "always be astute, and on its guard" to an applicant maintaining that particular issues are very straightforward and simple, and a respondent attempting to dress up a simple issue as very complicated and requiring a trial."
"I do not consider that the summary judgment applications are, in principle, appropriate. They are based on a particular interpretation of facts which are in dispute and, not unusually in the case of allegations of fraud and dishonesty, on the inferences to be drawn from established facts. Mr Wardell accepted, and indeed asserted, that the alleged inferences which the claimant seeks to draw must be assessed in the light of all the documents. In the light of the substantial factual and documentary evidence in the present case and the matters which are in dispute, this is, to my mind, precisely the type of mini-trial of disputed facts on the documents for which the summary judgment procedure is inappropriate."
MPS LLC's application
(1) The supposed "pervasive nature of the conduct [described earlier in the Re- Amended Particulars of Claim] and the overwhelming significance" of the Serie A and FIFA business to the MPS Group was such that MPS LLC must have been aware of such alleged conduct (paragraphs 84 and 107 of the Re-Amended Particulars of Claim).
(2) Mr Pozzali's role - being a shareholder and a person in senior management - was such that he "must have been aware of" the allegedly unlawful conduct (paragraphs 84 and 107 of the Re-Amended Particulars of Claim).
(3) A number of emails each of which are said by Jinxin to evidence dishonesty, namely:
b. Mr Pozzali was copied in on an email exchange between Mr Silva and Mr Radrizzani on 8th September 2014 concerning rumours about the closeness between the MPS Group and Infront Italy Srl (a consultant to La Lega) (paragraph 84(c) of the Re-Amended Particulars of Claim). In two emails, Mr Silva stated that:
"Also, I just saw Francini, who told me that Andrea had informed him that he wants to merge MP&Silva with Infront, news that he took very seriously. Keep in mind that these rumours can harm us in the Serie A tender, particularly if used by the competition (such as IMG or others) to demonstrate to the teams or to Lega [Calcio] that a conflict of interest in the assignment of rights might exist, even just theoretical or based on rumours. Let's not make any more statements, even privately, that could damage us, thank you!!
Keep in mind that the Serie A tender is delayed by a few weeks (probably to October, but we don't know) because they still need to close the domestic rights (the archive) with Sky before they move on to the foreign rights and, at the present time, we don't know how long they will take.
Let's think about what might be written by certain newspapers that were already pointing a finger at the "closeness" between MPS and Infront, if they now wrote that the two companies are even thinking of merging! I believe that we must not harm our opportunity to obtain the assigned rights."
c. An email chain dated 30th-31st January 2016 between a number of persons, including Mr Marinelli of UBS and Mr Silva, Mr Radrizzani, Mr Pozzali, concerning a call with one of the other bidders for the MPS Group (referred to as "S"), to discuss S's concerns about the potential loss by the MPS Group of Serie A. Mr Marinelli advised that the "commercial team" should "stress our belief in the ability to retain Serie A" and "clarify that the discussions is on the commercial issues around Serie A and we WIL NOT (sic) discuss the investigation" (paragraph 85 of the Re-Amended Particulars of Claim).
d. An email from Mr Marinelli to Mr Silva, Mr Radrizzani, Mr Pozzali, and Mr Auletta dated 22nd January 2016 providing an update on different bidders, in which a bidder (S) was noted to have made an indicative bid offer but with "3 major DD topics (Sirona agreements, Milan channel, entity holding Serie A rights)" which "have been discussed during a call yesterday" (paragraphs 107(b)(viii) and 107(c) of the Re-Amended Particulars of Claim).
e. An email dated 1st February 2016 from Mr Cappelletti to Mr Auletta, in which Mr Cappelletti identified "some commercial and operating issues that might have a significant impact on corporate profit in relation to the estimates in the current Business Plan", resulting in a reduced EBITDA of US$53,000,000, contrary to the business plan which estimated an EBITDA for 2015-16 of approximately US$81,000,000 (paragraph 110 of the Re-Amended Particulars of Claim).
f. An email chain following Mr Auletta having subsequently amended Mr Cappelletti's email to remove reference to the Opex issue and to amend the impact of the remaining issues, concluding that the worst case scenario was a reduction in EBITDA to US$58,000,000 but that a more realistic scenario could result in an EBITDA of US$72,000,000. In a subsequent email chain, Mr Pozzali said "I can't believe what I'm reading. Either we are crazy or something isn't working and I would like to know what" (paragraphs 111 and 111(a) of the Re-Amended Particulars of Claim).
(1) The pervasive nature of alleged illegal conduct in procuring the Serie A and FIFA rights and the significance of such rights to the MPS Group's business.
(2) Mr Pozzali's role being such that he "must have been aware of" the allegedly unlawful conduct.
(3) The emails referred to above.
(1) The pervasive nature of the illegal conduct / significance of the Serie A and FIFA rights
(1) The fact that the Serie A and FIFA Rights were of significance to the MPS Group's business is of no import to whether MPS LLC knew the alleged representations to have been false. This is no indicator of dishonesty, and is equally consistent with MPS LLC having made the alleged representations (if it did so) innocently or negligently.
(2) The remaining foundation of Jinxin's claim in deceit is, therefore, simply a generalised allegation that because of the "pervasive nature of the conduct" pursuant to which the Serie A and FIFA rights are alleged to have been acquired, MPS LLC "must have" known of the conduct alleged. This is a bare plea without proper basis.
(3) Jinxin does not plead a case that Mr Pozzali, MPS LLC and/or MPS Miami had any involvement in the acquisition of the Serie A or FIFA rights, on which Jinxin relies; no mention at all is made of MPS LLC or Mr Pozzali or MPS Miami in paragraphs 41-83 or 91-106 of the Re-Amended Particulars of Claim. Accordingly, if such rights were acquired unlawfully, it is not said that MPS LLC participated in that process, and its knowledge of the alleged unlawfulness needs to be identified as having been acquired in another way (but is not).
(4) It is common ground that MPS LLC was simply involved in the onward sale (via Mr Pozzali) of Serie A rights in the US and Latin America. It does not follow from its role in the onward sale of rights (from 2012 conducted by MPS Miami), that MPS LLC would have known how such rights were acquired.
(5) The inference that MPS LLC would have known how the rights were acquired is particularly difficult to understand when MPS LLC sat outside the MPS Group prior to the SPA.
(6) It is not alleged that the business of MPS LLC was always specifically aligned with the MPS Group. MPS LLC's separation is also apparent from certain Sale Documents.
(7) In any event, Jinxin is trying to have its cake and eat it. On the one hand, it advances a case that the alleged unlawfulness was "secret"; on the other hand, it suggests that the conduct was so widespread that by being within the group (which MPS LLC was not) CP and so MPS LLC "must have" been aware of it. In fact, it is not at all apparent from the pleaded facts that MPS LLC "must have" known the pervasiveness of the unlawful conduct alleged.
(1) Jinxin pleads and relies upon the sheer scale of the illegal business practices concerned. The scale of this alleged activity was breath-taking.
(2) Although there were efforts to diversify, this was a Group which was built upon the Serie A business (contributing on average 68% of its rights in/out gross profit).
(3) Following the introduction of the Melandri-Gentiloni Law in 2008, MPS acquired the Serie A rights in various stages for seven seasons, from 2010/11 to 2017/18.
(4) In fact, on Jinxin's case, this was a fundamentally corrupt business because MPS acquired these rights:
b. By paying bribes, totalling at least US$54 million, which were shuffled through offshore companies for non-existent services, many of which were fronts for persons who advised the Italian football league (and, on Jinxin's case, controlled the allocation).
c. By entering into secret anti-competitive agreements with potential rivals in order to suppress the price.
d. There was a similar story in the means by which MPS acquired Italian rights to the FIFA World Cup for the years 2018 and 2022 (and sought to obtain the rights for the 2026 and 2030 World Cup tournaments). In respect of the 2018 and 2022 World Cups, there is direct evidence of secret payments by MPS to an intermediary, through another offshore company, with consequent payment on by the intermediary to a senior FIFA official (and it appears that similar payments were made in respect of the 2026 and 2030 World Cups, only to be superseded by the breaking of the FIFA scandal).
e. The pleaded case, accordingly, is one of brazen and pervasive corruption within MPS, over a lengthy period of time, and in respect of its most significant business. MPS LLC does not seek to challenge any of these pleaded facts for the purpose of the Application, and rightly so.
f. Jinxin has further identified similarly dubious looking "consultancy agreements" in respect of Coppa Italia, Super Coppa and Copa America, indicating that such business practices appear to have been even more widespread.
(2) Mr Pozzali's role
(1) Jinxin fails to set out any case (let alone a case meeting the stringent requirements of pleadings in deceit and unlawful means conspiracy) to support the contention that Mr Pozzali's role would have given him this knowledge; Jinxin's pleading is entirely lacking in any specific content as to what Mr Pozzali is alleged to have learned by carrying out his role, when and how.
(2) In its Re-Amended Particulars of Claim, Jinxin relies on Mr Pozzali's role as (i) a founding member of the MPS Group; (ii) a shareholder in MPS (through MPS LLC); (iii) a "director" of MPS Miami; and (iv) having a "broad managerial role". As to this:
b. It is admitted that Mr Pozzali was one of the founders of the "MP & Silva" business in generic terms. The designation appears to have arisen because, from 2005 onwards, Mr Pozzali started selling a package of the Serie A rights in the Americas using the MP & Silva name. Mr Pozzali invoiced MPS Dublin for commission via dedicated service companies, before MPS LLC was incorporated in 2008. However, it is unclear how this founding role, which took place substantially before any of the unlawful acts alleged, supports Jinxin's case; Jinxin does not plead any case as to why the role of Mr Pozzali as a founding partner/member means that he "must have" been aware of how the Serie A and/or FIFA Rights were acquired many years later, where Mr Pozzali is not alleged otherwise to have been involved in this.
c. Mr Pozzali in fact became a shareholder via MPS LLC only following execution of the SPA, so his capacity as a shareholder has no relevance in this context.
d. Whilst the description of Mr Pozzali as a "director" of MPS Miami is disputed, it appears to be common ground that Mr Pozzali was not appointed to any formal position within the MPS Companies. In any case, simply being a director of a company is not enough to sustain a case in fraud: what matters is what was done or known as such (see Arcelormittal USA LLC v Ruia [2020] EWHC 3349 (Comm), para. 29-31). In any event, however, Mr Pozzali did not sit on any boards within the MPS Group, was not present at or provided with minutes of any meeting in which matters pertaining to the commission of alleged wrongdoing occurred, and did not negotiate any of the contracts which Jinxin alleges were fraudulent, and Jinxin does not allege otherwise.
e. The allegation of a broad managerial role is made in the context of Mr Pozzali overseeing "group sales, acquisition and development strategy across the Americas, covering the USA, Canada, Latin America and the Caribbean" (paragraph 12(c) of the Re-Amended Particulars of Claim), and his being involved in the rights-out sale of the Serie A business in the United States and Latin America. No case is pleaded as to why this management role, however broad, would have led Mr Pozzali to know how the Serie A and/or FIFA Rights were acquired in Europe (without his participation) or from whom.
f. Jinxin now attempts to repair the deficiencies in its pleaded case by referring to Copa America rights, and suggests in its skeleton argument (para. 124) that Mr Pozzali is "keen to avoid any further scrutiny of arrangements which fall squarely within his own territory", yet it ignores that it has pleaded no case that Mr Pozzali was involved in any wrongdoing in respect of Copa America (see paragraph 109 of the Re- Amended Particulars of Claim).
(3) In its submissions, based on documents adduced for the purpose of resisting the strike-out application, Jinxin places weight on the description of Mr Pozzali as a "Member of the Board" and it criticises MPS LLC for not commenting on Mr Pozzali's "overt role" as a member of the Board. However, once again, Jinxin has failed to pay close attention to the manner in which it has pleaded its own case:
b. The Re-Amended Particulars of Claim do not make any reference to Mr Pozzali being a member of the Board or seek to attach any particular significance to that description.
c. MPS LLC's Defence positively asserts that save for the responsibilities he assumed within MPS Miami, he was not "subsequently appointed to any formal position within the MPS Companies" (paragraph 9.3.3 of MPS LLC's Defence).
d. In its Reply, whilst Jinxin seeks to challenge what MPS LLC says about Mr Pozzali's role within MPS Miami it does not advance a positive case contrary to MPS LLC's contention that Mr Pozzali did not hold any other formal roles (paragraph 16.3 of MPS LLC's Defence; paragraph 6 of Jinxin's Reply)
(4) In response to the strike-out application, Jinxin now seeks to advance a case via paragraphs 36-37 of Mr Copeman's second witness statement that "the documentation shows that CP had a more central role in respect of the strategic management of the Group as a whole" and that Mr Pozzali had "oversight of the Group's rights-in contract negotiations". However:
b. Even if Mr Pozzali had the roles identified in the UBS presentation and Allen & Overy LLP Legal Vendor Due Diligence Report dated 18th November 2015 (which MPS LLC contends in paragraph 2.6 of its Defence were not prepared on its instructions and which are contradicted by the Ernst & Young LLP Vendor Due Diligence Reports) what Jinxin needs to show is that in this capacity Mr Pozzali acquired some relevant knowledge that is attributable to MPS LLC. Jinxin has not done so.
c. Jinxin also relies, in support, on a board resolution of MPS Lux dated 9th September 2014, which postdates most of the contracts which Jinxin alleges are tainted by fraud. The resolution is no part of Jinxin's pleaded case and the resolution does not appear to be mirrored by like resolutions passed by other MPS companies. Indeed, Jinxin has not sought to rely on any minutes of other board meetings from any other MPS companies as evidence of CP/MPS LLC's knowledge of falsity, despite having access to and the ability to review such documents. The inference is clear: either Mr Pozzali did not attend any relevant board meetings or, if he did, no conduct was discussed at those meetings upon which Jinxin can now rely in support of its claims against MPS LLC.
(5) Certain further hopeless points are also made by Jinxin to try and salvage its case, including that Mr Pozzali identifies himself as an MPS "partner from 2005 to 2018" on his LinkedIn page (in fact created in 2021), and is "closely connected" with Mr Silva, because he is married to his cousin. These points only serve to demonstrate that Jinxin's claims in respect of Mr Pozzali's knowledge of falsity are at best speculative and tenuous.
(6) Jinxin's submissions seek to place weight on the level of sale consideration received by MPS LLC. That does not form part of Jinxin's pleaded case.
(1) Given the extensive corruption alleged by Jinxin, it is (at the lowest) a fair inference that MPS LLC and Mr Pozzali would have been aware of it. Put another way, it is inherently unlikely that MPS LLC and Mr Pozzali would have been incurious and left in the dark as to the fundamental basis on which the major part of the business was conducted over the course of a decade.
(2) In order to draw this inference, Jinxin relies in particular upon the central role of Mr Pozzali within the business of the MPS Group. The documentary evidence currently available to Jinxin reveals the following:
b. Mr Pozzali was a "founding partner" of the business, alongside Mr Silva and Mr Radrizzani, as described in the UBS presentation. The acquisition was structured such that MPS LLC and Mr Pozzali obtained US$49 million from the sale as the third largest shareholder.
c. Mr Pozzali had a broad and senior managerial role within the MPS Group. Reference may be made to (a) the UBS presentation, in which he is described under the heading "entrepreneurial management team" as a "Member of the Board", with 11 years of experience "with the Company", and his profile stated that he is "part of the Board of Directors of the Group" who "also" overseas sales in the Americas; and
(b) the Allen & Overy LLP Vendor Due Diligence Report, in which it was reported that "As at 12 November 2015, the Group has 111 employees plus four board members (consisting of Marco Auletta, Riccardo Silva, Andrea Radrizzani and Carlo Pozzali)."
(3) The full detail, scope and responsibilities of Mr Pozzali as a member of the Board of the "Group" are not known, nor is it clear whether this is a reference to a corporate entity or a more generic executive body operating above formal structures. However, there is direct evidence of the significance and apparent role of this body in the Board Resolution of MPS Holding SA (Luxembourg) (the holding company) dated 9th September 2014 which provided that, in respect of all "Acquisition Contracts" (and so including Serie A and FIFA), "The correct negotiations of each Acquisition Contract shall be overseen and be under responsibility of the relevant Top Commercial Manager. The Directors of the Group Riccardo Silva, Andrea Radrizzani, Carlo Pozzali and Marco Auletta shall be kept at all times duly informed by the top management as to the main aspects and developments of the negotiations of each investment and shall give their availability to regularly receive information and discuss such issues".
(4) In addition, Mr Pozzali was also a director of MPS Miami, whose role as such included "group sales, acquisition and development strategy across the Americas, covering the USA, Canada, Latin America and the Caribbean". This meant being involved in the rights-out sale of the Serie A business in the United States and Latin America.
(5) The actual extent of Mr Pozzali's involvement in and knowledge of MPS's business will need further enquiry.
(6) MPS LLC does not explain Mr Pozzali's role as a member of the Board of the MPS Group.
"The business and operations of the MPS Group were managed principally by the individual tort Defendants and CP, namely by:
c. CP as a founding member of the Group, as (through MPS LLC) a shareholder in MPS and as a director of MPS Miami. The same MPS Management Presentation said that CP "oversees group sales, acquisition and development strategy across the Americas, covering the USA, Canada, Latin America and the Caribbean"
(1) Mr Pozzali's identity as a founder of the MPS Group was one which was apparently designated in 2005, a decade before the allegedly fraudulent conduct in question.
(2) MPS LLC's shareholding in MPS was acquired only after the execution of the SPA, which was allegedly induced by the fraudulent misrepresentations.
(3) Mr Pozzali's directorship of MPS Miami was concerned with the sale of rights in the Americas, and not the acquisition of the Serie A or FIFA rights. Indeed, there is no allegation that Mr Pozzali himself was guilty of the illegal conduct leading to the acquisition of those rights.
(3) The emails
(1) Jinxin relies on an email between Mr Silva and Mr Radrizzani to which Mr Pozzali was copied on 8th September 2014 (a year and a half before the SPA) "concerning rumours about the closeness between the Group and Infront Italy", from which Jinxin infers that Mr Pozzali and hence MPS LLC must have been similarly aware of the true nature of the arrangements concerning the Serie A business. Whilst this email does refer to "rumours" of a close connection between MPS and Infront Italy, that is in the context of Mr Silva having been told that Mr Radrizzani had proposed a merger between these entities (which Mr Radrizzani denied). Further, the email evidences a concern to put to bed the rumours of closeness simply so as not to harm the interest of MPS in Serie A. There is nothing in the email which supports any actually improper relationship between MPS and Infront Italy, or from which an inference of knowledge - not merely as to the relationship between MPS and Infront Italy but boldly as to the entirety of the "true nature of the arrangements concerning the Serie A business" - can be drawn.
(2) Jinxin relies on the email chain dated 30th-31st January 2016 which, it claims, means that Mr Pozzali and MPS LLC can have had no genuine belief in the asserted confidence or renewal of Serie A rights. As to this:
b. No wrongdoing or knowledge of wrongdoing is alleged against Mr Marinelli of UBS who wrote the email concerning a discussion with potential bidders about commercial strategy and, in particular, what the MPS Group might do by way of other commercial opportunities, if the Serie A rights were to be lost.
c. Although the email refers to the Milan investigation (which concerned Mr Silva and not MPS LLC), it does not detail the investigation, and far less does it address its substance, merits, prospective outcome or likely effect.
d. Similarly, the email chain does not set out information that would have led Mr Pozzali to comprehend the "true position" as opposed to the existence of the investigation, or fix Mr Pozzali with any knowledge of wrongdoing material to the alleged representations, and which would have led him and MPS LLC to have known these to be false.
(3) Jinxin relies on a copy of the email dated 22nd January 2016 from Mr Marinelli of UBS to Mr Silva, Mr Radrizzani, Mr Pozzali and Mr Auletta setting out in some detail four potential bids and key points relating thereto, and providing under "S" a list of "3 major DD topics (Sirona agreements, Milan channel, entity holding Serie A rights) have been discussed during a call yesterday". As to the alleged inference which Jinxin pleads can be drawn from this email:
b. The email is again sent by Mr Marinelli, against whom no wrongdoing or knowledge of wrongdoing is alleged.
c. The email refers to the Sirona Agreements as having been discussed with a potential bidder by way of due diligence. This does support knowledge that the Sirona Agreements existed and were shared with UBS and bidder "S", but not the broad inference as to dishonesty drawn by Jinxin.
d. There is nothing further in the email which suggests any unlawful conduct, or which would or can be inferred to have given CP or MPS knowledge of the same.
(4) The explanation for the pleading of these emails now given is that they evidence Mr Pozzali's involvement in the business so that it can be inferred that he knew about the allegedly pervasive (but secret, hidden and obscure) conduct so that MPS LLC made the representations falsely. But if there is nothing in the emails that evidences dishonesty, then Jinxin's plea is reduced to saying that (i) since Mr Pozzali was in some way, however peripherally, involved in the MPS Group's business and (ii) since there was unlawful conduct within the MPS Group, Mr Pozzali and therefore MPS LLC must have known this. Indeed, if these emails are the high point of Jinxin's case that Mr Pozzali was involved in the business of the MPS Group, one can ask rhetorically where is the reasonably credible material which establishes an arguable case in fraud.
(5) As regards the EBITDA Representation, Jinxin seeks to rely on only one specific email dated 1st February 2016 to allege that MPS LLC made the alleged representation falsely. The email does not show that Mr Pozzali knew the EBITDA Representations to have been false, or provide any proper basis for inferring dishonesty. Mr Pozzali's response to the various scenarios - "I can't believe what I'm reading. Either we are crazy or something isn't working and I would like to know what" - suggests only that the figures surprised him.
(6) Mr Pozzali is not claimed to have had any particular accountancy expertise, or to be an expert in forecasting EBITDA. Nor was he (and nor is he alleged to have been) responsible for signing off financial statements or accounts for the wider MPS Group.
(7) Jinxin has had access to a wealth of documentation, including a back-up of Mr Pozzali's mailbox, held by the MPS Group, which it either has or could have reviewed (see Mr Clayman's second witness statement, para. 18).
(1) The emails which have been pleaded are consistent with the inference that MPS LLC and Mr Pozzali were aware of the true manner in which MPS conducted its business. These emails indicate that Mr Pozzali was neither isolated from, nor uninformed about, the Serie A and FIFA rights-in side of the business. Whilst they do not, in and of themselves, demonstrate actual knowledge of dishonesty, they further undermine the already improbable premise that he was (for some unexplained reason) excluded from the business (and provide good reason to believe there will be much more when Mr Pozzali's emails are disclosed).
(2) Jinxin's case is that: (a) bribery and corruption was so rife in respect of (at least) Serie A and FIFA that it is to be inferred that anyone who had any knowledge of those assets must have been aware of it; and (b) that Mr Pozzali's senior management role within the MPS Group was such that it is to be inferred that he would have necessarily had an understanding and interest in the MPS Group's two major assets, and therefore it is to be inferred that he would have been aware of the true nature of the arrangements concerning those assets.
(3) The emails pleaded go to the second of these points. They support the contention that Mr Pozzali's importance, position and role within the MPS Group's business was broader than he is admitting and in particular that he did not sit in the USA in splendid isolation from his peers, excluded from any and all discussions pertaining to and knowledge of Serie A and FIFA.
(4) The email chain dated 8th September 2014 concerns apparent rumours of a merger between MPS and Infront Italy (the adviser to the League), shortly before a Serie A tender. Mr Silva expressly told Mr Radrizzani and Mr Pozzali not to mention or say anything about the "closeness" between MPS and Infront Italy. That Mr Pozzali was brought into this evidently important conversation is fully consistent with his roles as a co-founding partner and Board member of the MPS Group and is indicative of an intimate involvement in MPS's core business. If Mr Pozzali had no involvement or interest in the rights-in side of the business, was not kept informed of such matters, and had no knowledge of the Serie A business, this email being sent to him is baffling (and unexplained).
(5) The email chain dated 30th-31st January 2016 concerns the bidding process for the sale of the MPS shares, and shows Mr Pozzali being held out to purchasers as knowledgeable about, and involved in, the rights-in side of the business. Indeed, the specific topic in focus is the stability of the Serie A rights.
(6) The email chain dated 22nd January 2016, again concerning the acquisition process, shows the "Sirona agreements" being flagged as a "major DD topic" by one of the potential purchasers that had been discussed, the Sirona Agreement being the agreement through which the bribe was allegedly paid for the FIFA rights. It is unclear whether Mr Pozzali was present during the discussion about Sirona referred to, but he was an addressee of the email and was plainly involved in the process. It is a fair inference that Mr Pozzali either knew about the Sirona Agreement or found out about it after this email, given its apparent importance to the sale.
(7) With respect to Jinxin's case in respect of the falsity of the EBITDA Representations:
b. The Sale Documents forecast that the MPS Group's EBITDA for the year ending 2016 would be approximately US$81 million.
c. The email chain dated 1st February 2016 directly evidences that Mr Auletta, Mr Radrizzani, Mr Silva and Mr Pozzali were alerted to serious issues that could have a significant impact on the EBITDA figures contained in the Sale Documents; reacting to and discussing what to do about it amongst themselves; and appreciating that deviating so significantly from the business plan at this stage could "significantly increase the risk of not receiving bids or blowing the deal, even though negotiations are at an advanced stage".
d. The EBITDA figure was not revised in the Sale Documents.
e. The EBITDA figure was consequently falsely inflated.
f. Jinxin infers that Mr Auletta, Mr Radrizzani, Mr Silva and Mr Pozzali took a deliberate decision not to revise the figure, lest it interfered adversely with the sale process.
(8) Since the claim was pleaded, it has become apparent that a number of significant sources of further evidence exist, importantly (a) Mr Pozzali's emails; and (b) copies of Mr Silva's and Mr Radrizzani's email inboxes that contain their emails for the relevant period (Mr Copeman's second witness statement, para. 52-55). In particular:
b. It has recently been identified that hard drives held by BDO contain back up email data from the MPS mailboxes used by Mr Silva, Mr Radrizzani and Mr Pozzali. Jinxin has not yet reviewed any of those documents because Mr Silva, Mr Radrizzani and MPS LLC (a) have each objected on the basis of their purported entitlement to assert privilege over the contents of their company email accounts; and (b) have raised GDPR objections (Mr Copeman's second witness statement, para. 52-54).
c. Mr Silva and Mr Auletta have each revealed that they took a copy of their MPS mailboxes before they departed from MPS. These copies appear to have been taken before any mailbox content was deleted (Mr Copeman's second witness statement, para. 52).
d. Mr Silva has recently revealed that his criminal lawyer is holding four MPS laptops (Mr Copeman's second witness statement, para. 52).
e. It is therefore known that there are significant further repositories of evidence, covering the relevant period, and which are yet to be reviewed.
The adequacy of Jinxin's pleas of fraud against MPS LLC
Conclusion
(1) I allow MPS LLC's application to strike out Jinxin's pleas of fraud against MPS LLC in respect of the Business Practices Representations and the Serie A Representations in paragraphs 84, 85, 107, 125 and 126 of the Re-Amended Particulars of Claim.
(2) I dismiss MPS LLC's application to strike out Jinxin's plea of fraud against MPS LLC in respect of the EBITDA Representations in paragraph 110-111 of the Re-Amended Particulars of Claim. Further, given the basis of the plea of fraud in these paragraphs, in my judgment, Jinxin has a real prospect of succeeding in its claim against MPS LLC. I accordingly dismiss the application for summary judgment in respect of the EBITDA Representations.
