Gestmin SGPS SA v Credit Suisse (UK) Ltd & Anor, Court of Appeal - Commercial Court, November 15, 2013, [2013] EWHC 3560 (Comm)

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Gestmin SGPS SA v Credit Suisse (UK) Ltd & Anor, Court of Appeal - Commercial Court, November 15, 2013, [2013] EWHC 3560 (Comm)

Neutral Citation Number: [2013] EWHC 3560 (Comm)

Case No: 2011 FOLIO 1267




Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 15/11/2013

Before :


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Between :

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Philip Moser QC and Fiona Banks (instructed by Ashfords LLP) for the Claimant

Adrian Beltrami QC and David Simpson (instructed by Gibson & Co. Solicitors Limited) for the Defendants

Hearing dates: 3 - 21 October 2013

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A. Introduction

1. On 8 December 2005 the claimant in this case (``Gestmin'') invested €11,150,000 in an Initial Public Offering of shares in a company called Queen's Walk Investment Limited (``QWIL''). It did so on the advice of the second defendant, Credit Suisse Securities (Europe) Limited. In this action Gestmin claims that the advice was negligent and asks the court to award damages for loss suffered as a result of making the investment.

The parties and the contract

2. Gestmin is a Portuguese company established in 2004 as an investment vehicle for Mr Manuel Champalimaud.

3. The defendants are companies in the Credit Suisse group of companies. It is common ground that the proper party to the claim is the second defendant and for convenience I shall refer to that company as ``Credit Suisse''.

4. It is not in dispute that in April 2005 Gestmin and Credit Suisse entered into a Client Agreement under which Credit Suisse agreed to provide private banking services to Gestmin consisting of ``general investment advisory and dealing services in securities''. The relationship manager for Gestmin and Mr Champalimaud's point of contact with Credit Suisse was Mr Humberto de Sousa who, like Mr Champalimaud, is Portuguese. At the relevant time Mr Sousa was a director of Credit Suisse, based in London but dealing mainly with Portuguese and Spanish clients.

The claim in brief

5. Between July 2005 and July 2006 Gestmin made a series of investments in financial products on the advice of Credit Suisse.

6. Gestmin's claim in this action relates to only one of the investments made: the purchase in December 2005 of 1,115,000 shares in QWIL at a price of €10 per share. QWIL was an investment company whose strategy was to invest in the `equity' or `first loss' tranche of mortgage-backed securities. For reasons that are now well known, that strategy has not proved to be a rewarding one for those who held investments in such securities at the time of the `sub prime mortgage crisis' which began in 2007 and reached its height in 2008. In the last quarter of 2008 the quoted price of shares in QWIL fell as low as €0.51 per share. The value of the shares subsequently recovered somewhat but is still far below the price for which they were purchased by Gestmin.

7. Gestmin gave instructions to Credit Suisse in September 2006 to try to sell several of its investments, including its shareholding in QWIL. In November 2006 Credit Suisse was instructed to liquidate Gestmin's entire portfolio. For reasons which are in dispute, the shares in QWIL have still not been sold. It is agreed between the parties' financial experts that as at 30 September 2013 the value of the shares was around €3.9 million.

8. The first notification of a potential claim by Gestmin was a letter sent on its behalf by English solicitors to Credit Suisse on 14 September 2010. The present action was begun in October 2011, almost six years after the investment in QWIL was made.

9. Gestmin's central complaint is that QWIL was an unsuitable investment for Credit Suisse to recommend because it was an investment with high risk and low liquidity, whereas Gestmin's objectives were allegedly to make investments with low risk and high liquidity which would provide collateral for loans up to a high percentage of their value.

10. A striking difficulty which Gestmin faces in advancing this case is that, when Gestmin opened its account with Credit Suisse, Mr Champalimaud signed forms which identified Gestmin's investment objective as long term capital growth and indicated that Gestmin was prepared to accept a high level of risk and that its liquidity needs were low. Gestmin's response to this has been to allege that Mr Champalimaud signed the forms under a mistake as to their contents and that Credit Suisse was aware of and indeed responsible for this mistake.

11. Gestmin further alleges that Credit Suisse misrepresented and/or failed to explain to Gestmin the risks of investing in QWIL. A point is also taken that offering shares in QWIL to Gestmin allegedly involved a breach of Portuguese law.


12. In addition to Mr Champalimaud, Gestmin called six further witnesses of fact. They were:

i) Mr Jorge de Abreu, a Portuguese lawyer who is an old friend of Mr Champalimaud;

ii) Mr Fernando ...

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