Court strikes out £70 million classic Ferrari conspiracy

06/09/21

On 6 September 2021, the High Court struck out a £70 million conspiracy claim involving the world-renowned collection of classic Ferraris which had been on display at the Violati Maranello Rosso Museum in San Marino. The 71 car collection was assembled by the racing car collector and driver Fabrizio Violati, a friend of Enzo Ferrari.

In May 2014, the claimant (“MRL”) bought the collection, which it planned to sell at auction. To finance its acquisition of the collection, MRL obtained a €90 million loan from the First Defendant (“Lohomij”), part of “Louwman Group” the major Dutch automobile business. The loan was secured by a debenture over the collection. MRL entered into an agreement with Lohomij and Bonhams to sell the cars at auction. In August 2014, 10 cars were sold at auction at Quail Lodge, USA, including a Ferrari 250 GTO, which sold for a world record price of US$34.65 million.

MRL was disappointed with the auction results and failed to make loan repayments to Lohomij. MRL made various allegations about the conduct of the Quail Lodge auction. In July 2015, MRL, Lohomij and Bonhams entered into a settlement agreement in respect of MRL’s complaints. Lohomij also agreed to vary the terms of its financing facility to MRL pursuant to an amended facility agreement.  

MRL sought to sell the remaining cars in the collection to repay Lohomij the loan. Under the terms of the amended facility agreement, Lohomij first needed to give its consent to any sale, such consent not to be unreasonably withheld. MRL proposed the sales of certain cars, but Lohomij withheld its consent because it considered that the terms of the proposed sales were contrary to its commercial interests or prejudiced its security rights.

In May 2020, MRL issued proceedings making a series of claims against Lohomij and Bonhams, including claims in conspiracy, breach of fiduciary duty and breach of the amended facility agreement. MRL alleged that Lohomij and Bonhams had conspired in respect of the auction at Quail Lodge and acted dishonestly to put their own interests above those of MRL. MRL alleged that as part of the conspiracy, and in breach of the amended facility agreement, Lohomij had deliberately interfered in and unreasonably refused consent to the sales of certain cars in order to force their sale at an undervalue to associates of the Fourth Defendant, Mr Louwman.  MRL claimed losses of at least £70 million.

The Defendants applied to strike out or obtain summary judgment on the claims against them (save in respect of one minor claim). HHJ Keyser QC, sitting as a Judge of the High Court, held that as a matter of construction, the terms of the settlement agreement precluded the claim in conspiracy and effected a release of all MRL’s claims except for those based on freestanding causes of action arising after the date of the settlement agreement in July 2015. The Court analysed the decision of the House of Lords in BCCI v. Ali [2002] 1 AC 251, the subsequent case law as to the approach to the construction of contractual releases, and the doctrine of ‘sharp practice’. The Judge rejected MRL’s argument that because the settlement agreement did not have express words which released claims based on fraud, dishonesty or deliberate wrongdoing, the release was not to be taken to extend to such claims.

The Court also struck out and gave summary judgment on MRL’s claims that arose after July 2015, including Lohomij’s alleged breach of the amended facility agreement. The Judge assessed the plausibility of MRL’s case against the contemporaneous documents. He was conscious not to conduct a mini-trial, but noted that in respect of pleaded allegations the Court “was not bound merely to accept the mere say-so of anybody”. The Judge said:

“where it is clear that a factual case is self-contradictory or inherently incredible or where it is contradicted by the contemporaneous documents, the court, after careful consideration of the evidence that is currently before it and having regard to the nature of such further evidence as might reasonably be expected to be available at trial, is entitled to reject that case even on a summary basis. The court will not be dissuaded from giving judgment by mere Micawberism.”

The Judge considered the principles concerning contractual consent provisions and said that MRL had misconstrued the scope of the provisions alleged to have been breached. The Court held that on a critical examination of the available material the allegations of breach were not reasonably arguable and that Lohomij was entitled to act in its commercial interests. In the Court’s judgment, MRL’s allegations carried “not a shred of conviction”, with its case drawing on “utterly implausible inferences”. Strike out and summary judgment were granted in favour of Lohomij and Mr Louwman.

The judgment is here.