BL-2020-001417 - [2025] EWHC 2487 (Ch)

First, in this period, the first approaches were made to the two investors whose investments form the main subject matter of this claim, i.e. The Observatory (who eventually invested through 2B) and LGT Capital Partners (“LGT”) (who eventually invested through Crown).

In the judgment of 17 December 2021 in Musst v Astra, having heard the same witnesses as in this case, namely Mr Reeves, Ms Galligan and Mr Siddiqi (and other witnesses who were not called in this case), I made the following findings of fact, namely:

“(e)

The facts relating to the introduction of 2B

261.

There was a brainstorming session between Mr Siddiqi and Ms Galligan in March 2012 which led to a list of target customers being compiled.  Among them, Mr Siddiqi for Musst suggested to Ms Galligan that Matrix should contact the Observatory as a potential investor. Ms Galligan had known Mr Issac Septon and others at The Observatory since around 2010.

262.

As a result, Ms Galligan and other members of the Matrix sales team in March and April 2012 started speaking to potential investors about the proposed AMCO business.  This then enabled direct contact with customers by Mr Mathur and Mr Siddiqi.  Mr Siddiqi had technical know-how of the credit instruments relating to synthetic ABS which enabled him to make detailed presentations of the product, which was particularly important for a sophisticated investor including 2B and Crown.

263.

In about June 2012, Ms Galligan organised a conference call between Mr Siddiqi (of Musst), Mr Mathur, and Mr Septon of the Observatory at Musst's offices, and a call then took place between the three of them on 2 July 2012.  On the same day, Ms Galligan emailed Mr Septon an “AMCO” marketing presentation.  On 20 September 2012, Ms Galligan, still at Matrix, and Mr Mathur, still at Deutsche Bank, met Mr Septon in New York.  Subsequently, in October 2012, Ms Galligan left Matrix (which shortly afterwards went into insolvency) and joined Musst.  She was made redundant by Matrix on 6 November 2012.  There was a meeting on 13 November 2012 in New York with Mr Septon to which reference has been made above.  Mr Mathur did not know if Ms Galligan had been there, and Ms Galligan accepted that she was not there if that was what Mr Mathur said.  

264.

In December 2012, Mr Septon came to London to do his and The Observatory's first (or first proper) due diligence on the proposed business on behalf of 2B (or at least in anticipation of an investment by 2B or a vehicle such as 2B).  At Ms Galligan's instigation (now of Musst having left Matrix since its insolvency), he attended a long meeting on 4 December 2012 with herself, Mr Siddiqi, and Mr Mathur (now of Octave) at Octave LLP’s offices at 23 Ironmonger Lane, London EC2V 8EY, at which he said he wanted to invest in the proposed AMCO fund, as he confirmed by email later that day to Musst.  At that meeting, Mr Septon not only carried out operational due diligence, but enquired into the underlying strategy, and what types of trade would be carried out, and what underlying collateral there was for the synthetic ABS and what there would be in the portfolio if he were to invest. 

265.

Subsequently, on 11 February 2013, at Mr Septon’s or The Observatory’s direction, 2B entered into a contract with Octave LLP (“the 2B Contract”), under which it agreed to invest and thereafter invested (at least) US$20 million in “cash and synthetic asset-backed securities” and their derivatives, and other “structured credit products” controlled by Octave.  2B agreed to pay (a) a management fee assessed (to put it simply) by reference to the net asset value of the fund invested; and (b) a “Performance Fee” on net profits it received from the fund.

266.

After Musst and Octave entered into the Octave Contract on 18 April 2013, Ms Galligan, by an email exchange on 19 and 22 April 2013, asked Mr Michael Holdom (of Octave LLP) when Musst’s share of revenue thereunder would be paid to it; to which Mr Holdom, in reply, sent on Octave LLP’s March 2013 invoice to 2B, and asked Ms Galligan in turn to send him Musst’s invoices to Octave (i.e. for this agreed 20% share).

267.

Accordingly, from this point on, Musst invoiced Octave in relation to 2B, and Octave duly paid in accordance with the Octave Contract (until the novation to Astra LLP mentioned below), save that the first payment of US$10,000, was paid by Astra LLP on 13 May 2013. The total sum paid by Octave to Musst in relation to 2B (including the said first payment of US$10,000) was US$221,974.78.”

The Court is not bound by those facts. Considering the matter afresh, there is no reason to depart from those findings. In the judgment of 17 December 2021 in Musst v Astra, I made the following further findings of fact.

The Court does not need to follow these findings, but having heard the new evidence, there is no reason to depart from them.

I find that although neither Ms Galligan nor Mr Siddiqi had done business with Mr Isaac Septon of the Observatory, Ms Galligan had known him since around 2010. This enabled her to make contact with him on 24 April 2012. In June 2012, she organised a call of Mr Mathur, Mr Siddiqi and herself with Mr Septon for 2 July 2012 and on that day to send to him an “AMCO” presentation. On 18-21 September 2012, Ms Galligan, still at Matrix, and Mr Mathur went to the US to visit Mr Septon without Mr Siddiqi. In October 2012, whilst still at Matrix, Ms Galligan organised that a meeting would take place with Mr Septon in London in early December 2012.

In my judgment, Ms Galligan, then of Matrix, was involved in the introduction of Mr Septon. Despite that, prior to the demise of Matrix on 6 November 2012, there was also a significant participation of Mr Siddiqi on behalf of Tapestry/Musst in procuring the business of Mr Septon. This was in the following respects, namely:

Despite the significant role of Matrix, it ended by at the latest 6 November 2012. Whilst by that stage, there were the beginnings of the planned meeting for December 2012, it was not a formality that the investment would then take place. This was a major due diligence meeting as described above with Mr Siddiqi having the leading role. As noted above, Mr Septon enquired into the underlying strategy and what types of trade would be carried out. Insofar as Ms Galligan was involved at this stage, she was now working for Musst.

The agreement for the investment was on 11 February 2013. This did not unlock the money because it was necessary for Musst to obtain an agreement with Octave/Astra which occurred on 18 April 2013. It involved considerable negotiation in order to get Mr Mathur to sign. It was a sign of how significant Mr Mathur regarded the role of Mr Siddiqi that the agreement was with Musst and not with Matrix. There shall be described below the steps taken by Musst to obtain the money representing the performance fees referable to the Observatory/2B and LGT/Crown.

I have concluded that whilst the business of the Observatory/2B was secured through contributions of both Musst and Matrix, those of Musst were the greater. The reasons for this are as follows:

It has been suggested that Mr Septon’s willingness to attend London is evidence that he had decided to purchase subject to anything unexpected arising on the due diligence. Mr Septon did not give evidence, but the inference is that this was a critical stage in his decision making process. Mr Septon would not have come to London unless he was seriously interested in proceeding, but in respect of such a large investment, the inference is that in order to commit, he needed to have a thorough due diligence. Mr Siddiqi had a leading role in winning over Mr Septon in the due diligence meeting by his mastery of the technical details.

This is not to say that Matrix did not also play a significant role in the introduction. Ms Galligan, who was with Matrix up to October 2012, in anticipation of the insolvency process on 6 November 2012, had a significant role, but after the first approach, and in particular as follows:

According to a diary entry, Ms Galligan set up a call with Mr Septon to take place on 21 May 2012. That was a call with Mr Septon of Mr Siddiqi, Mr Mathur and herself, and she said that they were working on some trade examples. There was then a further teleconference with him which eventually took place on 2 July 2012 between the same persons. This was followed by an email of the same date from Ms Galligan attaching a presentation and trade examples for AMCO. MRL attach importance to the fact that Mr Siddiqi was not copied into these emails. That was a matter of form: the substance was that the technical presentations were not the province of Ms Galligan, but that of Mr Siddiqi and Mr Mathur. The evidence is that Mr Siddiqi took Mr Septon through the trade and he became sufficiently interested for there to be a follow up “as discussed” of the presentation and the trade examples being sent to him. Thereafter, there were several conversations between Mr Septon and Mr Siddiqi regarding hedge funds and the industry.

On 4 September 2012, Ms Galligan sent a further version of the presentation to Mr Septon. Ms Galligan met up with Mr Septon (and Mr Mathur) in New York on 18-21 September 2012. Even if she only attended because of the Visa difficulties of Mr Siddiqi, the fact is that she attended.

Ms Galligan, still working for Matrix, was involved in setting up the due diligence meeting of Mr Septon for early December 2012. There was an indication as to how interested Mr Septon was in that in saying that he could not attend what was discussed as “the first launch”, Ms Galligan wrote saying “He can act pretty quickly after this meeting but couldn’t get to London sooner.” Shortly, thereafter her participation was on behalf of Musst in anticipation of the cessation of trading of Matrix.

Although Ms Galligan did not have the technical expertise of Mr Siddiqi, she came over in the Musst v Astra trial and again in the instant trial as an engaging salesperson, and so her contact was significant.

The dominant contribution was that of Musst through Mr Siddiqi, but there was a contribution of Matrix through Mr Elliott prior to the cessation of trading of Matrix.

As for the contribution of Mr Siddiqi, although he had some limited pre-existing contact with LGT, the first to the fifth of the eight numbered points listed in respect of the Observatory apply. In addition to that, there should also be noted specific to LGT the following:

MRL emphasises the significance of the role of Mr Christopher Elliott. Mr Elliott had had contact with LGT in 2011 with Mr Frisson of LGT and LGT was a listed contact of Matrix on the unsigned Diapason contract of 2011. Without reference to Mr Siddiqi, Mr Elliott of Matrix set up a call with Mr Plotke of LGT for 12 April 2012 and sent an email on 26 April 2012 to Mr Rigter, copied to Mr Plotke referring to that call. Mr Elliott sent AMCO marketing documents to Mr Plotke and then set up a meeting on 15 May 2012 in Pfaffikon, Switzerland, between Mr Siddiqi of Musst, Ms Galligan, Mr Reeves and Mr Elliott of Matrix, Mr Mathur (still at Deutsche Bank), and Mr Plotke of LGT.

It is to be noted that there was a substantial presence of Matrix there comprising Mr Reeves and Ms Galligan in addition to Mr Elliott. It may have been that if Mr Elliott had not made the approach that Musst would have got there in any event because of Mr Siddiqi’s pre-existing connection with LGT. Mr Siddiqi had met various members of LGT’s investment team including Mr Rigter and Mr Plotke (the latter of whom he had met several times on the hedge fund circuit). Musst says that this was at Mr Siddiqi’s suggestion to Ms Galligan in their 12 March 2012 brainstorming session, although it could have been from Ms Galligan given the knowledge of Matrix of LGT.

That point is not decisive in that Mr Elliott did make the connection. Further, even if it was due to industry etiquette, the fact is that Mr Elliott remained the point of contact with LGT, so much so that he was involved after the cessation of trading of Matrix and there was some discussion about his being engaged in a personal or some other capacity thereafter. Further, it does not follow that if Mr Elliott had not been the front person that it would have been Mr Siddiqi who would have made the first approach: judging by that which occurred vis-à-vis the Observatory, there is reason to believe that it would have been Ms Galligan then employed by Matrix. Further, it is to be noted that the number of Matrix people there at the first meeting of 15 May 2012 make it unlikely that they had no role.

By an email of 31 August 2012, Mr Elliott reached out again to Mr Rigter copying Mr Plotke, hoping to meet again “on our next visit to Pfaffikon”. There was a meeting on 17 October 2012 between Mr Elliott, Mr Mathur and Mr Plotke and a follow up email of 18 October 2012. Mr Siddiqi and Ms Galligan were unable to attend because they were in India at the time.

There was then a follow up in late October 2012 regarding the prospectus, and Ms Galligan referred to Mr Elliott saying, “I think given your relationship with these clients they will know you are their point of contract without stressing further.” However, there was a problem about email addresses, evidently a reference to Matrix going out of business at the time. By 19 November 2012, with Matrix now in administration and no longer trading, Ms Galligan now working for Musst and with a Musst email address wrote to Mr Elliott at a Gmail address of his, saying that she was sorry about “the ambiguity at the moment” and that “we will make sure you are compensated fairly.” Whilst this was a recognition that Mr Elliott had had a role, it was also evidence that Matrix had ceased to be involved.

Despite this, there are significant distinctions between the position in respect of LGT from the position in respect of the Observatory. First, there was a greater prior connection which Mr Siddiqi had with LGT than his connection with the Observatory. First, whilst there was an important meeting on 15 May 2012 and a further meeting without Mr Siddiqi in October 2012, the majority of the meetings and telephone calls were after 6 November 2012 as set out above. Second, at the point of the insolvency of Matrix, there was far more to do in order to interest LGT in an investment. Even when there was a contract between Musst and Octave in April 2013, there was still no investment of LGT. These were not formal steps to get the investment over the line, but there was extensive contact to try to market and explain the product to LGT and ultimately to procure their investment. All these steps from after 6 November 2012 were without any involvement or contribution by Matrix.

Mr Siddiqi, or Ms Galligan, for Musst arranged the following meetings or conversations for Octave with LGT:

All of this crystallised in management contracts very shortly thereafter and in management fees received by Octave/Astra with percentages paid over by Octave/Astra to Musst without litigation or controversy until 2016. This is wholly different from the case of the performance fees which would not be paid without long and protracted litigation such that they would not be paid until at earliest 2022, many years after the introductions.

As for LGT, at some point, Mr Elliott of Matrix made the first approach to them, and also arranged a first meeting with them in Pfaffikon, Switzerland, which took place on 15 May 2012, attended by Mr Mathur, Mr Siddiqi, Mr Elliott and Ms Galligan.  The fact that Musst could have got there without Mr Elliott ignores the fact that Mr Elliott arranged the first meeting. Further, there was no repudiation of this at the time.

Mr Siddiqi says that he had intended that he himself should make the first contact, but Mr Elliott, without his permission, jumped in and did so.  Mr Siddiqi let him continue to liaise with LGT because the “industry etiquette” is that a potential investor is contacted on a specific idea by one person. Thereafter, Mr Elliott arranged the further meetings with LGT on 16/17 October 2012 in Switzerland again, and, after Matrix had ceased to trade on 13 November 2012 in London. Even after the insolvency, there were discussions for Mr Elliott’s continued involvement which shows that his involvement was valued.

In the Musst v Astra trial, the involvement of Matrix was said to have been merely administrative. Matrix lacked the technical know-how in the credit instruments relating to synthetic ABS, such that any investment depended on contact between Mr Mathur and/or Mr Siddiqi and the prospective investor. As was found in the judgment in the Musst v Astra trial, that did not relegate the contact of Matrix to a secretarial role. The co-ordinator was Mr Siddiqi, but the fact that there was supposed to be liaison before and after contact took place between Matrix and prospective investors does not mean that the extensive personal contact including meetings of Matrix with them was not important.

It does not follow from the fact that Matrix was taking a part of the distribution role that Matrix was taking the entire distribution role. I accept the evidence of Mr Siddiqi and Ms Galligan that they had a brainstorming session together on 12 March 2012 about their contacts including LGT (and The Observatory) . Mr Siddiqi did have the overall coordinating role, and this is not affected by the fact that Mr Elliott made the approach to LGT without prior reference to Mr Siddiqi.