10:53, July 19 903 0

2017-07-19 10:53:07
Mishcon loses diamond compensation claim in High Court

Mishcon de Reya has failed to throw out a claim for compensation against its Belgian client, the diamantaire Pluczenik, in the High Court.

The claim arose after Pluczenik terminated its relationship with international diamond dealer Willie Nagel, following its decision to move its global sale (‘sight’) from London to Botswana four years ago. In total, Nagel has claimed £3,547,546 in compensation.

Beginning his judgment with the memorable line “diamonds are not forever”, Mr Justice Popplewell accepted the arguments of Nagel’s firm, W Nagel, that it had lost substantial sums through commission due on sales prior to the termination of the contract it enjoyed with Pluczenik.

DWF associate Ben Griffin acted for the claimant, instructing Oliver Segal QC from Old Square Chambers, while Mishcon de Reya partner Adam Rose acted for Pluczenik. Rose instructed Robert Anderson QC and Peter Head at Blackstone Chambers.

Nagel, a Hatton Garden trader who is known to have offered donations to Labour party and Conservative party candidates in the past, became a DTC broker in 1959, following his decision to move to England to study as a lawyer.

By the 1960s he had firmed a close relationship with De Beers diamond jewellers in London as a DTC broker, which preceded Pluczenik appointing Nagel as its DTC broker in order to acquire a sight in London. Nagel argued this constituted a formal arrangement whereas Pluczenik argued this was no more than a formality.

The contract between Nagel and Pluczenik was terminated when the diamantaire moved the sight to Gabrone, Botswana. It instead decided to enter into a direct relationship with the selling arm of De Beers which did not require the intervention of a broker. Pluczenik wrote to Nagel in August 2013 to confirm the termination of the contract and that the “commercial relationship has ended”.

In about 1994, the year in which Isaac Pluczenik died, W Nagel’s commission was reduced from 1 per cent to 0.5 per cent which, according to Nagel, was on the condition that W Nagel would remain Pluczenik’s broker for as long as Pluczenik held a sight with the De Beers. There was a further agreement that the rate would not be reduced further in the future, which was disputed by Isaac Pluczenik’s son, Chaim.

W Nagel also claimed that it deserved compensation for Pluczenik for its failure to give three months’ notice in the termination of the contract.

Popplewell J said: “I have little hesitation in rejecting Chaim Pluczenik’s [Isaac Pluczenik’s son] evidence, which had internal inconsistencies and was of a piece with his generally unreliable testimony. As Willie Nagel convincingly said, it would not have been in keeping with his long relationship for Isaac to have asked Chaim to deal with a matter of such importance as this. I accept Willie Nagel’s evidence that there was a commitment given to him by Isaac Pluczenik in return for the reduction.”

Popplewell J was also critical of the way in which evidence was presented to him, saying Chaim was ” not a satisfactory witness”.

He continued: “He regularly found himself retreating from what he had said in his witness statement and indeed saying the opposite whilst vainly pretending that there was no departure form the former. He was prone to exaggeration and evasion in equal measure, and was so anxious to advance his company’s case that he sought to diminish the functions performed by Willie Nagel and W Nagel in a way that was both unrealistic and controverted by the documents.

“He would have me believe that Pluczenik received no benefit from having Wille Nagel or W Nagel as a broker, and that their role was solely administrative in the sense of preparing invoices and arranging shipment. This is not only contrary to the evidence of Willie Nagel and Marcus Schwalb, but is demonstrated by the documents to be a travesty of Nagel’s role. His combative and careless approach to giving evidence gave rise to a justifiable sense of mistrust on the part of W Nagel that there were a number of “hidden purchases” concealed by Pluczenik on which W Nagel had been denied commission.”

During the course of the hearing, Pluczenik accused W Nagel of filing the wrong CPQ [configured price quote] of another client, Smolensk Diamonds NV, instead of Pluczenik, an allegation that Popplewell J found to be “unfounded”.

A further consequentials hearing will determine the amount W Nagel will receive in compensation.

The legal line-up: