Property investor awarded £1.4 million
Posted: 25th April 2013
A property investor has won £1.4 million damages after he was drawn by dishonest means into a land deal which went bad. Two companies and three of their directors were found to have committed the tort of deceit in deliberately failing to inform the investor of the transaction’s true structure.
The Russian businessman, through his corporate vehicle, had been persuaded to invest in a scheme to buy a former landfill site in Berkshire which, it was hoped, would generate very substantial profits through the purchase of a ransom strip and the obtaining of improved planning permissions before it was sold on for residential or mixed development.
But matters did not proceed smoothly. Following the purchase, applications for planning permission were refused, interest continued to accrue on bank loans and the company that had bought the land went into liquidation. The businessman ended up losing the entirety of his investment.
He sued two corporate defendants and three of their directors on the basis that he been kept in the dark about important aspects of the deal, including the initial purchase price of the land and the identity of the purchaser. At first instance, all five defendants were found liable in deceit.
On appeal, the defendants argued, amongst other things, that the trial judge had not correctly identified or addressed all the elements of the tort of deceit; that the claim against them had not been properly pleaded and that the judge had erred in finding that fraudulent misrepresentations had been made.
Dismissing the appeal, the court ruled that the judge had made no error of law and that her findings were justified on the evidence. The three individual defendants had been painted as ‘men of impeccable antecedents and reputation’ but the court noted that that description was ‘hardly warranted in the circumstances of this case’. The court concluded: “All five defendants acted dishonestly. They have committed the tort of deceit and are liable to the claimant for damages in the sum of £1.4 million’.