4VVV Ltd & Ors v Nicholas Spence & Ors
[2024] EWHC 2434 (Comm)
Maria Helena Groen & Ors v Martin Charles Heath
27 June 2024
[2024] EWHC 1654 (Ch)
High Court
Someone lied to get investors to put money into their failing company. A court case proved the lies, and the liar now has to pay back all the money the investors lost.
Key Facts
- •Claimants invested in Seed Media Limited (SML), a start-up, based on misrepresentations made by the Defendant (Mr. Heath).
- •Misrepresentations concerned SML's software capabilities, customer base, financial state, and Mr. Heath's investment.
- •Claimants alleged deceit, negligence, breach of directorial duties, and unlawful means conspiracy.
- •Mr. Heath argued inadequate pleading, lack of merit, and that Claimants knowingly took high-risk investment.
- •Multiple witnesses testified, including Claimants, SML employees, and Mr. Heath.
- •Court assessed witness credibility and the truthfulness of representations made.
- •Applications to amend Particulars of Claim and Defence were considered.
Legal Principles
Elements of the tort of deceit
Clerk & Lindsell on Torts, Cartwright, Misrepresentation and Mistake
Liability for representations made in a representative capacity
Cartwright at [5-07]
Liability for representations made to third parties
OMV Petroleum Ltd v Glencore International AG [2015] EWHC 666 (Comm)
Liability for representations made by third parties
Cartwright (5-07), Bradford Third Equitable Benefit Building Society v Borders [1941] 2 All ER 205 HL
Requirements for pleading fraud
Bullen & Leake & Jacob’s Precedents of Pleading
It is no defence to show that a claimant could have discovered the truth.
Redgrave v Hurd (1881) 20 Ch D 1
Section 6 of the Statute of Frauds Amendment Act 1828
Roder UK Ltd v Titan Marquees Ltd [2012] QB 752
Negligence claims require assumption of personal responsibility creating a special relationship.
Williams v. Natural Life Health Foods [1998] 1 WLR 830 (HL), Barclay-Watt v. Alpha Panareti Public Ltd [2022] EWCA Civ 1169
Outcomes
Claims in negligence dismissed.
Mr. Heath did not assume personal responsibility for statements.
Claims in deceit succeeded.
Mr. Heath made numerous untrue statements, knowing they were false or being reckless as to their truth, which induced Claimants to invest.
Application to amend Particulars of Claim refused.
Unsatisfactory drafting, too late, and unnecessary given the findings.
Application to amend Defence refused.
Section 6 of the Statute of Frauds Amendment Act 1828 inapplicable to the facts.
Damages awarded to Claimants:
Based on the proven fraudulent misrepresentations that induced their investments.