Allison and Another v Horner
| Jurisdiction | England & Wales |
| Judge | Lord Justice Davis,Lord Justice Aikens |
| Judgment Date | 12 February 2014 |
| Neutral Citation | [2014] EWCA Civ 117 |
| Docket Number | Case No: A2/2013/0042 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 February 2014 |
[2014] EWCA Civ 117
Lord Justice Richards
Lord Justice Aikens
and
Lord Justice Davis
Case No: A2/2013/0042
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
HHJ SEYMOUR QC
Royal Courts of Justice
Strand, London, WC2A 2LL
Richard Colbey (instructed through the Bar Direct Access Scheme) for the Appellant
Miles Croally (instructed by Hierons) for the Respondent
Hearing date: 09/12/2013
Approved Judgment
Synopsis
The issue on this appeal from the judgment of HHJ Seymour QC dated 17 December 2012 is whether the appellant, Ms Trisha Anastasia Allison, ("Ms Allison") can rely on a defence of limitation to defeat a claim brought against her by the respondent Mr Dennis Karl Horner, ("Mr Horner") for damages incurred as a result of fraudulent representations by Ms Allison made in January 2003 in relation to a tax reduction scheme concerning films.
In his reserved judgment given after an 18 day trial, HHJ Seymour QC (who sat as a judge of the High Court) found that Ms Allison had made a number of specific fraudulent representations to Mr Horner on 13 January 2003 which had induced him to enter into the tax scheme being run by her and her associate, Mr Adrian Ross, ("Mr Ross") who was the second defendant in the proceedings. Those findings have to be accepted, because permission to appeal the issues of whether they were made and whether they induced Mr Horner to enter into the scheme was refused. However, as the fraudulent representations were made in January 2003, the limitation period for an action in deceit based on them would normally expire in January 2009. The action for the claim was only begun on 19 July 2010. The sole issue on appeal is whether the judge was correct to conclude that Mr Horner, as claimant, could rely on section 32(1) of the Limitation Act 1980 (as amended) to extend the limitation period 1. The judge found that Mr Horner did not have the requisite knowledge of the fraud of Ms Allison, and that he could not, with reasonable diligence, have discovered the fraud until 25 August 2004. Therefore, the six year limitation period ran from then so that the claim was brought in time. The challenge on the appeal is therefore made to the judge's findings of fact on this limitation issue.
The judge dismissed Mr Horner's claim against Mr Ross. The judge held that Mr Ross did not act dishonestly in his dealings with Mr Horner and so he was not liable for fraudulent misrepresentation. That conclusion is not challenged on appeal.
On 9 December 2013 we heard oral argument on the appeal. At the conclusion of the argument we announced that the appeal would be dismissed and that we would give our reasons for doing so in writing at a later date. These are my reasons.
The Facts
Pursuant to the terms of section 42 of the Finance (No 2) Act 1997 as amended by section 48(1) of the Finance Act 1997, a taxpayer who participated in a trade or business which consisted of or included the exploitation of British films could deduct from his tax liability the amount of any investment of a revenue nature that he had made in the acquisition of a qualifying film. The effect of this provision was, therefore, that the investor's liability to income tax would be reduced by the amount of the income tax that he would otherwise have paid on the sum he invested in the film.
Mr Horner was, in January 2003, a chartered accountant who did not practise as such but was, at the time, a management consultant. He held a position as one of a number of managing directors of ATOS KPMG Consulting Limited ("ATOS"). He was on high earnings and in the tax years 2000/1 and 2001/2 he paid tax totalling £192,099.29.
Ms Allison and Mr Ross had formed and ran an entity called Taipan Creative LLP ("Taipan"), which was, as its name implies, a limited liability partnership. In January 2003 a colleague in ATOS suggested to Mr Horner that he attend a presentation to be given by Ms Allison and Mr Ross. The presentation took place on 13 January 2003 in central London and about 15–20 people attended. The presentation was formal and lasted 1 to 2 hours. Ms Allison and Mr Ross distributed a document entitled "A Unique Low Risk High Return Investment Proposition" and Ms Allison spoke at some length to the audience, using a Power Point presentation.
The judge found 2 that in the course of her presentation Ms Allison made the following representations on which she intended those present to rely: first, that she was a specialist in film tax investment schemes. Secondly, that investors in the scheme she proposed had a guaranteed return on their investment. The judge found that Mr Horner relied on those statements. Thirdly, that the tax refunds that investors would receive were to be invested in the development or acquisition of films that qualified for relief under the relevant statutory provisions. The judge found that if this statement had not been made by Ms Allison, Mr Horner would not have signed documents authorising her to act on his behalf in procuring a tax refund from HMRC on the basis of his tax returns and also authorising the payment of the refund into a bank account of Taipan. Fourthly, that Ms Allison effectively conveyed the impression (and intended to do so) that the scheme she was promoting had been approved by HMRC and that Mr Horner relied on this fact in entering the scheme.
The judge also found that Mr Ross stated that the scheme had a "proven track record of success" and that, from his perspective, that was true. However, the judge found that he was applying the wrong criteria in evaluating "success". The judge found that Ms Allison knew (and indeed admitted in evidence) that the policy of HMRC was to pay out a tax refund in respect of this type of film finance scheme upon receipt of the tax return and then to investigate later: a policy known as "pay now, check later". The judge found that Ms Allison therefore knew that Mr Ross' representation was not true. 3
The judge also found that the representations I have listed were untrue and that Ms Allison had either made them herself or permitted Mr Ross to make them knowing that they were false and that she did not make any corrections. 4 The judge found that she made them or prompted Mr Ross to make them "intending the hearers, including Mr Horner, to rely upon the representations" and he found that Mr Horner did so. 5 Consequently the judge found that Ms Allison was liable to Mr Horner in deceit, subject to the limitation defence.
The judge considered at some length precisely what happened at the time of the representations and thereafter. For the purposes of this appeal I need only consider the judge's findings of fact on limitation. For the curious, however, I note that, as a result of the representations, Mr Horner signed copies of documents which enabled an application to be made on his behalf by Taipan, to HMRC to obtain a refund of income tax paid by Mr Horner for 2001/2 and 2002/3. This resulted in a payment of £168,756.30 from HMRC into the Taipan current account. On 4 June 2003 Mr Horner then received 20% of that amount (the so-called guaranteed return) amounting to £33,750, leaving £135,006,33 in the Taipan current account.
HMRC announced that it would be making enquiries into Mr Horner's claim for tax relief on the scheme on 19 January 2004, but it only began serious investigation of the scheme and another related scheme later in 2004. The investigation concluded that Mr Horner had not been entitled to any tax refund because he had not, at the relevant time, actually invested any sum in a British film in accordance with the statutory provisions. Mr Horner therefore had to repay to HMRC the whole of the tax refund, together with interest and penalties, which totalled £207,000. He paid that sum in three instalments in 2006. Mr Horner's claim against Ms Allison and Mr Ross was for the amount that he had to repay to HMRC, less the part of the tax refund which was paid to him from the Taipan current account and less some other amounts. That net sum claimed was £185,832.25 and the judge awarded him judgment in that sum plus interest of £47,076.22.
Limitation: the statutory provisions and the judge's findings
Section 32(1) of the Limitation Act 1980, as amended, provides as follows:
"Subject to subsections (3) and (4A) below 6 where in the case of any action for which a period of limitation is prescribed by this Act, either—
(a) the action is based upon the fraud of the defendant; or
(b) any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant; or
(c) the action is for relief from the consequences of a mistake;
the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.
References in this subsection to the defendant include references to the defendant's agent and to any person through whom the defendant claims and his agent."
Three points on the construction of that provision that are relevant to the present appeal have been made in the cases. First, in Barnstaple Boat Co Ltd v Jones7,
Waller LJ (with whom Moore-Bick and Moses LJJ agreed) held that the phrase "the plaintiff has discovered the fraud" in section 32(1) refers to knowledge of the precise deceit which the claimant alleges had been perpetrated on him. 8 It follows that knowledge of a fraud in a more general sense is not...To continue reading
Request your trial
-
JSC BTA Bank v Mukhtar Ablyazov and Another
...by the judgment of Aikens LJ (with whom Richards and Davis LJJ both agreed) in the recent decision of the Court of Appeal in Allison & Anor v Horner [2014] EWCA Civ 117. Aikens LJ said (at [14] to [16]): Three points on the construction of [section 32(1)] that are relevant to the present ap......
-
Arcadia Group Brands Ltd and Others and Others (Claimants/Appellants) v Visa Inc. and Others
...not commence until the victim discovered or could with reasonable diligence discover further facts. 63 Mr Randolph referred us to Allison v Horner [2014] EWCA Civ 117 (concerning the limitation period in a case of deceit) in support of his submission that "suspicion" is not enough but I ca......
-
Granville Technology Group Ltd ((in Liquidation)) v Infineon Technologies AG
...a claimant does not ‘discover’ a fraud until he has ‘material sufficient to enable him properly to plead it’”. 27 In Allison v Horner [2014] EWCA Civ 117 (a case concerned with reliance on s.32(1)(b) in the context of the tort of deceit), Aikens LJ formulated the issue as whether the claim......
-
Avonwick Holdings Ltd v Azitio Holdings Ltd
...th Ed.) puts it at paragraph 44–153, citing Halford v Brookes [1991] 1 WLR 428 per Lord Donaldson MR at page 443 and Allison v Horner [2014] EWCA Civ 117 per Aikens LJ at [14]: “Where actual discovery is relied on, discovery does not connote knowledge for certain and beyond possibility of......