Andrew Cole & Others v Scion Ltd & Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Nugee |
| Judgment Date | 30 April 2020 |
| Neutral Citation | [2020] EWHC 1022 (Ch) |
| Date | 30 April 2020 |
| Docket Number | Case No: BL-2018-000671 |
| Court | Chancery Division |
[2020] EWHC 1022 (Ch)
Mr Justice Nugee
Case No: BL-2018-000671
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Rolls Building, Royal Courts of Justice
Fetter Lane, London EC4A 1NL
Michael Pooles QC and Simon Howarth (instructed by DAC Beachcroft LLP) for Carpenter Rees Ltd
Graham Chapman QC and Mark Vinall (instructed by Peters & Peters Solicitors LLP) for the Claimants
Hearing date: 2 April 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This is the hearing of an application by the 3 rd Defendant, Carpenter Rees Ltd ( “CRL”), for summary judgment on, or strike out of, the claims brought against it on the grounds that they are statute-barred. The relevant claims are brought in negligence. It is accepted that the primary limitation period of 6 years has expired, but the Claimants rely on the latent damage provisions in s. 14A of the Limitation Act 1980 ( “ LA 1980”). The case for CRL is that the Claimants were given sufficient information to start time running by a particular letter sent shortly over 3 years before the proceedings were started, and hence the claims are all statute-barred. CRL do not for the purposes of this application rely on actual knowledge, only on constructive knowledge.
The relevant Claimants say that this issue is not suitable to be determined summarily. Some of them say they did not in fact receive the letter in time; all of them say that the letter did not contain enough information to start time running; or that they needed a reasonable time to take expert advice before they could be regarded as having the requisite knowledge, which would mean that their date of knowledge was less than 3 years before the proceedings were started.
Mr Michael Pooles QC and Mr Simon Howarth appeared for CRL; Mr Graham Chapman QC and Mr Mark Vinall for the Claimants. The hearing was conducted, as is becoming standard practice in the present circumstances, as a remote hearing using Skype for Business. This proved, as it has done in other cases I have heard, a perfectly satisfactory way to hold the hearing, and I do not think that the Court's ability to hear and test the argument, and determine the application, was impaired in any way.
I agree with the Claimants, and propose to dismiss the application, for the reasons which follow.
Background
This action is another claim brought by individuals who were persuaded to invest in film finance schemes promoted as tax-efficient investments. As with many such schemes, the anticipated tax advantages have not in the event been forthcoming as hoped, although in this case the participants have not been denied all relief as they have in some others. It bears some similarity to the Ingenious litigation (for which see Barness v Ingenious Media Ltd [2019] EWHC 3299 (Ch) and Rowe v Ingenious Media Holdings plc [2020] EWHC 235 (Ch)), and was initially brought as part of that litigation until deconsolidated, as I explain below, but it differs considerably in its details.
I can take the background from the Re-Amended Particulars of Claim. I am conscious that none of the facts have yet been proved, but I have no reason to think this summary is disputed. There are 17 Claimants in all (not including one case where a claim now vested in trustees in bankruptcy has been stayed). Each of them invested in one or more of three schemes promoted under the brand “Scion Premier” by companies using the name “Scion”. Under each scheme the participants became partners in a Jersey limited partnership, the relevant partnerships being Scion Films Premier (First) LP ( “Premier 1”), Scion Films Premier (Second) LP ( “Premier 2”) and Scion Films Premier (Third) LP ( “Premier 3”). Although numbered in this way, Premier 2 was in fact first in time, followed by Premier 1 and Premier 3. Each Claimant brings claims against two of the Scion companies involved, Scion Ltd and Scion Financial Partners Ltd. Those claims include, among others, claims in deceit and negligence but I am not concerned on this application with the claims against the Scion Defendants and the details do not matter.
Many, but not all, of the Claimants also bring claims against a company called Formation Asset Management Ltd ( “Formation”). Formation was a firm of independent financial advisers (or IFAs), called at the relevant time Kingsbridge Asset Management Ltd, which had a particular focus on clients in professional sports. Most of the Claimants were involved in professional football either as a player or as a manager, and many of them were advised in relation to the Premier schemes by advisers working for Formation.
Premier 2 was, as I have said, the first in time. A number of the Claimants invested in Premier 2 on Formation's advice. Those investments were made in the tax year 2005/06, most (if not all) in October 2005. Formation was not then a representative of CRL, and no claim in relation to Premier 2 is advanced against CRL in these proceedings. I am therefore not concerned with any claims in relation to Premier 2.
From 5 December 2005 however Formation was an appointed representative of CRL. Three of the Claimants (Mr Zatyiah Knight, Mr Daniel Murphy and Mr Martin O'Neill) invested in Premier 1 in early 2006 (and, I think, in the tax year 2005/06). Eight of the Claimants (the same three, and also Mr Andrew Cole, Mr Sean Davis, Mr Ian Pearce, Mr Christopher Powell and Mr Robert Savage) invested in Premier 3 in the next tax year (2006/07), either in late 2006 or early 2007. All eight were at the time either professional footballers or (in one case) a manager.
Each of these eight brings claims against CRL in relation to their investments in Premier 1 and/or Premier 3, and in the rest of this judgment “the Claimants” refers to these eight Claimants. The claims are put in two ways: (1) CRL is said to be liable for Formation's activities as appointed representative of CRL (either by virtue of statutory provisions in the Financial Services and Markets Act 2000, or because it is vicariously liable at common law), and Formation is said to have acted negligently in the advice it gave; (2) CRL is said to have owed the Claimants a direct duty of care as Formation's principal to carry out checks that Formation was acting with an appropriate level of competence and to have failed to carry out, or carry out adequately, such checks.
The claims in this action were initially included in a claim form issued on 6 November 2015 with claim number HC-2015-004561. That claim form also included a large number of other claimants, and claims against other parties, including in particular claims in relation to the Ingenious schemes, and was therefore part of the Ingenious litigation. By Order dated 7 March 2018 Morgan J, who was then the Managing Judge for the Ingenious litigation, ordered (by consent) that the present claims be dealt with in separate proceedings and directed that a new claim form be filed and served and allocated a new claim number. He also directed that the filing of such new claim form should not affect the existing parties' positions with respect to limitation. Pursuant to this the present claim form was issued on 22 March 2018 with claim number BL-2018-000671, but for limitation purposes the proceedings are to be regarded as having been brought on 6 November 2015.
It is not disputed that the date when the Claimants suffered their claimed losses was when they made their investments, and that the primary limitation period of 6 years started running then (at the latest). Since all the investments were made in the period 2005 to 2007, the primary period expired long before these proceedings were brought. In relation to the claims against CRL (whether vicarious or direct) no claim is brought in fraud, which means that the Claimants can only avoid the claims being statute-barred by relying on s. 14A LA 1980. As is well-known this in effect gives a claimant in a claim for negligence 3 years to bring a claim after he or she has the knowledge required for bringing such an action. I will have to look at the law in some detail later, but there was little dispute as to the law and it is agreed that the question is whether the Claimants did or did not have (or are deemed to have) the requisite knowledge by 5 November 2012. If they only acquired it on 6 November 2012, or at any later date, the proceedings would have been brought in time.
CRL relies on letters written by one of the Scion companies to the Claimants on either 31 October 2012 or 1 November 2012 as giving them the requisite knowledge; I will refer to these as “the October/November letters”. It can be seen that the timing is quite tight, but if the Claimants did have (or are deemed to have) knowledge on or before 5 November 2012, the fact that they are only a day or two out of time is neither here nor there; as Mr Pooles reminded me, it is not unknown for a claim form to be only a day or two late, 1 but if one leaves it to the last moment one has only oneself to blame.
Section 14A LA 1980
It is convenient to set out the terms of s. 14A LA 1980 at this stage. It was introduced into LA 1980 by the Latent Damage Act 1986, and was modelled on similar provisions in ss. 11 and 14 LA 1980 which apply to personal injury claims. It remains in the same form as originally enacted and...
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