Deborah Giddens v Brian Frost
| Jurisdiction | England & Wales |
| Judge | Russen |
| Judgment Date | 12 May 2022 |
| Neutral Citation | [2022] EWHC 1022 (Comm) |
| Docket Number | Case No: CC-2019-BRS-000018 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 1022 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS IN BRISTOL
CIRCUIT COMMERCIAL COURT
Bristol Civil & Family Justice Centre
2 Redcliff Street
Bristol
BS1 6GR
HH JUDGE Russen QC
(sitting as a judge of the High Court)
Case No: CC-2019-BRS-000018
John Virgo (instructed by Wards Solicitors LLP) for the Claimant
Andrew Dinsmore (instructed by Greenberg Traurig LLP) for the First and Second Defendants
Hearing date: 11 April 2022 (draft judgment circulated 3 May 2022)
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.
HH JUDGE Russen QC
HHJ Russen QC:
INTRODUCTION
This is my judgment following the trial of a preliminary issue on 11 April 2022. That issue is directed to the question of whether or not all the claims, alternatively the claims based upon negligent advice, made by the Claimant (“ DG”) against the First and Second Defendants (“ BF” and “ TFP” respectively) are statute barred.
DG's claims against BF, TFP and the Third Defendant (“ GF”, who is BF's brother) arise out her transfer in 2012 to a small self-administered pension scheme ( SSAS) of the cash equivalent transfer value of the benefits she had accrued in a Royal Mail occupational pension scheme. Allowing for the cash sum of £36,099 which DG received on the day she made the onward investment, the SSAS was used as the vehicle for the investment of £90,000 in what was said to be a truffle plantation scheme.
The truffle plantation scheme was offered by Viceroy Jones New Tech Limited (“ VJNT”), a company controlled by GF. VJNT's brochure for the scheme described the investment as involving a 15-year lease of trees which were to be inoculated with spores so as to promote truffle growth. Yields were expected to come on stream from year 5 onwards.
The truffle plantation scheme was a scam affecting approximately 100 investors whose experience was similar to and followed the same pattern as that experienced by Mrs Giddens. The nature of the scam was summarised in the judgment of ICC Judge Barber in Secretary of State v Viceroy Jones New Tech & others [2018] EWHC 3404 (Ch) by which she made orders for the compulsory winding up of VJNT (and four other companies including Westcountry Truffles Limited, a company of which BF had been a director) on petitions presented by the Secretary of State on public interest grounds.
TFP is a partnership between BF and his wife, Alison Frost, which in 2012 used the trading name “The Mortgage Shop”. At that time, the partnership shared an address with a company called Somerset PRP Limited (of which BF was a director) which was advertising a service designed to “ release up to half your frozen pension value”. A document advertising that service showed that company's phone number altered to refer the reader to the office number of The Mortgage Shop.
DG's claim against BF, TFP and GF is advanced under two main heads: a claim in fraud and a claim based upon defective advice. The fraud claim is based upon a conspiracy to injure (the alleged conspirators being BF or TFP, GF and/or VJNT) and the defective advice claim is based upon alleged breaches of a common law duty of care, an implied contractual duty of care and a duty to comply with certain provisions of the Conduct of Business Sourcebook Rules (COBS Rules) promulgated by the Financial Conduct Authority.
BF and TFP deny liability to DG. They say that she was not one of their clients, that they never advised her, that they referred her to a third party called pensionpractitioner.com (“ TPP”) who administered her SSAS, and that she was advised by HDIFA (the trading name of one Heather Dunne, an Appointed Representative of Berkshire Financial Advisers Limited). In her judgment in the public interest proceedings, ICC Judge Barber rejected BF's attempt to distance himself from the truffle plantation scheme and VJNT. She found that he lied repeatedly in cross-examination and concluded that he had no plausible explanation for a pattern of referrals which resulted in a client, who had been referred to an IFA or a pension adviser, then purchasing truffle trees through VJNT. She noted that GF had accepted in his evidence that BF was an ‘introducer’.
However, although Judge Barber gave an example of BF receiving a commission of £48,103 on the introduction of an investment of £167,000 with VJNT by a Mr Giddens (not DG) and one of £53,937 on an investment by a Mr Grice, if the present claim is to continue then the issues of fact and law which arise on the defence to DG's claim will fall to be decided on the evidence in these proceedings.
GF has taken no part in these proceedings and a default judgment was entered against him, for damages to be assessed, on 5 July 2021.
At this stage I should mention a point made by DG's counsel, Mr Virgo, in his skeleton argument. He submitted that the absence of any evidence from BF or TFP on the preliminary issue of limitation, coupled with the default judgment against GF, meant that the court must proceed on the basis of an assumption that DG's claim in fraud will – subject to any limitation defence – succeed. However, Mr Dinsmore, counsel for BF and TFP, was right to respond that I should make no assumptions about the merits of DG's claim in determining the preliminary issue. To illustrate the point, he referred to an email which DG had sent to the Insolvency Service on 26 October 2018 in which, responding to a question as to whether BF stated he was offering independent financial advice in respect of the transfer of her pension, she answered “ Not that I recall.” Whether or not that answer is harmful to DG's case, as pleaded, would be a matter for trial. Making assumptions about the merits of DG's claim would also involve me ignoring the terms of the Order, mentioned below, directing the trial of that issue.
EVENTS LEADING TO THE PRELIMINARY ISSUE
The monies in DG's SSAS were paid into the truffle investment scheme on or about 17 October 2012. The Claim Form was issued on 21 November 2019.
BF and TFP aver that the claims are time-barred pursuant to section 2 of the Limitation act 1980 on the basis that the relevant events took place in 2012. DG relies upon sections 14A and 32 of the Limitation Act 1980 to postpone the limitation period.
On 25 September 2020, the court directed a trial of a preliminary issue identified by this question: “ Are the Claimant's claims statute-barred pursuant to the Limitation Act 1980?”
Paragraph 5 of the Order dated 20 September 2020 made provision in respect of the facts to be assumed or established for the purpose of deciding the preliminary issue. Paragraph 5.2 says:
“For the purposes of the preliminary issue, it is assumed that the First and Second Defendants' alleged advice was so unsuitable that it is to be inferred that they chose to commit the breaches of duty complained about deliberately where the same were not likely to be discovered for some time (as pleaded at Particulars of Claim, § 41.2; Defence, § 50.2; Reply § 50). This assumption is entirely without prejudice to the First and Second Defendants' case that the Claimant was not a client, that no advice was ever given and that there was no deliberate concealment.”
Allowing for the assumption which underpins the requirement of “deliberate concealment” for the purposes of section 32 of the Limitation Act 1980 (addressed below) no wider assumption should be made about the merits of DG's claim.
DG says the answer to the preliminary issue is “no”. Her case is that she first had cause to become concerned about the supposed investment in the truffle scheme in November 2016 when she then contacted GF. Far from admitting participation in the scam, GF sought to pacify her and, she says, it was only in May 2017 that she acquired full knowledge of the fraud that had been perpetrated against her.
BF and TFP, on the other hand, say the answer to the question is “yes”. They say all of DG's claims are time-barred or, alternatively, that the claims based on negligent advice are barred.
Their position is that the reasonable diligence to be expected of a claimant who is the victim of fraud (see the discussion of section 32 below) means that DG cannot prove she could not have discovered the alleged fraud prior to November 2016. They say DG either knew of or should have known of it from the moment she made the investment in the truffle plantation scheme in October 2012 or certainly by May 2013 when she was told she had been sent her Government Gateway User ID enabling her to access the details of her investment. They rely upon a further fall-back date (outside the 6 year period prior to the issue of the Claim Form) of September 2013 when she received the Government Gateway details in the context of her having queried certain pension administration fees. On the basis that DG should have known of the alleged wrongdoing prior to November 2013 it is said that all her claims are time-barred.
Alternatively, in relation to the claims based on negligent advice, BF and TFP contend that facts which were observable or ascertainable prior to that date (see the discussion of section 14A below) justified DG embarking on the preliminaries to the claim which was in fact issued more than 3 years later. They rely upon the fact that DG did log in to the Government Gateway on 24 July 2014 and, as a fall-back, the date of September 2016 when an article about the truffle investment scheme scam (which DG printed off on 24 November 2016) was first published. On the basis that DG knew or should have known of the allegedly negligent advice prior to...
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