Liberty Partnership Ltd (formerly known as Tancreds Ltd) v Geoffrey Douglas Tancred
| Jurisdiction | England & Wales |
| Judge | Martin Griffiths |
| Judgment Date | 18 October 2018 |
| Neutral Citation | [2018] EWHC 2707 (Comm) |
| Docket Number | Case No: LM-2014-000254 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 18 October 2018 |
[2018] EWHC 2707 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LONDON CIRCUIT COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Martin Griffiths QC (SITTING AS A DEPUTY HIGH COURT JUDGE)
Case No: LM-2014-000254
Oliver Assersohn (instructed by Nunn Rickard Litigation) for the Claimant
Jacques Algazy QC (instructed by Roythornes Limited) for the Defendant
Hearing dates: 16–19, 23–24 and 26 July 2018
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.
Martin Griffiths QC (SITTING AS A DEPUTY HIGH COURT JUDGE)
Deputy High Court Judge Martin Griffiths QC:
This is the trial of a preliminary issue as to whether any and, if so, which of the Claimant's claims should be allowed to proceed to further trial in the light of the expiry of a primary contractual limitation period. The primary contractual limitation period is 18 months but an alternative contractual limitation period applies to claims which arise or are delayed as a result of wilful concealment, which is the allegation in this case.
Background to the questions raised in the Preliminary Issue
The Claimant (Liberty Partnership Limited, formerly known as Tancreds Limited) bought a business from the Defendants, Mr and Mrs Tancred, which operated from high street premises at Market Deeping in Lincolnshire. The business provided independent financial advice to local people. It was conducted by a company called GD Tancred Financial Services Limited (“the Company”), owned by Mr and Mrs Tancred. By a Share Purchase Agreement dated 14 November 2007 (“the SPA”), Mr and Mrs Tancred sold all the shares in the Company to the Claimant, and that is how the Claimant acquired the business.
Mr and Mrs Tancred were the sole directors of the Company and also the sole shareholders. Mr Tancred's shareholding was 99% and Mrs Tancred's was 1%. Mr Tancred was a qualified and experienced independent financial advisor (“IFA”). Mrs Tancred was a former teacher, who, whilst not being an IFA herself, worked full-time for the Company in the office on the administrative side. This was very much a husband and wife team, running a family business together, with other staff whom they employed, both as IFAs and to deal with administration.
Before the sale to the Claimant, the business had got into trouble with the regulators. This began with a letter from the Financial Services Authority (“the FSA”) dated 21 December 2004 announcing a routine visit to look at the Company's income withdrawal business. The FSA visited the office, interviewed Mr Tancred and reviewed various client files.
On 24 June 2005, the FSA wrote a letter headed “Advising on Pension Transfer/Opt Outs”. It raised concerns about whether the Company had proper authorisation for what it was doing under the Financial Services and Markets Act 2000 (“ FSMA”). On 4 July 2005, another IFA at the Company, Mr James Hudson, replied saying there had been “an oversight regarding the Pension Transfer Permission”, and gave an explanation and various assurances. These included a statement that the Company “has Mrs Maureen McKenna of McKenna Associates as our Pension Transfer Specialist. Mrs McKenna, who is a G60 Adviser, always oversees any advice given in this area.” G60 is a specialist qualification for financial advice on pension transfers, which Mrs McKenna had and neither Mr Tancred nor anyone else connected with the Company had.
The FSA followed up on broader concerns which had been raised by its visit in a letter of 19 October 2005. This was a 5-page letter requiring answers and proposals from the Company about a range of criticisms and concerns. It warned of possible referral for enforcement action. There was further correspondence but, on 7 April 2006, the FSA set up a formal investigation into the Company under FSMA. Visits, interviews and correspondence followed.
On 27 September 2006, the Company entered into a Settlement Agreement with the FSA (“the FSA Settlement Agreement”). One term was that the Company agreed to write “in a form of letter signed off by an external compliance consultant, and to the satisfaction of the FSA, to all existing income withdrawal customers”. Another term was that all the Company's future sales of income withdrawal products would require sign off from an external compliance consultant. A company known as 360 Services was engaged by the Company to do this.
The FSA Settlement Agreement provided for a signed FSA Warning, an FSA Decision and an FSA Final Notice to be issued against the Company in succession, each to be in substantially the same terms. All of this was implemented. The FSA Final Notice against the Company was dated 17 October 2006.
It was after this that negotiations leading to the SPA were opened with the Claimant. A Confidentiality Agreement was signed on 1 January 2007 and the SPA itself was dated, as I have said, 14 November 2007. That was also the Completion Date for the sale of the business.
It was a term of the SPA that Mr and Mrs Tancred should continue to work for the business for a period of time. They eventually in or after the end of March 2009 (the precise date is disputed), over 16 months after the date of its acquisition by the Claimant under the SPA.
The SPA referred to a formal Disclosure Letter, dated (like the SPA) 14 November 2007. The Disclosure Letter provided “details of complaints from clients which have been brought to the attention of the Company” (as well as the FSA Settlement Agreement and the FSA Final Notice) and “details of complaints from clients of the Company since 2002”.
It is the Claimant's (disputed) case in the Particulars of Claim that, although only one of the disclosed complaints led to a decision against the Company by the Financial Ombudsman Service (“the FOS”), a number of other complaints had been received before the date of the Disclosure Letter and SPA which were not disclosed, and that some 45 other complaints were received by the Company after the SPA, and prior to April 2013, relating to business placed before the SPA and arising from non-compliance by the Company with its regulatory obligations. 13 of these complaints were upheld by the FOS and compensation had to be paid. Another 19 were successfully defended, not pursued further or withdrawn. The rest had not been resolved before the Company went into liquidation. No new business was being placed by March 2009 and the Company went into Creditors Voluntary Liquidation on 5 April 2013. The Claimant now brings this action to recover losses which it alleges were suffered as a result of breaches of the SPA.
Procedural history
Proceedings were issued on 14 November 2013. Particulars of Claim and a Defence followed in March and April 2014. After transfer to this Court from the County Court, an Order for directions was made by consent on 19 June 2015 which directed that
“The issue of the alleged wilful concealment shall be tried as a preliminary issue”. That is the Preliminary Issue which I am now deciding. Directions for disclosure and witness statements, limited to the preliminary issue, were also agreed.
A consent order dated 18 November 2015 directed service of Points of Claim on the Preliminary Issue (the “PCPI”) and Points of Defence on the Preliminary Issue (the “PDPI”). The PCPI were served on 21 December 2015. Including Schedules, they were longer than the original Particulars of Claim and represented, in effect, a complete re-pleading of the case on the Preliminary Issue (although they did not supersede the Particulars of Claim). The PCPI included details of complaints not previously identified in the Particulars of Claim or in Further Information served by the Claimant on 5 November 2014 pursuant to a Part 18 request. The PDPI were served on 25 January 2016 (amended on 27 October 2016) and objected to the scope of the PCPI. The Claimant served further (voluntary) Particulars of the PCPI on 25 November 2016 and a Reply to the PCPD on the same day, making further changes to the Claimant's case.
The issues
The Claimant's case was refined during the course of the trial of the Preliminary Issue, partly as a result of concessions obtained from Claimant witnesses in cross examination. By the end of the trial, the following questions remained for me to decide.
i) Whether the Claimant was running new causes of action outside the scope of the Particulars of Claim and, if so, whether amendment should be permitted to allow them.
ii) Whether there was wilful concealment of the FSA letter dated 24 June 2005 and the letter in response dated 4 July 2005.
iii) Whether there was wilful concealment of the true extent of Ms McKenna's involvement in the Company's pension transfer transactions.
iv) Whether there was wilful concealment of breaches of a warranty stating that 360 Services had assumed compliance of all income drawdown products sold by the Company.
v) Whether there was wilful concealment of a failure to comply with an FSA requirement that the Company should send a letter “in a form… signed off by an external compliance consultant, and to the satisfaction of the FSA, to all existing income withdrawal customers…”
vi) Whether there was wilful concealment of complaints alleged by the Claimant to have been made before the SPA by customers surnamed Aldous, Fox, Holling, Isaacs, Johnson, Smith and Vickers.
vii) Whether there was wilful concealment of matters which eventually gave rise to complaints made after the SPA by customers surnamed Allen, Bloodworth, Clarke, Drury, Holloway, Hornsby, Lingard, Smalley, Smith, Trout, Upex, Vesty...
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