“It is fanciful that Super Fast will establish at trial that Grindale could not have discovered the alleged fraud without exceptional measures, such that limitation did not start to run, until this late date. Instead, if Grindale had acted with reasonable diligence, it would have discovered the claim that it now advances by no later than March 2011 when it entered administration.”
“43. In light of these developments [the realisation of the condition and the rentals], I realised that there must have been a problem with the valuation. My inference was that Knight Frank must have made mistakes. I certainly did not suspect that I had been lied to by Mr Kennedy as to what Knight Frank had said in their report. As I have explained, that possibility would have seemed impossible, and for that very reason it did not in fact occur to me. 44. As context, I should add that while the defects in the properties and the low rent rolls clearly suggested a problem with the valuation, the position post-completion was not so drastically out of line with what I could have expected as to suggest something sinister had happened. It is not unusual for tenants to move out when investment properties in this market are sold to a new landlord. To my mind, that explained at least part of the high vacancy rate and lower rent rolls.”
“As per the details discussed during our recent meeting in Manchester, you will see the total rental income generated within the BOI portfolio does not cover the total payments due to BOI on an ongoing basis. We were disappointed to learn that the actual rental values achievable for the newer OCM portfolio are in reality a lot lower than that originally purported by the bank when the deal was sold to us.”
“AE inferred that they had been misled and would look to sue the Bank, mis-advised of the rent on the former OCM portfolio. Grindale would object to the appointment [i.e. of administrators] and had/would seek advice from Counsel.” “AE informed AK that he was not going to help in any way “Why should I? In the good times the Bank persuaded me to take a loan, misled me on information, you persuaded me, you pressurised me, incentives were given. Financially and commercially, Administration makes no sense – you don’t care about voids and insurance costs”.”
“I recall on or around March 2011 that I was instructed by Mr Ehrentreu in respect of the administration of Grindale and subsequently his own personal affairs. Mr Ehrentreu told me that he had received a demand for repayment of his loans from the Bank of Ireland. I recall that he asked me whether there was any basis for bringing a claim against the original valuer in negligence arising from the valuations which they had provided on a portfolio of properties that Grindale had purchased which Mr Ehrentreu considered may have been too high. My advice (in relation to which no privilege is waived) was that there was no contractual nexus with the valuer, and I considered it unlikely that he could successfully sue the valuer.”
“The Administrator cannot remember whether he was aware of any actual or alleged fraudulent activity on the Part of the Bank or any of its employees or representatives, or whether he had any cause to consider bringing legal proceedings against the Bank, during his time in office as joint administrators of Grindale.”
“Mr Underwood does not agree that this wording gives a totally accurate understanding of his position. Although it is true that he cannot remember the matter in detail, he believes that if he had been aware of actual or alleged fraudulent activity on the part of the bank that this is something that he would likely recall.” “Mr Green does not agree that the statement as drafted gives a complete picture of his view. Mr Green would agree that he does not recall being aware of any actual or alleged fraud. However, he would add to this that such a situation would be out of the ordinary and would likely involve various types of escalation within PwC. He is therefore of the view that, had he become aware of actual or alleged fraudulent activity, this would be something that he would recall.” “Mr Reed does not agree with the statement as drafted. Whilst it is technically true that he does not remember being aware of any actual or alleged fraudulent activity he would want to add that such activity would be unusual and he thinks he would recall if he had become aware of such activity during the course of the appointment […] He does not have a detailed recollection of the matter and this includes having no recollection of fraudulent activity. Given that Mr Reed thinks he would recall such an unusual development his conclusion is that he likely had no such suspicions of fraudulent activity.”
“70. In the course of briefing Mr Levy on the IG Index Litigation in my initial discussions with him in the January 2017, and in the course of explaining my financial circumstances to him, I mentioned that I had entered an individual voluntary arrangement (the “IVA”) in August 2016. Mr Levy was astonished to find that I had been forced to take this step. As I have said, we were old acquaintances in the community… He wanted to know how I had been reduced to such a parlous state. I therefore told him the story of Grindale’s collapse.” “71. Mr Levy was eager to explore whether there might be a claim after all. I was sceptical, since I had satisfied myself of what the position was, on the evidence available, back in 2011. And frankly, I had more regard for Mr Fulda’s acumen than Mr Levy’s. In light of the fact that Mr Levy would likely start working for me in the IG Index Litigation, however, I was happy to go along with the exploratory work he proposed. We set up a damages-based agreement (“DBA”) which would reward Mr Levy if a claim succeeded. As such, I did not have to put any money in up front.”
“My client is contemplating proceedings relating to losses arising from professional negligence of parties with whom he had dealt.” “My client has concerns about the conduct of the administration of the company that may have caused him great financial loss.”
“As it transpired, the valuation was inflated and the annual rent received for those properties was inflated. As a result of the inflation in value and the inflation of the statement of rent received, my client's business was damaged in that his business was fatally compromised causing personal loss to my client and resulting in personal injury by way of psychiatric damage.”
“My client is currently considering a claim for damages resulting from misrepresentation from the Bank of Ireland.”
“As he [walked past Mr Ehrentreu] [Mr O’Brien] recognised me, and said “Hey, how are you mate? How you doing pal? How are you?”
“Well they f*cked you twice, didn’t they?” “Well, they f*cked you, twice didn’t they?” (he said it twice). I asked him what he meant. He replied “Just do yourself a favour, if you want to find out what I mean mate, just get the old record of the portfolio in the Land Registry and get in touch with the receivers. Then, you will know what I mean mate.”
“78. My conversation with Mr O’Brien entirely changed my perspective and prompted me to reconsider Grindale’s transaction with BOI in respect of the OCM Portfolio. In particular, it was this conversation that first triggered my suspicion that Mr Kennedy might have lied to me about the3 November 2008 Schedule. Mr O’Brien had said very firmly that BOI had “f*cked” me twice. I thought one of those instances could be the calling in of the loan in March 2011, but I was not at that point sure about the meaning of the other instance. When I considered over the next six months or so how I might have been “f*cked” by BOI in that regard, I contemplated for the first time whether it was possible that Mr Kennedy had lied about the valuation.” “79. As I developed suspicions that Mr Kennedy had lied about the valuation following my conversation with Mr O’Brien, I conducted my own investigations in 2018. For the first time, I had reason to obtain historic records from the Land Registry, along with the administrators’ reports on the Previous Owners. These documents indicated that the Previous Owners may have substantially overpaid for the OCM Portfolio properties in 2004-5. The documents further indicated that the administrators of the Previous Owners had assigned claims against “One Stop”, the property management company which had advised them in respect of their acquisition of the OCM Portfolio properties. The assignee of those claims seems to have obtained a settlement of c.£2.7 million (on the basis that the assignments provided for the assigning administrators to receive 10% of any sums recovered via the claims, and the administrators received around£270,000 per their reports).”
“However, what is clear is that the valuation provided for the Folly Lane properties on8 November 2008 spread sheet. cannot be right. There can only be three possibilities: 1. Mr Kennedy forged the8 November 2008 spreadsheet. 2. KFR had carried out a valuation of the properties at a much earlier date and certainly before the 2008 crash and Mr Kennedy dishonestly presented it as being current. 3. KFR had carried out a 2008 valuation, which was woefully negligent. This seems to be very unlikely given their recent retrospective valuation of the same properties.”
“We have considered the history of the matter and there is nothing which at the time of the transaction by which our client acquired the OCM portfolio that suggested that your client had acted dishonestly or recklessly. That remained the position even when it became apparent that there were severe problems with the properties forming part of the portfolio and through the eventual Administration and Liquidation of Grindale. Mr Ehrentreu was first alerted to the potential issue when in December 2017 he met in a Manchester street a gentleman who had managed the OCM portfolio before receivers were appointed by you client…”
“24.3 The court may give summary judgment against a claimant or defendant on the whole of a claim or on an issue if— (a) it considers that the party has no real prospect of succeeding in the claim, defence or issue; and (b) there is no other compelling reason why the case or issue should be disposed of at a trial.”
“… 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.”
“586. Although both sides had a lot to say about limitation, the relevant legal principles for this case are both simple and well-established: (1) The burden of proof in establishing their case under section 32 was on the Claimants: Paragon Finance plc v D B Thakerar & Co.[1998] EWCA Civ 1249 ;[1999] 1 All ER 400 , per Millett LJ at p. 418b-d. This is a passage cited as "authoritative" by the majority in the Supreme Court in Test Claimants in FII Group Litigation v HMRC[2020] UKSC 47 , at [203] per Lord Reed PSC and Lord Hodge DPSC; see also [209(2)], [213(16)]. (2) Discovery of the fraud, for the purposes of section 32(1), means knowing that there is a worthwhile claim, i.e., having sufficient confidence in the facts it is necessary to allege to justify embarking on the preliminaries to issuing proceedings: Gemalto Holding BV v Infineon Technologies AG[2022] EWCA Civ 782 , per Sir Geoffrey Vos MR, in particular at [45] and [53], applying in the context of fraud the reasoning in Test Claimants in FII Group Litigation v HMRC (above) at [192]-[193], [196] and [213(14)]. (3) The requirement of "reasonable diligence" for the purposes of section 32(1) means that the Claimants (the burden being on them) must show that they could not have discovered the fraud (in the sense just explained) without "exceptional measures which they could not reasonably have been expected to take": see again the "authoritative" passage from the judgment of Millett LJ in Paragon Finance plc v D B Thakerar & Co. (4) Although not necessary, it can be useful to consider whether, and if so when, something happened to put the Claimants on notice of a need to investigate: OT Computers v Infineon Technologies[2021] EWCA Civ 501 , per Males LJ at [47]. This is sometimes referred to as the "trigger" for investigations, and in many cases can be identifiedwhen it is objectively apparent that something has gone wrong, which ought to prompt the Claimants to ask "why?" and investigate accordingly: Granville Technology Group Ltd v Infineon Technologies AG[2020] EWHC 415 (Comm) , per Foxton J at [48]. [Upheld on appeal under the name OT Computers v Infineon Technologies[2021] EWCA Civ 501 .]”
“Second although the question what reasonable diligence requires may have to be asked at two distinct stages, (1) whether there is anything to put the claimant on notice of a need to investigate and (2) what a reasonably diligent investigation would then reveal, there is a single statutory issue, which is whether the claimant could with reasonable diligence have discovered (in this case) the concealment. Although some of the cases have spoken in terms of reasonable diligence only being required once the claimant is on notice that there is something to investigate (the “trigger”), it is more accurate to say that the requirement of reasonable diligence applies throughout. At the first stage the claimant must be reasonably attentive so that he becomes aware (or is treated as becoming aware) of the things which a reasonably attentive person in his position would learn. At the second stage, he is taken to know those things which a reasonably diligent investigation would then reveal. Both questions are questions of fact and will depend on the evidence. To that extent, an element of uncertainty is inherent in the section.”
“116. So far as the first step is concerned, I consider that the judge was right in his conclusion that it is inherent in s32(1) of the 1980 Act, particularly after considering the way in which Millett LJ expressed himself in Paragon, that there must be an assumption that the claimant desires to discover whether or not there has been a fraud. Not making any such assumption would rob the effect of the word “could”, as emphasised by Millett LJ, of much of its significance. Further, the concept of “reasonable diligence” carries with it, as the judge said, the notion of a desire to know, and, indeed, to investigate.”
“It is inherent in the section 32 schema that there is an assumption that the claimant desires to discover whether or not a fraud has been committed, and that there must therefore be an anterior "something" to put a claimant on notice of the need to investigate if there has been a fraud, concealment or mistake: Law Society v. Sephton [2004] EWCA Civ1627 at [116]; Gresport Finance v. Battalagia,[2018] EWCA Civ 540 at [41].”
“Gresport Finance Ltd v Battaglia[2018] EWCA Civ 540 is a further case in which the Paragon Finance test has been applied. Henderson LJ suggested at para 49 that another way of making the same point as Neuberger LJ had made was that, rather than making an assumption that the claimant desires to discover whether there has been a fraud, the concept of reasonable diligence only makes sense if there is something to put the claimant on notice of the need to investigate whether there has been a fraud, concealment or mistake (as the case may be). He emphasised at para 50 that it is a question of fact in each case whether the claimant could not with reasonable diligence have discovered the relevant fraud, concealment or mistake.”
“For these reasons I consider that a reasonably diligent investor would have put been sufficiently on inquiry to be prompted to ask some basic questions and demanded further information.”
“199. This is an appropriate point to ask whether there was a “trigger” which would reasonably prompt L30 to investigate. I conclude without any real hesitation that there was.” “200. As for the contention by L30 that nothing thus far indicated wrongdoing, still less fraud on the part of CS and that all that had emerged was generalised concerns regarding the practices of banks in general which were insufficient to amount to a trigger, I reject that submission.” “201. Firstly, the focus here is not on precision but on a trigger – being on notice that there is something to investigate: a something which would have caused a reasonably attentive and diligent person to ask questions (cf. OT Computers [47]). What all of this did was not to highlight a case against CS alone nor indeed to point a finger at specific other banks. Rather it indicated the potential for claims in multiple directions…”
“So one can see that a factual matrix can arise in circumstances that will require certain investigations to be reasonable and those investigations may not turn up a fraud. And one can see, on the other hand, that certain things may occur that may direct one down a different path revealing different facts and matters, reasonably, and that those ought reasonably to lead to the discovery of fraud.”
“37. In the Hong Kong case of Peconic Industrial Development Ltd v Lau Kwok Fai[2009] 5 HKC 135 , para 30, Lord Hoffmann NPJ preferred to leave open the question of “the extent to which the personal characteristics of the plaintiff are to be taken into account in deciding what diligence he could reasonably have been expected to have shown”, noting that “it does not follow that because an objective standard is applied, he must be assumed to have been someone else.” “38. Commenting on this decision in Hussain v Mukhtar[2016] EWHC 424 (QB) , Martin Chamberlain QC (sitting as a deputy High Court judge) suggested that this did not mean that personal characteristics such as naiveté and inexperience in financial matters should be taken into account as to do so would involve a departure from the objective standard which the cases require. I would agree that personal traits or characteristics bearing on the likelihood of the particular claimant discovering facts which a person in his position could reasonably be expected to discover, such as whether the claimant is slothful, naïve, shy, nervous, uncurious or ill-informed, are not relevant. But it does not necessarily follow, as Lord Hoffmann NPJ said in Peconic, that the claimant must be assumed to be someone or something which he is not.” “48. Third, while the use of the words could with reasonable diligence make clear that the question is objective, in the sense that the section is concerned with what the claimant could have learned and not merely with what he did in fact learn, the question remains what the claimant (or in the terminology of the section, the plaintiff) could have learned if he had exercised such reasonable diligence. That must refer to the actual claimant, in this case OTC and not to some hypothetical claimant.”
“191. The formulation adopted in Halford v Brookes[1991] 1 WLR 428 , Haward v Fawcetts and AB v Ministry of Defence places the commencement of the limitation period slightly earlier than the fraud cases discussed earlier. The relevant time is when the claimant knows "with sufficient confidence to justify embarking on the preliminaries to the issue of a writ", rather than the point in time when he could plead a statement of claim.This is not the occasion on which to review the formulation used in the fraud cases, which reflects the special standards applicable to the pleading of fraud...”
“The state of knowledge which a claimant must have in order for it to have discovered the concealment (or as the case may be, the fraud or the mistake) has been considered in the cases. For the most part the statement of claim test has been applied: that is to say, a claimant must have sufficient knowledge to enable it to plead a claim…This was the test which the judge applied in the present case and his approach is not challenged on appeal. More recently, in the FII case[2020] 3 WLR 1369 , where the issue was from what point it can be said that the claimant has discovered a mistake of law, the Supreme Court suggested that time should begin to run from the point when the claimant knows, or could with reasonable diligence know, about the mistake with sufficient confidence to justify embarking on the preliminaries to the issue of proceedings, such as submitting a claim to the proposed defendant, taking advice and collecting evidence. This may mean that time begins to run somewhat earlier than under the statement of claim test, but this is a point which need not be explored in the present case.”
“44. Undoubtedly, the reasoning adopted by Lords Reed PSC and Hodge DPSC applies equally to fraud, mistake and deliberate concealment. If there is a difference, it would have to be found, as they have said, in the stricter rules of pleading in fraud, something that is not applicable in competition cases (or to cases of deliberate concealment) …” “45. In my judgment, the parties were right to submit that, after FII, limitation begins to run in a deliberate concealment case when the claimant recognises that it has a worthwhile claim, and that a worthwhile claim arises when a reasonable person could have a reasonable belief that (in a case of this kind) there had been a cartel. Gemalto’s four propositions overcomplicate the position. The FII test must be applied with common sense. As the judge held, there is unlikely in most cases, as in this case, to be a real difference between the application of the statement of claim test and the FII test. Indeed, the statement of claim test is, perhaps, little more than a gloss on the FII test …” “47. … The question of whether a claim is worthwhile is not a complex balance of the chance of success as Mr Turner suggested. The limitation period is not postponed until the claimant can show that it is more likely than not to succeed. Of course, if the putative claim would be struck out as not disclosing a cause of action, it would be right to say that the claimant had not discovered that it had a worthwhile claim…That is why I say that I am far from sure that there is a real difference between the statement of claim test and the FII test so far as concealment cases are concerned.”
“46. The Court [in Gemalto] was not therefore directly concerned with a claim based on fraud within s. 32(1)(a) LA 1980. But in the course of a wide-ranging historical survey the majority did say various things about such a case, particularly at [180]-[186]. There they referred to a number of decisions to the effect that time starts running in a fraud case where the claimants are “in a position to plead their own case”: see Biggs v Sotnicks[2002] EWCA Civ 272 at [64] per Arden LJ, Law Society v Sephton & Co[2004] EWHC 544 (Ch) (“Sephton”) at [44] per Mr Michael Briggs QC, and Peconic Industrial Development Ltd v Lau Kwok Fai [2009] HKCFA 17 per Lord Hoffmann NPJ. At [191] they said that it was not the occasion to review the formulation used in the fraud cases, which reflects the special standards applicable to a pleading of fraud. This test was referred to in Gemalto as “the statement of claim test”.” “47. The question in Gemalto was which of these two tests applied to a claim in a cartel case where the claimant relied on deliberate concealment within s. 32(1)(b) LA 1980. Sir Geoffrey Vos MR (with whom Green and Birss LJJ agreed) held that it was the FII test: the proviso to s. 32(1) is to be construed consistently as between mistake and deliberate concealment cases, and time begins to run in a deliberate concealment case when the claimant recognises that he has a worthwhile claim: see at [53]. Sir Geoffrey Vos said that there was unlikely in most cases to be a difference between the application of the statement of claim test and the FII test (at [45]), but if there were a difference for fraud cases it would have to be found in the stricter rules of pleading in fraud (at [44]).” “48. It can therefore be taken to be established that in a fraud case, time starts to run when the claimant has discovered enough to plead their case.” “49. This does not however answer the question what “the fraud” is which the claimant needs to have discovered. In most cases the answer is obvious. A claimant brings a claim alleging a fraud. If you want to know if that claim is barred the relevant inquiry is when the claimant knew enough to plead that claim. What the majority judgment in FII makes clear is that a claimant can know enough to plead a claim without knowing whether it will succeed. This is a significant strand in their reasoning: see in particular at [177] where they say that the limitation period runs alike for claims which fail as for claims which succeed; at [196] where they say that it is in the nature of litigation that facts and law are commonly disputed and that until the court has resolved that dispute the parties can at best have only a reasonable belief that their assertions are correct; and at [199]-[202] where they make the point that questions of limitation are decided on the assumption that the claimant has the claim that he asserts, and the fact that the defendant disputes an element of the cause of action does not mean that the commencement of the limitation period is postponed until that dispute is resolved.”
“687. There has been some debate in the authorities as to whether the test is that the claimant must have sufficient knowledge to plead its case, or to justify embarking on the preliminaries to the issue of a writ, i.e. recognising that a worthwhile claim arises. It is now established that the worthwhile claim test is applicable for the purposes of s.32(1)(b) (where a fact relevant to the right of action has been deliberately concealed by the defendant) and s.32(1)(c) (where the action is for relief from the consequences of a mistake): see Test Claimants in the FII Group Litigation v Revenue and Customs Comrs[2022] AC 1 ("FII") ; and Gemalto Holdings BV v Infineon Technologies[2022] EWCA Civ 782 ;[2023] Ch 169 (“Gemalto”).” “688. The position in relation to s.32(1)(a) was expressly left open in FII (see Lord Reed and Lord Hodge at §191), but, in Gemalto, the Court of Appeal considered (obiter) that the logic of the reasoning of the Supreme Court in FII extended equally to fraud claims, under s.32(1)(a) . As Sir Geoffrey Vos MR noted in Gemalto (at §45), however, there is unlikely to be a difference in most cases. That includes, in my view, this one.”
“586(2). Discovery of the fraud, for the purposes of section 32(1), means knowing that there is a worthwhile claim, i.e., having sufficient confidence in the facts it is necessary to allege to justify embarking on the preliminaries to issuing proceedings: Gemalto Holding BV v Infineon Technologies AG[2022] EWCA Civ 782 , per Sir Geoffrey Vos MR, in particular at [45] and [53], applying in the context of fraud the reasoning in Test Claimants in FII Group Litigation v HMRC (above) at [192]-[193], [196] and [213(14)].”
“At the first stage the claimant must be reasonably attentive so that he becomes aware (or is treated as becoming aware) of the things which a reasonably attentive person in his position would learn.”
“We were disappointed to learn that the actual rental values achievable for the newer OCM portfolio are in reality a lot lower than that originally purported by the bank when the deal was sold to us.”
“44. As context, I should add that while the defects in the properties and the low rent rolls clearly suggested a problem with the valuation, the position post-completion was not so drastically out of line with what I could have expected as to suggest something sinister had happened. It is not unusual for tenants to move out when investment properties in this market are sold to a new landlord. To my mind, that explained at least part of the high vacancy rate and lower rent rolls.”
“I recall that he asked me whether there was any basis for bringing a claim against the original valuer in negligence arising from the valuations which they had provided on a portfolio of properties that Grindale had purchased which Mr Ehrentreu considered may have been too high. My advice (in relation to which no privilege is waived) was that there was no contractual nexus with the valuer, and I considered it unlikely that he could successfully sue the valuer.”
“Specialise[d] in commercial litigation and investigations, including civil fraud, and [has] over 30 years’ experience.”
“in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial.”
“72.1. First, he did not have a clear idea of what the claim might be, or against whom it might lie. Given the time that had passed, his immediate concern was to ensure that documents were preserved, and to unearth anything that might be useful to set up a claim in future. I would describe his approach as scattergun. It is true that he wrote to BOI, in the terms of the letter Mr McNamee exhibits. Yet he also wrote, two months earlier, to Eddisons and PWC (these letters were apparently sent on21 February 2017 ). On the same day he wrote to BOI (i.e.24 April 2017 ) he also wrote to Knight Frank.” “72.2. Second, while I had entered the DBA and agreed that he should investigate possible claims, I did not review or even know of the letters themselves at the time he sent them. I only saw the letter to BOI when BOI provided it as part of pre-action disclosure, and I only obtained the other letters from Mr Levy more recently, in July 2024. Nor did Mr Levy send me any replies to the letters at the time (he has recently sent me a short response from Knight Frank dated8 May 2017 ). It seems that he intended to see what came of the initial letters, and inform me of any leads that emerged; evidently none did. It was a series of classic “fishing expeditions”
“My conversation with Mr O’Brien entirely changed my perspective and prompted me to reconsider Grindale’s transaction with BOI in respect of the OCM Portfolio. In particular, it was this conversation that first triggered my suspicion that Mr Kennedy might have lied to me about the3 November 2008 Schedule. Mr O’Brien had said very firmly that BOI had “f*cked” me twice. I thought one of those instances could be the calling in of the loan in March 2011, but I was not at that point sure about the meaning of the other instance. When I considered over the next six months or so how I might have been “f*cked” by BOI in that regard, I contemplated for the first time whether it was possible that Mr Kennedy had lied about the valuation.”
“some sort of attribution of blame”
“I am fully aware that many of my complaints are subject toLimitation Act 1980 . However, I am sure you are aware that this Act does not include fraudulent breach of trust or accusation of fraud. Furthermore, I do have a personal reason, an explanation for the delay of my complaint. Should the need arise, we will make a submission to court to explain my legal reason for the delay.”
“48. Third, while the use of the words could with reasonable diligence make clear that the question is objective, in the sense that the section is concerned with what the claimant could have learned and not merely with what he did in fact learn, the question remains what the claimant (or in the terminology of the section, the plaintiff ) could have learned if he had exercised such reasonable diligence. That must refer to the actual claimant, in this case OTC and not to some hypothetical claimant.”
“70. In the course of briefing Mr Levy on the IG Index Litigation in my initial discussions with him in the January 2017, and in the course of explaining my financial circumstances to him, I mentioned that I had entered an individual voluntary arrangement (the “IVA”) in August 2016. Mr Levy was astonished to find that I had been forced to take this step…He wanted to know how I had been reduced to such a parlous state. I therefore told him the story of Grindale’s collapse.” “71. Mr Levy was eager to explore whether there might be a claim after all. I was sceptical, since I had satisfied myself of what the position was, on the evidence available, back in 2011. And frankly, I had more regard for Mr Fulda’s acumen than Mr Levy’s. In light of the fact that Mr Levy would likely start working for me in the IG Index Litigation, however, I was happy to go along with the exploratory work he proposed. We set up a damages-based agreement (“DBA”) which would reward Mr Levy if a claim succeeded. As such, I did not have to put any money in up front.”
“The correct test is whether or not, on the basis of the primary facts pleaded, an inference of dishonesty is more likely than one of innocence or negligence. As Lord Millett put it, there must be some fact ‘which tilts the balance and justifies an inference of dishonesty’.”
“However what is clear is that the valuation provided for the Folly Lane properties on8 November 2008 spread sheet. cannot be right. There can only be three possibilities: 1. Mr Kennedy forged the8 November 2008 spreadsheet. 2. KFR had carried out a valuation of the properties at a much earlier date and certainly before the 2008 crash and Mr Kennedy dishonestly presented it as being current. 3. KFR had carried out a 2008 valuation, which was woefully negligent. This seems to be very unlikely given their recent retrospective valuation of the same properties.”
“We have considered the history of the matter and there is nothing which at the time of the transaction by which our client acquired the OCM portfolio that suggested that your client had acted dishonestly or recklessly. That remained the position even when it became apparent that there were severe problems with the properties forming part of the portfolio and through the eventual Administration and Liquidation of Grindale. Mr Ehrentreu was first alerted to the potential issue when in December 2017 he met in a Manchester street a gentleman who had managed the OCM portfolio before receivers were appointed by your client.”
“Mr Ehrentreu was aggrieved as to the conduct of the Bank in selling him a portfolio that did not perform as it should have done and also at the manner in which it conducted itself leading up to the application for administration. Nevertheless, until 2017 it had not occurred to him that the Bank had misled him as to the value of the OCM Portfolio and its rental income. This assumption changed in December 2017 when, by chance, he bumped into a gentleman who had managed the OCM Portfolio on behalf of the original owners in Manchester city centre called David O'Brian, who had previously been introduced to him by Gavin Kennedy prior to GDL buying OCM portfolio as being the property manager of that portfolio on behalf of the owners of the properties. Mr. O'Brian informed Mr Ehrentreu that he had been deceived by the Bank and should carry out his own investigations.”
“Within three months, Mr Ehrentreu began to have some significant concerns in respect of the OCM Portfolio.” “The rental income of the Properties was significantly below the figure indicated by the Bank, which had represented through the means of the purported KFR valuation that annual rental income in relation to the Properties was in the region of£333,900 whereas actual annual rental income equated to£175,000 . Although this was of real concern to Grindale, it did not at that stage consider that the Bank had misrepresented the rental income. It considered that much of the shortfall was due to vacancy rates and believed that the financial crash had led to falling demand.”
“The facility documentation contained a condition that Grindale would complete the refurbishment of the Properties within 3 months. However, post-completion it was discovered that some of the Properties were not up to the required Local Authority standards... For these reasons, Grindale informed the Bank that refurbishment would take longer than anticipated which meant that GDL would inevitably be in breach of the relevant condition in the facility documentation. On2 November 2009 , the Bank wrote a letter to Grindale confirming that the company was in breach of the loan conditions.”