Imran Arif v Dalbir Singh Sanger [2025] EWHC 1540 (KB)

[2025] EWHC 1540 (KB)

Case No QB-2019-002437

IN THE HIGH COURT OF JUSTICE

KING’S BENCH DIVISION

Venue Royal Courts of Justice,, Strand, London, WC2A 2LL

Date 23 June 2025

Before

MR STEVEN GASZTOWICZ KC

SITTING AS A DEPUTY HIGH COURT JUDGE

Between

IMRAN ARIFClaimant

DALBIR SINGH SANGERDefendant

Zachary Kell and Harmish Mehta (instructed by James Chan & Co) for Claimant

Geoffrey Zelin (instructed by Stradbrooks Solicitors) for Defendant

Hearing Hearing dates: 25-28 March 2025 and 3 April 2025

Approved Judgment

I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

.............................

MR STEVEN GASZTOWICZ KC:

[1]This is the trial of a preliminary issue pursuant to the order of Senior Master Cook made on 24 April 2024.

[2]The issue is whether the Claimant can overcome the limitation defence raised in paragraphs 2A to 2D of the Re-Amended Defence dated 9 September 2020, namely that the claim has been brought outside the 6 year period prescribed in s2 of the Limitation Act 1980. The Claim

[3]The action has been brought on the basis of fraudulent, or alternatively negligent, misrepresentations alleged to have been made by the Defendant. These are alleged to have induced the Claimant to enter into a joint venture (or “JV”) with the Defendant using a company as a joint venture vehicle and to invest money to be used for the purchase of land next to the Widow’s Son pub on Devons Road, London, E3 for residential development.

[4]The company incorporated for the purpose on 14 December 2012 was Bow Properties Developments Limited (‘Bow’).

[5]The Claimant, by his Re-Amended Particulars of Claim relies on a total of 10 misrepresentations set out in paras 9 to 16B of the Re-Amended Particulars of Claim. In summary, they are that:(1) It would be easily achievable to develop a block of 7 to 8 flats on the land;

(2) The members of the Joint Venture would easily make a profit from this development. It is said to have been implicit in this representation that the profit would be a significant enough return to make it worthwhile for the Claimant to invest in the same;

(3) The purchase price for the land would be £350,000. It is said to have been implicit in this representation that this price had been quoted or otherwise set by a third party or their agent with which the Defendant had no previous interest and was acting wholly at arm’s length;

(4) The Claimant would need to “act fast” so that the Defendant could negotiate the purchase of the land quickly with the selling agent, otherwise the deal would be “off the table”. It is said to have been implicit in this representation that the Defendant was acting on behalf of the company/what would be incorporated as the company, in the transaction which was otherwise at arm’s length;

(5) The Claimant, the Defendant and Mr Mandeep Singh(known as Billy)/Mr Gursharan Singh would all be parties to the Joint Venture for the purpose of developing on the land;

(6) The stakes in the Joint Venture would be divided as to 40% to the Defendant, 35% to the Claimant and 25% to Billy/Mr Singh;

(7) At all material times the owner of the Widow’s Son was not, and would not be, the Defendant or any corporate entity in which he was an officeholder (which is said to have been a representation impliedly made by silence);

(8) Throughout the negotiations the Defendant was purportedly carrying out on behalf of the company/what would be incorporated as the company for the purchase of the land, Sandhu & Shah (solicitors) would be acting on behalf of the company for that transaction. This representation is said to have started around February 2012 and continued throughout the purported negotiations, with it being implicit in it that Sandhu & Shah would not also be solicitors acting on behalf of the party (namely Dalco Developments Ltd) intending to sell the land to the company.

[6]It is also pleaded that “implicit in or by virtue of the above representations, collectively or individually, there were representations that: (9) The deal/JV arrangement at all times was in relation to the purchase of the land and was not linked to the purchase of any other property including the Widow’s Son, which representation is said to have been implicit in the representations already recited. (10) The Defendant would act on behalf of the Company/what would be incorporated as the Company in accordance with the duties of a director pursuant to the Companies Act 2006 ("the 2006 Act") and the Articles of Association of the Company' ("the Articles"), in particular: a) Pursuant to s.172 of the 2006 Act, the Defendant would act in the way he considered, in good faith, would be most likely to promote the success of Company for the benefit of its members as a whole (including the Claimant) ("the s.172 Duty"). b) Pursuant to s.177 of the 2006 Act, the Defendant would declare to his other directors (including the Claimant) if he was in any way, directly or indirectly, interested in a proposed transaction or arrangement with the company, the nature and extent of that interest ("the s.177 Duty"). c) Pursuant to Article 14 of the Articles, the Defendant would declare any direct or indirect conflict of interest — or both — in relation to any transaction with the Company, including all relevant details relating thereto, in advance of negotiations being entered into upon the relevant transaction, in writing to the other directors (which included the Claimant) and otherwise would obtain written approval in advance in relation to each particular case ("the Art 14 Duty"). d) To otherwise act in accordance with the Articles, including but not limited to Article 7, decisions to be taken collectively between the directors, and Article 8 decisions between directors to be unanimous. The Claimant will rely upon the Articles at trial for their full terms and effect”. a) Pursuant to s.172 of the 2006 Act, the Defendant would act in the way he considered, in good faith, would be most likely to promote the success of Company for the benefit of its members as a whole (including the Claimant) ("the s.172 Duty"). b) Pursuant to s.177 of the 2006 Act, the Defendant would declare to his other directors (including the Claimant) if he was in any way, directly or indirectly, interested in a proposed transaction or arrangement with the company, the nature and extent of that interest ("the s.177 Duty"). c) Pursuant to Article 14 of the Articles, the Defendant would declare any direct or indirect conflict of interest — or both — in relation to any transaction with the Company, including all relevant details relating thereto, in advance of negotiations being entered into upon the relevant transaction, in writing to the other directors (which included the Claimant) and otherwise would obtain written approval in advance in relation to each particular case ("the Art 14 Duty"). d) To otherwise act in accordance with the Articles, including but not limited to Article 7, decisions to be taken collectively between the directors, and Article 8 decisions between directors to be unanimous. The Claimant will rely upon the Articles at trial for their full terms and effect”.

[7]Para 60 of the Re-Amended Particulars of Claim states that “the Claimant was in fact induced by the Representations, collectively and/or individually to act”. This is repeated in para 68 of the Re-Amended Particulars of Claim.

[8]As the Claimant says he was induced by the representations to act as he did, it is implicit in this that he knew of them, including the implied representations referred to at (10) (a) to (d) above.

[9]When asked about this at the outset of the trial, the Claimant’s counsel confirmed that it was accepted that the Claimant was aware of the provisions of the Companies Act 2006 and the duties they imposed on the Defendant as a director, and of the Articles of Association there referred to, and that the trial of the preliminary issue had to proceed on that basis.

[10]In para 55 of the Re-Amended Particulars of Claim it is said that:(i) “The First Representation was false because it would not have been easily achievable to build a block of seven to eight flats on the Land. It was clear from the fact that the land abutted a listed building, namely the Widow's Son, the existence of the Covenants and the fact the land was tied to the Widow's Son as a public house that, at best, this proposed development would be extremely difficult to achieve if not impossible. This becomes further evident from the fact that planning permission had been refused on 15 May 2013. Further, the application to build two houses on the Land was met with difficulty leading to the Conditional Planning Permission with eleven conditions.

(ii) The Second Representation was false because as the Land was impossible to develop on except by following the extensive conditions set out in the conditional planning permission - it was clear from the fact that the Land abutted a listed building, namely the Widow's Son, the existence of the Covenants and the fact the land was tied to the Widow's Son as a public house that these issues with planning would arise and therefore that it would be clearly be very difficult and the overheads too costly for the members of the JV to make a significant profit from the development.

(iii) The Third Representation was false because the purchase price for the Land was not £350,000 set by a third party who was distinct or separate from the Defendant (or the Defendant's companies) or otherwise as a transaction at arm's length. This is evident from the fact that when Dalco purchased both the Widow's Son and the Land from Punch on 22 March 2012 the purchase price was £450,000. Further, the office copies for the Widow's Son and the Land show prices stated of £450,000 and £350,000 respectively. When an attempt was made to auction the Land with the added benefit of the Conditional Planning Permission the price listed was £150,000. The Defendant's disclosure shows that Sandhu & Shah on behalf of Dalco and/or the Defendant personally were negotiating with Messrs TLT LLP ("TLT") in the deal to purchase the Widow's Son and the Land from Punch and that clearly the £350,000 price had been set by the Defendant, personally and/or acting as director and shareholder of Dalco. For example, on 10th February 2012, Sandhu & Shah wrote to TLT asking to split the sale under two separate contracts, one for the Widow's Son for the price of £100,000 and one for the Land for the price of £350,000.

(iv) The Fourth Representation was false because there was no need to negotiate the sale quickly with a selling agent in an arm's length transaction but instead the need for urgency came about as a result of the Defendant acting on behalf of Dalco and/or personally in trying to obtain both the Widow's Son and the land. TLT in a letter to Sandhu & Shah had set the timing for the exchange as 10 days from the date of their letter of 9th February 2012, namely 19th February 2012. The deal between Punch and Dalco was finalised on 22 March 2012 more than a month after the Third Fourth Representation was made. The Company became registered proprietor of the land on 16 April 2012. The Claimant was never made aware of any of the negotiations between Sandhu & Shah/TLT or Dalco/Punch. Further, Sandhu & Shah's ledger for, inter alia, the payments made by the Claimant which purportedly were to go towards the Land stated that the client it was acting for was Dalco rather than the Company. These payments had been mixed together in the same account which suggests they were for the purpose of one transaction, namely Dalco's purchase from Punch, rather than for the Company's purchase of the Land.

(v) The Fifth Representation was false because the Defendant never intended there to be a JV in which the Claimant, the Defendant and Billy/Mr Singh would be parties. If the Completion Statement is true then it clearly shows Mr Singh never paid any money towards the Land: paragraph 26 above is repeated herein. This is also evident from the sudden changes in corporate structure prior to planning permission initially being dealt with by the Defendant. Mr Singh suddenly resigned and purported to transfer his shares to Mr Sarbjit Sanger, subsequently the Defendant resigned. Afterwards the Claimant was forcibly removed from the Company without his knowledge or consent.

(vi) The Sixth Representation was false because the Defendant never intended for the parties to share the stakes in the JV and, accordingly, the Land as pleaded in paragraph 14 above. This is clear from the aforementioned sudden changes in corporate structure and the discrepancies over the price of the Widow's Son and the Land combined. Paragraphs … (iv) and … (v) above are repeated.

(vii) The Seventh Representation was false because the Defendant, personally and/or as director and shareholder of Dalco, was in negotiations with Punch and/or intended to enter into negotiations with Punch to purchase the Widow's Son.

(viii) The Eighth Representation was false because Sandhu & Shah were also acting for Dalco and/or the Defendant personally in the sale of the Widow's Son and the Land to Dalco by Punch, and any conveyance of the Land by Dalco to the Company. Further, Sandhu & Shah's ledger for, inter alia, the payments made by the Claimant towards the Land stated that the client it was acting for was Dalco rather than the Company. Paragraph … (iv) above is repeated herein.

(ix) The Ninth Representation was false because, by virtue of the premises, the deal/JV arrangement was inextricably linked to the purchase of the Widow's Son by Dalco. Paragraphs [(iii) and (iv)] above are repeated herein.

(x) The Tenth Representation was false because: a) The Defendant was acting in breach of the s.172 Duty by ensuring that Dalco benefitted over and above the Company, namely that Dalco purchased the Widow's Son for a fraction of the price (i.e. £100,000) for which the Company purchased the Land (i.e. £350,000). b) The Defendant was acting in breach of the s.177 Duty by failing to declare to the Claimant his/Dalco's interest in the purchase of the Widow's Son and the aforementioned negotiations between TLT (on behalf of Punch) and Sandhu & Shah (on behalf of Dalco and/or the Defendant personally). Paragraphs [(iii) and (iv)] above are repeated herein. c) The Defendant was acting in breach of the Art 14 Duty by failing to declare to the Claimant the direct or indirect conflict of interest which arose as a result of his/Dalco's interest in the Widow's Son. Paragraph [(b)] above is repeated herein”.

[11]Loss is alleged to have been suffered as a result.

[12]The Claimant accepts that the causes of action he relies on were complete by 14 February 2012 when he made the first payment towards the JV and acquired his shares in the joint venture company, Bow Properties Developments Limited, or at the latest by 22 March 2012 when the JV company purchased the land.

[13]The claim form was issued on 5 July 2019. Separate Causes of Action

[14]The question arises as to whether there is one cause of action on the facts pleaded or more than one.

[15]In Seedo v El Gamal

[2023] Ch 473

, Nugee LJ, for the Court of Appeal, at para 70 and 71 considered the position in relation to separate causes of action in relation to fraud for limitation purposes, and said as follows: “70. Take the case where a vendor sells a house to a purchaser. In order to induce the sale the vendor tells the purchaser two distinct and unconnected lies, I would readily accept that they gave rise to different causes of action. Suppose for example the vendor untruthfully said that there were no ongoing disputes with the neighbours, and also that the house did not suffer from subsidence. The purchaser discovers soon after moving in that the first statement was untrue, but reaches an accommodation with his neighbour such that he does not think it worth suing the vendor for that deceit. Then some years later he discovers that the second statement was also untrue, with far more serious consequences. In my view that would be a separate complaint of a separate deceit; it would constitute a separate cause of action; and the purchaser would have six years from when he discovered (or could with reasonable diligence have discovered) that statement to be untrue, even if his right of action on the first deceit was statute-barred. 71.But it is not obvious that the same applies where the vendor tells two related lies as part of the same overall deceit. Suppose for example that the vendor tells the purchaser untruthfully that the house does not suffer from subsidence, and also that he has not made any insurance claim in respect of the house. In fact the house not only suffers from subsidence but the vendor made a claim on his policy for it. The purchaser discovers that the house does suffer from subsidence and that the vendor knew that, but fails to bring a claim within six years. He then happens to discover that the vendor also lied about not making an insurance claim. I would think it very surprising if that could give him another six years to bring what would in essence be a claim for the same deceit. In my judgment he could not do so, and that would be because the second lie did not give rise to a separate cause of action. Both lies, although different in their detail, were designed to conceal from the purchaser the same thing”.

[16]In the present case, Mr Zelin, for the Defendant, suggests there was just one cause of action in deceit/negligent misrepresentation. Mr Kell, for the Claimant, initially suggested there could be six separate causes of action but alternatively suggested there were three:(1) that the Defendant through Dalco was a hidden seller involved in fixing the price for the acquisition of the land (representations 3 -4 and 7-10);

(2) that development would be easy (representations 1 and 2); and

(3) as to the membership structure of the company (representations 5 – 6). 17. Having considered the judgment in Seedo, I consider it correct that there were three, and proceed on this basis. The Legal Position in relation to Limitation

[18]The Claimant accepts that the claim form was issued outside the ordinary limitation period of 6 years for tort claims, laid down by s2 of the Limitation Act 1980, which was applicable here.

[19]However, the Claimant relies on s32 of the 1980 Act. In so far as is relevant for present purposes, this provides that,(1) …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 [or] concealment…(as the case may be) or could with reasonable diligence have discovered it…

(2) For the purposes of subsection (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty.

[20]It is ss 32(1)(a) and 32(1)(b) that are directly relevant here, but I have included in the quotation s32(1)(c) relating to mistake for reasons that will be apparent from paras 28 and 29 below.

[21]The tort of fraudulent misrepresentation is capable of coming within s32(1)(a): see Regent Leisuretime Ltd v NatWest Finance Ltd

[2003] EWCA Civ 391

at para 100.

[22]In relation to other torts, the meaning of ‘deliberate concealment’ in s32(1)(b) was considered by the Supreme Court in Canada Square Operations Ltd v Potter

[2023] UKSC 41

[23]It was there held that ‘concealment’ means the keeping of something secret, whether by taking active steps to hide it or by failing to disclose it, whether or not there is an obligation to disclose it and whether or not the defendant knew that the fact concealed was relevant to the claimant’s right of action (see paras 67 and 98).

[24]‘Deliberate’ in this context means intentionally but recklessness does not amount to deliberateness. The defendant must have considered whether to inform the claimant of the relevant fact and decided not to (see paras 106 - 109, referring to s32(2), but applicable to s32(1) by analogy).

[25]A fact relevant to a claimant’s right of action is a fact without which the cause of action is incomplete: see AIC Limited v ITS Testing Services (UK) Limited (“The Kriti Palm”)

[2006] EWCA Civ 1601

at para 323 per Rix LJ.

[26]A fact which merely improves the prospects of success or bears on a matter which may provide a defence is not a fact relevant to the claimant’s right of action: see Arcadia Group Brands Ltd v Visa Inc

[2015] EWCA Civ 883

at [49] per Sir Terence Etherton C).

[27]As to the level of knowledge required to constitute ‘discovery’, most authorities concerned with the ‘fraud’ and ‘deliberate concealment’ limbs of s.32 have, until recent developments, applied the ‘statement of claim’ test, meaning that the claimant must know enough to be able to plead a claim: see OT Computers Limited (in liquidation) v Infineon Technologies AG

[2021] EWCA Civ 501

[28]However, in FII Group Test Claimants v HMRC

[2020] UKSC 47

- a ‘mistake’ case under s32(1)(c) - the Supreme Court adopted the formulation set out by the Court of Appeal in Halford v Brookes

[1991] 1 WLR 428

at p443 and held that the claimant must know that they made a mistake “with sufficient confidenceto justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence”: see para 193 (my emphasis).

[29]This related directly to the ‘mistake’ limb of s.32, although the court analysed the authorities applicable to the fraud and deliberate concealment limbs.

[30]In relation to fraud, the court at para 183 referred to para 64 of the judgment of Arden LJ in Biggs v Sotnicks [2002] Lloyd’s Rep PN 331, where the court treated the correct date as being when the appellants were in a position to plead their own case, and to Law Society v Sephton & Co [2004] PNLR 27, at para 44, where the court proceeded on the basis of the parties’ agreement that a claimant did not discover a fraud until he had material sufficient to enable him properly to plead it.

[31]The court acknowledged that, “The formulation adopted in Halford v Brookes

[1991] 1WLR 428

, places the commencement of the limitation period slightly earlier than the fraud cases …. 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 formulation used in Halford v Brookes, Haward v Fawcetts ….. is, however, consistent with the way in which the point was expressed by Lord Brown in Deutsche Morgan Grenfell (para 180 above) and by Lord Walker JSC in FII

[2012] 2 AC 337

(para 48 above)”.

[32]At para 180 of Deutsche Morgan Grenfell, Lord Brown was quoted as having there said, “I would hold that as soon as a paying party recognises that a worthwhile claim arises that he should not after all have made the payment and accordingly is entitled to recover it (or, as here, to compensation for the loss of its use), he has discovered the mistake within the meaning of section 32; and, by the same token, I would hold that if he makes any further payments thereafter, they are not to be regarded as payments made under a mistake of law”.

[33]In Gemalto Holding BV v Infineon Technologies AG

[2022] EWCA Civ 782

, the Court of Appeal considered the analysis in FII and held at para 45 that, “after FII, limitation now begins to run in a deliberate concealment case when the claimant recognises that it has a worthwhile claim, and that a reasonable belief arises when a person could have a reasonable belief (in a case of this kind) that there had been a cartel …. 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”. (my emphasis)

[34]In Seedo, the Court of Appeal, having reviewed FII and Gemalto, stated at para 48 that “in a fraud case, time starts to run when the claimant has discovered enough to plead their case” (again my emphasis).

[35]It therefore appears that, on the basis of the reservation of the position by the Supreme Court in relation to fraud cases in FII and the statement of the Court of Appeal in Seedo that the statement of claim test continues, for the time being at least, to apply for the purposes of the fraud limb of s32 whereas the slightly differently worded FII test now applies to the deliberate concealment limb.

[36]In relation to ‘reasonable diligence’, in Paragon Finance Plc v DB Thakerar & Co

[1999] 1 All ER 400

, Millet LJ stated at pp418B-418D:

“The burden of proof is on [the claimant]. They must establish that they could not have discovered the fraud without exceptional measures which they could not reasonably have been expected to take. In this context the length of the applicable period of limitation is irrelevant. In the course of argument May LJ observed that reasonable diligence must be measured against some standard, but that the six year limitation period did not provide the relevant standard. He suggested that the test was how a person carrying on a business of the relevant kind would act if he had adequate but not unlimited staff and resources and were motivated by a reasonable but not excessive sense of urgency”

. The Requirement of ‘Reasonable Diligence’ 37. As Neuberger LJ said Law Society v Sephton & Co

[2004] EWCA Civ 1627

(where he was in the minority, but not on this point), there must be an assumption that the claimant desires to discover whether or not there has been a fraud committed against them (see para 116). Otherwise the word “could” in s.32 would be robbed of much of its significance: see per Aikens LJ in Allison v Horner at para 16. 38. In Gresport Finance Ltd v Battaglia

[2018] EWCA Civ 540

, Henderson LJ observed at para 46: “Another way to make the same point…might be that the ‘assumption’ referred to by Neuberger LJ is an assumption on the part of the draftsman of section 32(1), because the concept of reasonable diligence only makes sense if there has been 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)”.

[39]In Peco Arts Inc v Hazlitt Gallery Ltd

[1983] 1 WLR 1315

a purportedly original work of art was subsequently discovered to be a reproduction. Webster J held at pp1322-1323: “…the precise meaning to be given to [the words reasonable diligence] must vary with the particular context…In the [present] context…reasonable diligence means not the doing of everything possible, not necessarily the using of any means at the plaintiff’s disposal, not even necessarily the doing of anything at all; but that it means the doing of that which an ordinarily prudent buyer and possessor of a valuable work of art would do having regard to all the circumstances, including the circumstances of the purchase”.

[40]This was approved in Gresport Finance Ltd v Battaglia

[2018] EWCA Civ 540

at para 50.

[41]One area of debate in the present case has been whether the requirement of ‘reasonable diligence’ in s32 requires a ‘trigger’ and, if so, what can constitute this.

[42]Mr Kell, for the Claimant, relies on the statement of Lewison J (as he then was) at para 42 of JD Wetherspoon v Van de Berg & Co Ltd

[2007] EWHC 1044 (Ch)

that, “If there is no relevant trigger for an investigation, then it seems to me that a period of reasonable diligence does not begin”.

[43]He further relies on DSG Retail v Mastercard

[2020] EWCA Civ 671

, where the Court of Appeal considered that the Competition Appeal Tribunal fell into error in proceeding on the basis that the reasonable diligence test involves an assumption that the claimants were on notice of the need to investigate (paras 62-71).

[44]In OT Computers v Infineon Technologies

[2021] QB 1183

, Males LJ said, at para 47, that, “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”.

[45]In looking at what the claimant could have discovered if he had acted with reasonable diligence throughout, that must be judged according to the circumstances, which include the nature of the transaction, the person he is dealing with, and all else he is aware of. Anything which comes to his attention as meaning that further enquiries require to be made can be described as a “trigger” requiring them to be made if acting with due diligence.

[46]This is consistent with the judgment of Sir Geoffrey Vos C, as he then was, in DSG Retail v Mastercard

[2020] EWCA Civ 671

at paras 65-66 where he approved the statement by Foxton J in Granville Technology Group Ltd v Infineon Technologies AG

[2020] EWHC 415 (Comm)

that what is meant in the authorities by a ‘trigger’ is “whether the claimant was on notice of something which merited investigation”.

[47]It seems to me that a claimant may be on notice of something which merits investigation from an early stage even if he has no reason to think that anything is wrong. The question is whether reasonable diligence required him to make further enquiries and whether, and when, if he had acted with such reasonable diligence, the fraud or concealment could have been discovered.

[48]A person might, for example, when he has entered into a legal arrangement with someone, be reasonably expected to check things said on the basis of which he has entered into the transaction, without anything further occurring.

[49]Where, for example, A has paid a reservation fee to B, a stranger, to secure the right to buy a house at 23 Acacia Avenue W1, where B lives and which B says he owns, reasonable diligence would surely require A (himself or through solicitors/conveyancers) to check B has title to it before proceeding further. If doing so would have revealed that B was merely a tenant and did not own the house, so that his representation to that effect was fraudulent, time for an action to recover the reservation fee would run under s32 from that time.

[50]If there is no cause for investigation, in the circumstances generally or in anything specific which comes to the Claimant’s attention, failure to investigate will, on the other hand, not mean there has been a failure of reasonable diligence in not carrying out such an investigation.

[51]The use of the word ‘trigger’ is merely shorthand for considering whether there is any such cause.

[52]Consistent with this, in DSG Retail v Mastercard [2020] Bus LR 1360 the Court of Appeal referred to the need for something to put the claimant on notice to investigate further and to the need for a trigger point, not an event: see paras 62-63.

[53]The question is not whether the claimant ‘should have known’ of the fraud, but whether he ‘could have known’ of it, and the burden is on him to show that he could not have done so except by taking exceptional measures which it was not reasonable in the circumstances to expect him to take: see eg Allison v Horner

[2014] EWCA Civ 117

at para 19. The Relevance of the Claimant’s Position

[54]In the present case, the Defendant, through Mr Zelin, contends that because the Claimant was a director of Bow, he was required to comply with director’s duties owed to it, and if he failed to discharge those duties he was not acting with reasonable diligence.

[55]He relies on OT Computers, where the Court of Appeal considered whether, where a claimant relied on deliberate concealment, it was relevant that it could be discovered by a person carrying on business of a particular kind, although the claimant was in administration, not carrying it out.

[56]Males LJ there said at para 38 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”

. However, “it does not necessarily follow, as Lord Hoffmann said in Peconic, that the claimant must be assumed to be someone or something which he is not”.

[57]In para 49 he went on to say that, “the question remains what the claimant (or in the terminology of the section ‘the plaintiff’) could have learned if he had exercised reasonable diligence. That must refer to the actual claimant, not some hypothetical claimant”.

[58]He pointed out, however, that, “There is no warrant in the language of the section for a different test to be applied in certain cases, such as cases where the claimant is carrying on business. The application of the test will differ according to the circumstances, but there is a single test”

[59]In para 58 he went on to quote Lord Hoffman’s approach to the question of what assumptions needed to be made about the claimant set out at para 33 of Adams v Bracknell Forest Borough Council

[2005] 1 AC 76

, namely that, “Section 14(3) [of the 1980 Act] uses the word ‘reasonable’ three times. The word is generally used in the law to import an objective standard, as in the reasonable man. But the degree of objectivity may vary according to the assumptions which are made about the person whose conduct is in question. Thus reasonable behaviour on the part [of] someone who is assumed simply to be a normal adult will be different from the reasonable behaviour which can be expected when the person is assumed to be a normal young child or a person with a more specific set of personal characteristics. The breadth of the appropriate assumptions and the degree to which they reflect the actual situation and characteristics of the person in question will depend upon why the law imports an objective standard”.

[60]Males LJ went on to say at para 59 that, “In my judgment a similar approach applies to section 32. The section requires an objective standard (what the claimant could have discovered with the exercise of reasonable diligence) but what assumptions are appropriate in the case of a claimant from whom wrongdoing has been deliberately concealed and the degree to which they reflect the actual situation of that claimant will depend upon why the law imports an objective standard. Here, the purpose of the section is to ensure that the claimant - the actual claimant and not a hypothetical claimant - is not disadvantaged by the concealment. In achieving that purpose it is appropriate to set an objective standard because it is not the purpose of the law to put a claimant which does not exercise reasonable diligence in a more favourable position than other claimants in a similar position who can reasonably be expected to look out for their own interests. Rather, claimants in a similar position should be treated consistently. However, a claimant in administration or liquidation which is no longer carrying on business is not in a similar position to claimants which do continue actively in business and it is unrealistic to suggest otherwise”.

[61]Mr Zelin says that when an investor also becomes a director, as the Claimant here did, he is in a different position from that of a “mere” investor, in that he owes duties to the company, which, if he fails in them means he did not act with due diligence for the purposes of s32.

[62]To support his point, an example was given by Mr Zelin by way of analogy. It was that if someone is employed by HM Inspectorate of Manhole Covers (were there such a thing) to open all manhole covers in an area and inspect them and failed to do so in relation to one of them, but had he complied with his duty he would have found a bag of documents in it showing he had been a victim of a fraud in relation to eg a house purchase he had made, he would not have exercised reasonable diligence and so woud be unable to rely on s32.

[63]However, I am not convinced as to this. Section 32 appears to require a person to exercise reasonable diligence in the context of discovering whether he is the victim of a fraud, or has another cause of action the facts of which have been concealed from him - in other words, to be astute to this possibility, and to use reasonable diligence in investigating whether that is so.

[64]In the example given by Mr Zelin, A may not have been reasonably diligent in the performance of his duties to the Inspectorate but if he had entered into a normal contract with B for the purchase of a house in relation to which B had made representations, with nothing to excite A’s suspicions they were false or anything was wrong or which warranted further investigation, his failure of duty to the Inspectorate in not opening manhole covers, where documents showing the representations were fraudulent were hidden, does not in my view mean he failed to use reasonable diligence in relation to the discovery of the fraud.

[65]In the present case, so far as the misrepresentations themselves are concerned (if such they be), they are alleged to have been made to the Claimant, not to the Company (Bow), requiring investigation, if at all, by the Claimant, not by the Company of which he was a director. Furthermore, even had they also been made to the Company, the Company was set up and operated as a joint venture vehicle and it seems to me the Claimant’s duty to the company as a director to use reasonable diligence to discover fraud against it would be likely to mirror his own duty as a joint venturer to use reasonable diligence to discover the fraud against him.

[66]That is not to ignore the Claimant’s position as a director of the Company, however.

[67]As Males LJ pointed out in OT Computers at para 48, “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 …. 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”.

[68]What the Claimant here could with reasonable diligence have learnt must take into account that he was a director of the Company, with the powers that gave to him and, as was confirmed at trial, he was aware of the provisions of the Companies Act 2006 and the duties they imposed on the Defendant as a director, and of the company’s Articles of Association.

[69]If things were done in relation to the company that should not have been done which led an objectively reasonable man in the Claimant’s position to suspect things were being hidden from him or mean that there was something wrong in what he had been told, reasonable diligence would be likely to require further investigation.

[70]Further, in relation to what he could do, as he was a director of the company he could, for example, ask third parties to produce documents held on its behalf or for information relating to its transactions, which he would otherwise have been unable to do.

[71]In addition, the Claimant, as he accepted in cross-examination, was in the position of an educated man, with a university degree in business and business services, who was putting his redundancy money and money from his father into the venture.

[72]These were in the context of s32 all things of relevance relating to the Claimant, who, to adapt what Lord Hoffmann said in Peconic must not be assumed to be someone or something he is not (see para 56 above).

[73]This is just as in BAT Industries PLC v HMRC

[2024] EWHC 195 (Ch)

the fact the Claimant was a well-advised multinational group was taken into account.

[74]Even aside from the Claimant’s directorship, to adapt what was said by Miles J at para 782 of European Real Estate Debt Fund (Cayman) Ltd v Treon

[2021] EWHC 2866

, a person making a substantial financial investment in a venture will be able to demand, of those involved, up to date financial information and to raise detailed questions. Rather than relying on its own speculation or assumption, he will be expected to ask questions and to be given answers.

[75]In response to questions I raised during his closing argument, Mr Kell contended that if someone asks to borrow £10m and says he has a house in Berkshire worth £20m, he does not have to search the Land Register to check that is true. However (absent any additional facts) it is in my judgment a plain example of where reasonable diligence would require him to do so.

[76]This is also not in my judgment displaced by saying, as Mr Kell did, that people are entitled to proceed on the basis that those they are dealing with are honest, which the Claimant’s counsel also referred to. The whole basis of s32 is that, notwithstanding that general proposition, where circumstances mean that reasonable diligence requires further investigation of matters, it is expected to be made. Where that would have led to discovery of the fraud or relevant concealed facts, the limitation period is not postponed beyond that.

[77]The question here is whether a person of moderate intelligence (as the Claimant himself here, at the least, in fact was) in the position of the Claimant, invited to join, and joining, a joint venture, led by another whom he barely knew, with a desire to discover whether or not a fraud has been committed against them or actionable misrepresentation made, could, in all the circumstances of the case, have discovered the fraud or concealment by the exercise of reasonable diligence.

[78]Facts the Claimant knew or could with reasonable diligence have found out before the cause of action was complete are relevant, not just matters that could not have been known until after the event: see Treon at paras 770-775.

[79]As Miles J noted in that case, in Paragon Finance plc v DB Thakerar & Co

[1999] 1 All ER 400

, a case about mortgage fraud, Millett LJ recited at p417 the relevant events going to the plaintiffs’ state of knowledge about the fraud, some of which took place before the transactions giving rise to the losses claimed, while others happened afterwards. As he said, the full sequence of events needs to be considered.

[80]The burden of proof is on the Claimant to establish that he could not have discovered the fraud (or concealment of relevant facts) without exceptional measures which he could not reasonably have been expected to take (see Paragon at pp418B-418D and Allison v Horner, above, at para 19). The material Facts alleged to have been deliberately concealed here

[81]In para 46 of the Claimant’s witness statement, which stood as his evidence in chief, he stated that the Defendant had deliberately concealed the following material facts from him, “among other things”:(a) his position as director/controlling mind of Dalco,

(b) Dalco's purchase of the Pub from Punch Partnerships (PTL) Ltd (‘Punch’) alongside the Land,

(d) the existence of the Covenants,

(e) that Mr Gursharan Singh or Billy was no longer an investor in the Joint Venture or a director of Bow,

(f) that he had been removed as a director of Bow,

(g) that the planning applications made by the Defendant/BPD were made in conjunction with the owner of the Pub, ie the Defendant/Dalco, and

(h) the existence of a lease over the Pub and the Land for a number of years (being for 10 years from 15 May 2006). Evidence

[82]I must decide the facts on the balance of probabilities.

[83]I heard oral evidence from the following witnesses: -. The Claimant -. Jonathan Freegard -. The Defendant -. Gagan Joshi -. Mandeep Singh Ahluwalia (known as Billy)

[84]I have taken all the evidence, both oral and documentary into account, whether I specifically mention it or not. It is not practical to recite here the whole of that evidence. It is, however, appropriate to mention some important parts of it, to be taken into account in assessing what happened, what the Claimant knew, and what a person in his position exercising reasonable diligence could have discovered. The Claimant’s Evidence

[85]The Claimant’s evidence was that between 1996 and 2011 he was a project manager in IT services. He also during this time invested in buy to let properties marketed by estate agents. He subsequently revealed in cross-examination that he also had a degree in business and business services.

[86]The Claimant’s only contact with the Defendant up to the alleged fraud, in 2012, was that in 2001 he bought two houses in Walpole Road, London from the Defendant’s company Impact Developments Ltd, which had built them. He knew the Defendant had done some conversions and developments.

[87]He said that he occasionally went into the offices of Marvel Estates (‘Marvel’), which was run by Mr Gursharan Singh (‘Mr Singh’) and his son Mandeep Singh Ahluwalia, who was known as Billy, to enquire about letting out properties. Though they talked about things, including Billy’s property investments, he never in fact used Marvel for letting purposes.

[88]He said that in 2012 the Defendant called him out of the blue and told him he was going to be doing residential property development in the Bow area of London and asked him if he would be interested in investing alongside a friend of his, who was Billy.

[89]He said the Defendant told him he had a few sites in mind for the development and he agreed to visit them. He was then shown two sites by the Defendant, together with Billy, but neither of them was the land at the side of the Widow’s Son pub. Neither was said by the Defendant to be suitable. According to the Claimant, the Defendant said the second site was not suitable due to the location, although they had gone to visit it. He said that during the visits the Defendant gave him the impression he was an incredibly successful property developer.

[90]The Claimant’s evidence was that on 8 February 2012 the Defendant called him and said he had found a site next to a pub with excellent potential on which a block of 7 to 8 flats could be built. He said that he, Billy and the Claimant would make an easy profit. He said the price “for the whole thing” was going to be £350,000, and gave some crude build and sales costs. He said the Claimant would have to “act fast” otherwise “the deal would be off the table”. The Claimant asked for a day or so to consider.

[91]The Claimant said that the next day (9 February), the Defendant called him again and said he had to make a decision quickly or the deal would be off the table. He said the site was going to be “a goldmine”. The Defendant assured him he would handle everything, including the purchase of the development site and in terms of obtaining planning permission and the building of the flats. They agreed the Claimant would be an investor “as there was no other contribution I could offer”.

[92]When asked in cross-examination about the time he expected the venture to take, the Claimant’s evidence was that he knew conveyancing normally took about a month, and the Defendant, whom he believed, said he would get planning permission in 3 - 4 months, and it would take 6 - 8 months to build the development, so that it would take about a year in total to complete the project.

[93]The Claimant said he did some crude “back of an envelope” calculations based on the rough build costs that had been mentioned and Rightmove sales figures in the area “and broadly worked out there would be a profit”. In cross-examination, he said he knew the pub was on Devons Road and the Defendant told him it was next to a station and a pub. He said he did not know what design costs, planning fees and the like would be.

[94]He then agreed on about 11 February to enter the Joint Venture with the Defendant. He was to put in £127,000 for a 35% share, part of which was his redundancy money and part of which was his father’s money.

[95]He said there had been no meeting at the site with the Defendant and Billy or anyone else prior to his decision to proceed, that the Defendant told him the land was next to a pub but did not tell him he was acquiring the pub, or that it was a Grade II* listed building that came with the land, or that the land had a restrictive covenant over it prohibiting development. In cross-examination, the Claimant said he knew it was on Devons Road and said the Defendant had said he could show him the land after exchange of contracts, but did not show him it before. He said that did not strike him as odd.

[96]Before the Claimant paid anything, an e-mail from Sandhu & Shah, solicitors, on 14 February, at p1247 of the hearing bundle, asking for his contribution to the deposit to buy the land, made him aware they were acting and gave the address of the land (namely, 75 Devons Road).

[97]The Claimant said in cross-examination that he first drove past the land to see it after completion in March 2012, and thought it small. It was about 20-25 minutes’ drive from his home. When he did stop and visit the land itself later in March/April 2012 (and subsequently with Mr Freegard in about August 2013) he looked over the wall and did not see any access to it other than through the pub.

[98]An e-mail from the Claimant on 14 February 2012 in the hearing bundle shows that the Claimant asked the Defendant on that date “If the landlord of the pub objects to the build can that damage the planning permission for the development?” The Claimant relied on this to support his case that he was unaware that the Defendant had bought the pub at the same time as the land was acquired by the company, as the Defendant alleged. However, I consider the e-mail equally consistent with the reference to the ‘landlord’ of the pub being in the usual colloquial sense of the tenant actually running it. It does show, however, that the Claimant himself not only knew that the land was next to a pub but was aware that its setting could be of importance.

[99]There is no written evidence of any reply (an e-mail saying “ok” was referred to in the Claimant’s witness statement, but he clarified in cross-examination that it did not relate to this), but the Defendant's evidence was that he rang the Claimant up and told him it would not be a problem because the tenant had agreed to co-operate in return for improved lease terms. If the Defendant did not respond, as the Claimant said in evidence, the Claimant failed to pursue this or to regard it as unsatisfactory.

[100]He said the Defendant had told him he would form a company in which Billy and himself would become directors, and that he would have to be a director in order to obtain shares in it. The Claimant said he “presumed this would be a legitimate way to manage my investment and was guided by and had followed the Defendant’s lead”.

[101]Once the Claimant had paid his share of the purchase deposit to Sandhu & Shah, he received a certificate of incorporation and share certificates and understood he was a director. He also received a copy of the Company’s Articles of Association.

[102]On being asked in cross-examination about the need for company documents to be signed and approved, for there to be meetings of directors or communications between them making decisions, the Claimant agreed it would have been prudent at the contract stage to have a meeting to discuss things, and so, too, on completion, but said he was relying on the Defendant.

[103]Later on, in 2019, the Claimant wrote to the Defendant saying ,“As a director of the company, you are required to be familiar with its articles of association and the Companies Act 2006”. Although this was much later, it was put to him that the same applied to him in 2012, but he said that – despite his business degree, which had in part dealt with different entities such as companies – he was “not alive to that at the time”. However, as I have said, it was accepted on his behalf that he was aware of the provisions of the Act and of the Articles at the time he put his money into the joint venture (see paras 7 and 8 above). He also accepted in cross-examination that as a director he could have asked Sandhu & Shah for information.

[104]He also accepted in cross-examination that given he thought that the period the whole project would take to the development having been built would be about a year, having entered into the arrangement in February 2012 the question of money for building and other costs would arise during 2012. He subsequently said that it may take over 18 months for the build to be complete. As an aside here, I would note that, if so, it would still have to have been well-advanced by February 2013, with funds having to be provided to enable such building works to take place.

[105]The Claimant said that, unbeknown to him, Mr Gursharan Singh became a co-director rather than Billy and at the end of February 2012 Mr Singh’s shares and directorship were transferred to Sarbjit Sanger, the Defendant’s younger brother, although he was not an investor in the Joint Venture.

[106]The Claimant said that on 15 March 2012 he was asked by the Defendant to transfer the remaining balance due from him of £115,436 to Sandhu & Shah, which he did.

[107]The Companies House documents in the trial bundle show that Mr Gursharan Singh resigned as a director on 28 February 2012, though this was only registered at Companies House by the company agent used, on 5 May 2012. The Defendant also resigned as a director on 1 May 2012, which was registered at Companies House on 5 May, which the Claimant said was also unbeknown to him at the time.

[108]It is not in dispute that subsequently, the Claimant sent the Defendant details of other properties coming up for auction to get his advice as a builder, but, the Claimant said, “these were property refurbishment projects and not land developments”.

[109]On 18 July 2012 the Claimant e-mailed the Defendant saying “How is progress with the Planning permission developing?” The Claimant replied the same day saying “preparing a perhap [sic] to go in this week for planning meeting before the main application goes inn”. This was a reference to a pre-application request to the council responsible for deciding planning applications for advice on a planning proposal put forward to it. The Claimant said he did not know what a “pre-app” (or “perhap” as it was described in the e-mail) was. However, he accepted in evidence that he then received an e-mail, the same day, asking him to call the Defendant, which he said he probably did.

[110]It seems likely the Claimant would have wanted to know what was meant by this and been told in this call. On 17 September 2012 the Claimant asked the Defendant by e-mail whether there had been any developments in relation to the planning permission and was told in reply that the Defendant was waiting for a date for the meeting.

[111]Although the Claimant e-mailed in response “ok thanks – keep me posted” he said he did not ask about the pre-application advice received, or see it until July 2013, though it seems unlikely having asked to be kept posted and the Defendant’s evidence and that of Gagan Joshi, his assistant at the time, was that he collected the subsequent pre-application report by the Council dated 8 October 2012 from the Defendant’s offices shortly after it was issued.

[112]The pre-app report (as I shall continue to call it) stated in clear terms that the land was next to the Grade II* listed pub, to which the application failed to have regard, and raised concerns as to height, bulk and design of what was proposed (a 5 storey development of 4 flats), and a number of other concerns.

[113]The Claimant was asked in cross-examination whether in February 2013, a year after his investment, and by which time he had on his evidence expected the development to have been built, he was concerned that nothing had been started. He said the Defendant had said things take time, but he did not pursue this. He accepted that he could also have asked Billy about progress, which it would not have been unreasonable to do, but he did not do this. The Claimant’s evidence was that during the period June 2012 to July 2013 he made 6 to 7 calls to the Defendant regarding the land, asking what was going on, and was always informed the application was in hand and progressing and that it was slow but the Defendant was dealing with it.

[114]An application for planning permission for two houses and a flat above the pub was made in the name of Bow on 20 March 2013 but the Claimant’s evidence was that “the Defendant did not inform me of this”. It was refused on 15 May 2013. He was asked whether he could have checked on the Council’s website to see whether a planning application had been made and its terms, and accepted he knew the site address, but said he did not know how to do this and was not concerned to do it. Had he done so, he would have seen it was an application also involving the pub. He accepted he could also have made enquiries at that time with Billy or others about the land ownership.

[115]The Claimant said he did not collect the plans or anything else from the Defendant’s offices. Bow’s registered office was that of its accountant and he did not know the Defendant’s own address even in 2013.

[116]On 21 July 2013, Gagan Joshi, the Defendant’s then assistant, sent the Claimant an e-mail chain between Ron Newton, whom he knew to be the architect, and on 25 July e-mailed him an e-mail between Ron Newton and Mr Joshi. The Claimant said that only then did he discover that planning permission had been refused. He e-mailed Gagan Joshi on 26 July asking for “1. All plans submitted to date, to the council by the current Architects 2. All copies of correspondence to architect and their comments. 3. Please copy these ready for me for Monday morning 4. This is so that when I go armed to another architect practice there wont be as much duplication and cost implications. 5. I will advise of all costs in advance of new architect so that things are transparent. Call me on 07956225834 when prepared”.

[117]The request to collect these is consistent with the Defendant’s evidence that the Claimant wanted hard copies of things such as plans, which, being of large size, would probably not have been easy to e-mail, and with that of Gagan Joshi, that he collected hard copies, rather than having anything by e-mail, previously. The e-mail of 26 July 2013 does not mean the Claimant had not seen plans earlier, but he clearly wanted to be sure he had copies of everything for a new architect to see in order to keep fees down. The Defendant replied to that e-mail from the Claimant, within the hour, saying “All I have is the pre hap report and the plans you took, I will email you the pre hap report”. This is consistent with the plans having been provided earlier and not being able to be easily sent by e-mail, though is in itself ambiguous as to whether the pre-app report now being e-mailed had previously been collected in hard copy. There is no e-mail from the Claimant in response challenging what was said, which is clear as to the plans having been previously provided at least, nor did he say in evidence that he had done so.

[118]The Claimant then involved another architect, Mr Jonathan Freegard, with whom he visited the land on 1 August 2013. In the meantime, the Claimant obtained a copy of the Council’s refusal notice from the Council directly.

[119]The Claimant said he then found out that the application had been made in conjunction with the pub owner and was for two houses not flats. He said he telephoned the Defendant and told him that he believed flats would be more profitable. He said he “had expressed in a phone call that I was not happy with the length of time it had taken to get to this point and that the planning application was rejected”. The Defendant said he had told him previously that he was the owner of the pub (the Defendant’s evidence being that he told him that he was buying the pub and land but that the joint venture would related just to the land).

[120]The Claimant said in evidence that when he did learn that the Defendant was the owner of the pub he was not concerned about that and, indeed, he was still happy to continue with the Defendant, agreeing to invest in a project for the building of 11 residential units at Royston in January 2014. Though not mentioned in his witness statement, in cross-examination, he also accepted he had gone into another project with the Defendant in Clayhall. Mr Freegard’s Evidence

[121]Mr Freegard, an architect, gave evidence. He said that he was first contacted by the Claimant, making an enquiry about using his services on 29 July 2013. The Claimant said the land it related to was adjacent to a pub on Devons Road, and Mr Freegard immediately knew where this was from his description, although he had no previous involvement with the site. The Claimant said planning permission had been refused and wanted advice on what could be done to get permission. Mr Freegard then looked up the site on the planning portal. Before examining the documents there in detail, however, he met the Claimant at the land on 1 August 2013 and could see there was no way into it other than through the pub. He said that anyone could have seen the application on the portal, as he did when he looked. The Defendant’s Evidence

[122]The Defendant’s evidence was that before the Claimant decided to go into the venture with him, he met him, and Billy, at the site, that he told them he was buying the whole site (pub and land), through his company, Dalco, and would be selling the land to a new company, Bow, set up to carry out the development of the land. He said he also told the Claimant that the pub was Listed Grade II*.

[123]He said it was clear to anyone looking at the site that the land was part of the pub, as it was its beer garden and could only be accessed through the pub. They were bought as one lot and it was Sandhu & Shah that asked for two separate contracts and proposed to the seller the split in the purchase price as to £100,000 for the pub “to be purchased by Dalco” and £350,000 for the land, “to be purchased by Dalbir sangar and others”. The Defendant’s evidence was that the price of £350,000 for the land was based on advice he had received from a local estate agent called Claridges, based on development potential for two houses, which had been on the site previously, and for which he was confident he could get permission for two replacements as a minimum.

[124]He said he discussed with the Claimant that if he invested, he would become a shareholder and director of the new company (Bow). He told him he would have to decide quickly as there were others who were interested in investing and the owners of the pub (Punch) were looking for an early sale. The Claimant did not, he said, ask any questions or ask for any documents, which he would have provided if asked. The solicitors, Sandhu and Shah, had advised that the restrictive covenants should not be an obstacle to development.

[125]He said that Mr Gursharan Singh and Billy, though initially involved, dropped out because they could not pay their share of the completion money.

[126]He said the Claimant did not take much interest in what was going on. He asked in September 2012 whether there were any developments with the planning permission, and was told the Defendant was waiting for the pre-app meeting with the Council and he asked to be kept posted. He said he would have told him the pre-app meeting was fixed for 25 September when he was himself told that, but the Claimant did not attend, or ask for any further update. He said that when he received the pre-app report saying the development of flats put forward was not acceptable he told the Claimant the Council were not favourable to flats and wanted houses, and he could collect the report, which Mr Gagan’s evidence was that he did.

[127]He said that when the subsequent planning application went in, the Claimant was told and collected the plans and the application. When the application was refused on 15 May 2013 the Claimant was told and suggested appointing a new architect.

[128]He said he told the Defendant when he, the Defandant, was resigning as a director and when he transferred his shares and the Claimant agreed to resign as a director in 2014, this was for reasons he explained connected with an inter-company loan that needed to be made to Bow. Billy (Mandeep Singh Ahluwalia)’s Evidence

[129]Billy gave evidence. He was emphatic that he had visited the site at the outset with both the Defendant and the Claimant before investments were made, and did not recollect visiting any others. It was clear the land was part of the pub, being its beer garden. His evidence was that he knew from the outset that the Defendant was going to be the owner of the pub, which it was obvious from looking at it was a listed building. Gagan Joshi’s Evidence

[130]Gagan Joshi was the Defendant’s assistant at the time of the joint venture. He said he was certain the Claimant had collected a copy of the Council’s pre-app report from their offices shortly after it was received in October 2012. He also thought the Claimant had collected the plans and documents for the planning app itself, which were in A3 size, from their offices. His evidence was that the Claimant always wanted hard copies of everything and whenever they received documents or plans, whether from the architects, the planners, or anyone else, relating to the development, the Claimant would be told by the Defendant and come in to collect them. Findings and Decision

[131]Once the Claimant did himself find out about the fraud or concealment, that stops postponement from continuing beyond that time. If, however, the Claimant only found out about it later than, objectively judged, a person in his position exercising reasonable diligence could have done, that will not assist him. As set out above, the burden is on the Claimant to show that he could not have discovered the fraud or deliberate concealment except by taking exceptional measures which it was not reasonable in the circumstances to expect him to take.

[132]The Claimant, when cross-examined, suggested he was very naïve in relation to business matters and as to the nature of a company, which he just about knew was its own entity. However, he subsequently accepted that, although he had not mentioned it in his witness statement or elsewhere, he had a degree in business and business services.

[133]Although he made no mention of it in his witness statement, the Claimant also accepted under cross-examination that the land was only 20 to 25 minutes drive from his home and that he had visited the site on two occasions in March/April 2012, on the first occasion looking at it on a drive-by basis, because parking was said to be difficult, and then on foot. He had seen on that occasion that the only existing access was through the pub.

[134]I gained the impression that the Claimant was minimising, both in his witness statement which stood as his evidence in chief and in cross-examination what he understood about business affairs and about the land in question at, or towards the start of, the joint venture. I also find difficulty in accepting he could not have collected relevant documents such as plans and pre-application advice because he did not know the business address of the leader of the venture he was going into, as he emphasised the Defendant to be, even in 2013.

[135]This casts doubt on the reliability of his evidence.

[136]It was also clearly a matter of importance to him what was being done with the money he put into the venture, which was his redundancy money and money from his father.

[137]His position was that of an educated man with a business degree. He had also been a project manager in IT services. He had by the time he entered into the Joint Venture also acquired and operated a number of buy-to-let residential properties. After he entered into the Joint Venture, he was also then a director of Bow until April 2014 with the power to call for company documents or to require third parties to provide relevant information. It was also expressly confirmed on his behalf that he was aware of the provisions of the Companies Act 2006 and the duties they imposed on a director and of the Articles of Association as referred to in paras 16B and 60 of the Re-Amended Particulars of Claim (see paras 7 and 8 above). This included the fact that decisions of directors had to be taken collectively in communications between the directors, and to be unanimous, even though the company was a joint venture vehicle.

[138]I consider it likely, on the balance of probabilities, that the Claimant did visit the land with the Defendant prior to investing.

[139]Not only is there the Defendant’s evidence that this is what happened, but also Billy’s, which appeared to be honestly given, and did not appear to be tailored to support the Defendant, as I shall refer to in para 147 below.

[140]Furthermore, anyone considering investing his redundancy money and money of his father’s in a potential development site would be likely to want to see it for himself (and to judge, so far as he could, whether it was suitable for a development of the type proposed). The Claimant said, in line with this, that he was shown two other sites, which were not acceptable, and it seems unlikely he would not have seen this one, which he was told was. Had he been deflected from doing so, alarm bells would surely have begun to ring and he would have wanted to make further enquiries about it and why this was.

[141]However, even if the Claimant did not visit the land before making substantial payments for its acquisition from redundancy money and his father’s money, I cannot accept that a person in his position exercising reasonable diligence would not have done so.

[142]In addition, even if the Claimant did not visit the land at the outset, he accepted in cross-examination (though he did not reveal it in his witness statement) that he did see it in March or April 2012.

[143]Anyone visiting the land at the outset, or in March/April 2012 (as the Claimant accepted he did), would have seen (as the Claimant did in March/April 2012) that the land was the pub’s beer garden, with the only means of access to it appearing to be through it.

[144]A person in the position of the Claimant exercising reasonable diligence would in these circumstances have wanted to know more about this, and how the sale of the land was to take place (or had done), whether on its own or with the pub and whether the land’s relationship with the pub was going to be an obstacle to development.

[145]I consider that a person exercising reasonable diligence would have made enquires of the Defendant about the ownership of the land and pub, if he did not already know the position as to this, and that those enquiries would most likely have revealed that the land and pub were both being sold and that the Defendant would be buying the pub (and that the owner of that would therefore have no objection). He would then have wanted to know whether the landlord running the pub might object (which ties in with the Claimant’s e-mail about this to which I have referred above).

[146]Had such enquires about ownership been made, this would in my judgment have revealed that the Defendant (through Dalco) was buying the pub. The Defendant would have found it difficult to lie (and on the balance of probabilities would not have done so) given that ownership could subsequently be established via the Land Registry, even if it did not otherwise come to light, via Billy - whose evidence that he knew that the Defendant was buying both the pub and the land but passing only the land on for development I accept - or otherwise.

[147]I accept Billy’s evidence in relation to this because it appeared to be honestly given, and did not appear exaggerated in that he said he was told about this when the Defendant first spoke to him about the venture, rather than when he said the land was viewed in the presence of the Claimant, which would clearly have strengthened the case for the Defendant if he wished falsely to support it.

[148]Once a person exercising reasonable diligence had discovered, as I consider he would have been likely to have done in 2012, that the Defendant was buying the whole site comprising, via Dalco, the pub as well as, via Bow, the land, a person exercising reasonable diligence would plainly have wanted to know how the price of the land as a separate unit was being, or had been, arrived at. Indeed, even aside from this, he would have wanted to be satisfied the land was worth what was being paid for it.

[149]In terms of the price, I again consider it would have been difficult for the Defendant to tell a bare faced lie as to the amount being paid for each part of the site on the split and unlikely he would have done so. Furthermore, a person exercising reasonable diligence would have wanted to satisfy themselves that the amount being paid for that element, as compared to the pub, was reasonable.

[150]The Claimant barely knew the Defendant and a person in his position exercising reasonable diligence would have wanted to be satisfied that what he was being told about the purchase price for each part was correct, and that the land was worth what was being paid for it, into which he was putting redundancy and other money. I consider he would have done this by asking the Defendant for the valuation he would have expected him to have obtained, and if no expert valuation was forthcoming (and it is at the heart of the Claimant’s case that the price paid for the land as compared to that paid for the pub was fraudulently inflated, so that it could not have been independently valued at the amount stated), alarm bells would ring, and he would have obtained an independent valuation. Any expert would have wanted to know whether there was any connected sale given the site was currently one with the pub, how the land and pub were to be conveyed to the different entities, and what they were, and how any stated price for the land had been arrived at, as well as what restrictive covenants applied to the land (and would have been bound to have looked at the Land Registration), and to report accordingly, and the fraud (assuming there was one), or any concealed facts as to these matters, would have been revealed.

[151]Aside from this, a person in the position of the Claimant exercising reasonable diligence would, in order to judge whether the development of the land, in a project at the invitation of a person barely known to him in which he was investing his redundancy money and his father’s money, have been likely to have searched the Land Register, either himself or with assistance, to see what it showed. This also would have revealed that the pub and land were in the same ownership, and, whenever carried out (whether before the Claimant agreed to go into the venture, before he paid his deposit monies in February 2012, or before he paid the completion monies in March 2012) would have revealed the existence of the restrictive covenants he relies on as having been hidden from him. It would also have revealed the lease of the pub (to a Mr and Mrs Turner) dated 15 May 2006.

[152]Accordingly, I am satisfied on the balance of probabilities, that, objectively judged, the Claimant could with reasonable diligence in 2012 have ascertained that that the pub and land were in the same ownership, that the pub was being acquired by the Defendant, via Dalco, at the same time as the land, via Bow, what the price paid for the land as compared to that paid for the pub was and (if it was the case as the Claimant alleges) that the price for the land was not a reasonable one but was unduly inflated in favour of a low price for the pub, to the Defendant’s advantage, which would likely have been at his behest.

[153]If, as the Claimant alleges, the position as to these matters was fraudulently, or negligently, misrepresented to him by the Defendant, this could thereby have been discovered by the exercise of reasonable diligence.

[154]It follows that in my judgment the Claimant could with reasonable diligence have discovered the facts on which the first cause of action is based, namely that the Defendant through Dalco was a hidden seller involved in fixing the price for the acquisition of the land (representations 3-4, and 7-10, which the Defendant must have known were untrue) in 2012, outside the limitation period. I am satisfied he could have done so sufficiently to plead a case in fraud or in negligent misrepresentation.

[155]I turn to the second cause of action, based on what is said by the Claimant to be the fact that the land was not easy to develop which the Defendant fraudulently or negligently represented it to be.

[156]In so far as the restrictive covenants made, or contributed to making, the land not being easy to develop, as the Claimant alleges, the Claimant could with reasonable diligence have discovered their existence in 2012, for the reasons I have already given (and it would have been obvious the Defendant must have known of them, which were recorded in the Land Register, when considering a purchase of the site).

[157]The other facts said in the Re-Amended Particulars of Claim to have meant the land was not easy to develop are first that the land was “tied to the Widow’s Son as a public house”. This could with reasonable diligence have been discovered by the Claimant in 2012 for the reasons I have given already.

[158]Second, is the fact that the land abutted a listed building. As I have found, a person exercising reasonable diligence would have viewed it at the outset, and the Claimant himself accepted having done so in March/April 2012. A Grade II* listing is a very high - the next to highest - category of listing. It would have been likely to be apparent that the two storey pub was of at least some heritage interest, and a person exercising reasonable diligence would in my view have made enquiries about this and whether it might cause problems in getting planning permission for a seven or eight flat development in its garden.

[159]I am satisfied that the Claimant (who had been employed in IT project management) could by the exercise of reasonable diligence in 2012 have discovered the pub’s listing by making enquiries online, or through the Council, or otherwise, and thereby have discovered the Grade II* listing of what was obviously an immediately adjoining building that could impact on the ability to easily develop the land.

[160]Separately to this, I find as a fact that the Claimant was in July 2012 aware that pre-application advice was being sought from the Council responsible for the grant of planning permission, via the Defendant’s e-mail of 18 July 2012 followed by a phone call.

[161]In relation to what that advice when received from the Council in September 2012 was, the Claimant’s evidence was that the Defendant had told him when he was considering entering into the joint venture in February 2012 that planning permission would be obtained within 3-4 months of buying the site (which was completed in March as he had expected) and he would as a result inevitably have wanted to know by September 2012 (6 months on from acquisition) what was happening and why that had not been achieved.

[162]A person exercising reasonable diligence would certainly have wanted to know the results of the pre-app advice he was aware was being sought. The Defendant would have found it difficult to avoid disclosing the pre-app advice, particularly given the fact he had said he was seeking such advice, and he would also have known the Claimant could as a director have checked the position directly with the Council, as I consider someone exercising reasonable diligence would have done in the absence of the Defendant providing it.

[163]The report (which is before the court) would have shown – and I am therefore satisfied that the Claimant could with reasonable diligence have discovered - that(1) the pub was Grade II* listed,

(2) was one site together with the land (as to which enquires would then have been made by a reasonably diligent person as to ownership), and

(3) was not likely to be easy to develop, or be a goldmine based on a development of 7-8 flats, which the Council found unacceptable.

[164]In fact, I find as a fact, however, that the Claimant did collect a copy of the Council’s pre-app report from the Defendant’s offices. Not only is there the Defendant’s evidence as to this, and not only does it make sense that he would have wanted to see it, but Mr Joshi was certain he had done so. This certainty in his witness statement and oral evidence stood in contrast to his evidence that when the 2013 planning application was made, “to the best of [his] recollection” the Claimant collected the plans, and made his evidence as to the collection of the pre-app report the more credible.

[165]Accordingly, I am satisfied that the Claimant did know of, or, if he did not, could with reasonable diligence have discovered, the facts, and the fraud and any concealment based on them, the subject of the second cause of action (based on representations 1 and 2, which if they were made would by reason of the above obviously have been known by the Defendant to be false) sufficient to enable fraud and negligent misrepresentation to be pleaded in 2012 or alternatively by April 2013 at the latest.

[166]Further, however, and again separately to the above, in March 2013 a planning application was made to the Council, now for two houses. By this time, a year had passed since the acquisition of the land. Even if the Claimant (or a person acting with reasonable diligence) had not wanted to know by September 2012 what the position was with the planning application, he would certainly have wanted to do so by now, given his understanding that the development should have been complete by then (but had not even begun, with no contribution to building costs having been sought, and nothing happening on site).

[167]In fact, I consider on the balance of probabilities that the Claimant did collect the plans when the planning application was made. There is in addition to the Defendant’s evidence, Mr Joshi’s measured evidence to the best of his recollection, that this was so, and, tellingly, the later e-mail from the Defendant to the Claimant saying he had had them was not complained about, contested, or queried, in any way by him. From the plans, it could in March 2013 be seen what was being applied for was houses not flats, as the Claimant says he had been told were to be developed. That he did not raise concerns about this is consistent with knowing that the pre-application advice had been that flats would not be permitted, though a smaller scale, less bulky development may be considered more favourably. The Claimant could with reasonable diligence also, in the absence of having plans, have discovered from keeping an eye on the planning portal, or enquiring with the Council what the position was, at the time when he expected that the development should actually have been complete, on the basis of the representations he says were made as to ease of development.

[168]This also in my judgment means that for this reason, the Claimant did, or could with reasonable diligence have, by March 2013 discovered the concealment (if such it was) of these facts and the fraud the subject of the second cause of action sufficient to enable an action to be brought by April 2013 at the latest.

[169]I turn to the third cause of action based on fraudulent or negligent misrepresentations by the Defendant as to the membership structure of the company, Bow (representations 5-6).

[170]The Claimant’s case is that the Defendant never intended there to be a joint venture in which the Claimant, the Defendant and Billy would be parties and, as set out in para 46 of the Claimant’s witness statement, that the Defendant kept from him that “Mr G Singh or Billy was no longer an investor in the JV or a director of [Bow]”.

[171]However, the Claimant has accepted being aware, at the time he entered into the venture, of the requirement in accordance with the Articles of the Company for decisions to be taken collectively between the directors and for decisions to be unanimous (see paras 7 and 8 above).

[172]The Claimant’s evidence is that he never attended any board meeting or took part in any decisions as to what was done by the Company, in relation to applying for planning permission, when and in what terms, appointing agents, spending money, or otherwise. He had understood, he said, that the development would be complete within 12 months but had not been asked to participate in any decisions.

[173]A person in the Claimant’s position, knowing of the Articles’ requirement for collective decisions, exercising reasonable diligence, would have wanted know why this was. Furthermore, he would have wanted to know from Billy if he had been involved and what was going on. This also applies in fact to the position in relation to the planning application the Claimant expected to have been made within 3-4 months of acquisition of the land, and to the development he understood would be complete within 12 months.

[174]The Claimant knew Billy better than the Defendant and it seems inconceivable that, if he thought he was still involved, he should not have asked Billy about any of this. Had he done so, he would have found out that he was not involved, and would have been likely to have carried out a search at Companies House to see what the position in relation to directorships and involvement was. Whether the Claimant himself would have done so or not, had he been acting with reasonable diligence he would have done so, and the fact that neither Billy nor Mr Singh were (or were any more) directors would have been revealed.

[175]The Claimant also says that he was removed as a director without his consent in April 2014, which he only found out about in September 2018. There is, of course, a dispute as to this, with the Defendant giving reasons as to why there was a change of directors at that time, of which this was part. However, the Claimant’s case also is that he had never actually taken any part on the decision-making of the Company or performed the role of director.

[176]A person exercising reasonable diligence would in my judgment have discovered, as I have said, that Billy and Mr Gursharan Singh were not, or were no longer, directors by March 2013 at the latest. The alleged fraud as to this (and the Defendant’s own resignation in March 2012) would thereby have been exposed. That itself in my judgment meant the cause of action based on the structure of the Company not being as promised was complete by then. The subsequent alleged removal of the Claimant as a director simply bolstered that case (and see para 26 above).

[177]I am therefore satisfied in relation to the third cause of action that the Claimant could with reasonable diligence have discovered the fraud (if such it be) or concealment of relevant facts relating to the corporate structure sufficient to plead the cause of action by March 2013 at the latest, and probably earlier. Conclusion

[178]For the reasons I have given, I consider the Claimant is not able to overcome the limitation defence to the claim, which is the preliminary issue for my determination.