NGM Sustainable Developments Ltd v Wallis & Ors

LORD JUSTICE McCOMBE: This is a renewed application for permission to appeal from the judgment and order of Mr Justice Peter Smith of 22 July 2015 whereby he dismissed the claimant's actions for various relief in respect of alleged fraudulent misrepresentation said to have been made by the defendants in the course of negotiations for the funding by the defendants, or one of them, for the purchase by the claimant of land and water areas at Surbiton in Surrey. The claimant was in the course of seeking to acquire the relevant Surbiton property for a sum of some £1.65 million. The second defendant, a company called Lizzano Limited, provided a loan of £165,000 to enable payment by the claimant of the 10 per cent deposit. The judge found that there had been no misrepresentation such as he perceived that was alleged in the pleadings and dismissed the action. The judge also considered that the claim in damages would have failed in any event.

It is argued for the proposed appellant, the claimant, by Mr Collings QC in cogent and clear submissions that the learned judge misunderstood the claimant's case as pleaded as to the nature of the misrepresentation that was being alleged and that if that misunderstanding had not been present, the claimant would have succeeded on the judge's own findings. He submits that this is therefore a fundamental procedural error which affords a real prospect of success on appeal, and further he argues that if the appeal were to be successful on this ground, this would be one of those unusual cases where judgment for the claimant would follow on the appeal rather than calling for a retrial of the case.

The claimant alleged that the defendants represented they intended at the relevant date to provide finance in accordance with the terms of a Side Letter dated 15 January 2010. The Side Letter was at the "side" of the loan agreement deposit. The claimant alleged that the defendants never intended to enter into long term funding arrangements in accordance with that letter, but in effect planned to hijack the arrangements so as to acquire for itself the opportunities presented by the purchase of the property and the benefit of a patent that was to be used in the course of the development.

The case was put in the pleadings in the following way, first, as emphasised by Mr Collings this morning, in paragraph 64 of the amended particulars of claim as follows:

The pleading goes on to allege the falsity of the representations in two particular respects, quoting part of paragraph 98:

Mr Collings submits that the judge did in fact find that the defendant intended to enter into funding arrangements in the long term on 15 January 2010, but not in accordance with the Side Letter. It is argued that the learned judge ought therefore to have found for the claimant. The judge emphasised that the case was pleaded in the terms that I have quoted, namely the falsity of the representations alleged was that the defendants did not intend to enter into the funding arrangement, either in accordance with the Side Letter or otherwise.

In paragraph 5 of Mr Collings' advocate's statement for the purposes of this application, he says this:

Mr Collings emphasises that the representation was that there was an intention to enter into funding arrangements in accordance with the Side Letter, and, he adds in oral submission, and no other. He relies on three points in his statement, and they are these: first, that the judge's point was a mere pleading point; secondly, that the words "either/or" were used in a disjunctive sense and, although he did not emphasise it particularly strongly this morning, that meant that the pleading had to be looked at in separate compartments; and thirdly, and as he puts it, most importantly in the advocate's statement:

Mr Collings has supplemented those submissions this morning by helpful references to the manner in which the case was pleaded, both on his side and by certain extracts of the pleadings of the defendants on the other.

In my judgment, ably argued though those points are by Mr Collings, I do not consider that they offer any real prospect of success on the appeal. First, I think the respondents and the judge were correct in their assessment of what the case being made was. It was that the defendants never intended to enter into a loan by way of long term finance in any circumstances, and this was all a distinct sham. The case seems to be that the representation was that there was an intention to enter into a funding arrangement by way of the Side Letter and no other terms whatsoever, notwithstanding the vagueness of the Side Letter itself.

Secondly, pleading point or no, that is what the case was. In my judgment, Mr Collings cannot say that the words "or otherwise" in paragraph 98 were inserted out of mere caution. The allegation was far too important to the case for that. The inference sought to be drawn by Mr Collings and the claimant appears very clearly in paragraph 98B of the pleading, which Mr Collings reminded me of this morning. I will not quote that again, but the parties know what I mean. In any event, pleas of fraudulent misrepresentation need to be made in the clearest possible terms and with the utmost specification and particularisation.

Thirdly, and perhaps most importantly, as the judge said in paragraph 92 in a passage that Mr Collings himself relies on, he had seen the witnesses and the documents and found no evidence of dishonest misrepresentation at all. It is clear from other paragraphs of the judgment that the judge reached the conclusion that this negotiation fell apart not for any purposes of any misrepresentation, but for two reasons: first, the claimant had no money and was desperate; and secondly, there was a spectacular falling out between two important protagonists on respective sides of the negotiation.

In my judgment in the end, this was not a procedural error at all. As the defendants allege in their short response, the first one, dated August 2015, the claimant simply lost on the facts.

The single judge also rejected the prospects of appeal in relation to relief, which Mr Collings meets in his advocate's statement. I ought to deal with that, although he did not have time to amplify it in his oral submissions. He said as to that in paragraph 9:

The first point made in that paragraph is hardly the fare of a successful appeal, and I also accept as to this part of the case what the defendants say on this point in paragraph 13 of their statement made under practice direction 52C.19 in resistance of the grant of permission. However, primarily the claim failed on the face of extremely elaborate pleadings which the learned judge had to decipher by way of understanding of what was being alleged and what the falsity was simply on the facts as he found. He found there was no fraud and in my judgment it does not avail the claimant, ably as its case is put by Mr Collings, to rely on a pleading case of the nature that is now made. The Side Letter did not bear the moment that the claimant sought to put on it and the representation alleged was not proved to be false.

In the circumstances, in spite of the careful argument, this renewed application is refused.