Tenet success in fraudulent misrepresentation claim

Tenet has recently achieved success for its clients in the Central London County Court in respect of a claim for fraudulent misrepresentation against the authors of a highly inflated valuation of a well-known business coaching company, in which our clients were persuaded to invest.

Over the coming weeks we will be publishing a two-part article discussing this case in more detail as it was a well-planned approach by the defendants to distance themselves from responsibility whilst also creating a number of other commercial and practical factors in the way of the claimants.  Our two-part article shall also look at the lessons which can be taken from it to try and help people avoid being caught by a similar situation.

However, in the meantime, we are keen to share our success and that of our clients, for which this has been a long and drawn-out battle for justice.

Case summary

The claim was brought by three investors against the Founder/CEO and Head of Investor Relations of coaching company, Shirlaws. What makes this case somewhat unusual is that the defendants were not directors of the company (something that we believe was intentional to place distance from the responsibility for their actions). The dispute centered on the valuation of the company in which our clients invested, namely Shirlaws Group Limited, which the defendants had alleged held assets worth over £60m. However, many of the alleged assets, which were described as “off-balance sheet” assets, had little or no intrinsic value (a fact that the defendants were fully aware of at the time).

Although the investors were told that the company held assets worth over £60m, they were offered shares at based on a company valuation of £30m, which the defendants were quick to point out gave them an immediate uplift on their investment. The investors were also encouraged to move quickly on their purchase of shares as they were told that the valuation of the company would soon increase further.

In bringing their claim, our clients had to prove that:

  • a misrepresentation had been made (i.e. an untrue statement of fact or law)
  • upon which they relied in being induced to enter a contract; and
  • which thereby caused them loss.

Fraudulent misrepresentation also requires the false representation to have been made knowingly, without belief in its truth, or recklessly as to its truth. In this case the judge found that the defendants had been “…wilfully and deliberately dishonest…” having not declared the true underlying value of the assets of the company.

A copy of the judgment, which was handed down on 6 July 2021, can be found here:

Should you suspect that you are a victim of fraud or other wrongdoing, please do not hesitate to get in touch at hello@tenetlaw.co.uk

Contact details

Phone: 0121 796 4020

Email: hello@tenetlaw.co.uk

Fax: 0843 216 4240

Location

Tenet Compliance & Litigation Limited
10th Floor, Lyndon House, 62 Hagley Road, Birmingham, B16 8PE

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