A high court judge recently dismissed a £68m negligence claim against Yorkshire law firm Lupton Fawcett.
Companies in liquidation due to failed property development ventures brought forth the claim. Justice Sheldon also rebuffed proposed amendments to a separate £57m negligence claim against former Leeds law firm Metis Law, except for those agreed upon by the law firm.
The losses incurred by these companies stem from investments and secured lending, prompting the need for repayment. These investments were tied to schemes associated with Gavin Woodhouse, currently under investigation by the serious fraud office for suspected fraud and money laundering since August 2021.
The claimant companies have characterised themselves as victims of a Ponzi fraud. Although Lupton Fawcett isn’t implicated in the fraud, it’s alleged that proper advice could have prevented the losses. Justice Sheldon remarked on the numerous iterations of the claim since its filing in April 2022, indicating the complexity of the case.
Woodhouse, along with his business partner Robin Forster, began promoting investment schemes in 2014 through the MBi Group. Lupton Fawcett was engaged to assess whether these schemes constituted collective investment schemes under the Financial Services and Markets Act 2000. Despite later separations in business interests, Lupton Fawcett continued advising on these schemes into 2017 and beyond.
Metis Law was subsequently tasked with advising on investment transactions from July 2016, including handling deposits from investors. However, all schemes ultimately failed, leading to the claimants’ administration and liquidation.
The claimants argue that Lupton Fawcett’s failure to provide comprehensive advice led to the promotion and acceptance of doomed investments. Lupton Fawcett, however, contends that their duty was limited to assessing FSMA compliance, not the success of the business ventures.
Justice Sheldon dismissed the claim against Lupton Fawcett, emphasising the distinction between the receipt and use of investment funds. He also rejected proposed amendments to the claim against Metis Law, citing redundancy and the need for justification.
Image: Canva.
