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Civil Fraud: Significant Cases in 2023

Author: Nicola Sharp  28 December 2023
4 min read

In 2023, civil fraud cases were brought to the High Court, the Court of Appeal, the Privy Council and even the Supreme Court. We have selected some of the most notable decisions of the year and provide a short summary of the issues.


The limitations of the Quincecare duty

Case: Philipp v Barclays Bank PLC [2023] UKSC 25

In one of the most widely talked-about decisions this year, the Supreme Court confirmed that victims of authorised push payment (APP) fraud cannot seek reimbursement from their bank.

The Supreme Court disagreed with the Court of Appeal’s decision and held that victims APP fraud cannot call on a long-established duty of care known as the Quincecare duty to seek reimbursement of funds from their bank.

Where the instruction comes directly from the customer, and not via an agent, there is no Quincecare duty on the banks to (i) ensure the instructions were as the customer had intended or (ii) to prevent the transaction. The duty of a bank in relation to a contract with an individual is simply to carry out their instructions promptly.

Read our take on the Supreme Court ruling on Quincecare.


Who is responsible for a company’s fraudulent trading?

Case: Tradition Financial Services Ltd v Bilta (UK) Ltd [2023] EWCA Civ 112

This was an important case, which widened the interpretation of section 213 of the Insolvency Act 1986, effectively to enhance the protection to consumers and businesses against fraud.

The court decided that a "party to" a company's fraudulent trading under s.213 was not restricted to a person with a controlling or managerial function within the company.

Liability would be established if the party was involved in the carrying on of a fraudulent business, not if it was merely involved in a fraud. Liquidators may now bring claims against third parties if they are suspected of being party to fraud, even if they were not involved in the management of the company.

More about this case can be read here.


Recovering funds from a fraudulent investment scheme

Case: Alexander Hamilton v Mark Barrow & Ors [2023] EWHC 1732 (KB)

This case was a rare triumph for investors who have been swindled out of their money. In many cases, recovery of funds invested in a fraudulent scheme is complicated. Even if claimants receive a favourable judgment, enforcement may prove futile if funds have been dissipated and the person in control of the money is difficult to trace.

However, on this occasion, the claimant was successful in receiving compensation for his investment in a fraudulent scheme. He invested around $700,000 in an unregulated enterprise known as the Currency Club, which invested in foreign exchange futures.

The person who placed the trades vanished and no funds have ever been recovered from him. Instead, the claimant sought compensation from the people who introduced him to the scheme.

Part of the claimant’s success was owed to the evidence produced at trial. It’s a reminder that keeping accurate records of the information given to investors, and formalising the arrangements in contracts, is the most robust protection against fraudsters - and a more reliable route to compensation for lost funds.

Our summary of the case can be read here.


Liability in civil fraud for breach of a warranty in an SPA

Case: Next Generation Holdings Limited & Anor v Alex Finch & Ors [2023] EWHC 2383 (Ch)

The High Court found that ex-AFL Insurance Brokers owners Bob and Alec Finch knew about a £3.5m money hole in the accounts, and manipulated the figures in the sale of AFL to Next Generation Holdings Limited in 2017.

While the contractual time limits for bringing a claim in breach of warranty had expired, the finding of fraud circumvented the limitation issue. The evidence in this case was more than just a convenient way around the time bar; it was a deliberate attempt to conceal the true position of the accounts.

More about the case can be read here.


When ‘half-truths’ amount to deceit

Case: Old Park Capital Maestro Fund Limited v Old Park Capital Limited (in liquidation) & Ors [2023] EWHC 1886 (Ch)

This case reiterates the need for full transparency in the financial sector.
The Court found that one of the defendants gave representations on the investment strategy, which he knew to be untrue. But it was more subtle than a clear-cut lie. One of the representations was a statement that the Offering Memorandum contained a complete description of the investment approach that the fund would adopt in practice.

While a lay person may be given the benefit of the doubt about the mechanics of the complex investment strategy, this defendant had working knowledge of the sophisticated strategy. He knew what his target investors were interested in - and that did not include what was actually on offer.

The Offering Memorandum did not mention certain papers explicitly, which the Court inferred was more than a mere oversight on the defendant’s part. Instead, it represented a conscious decision designed not to deter investors by mentioning a feature that he knew would be unattractive to them.

Our full summary can be read here.


Remedies for dishonest assistance

Case: Hotel Portfolio II Limited (in liquidation) & Anor v Andrew Ruhan & Anor [2023] EWCA Civ 1120

The Court of Appeal overturned an order for the defendant to pay compensation of £102 million and compound interest of £60 million in a case of alleged dishonest assistance.

On appeal, Lord Justice Newey found that there was a single and uninterrupted course of conduct, which taken as a whole, caused the claimant no loss. The defendant’s liability was limited to his personal profit. He set aside the order for the defendant to pay compensation and substituted it instead with an order for account of profits.

Our summary of the case can be read here.


Setting aside a judgment obtained by fraud

Case: Tinkler v Esken Ltd (formerly Stobart Group Ltd [2023] EWCA Civ 655

Sir Geoffrey Vos, in his Court of Appeal judgment, articulated the ‘modern approach’ to setting aside a judgment for fraud, likening it to an action for deceit.

It must be shown that the court has been deceived. Deliberate dishonesty is required, and materiality (relevance) must be shown. If these elements are made out, the judgment can be set aside.

Our summary of the case can be read here.

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Nicola Sharp

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Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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