Judgment for the Defendants in Libyan Investment Authority v King

On 10 February 2023, the High Court (Miles J) handed down judgment in the case of Libyan Investment Authority & Ors v King & Ors [2023] EWHC 265 (Ch).

The Defendants secured a resounding victory, with the dismissal of all claims. They were represented by Patrick Green KC, Henry Warwick KC, Rachel Tandy and Reanne MacKenzie, instructed by Rupert Croft and Laura Nelson of Croft Solicitors.

The claims by the Libyan Investment Authority, Libya’s sovereign wealth fund, were first issued in 2016 and struck out in their entirety in 2018, with indemnity costs.  They were then repleaded primarily in deceit, breach of agency duties, unlawful means conspiracy and dishonest assistance.

The Judgment helpfully analyses all these causes of action, before dismissing all the claims, not least because the Defendants honestly believed the representations made.

It is an important and helpful Judgment in summarising and explaining the requirements of the tort of deceit, in particular in relation to complex representations and where representations are said to have been made by a third party but adopted by the defendant.

The Facts

The case concerned a joint venture to develop a hotel and retail park at one of the last undeveloped junctions on the M25, in Hertfordshire.  The LIA invested in the joint venture company in 2010.

Following outbreak of the Libyan Civil War in 2011, the project stalled.  Changes of administration at the LIA followed.  Thereafter, the LIA alleged that it had been induced to invest by misrepresentations made as to value by a third party, King Sturge (“KS”).  The initial formulation of the claim alleged that a letter from KS constituted a property valuation and that KS had acted dishonestly and the other Defendants were complicit.  As noted above, that was struck out; the evidence was found to be only consistent with KS’s honesty, and their letter could not realistically be viewed as a property valuation.

There was then a procedural appeal on the effect of striking out the Particulars of Claim in their entirety but not the Claim Form ([2020] EWCA Civ 1690, [2021] 1 WLR 2659).

The reformulated case was heard by Miles J, over 5 ½ weeks in November and December 2022; Judgment was handed down on 10 February 2023.

Key Findings on the Law

The Judge sets out an excellent summary of the key ingredients of the tort of deceit and how they are to be applied in practice, as well as providing clear guidance on the tort in a three-party context:

1. Adopting a representation by a third party: The Judgment clarifies the boundaries of the principle (established in Bradford Third Equitable Benefit Building Society v Borders [1941] 2 All ER 204) that a defendant can make a representation by approving or adopting a statement made by a third party. It emphasises that any such approval must be clearly manifested or communicated to the claimant in some way (see also the decision of Henshaw J in Ivy Technology v Martin [2022] EWHC 1218 Comm).  In this case, since the LIA claimed not to have known of the Defendants’ involvement in the production of KS’s letter of advice (and since that involvement was not evident on the face of the letter), that criterion was not made out: §§521(ii)-(iv), 545-9 and 552. This is important, since a prior (interim) decision that this case was potentially arguable ([2020] EWHC 440 Ch) is presently cited in the current edition of Clerk & Lindsell (Chapter 17, section 2(a)).
2. Subjective test: The Judgment serves as a useful illustration of the importance of applying the subjective test when considering a defendant’s knowledge and belief (compared to the objective test when seeking to identify whether a representation has been made at all): §§521(vi)-(viii) and 561-565.
3. Implied representations: The Judgment considers the circumstances in which an express statement of opinion might incorporate a further implied representation, applying the well-known principles set out by Rix LJ in The Kriti Palm [2006] EWCA Civ 1601 at 296A. In particular, the Court concluded that that KS’s letter of advice contained a representation as to KS’ opinion of value. That could not, however, incorporate an implied representation that there was no reason for anyone to believe that such opinion was inaccurate – both on the objective interpretation of the letter, and because in any event such a representation would be impossibly wide (§§550-1). Essentially, because the KS letter represented KS’ honest opinion, the deceit claim could not succeed: “there is no liability in law for making true statements or for causing others to make them” (§552).

The Judgment also sets out useful summaries of the current state of the law relating to agency relationships (§§601-605), dishonest assistance (§605) and unlawful means conspiracy (§§761-764).

A full copy of the Judgment can be accessed here.