A High Court judge has dismissed a £68m negligence claim against the Yorkshire law firm Lupton Fawcett, citing insufficient grounds for the case.
- The claim was initiated by companies in liquidation due to failed property developments tied to investment schemes.
- Justice Sheldon rejected amendments to a related £57m negligence claim against Metis Law, except for agreed alterations.
- The schemes, linked to Gavin Woodhouse, are under investigation for potential fraud, highlighting the complex legal entanglement.
- The case underscores the intricacy of financial advice, with arguments over the scope of Lupton Fawcett’s obligations.
A High Court judge has dismissed a £68 million negligence claim filed against Lupton Fawcett, a prominent Yorkshire law firm. The claim was brought by companies that have entered liquidation as a result of failed property development projects. These companies have alleged negligence, arguing that appropriate advice from Lupton Fawcett could have potentially averted the substantial financial losses.
The projects in question were tied to investment schemes associated with Gavin Woodhouse, who, along with his business partner Robin Forster, began promoting them in 2014 under the MBi Group. Lupton Fawcett was tasked with determining if these schemes fell under the classification of collective investment schemes as defined by the Financial Services and Markets Act 2000 (FSMA). Despite splits in business operations, Lupton Fawcett continued its advisory role on these schemes until 2017 and beyond.
Concurrently, Metis Law was engaged from July 2016 to provide advice on investment transactions, including managing investor deposits. However, these schemes eventually collapsed, leading to the liquidation and administration of the claimant companies. The claimants assert that Lupton Fawcett’s alleged failure to give thorough advice resulted in the endorsement of investments that were destined to fail.
Justice Sheldon addressed the numerous amendments made to the claim since its inception in April 2022, highlighting the complexity involved. He reinforced that the liability for advice did not extend to the success of the business ventures and was limited to FSMA compliance. Moreover, Justice Sheldon dismissed proposed amendments to a separate £57 million negligence claim against Metis Law, stressing the requirement for justification and pointing out redundancies.
Gavin Woodhouse is being investigated by the serious fraud office for suspected fraud and money laundering, a probe that has been ongoing since August 2021. The claimant companies position themselves as victims of a Ponzi fraud. Although Lupton Fawcett is not implicated in the alleged fraud, the claimants argue that comprehensive advice might have mitigated their losses. Justice Sheldon, however, clearly delineated the roles concerning the receipt and utilisation of investment funds.
The dismissal of the £68 million negligence claim against Lupton Fawcett highlights the complex delineations of legal advisory responsibilities in financial investments.
