Super Fast Trading Limited v The Governor and Company of the Bank of Ireland & Anor

Neutral Citation Number: [2025] EWHC 871 (Comm) IN THE HIGH COURT OF JUSTICE KING'S BENCH DIVISION BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES COMMERCIAL COURT Case No: CL-2023-000856 Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL Date: 11 th April 2025 Before : Dame Clare Moulder DBE - - - - - - - - - - - - - - - - - - - - - Between : SUPER FAST TRADING LIMITED Claimant - and – (1) THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND (2) BANK OF IRELAND (UK) PLC Defendants - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Mr Fenner Moeran KC and Mr Benjamin Slingo (instructed by Charles Russell Speechlys LLP) for the Claimant Mr Richard Hanke (instructed by DLA Piper UK LLP) for the Defendants Hearing dates: 24 and 25 March 2025 - - - - - - - - - - - - - - - - - - - - - Approved Judgment This judgment was handed down remotely at 10.30am on 11th April 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives. ............................. DAME CLARE MOULDER DBE Approved Judgment Dame Clare Moulder DBE : Introduction Super Fast 1. This is the Court’s reserved judgment on the application by The Governor and Company of the Bank of Ireland and Bank of Ireland (UK) PLC (the “Defendants” and referred together as the “Bank”) dated 17 July 2024 for summary judgment pursuant to CPR Part 24 against Super Fast Trading Limited (the “Claimant”) (the “Application”). Grounds 2. 3. 4. 5. 6. 7. 8. These proceedings relate to loan facilities advanced by the Bank to Grindale Limited (“Grindale”) in May 2009. The Claimant brought the claim as assignee of the cause of action on 11 December 2023. The Defendants seek summary judgment on the grounds that the cause of action advanced by the Claimant was time-barred at the date on which these proceedings were issued. The representations on which the Claimant’s claim are founded were said to have been made by the Bank on 3 November 2008. The transaction which the Claimant asserts Grindale entered into as a consequence of that representation completed on 19 May 2009. On the basis that these proceedings were not issued until 11 December 2023, the primary limitation period had by that date expired and that does not appear to be in dispute. However, the Claimant relies (paragraphs 2 and 3 of its skeleton) on s.32(1)(a) of the Limitation Act 1980 (the “Limitation Act”): the Claimant says that Grindale did not suspect, let alone know of a fraud, and could not with reasonable diligence have discovered the fraud more than six years before the claim was brought (i.e. 11 December 2017). The Defendants have not yet filed a defence and accordingly there is as yet no pleaded case setting out how the claim is time-barred or any Reply. Accordingly, the basis of the case on which the Defendants seek summary judgment and the issues raised by the Claimant in response are not pleaded. Instead the Court is obliged to try and identify the issues from the witness statements, the skeleton arguments for the hearing and the oral submissions. This makes the task of the Court in determining whether there is a real prospect of the Claimant succeeding on the issue of limitation (the test on a summary judgment application) more difficult. It appears however from the oral submissions that the Defendants’ case (for the purposes of the Application) is based not on actual knowledge of fraud by Grindale but on the assertion that Grindale would have discovered the claim if it had acted with reasonable diligence. The Defendants’ case as set out at paragraph 5 of the skeleton is that: “It is fanciful that Super Fast will establish at trial that Grindale could not have discovered the alleged fraud without exceptional measures, such that limitation did not start to run, until this late date. Instead, if Grindale had acted with reasonable diligence, it would have discovered the claim that it now advances by no later than March 2011 when it entered administration.” I note that Counsel for the Bank has stated that the alternative claim, that the Claimant’s claim be struck out in its entirety pursuant to CPR Part 3.4(2)(a) and/or the Court’s inherent jurisdiction is no longer pursued. DAME CLARE MOULDER DBE Approved Judgment Super Fast Evidence 9. 10. In support of the Application the Defendants have filed the witness statement of Mr Paul McNamee, solicitor in the firm of DLA Piper (UK) LLP (“DLA”), solicitors for the Defendants dated 17 July 2024. In response the Claimant has filed witness statements from: a. Mr Aryeh Ehrentreu dated 21 November 2024; b. Mrs Hannah Ehrentreu, Mr Ehrentreu’s wife, dated 21 November 2024; c. Ms Caroline Anne Greenwell, partner in the firm of Charles Russell Speechlys LLP, solicitors for the Claimant (“CRS”) dated 21 November 2024; d. Mr Leigh Wright, a Criminal Defence Solicitor at Tuckers Solicitors LLP, dated 21 November 2024; and e. Mr Sydney Fulda, partner of Gunnercooke LLP, dated 21 November 2024. Background 11. 12. 13. The Claimant in these proceedings is Super Fast Trading Limited (“Super Fast”), a company incorporated in England and Wales on 10 June 2020. At all times since its incorporation, the only director and sole shareholder of the company was Mr Aryeh Ehrentreu. On 10 March 2011, Grindale entered administration following the appointment of joint administrators by Clydesdale Bank PLC. At all material times prior to this, Mr Ehrentreu had been the sole director of the company and held a 50% shareholding. The remaining 50% shareholding was held by his wife, Mrs Hannah Ehrentreu. On 14 May 2009, the Bank agreed a 5 year cash advance loan facility with Grindale in the sum of £15.724 million which would refinance the existing portfolio over which the Bank had security, and provide additional funding primarily for the purpose of acquiring a further portfolio of 36 properties (referred to as the “OCM Properties”) (the “Facility Agreement”). Summary of Events 14. For the purpose of this Application I set out below all the relevant alleged facts from the Particulars of Claim (“PoC”) (which it is assumed for the purposes of this Application will be established at trial) as well as summarising the relevant evidence currently before the Court. The Alleged Fraud 15. Mr Ehrentreu was first introduced to a Mr Gavin Kennedy, one of the Bank’s managers, in the course of negotiating the original facility with the Bank. He went on to meet Mr Kennedy on a regular basis to discuss the status of that loan. At one of those meetings, in 2008, Mr Ehrentreu mentioned that Grindale was interested in buying further properties from distressed sellers. At a lunch meeting shortly before 3 November 2008, Mr Kennedy then mentioned a portfolio of properties which he said would interest Grindale. He explained that the owners were borrowers from the Bank who had mismanaged the OCM Properties and got into financial difficulty. He proposed that Grindale should buy the properties at process sufficient to clear the existing debt to the Bank, with the Bank lending Grindale the sum required for this purpose. Grindale would acquire the properties without putting in any money of its own up-front, and the Bank would get a far more reliable borrower. [PoC/21, 34] DAME CLARE MOULDER DBE Approved Judgment Super Fast 16. 17. 18. In setting out this proposal, Mr Kennedy explained that the Bank had procured a recent valuation of the OCM Properties from Knight Frank, and that there was accordingly no need for Grindale to go to the cost of arranging a valuation of its own. Mr Kennedy said that he could not share the valuation itself but would send Mr Ehrentreu a schedule laying out the values of the individual properties. [PoC/34] On 3 November 2008 Mr Kennedy sent Mr Ehrentreu such a schedule (the “Schedule”). Which contained a column of capital values headed “Knight Frank Recent Revaluations”, with a total figure of £7,459,250. It also contained a column of rental values headed “Annual Rental Income”. [PoC/35-36] In fact, the Schedule did not contain capital values derived from an up-to-date valuation by Knight Frank. Rather, Mr Kennedy had such a valuation (the “September 2008 KF Revaluation”) which showed that the OCM Properties were collectively worth £6,347,000. The capital figures in the Schedule were largely derived from an out-of-date valuation conducted by Knight Frank some 17 months earlier, in June 2007 (the “2007 KF Valuation”). [PoC/27-33] Events following acquisition of the OCM Properties up to the demand for repayment March 2011 19. 20. Grindale completed on the OCM Properties on 19 May 2009. The Claimant’s pleaded case is that over the three months from completion Mr Ehrentreu realised that the purchased properties were generating substantially less rental income than expected. Whereas the annual rental income column of the Schedule gave a figure of £333,900 for the purchased OCM Properties the portfolio yielded around £175,000 on an annualised basis. The Claimant assets that a key reason for the unexpectedly low rental income was that a much lower proportion of the purchased OCM Properties, around 80%, were untenanted as of completion. Another key reason was that various of the purchased OCM Properties were in a far poorer condition and required more complex refurbishment that Mr Ehrentreu had expected. [PoC/54-55] 21. Mr Ehrentreu’s evidence is that: “43. In light of these developments [the realisation of the condition and the rentals], I realised that there must have been a problem with the valuation. My inference was that Knight Frank must have made mistakes. I certainly did not suspect that I had been lied to by Mr Kennedy as to what Knight Frank had said in their report. As I have explained, that possibility would have seemed impossible, and for that very reason it did not in fact occur to me. 44. As context, I should add that while the defects in the properties and the low rent rolls clearly suggested a problem with the valuation, the position post- completion was not so drastically out of line with what I could have expected as to suggest something sinister had happened. It is not unusual for tenants to move out when investment properties in this market are sold to a new landlord. To my mind, that explained at least part of the high vacancy rate and lower rent rolls.” In an email sent by David Mintz of Grindale to Andy Keal and Dawn Fleming of the Bank on 1 September 2010 (and copied to Mr Ehrentreu) stated: “As per the details discussed during our recent meeting in Manchester, you will see the total rental income generated within the BOI portfolio does not cover the total payments due to BOI on an ongoing basis. We were disappointed to learn that the actual rental values achievable for the newer OCM portfolio are in reality 22. DAME CLARE MOULDER DBE Approved Judgment Super Fast 23. 24. 25. 26. a lot lower than that originally purported by the bank when the deal was sold to us.” Before 15 August 2009 Mr Ehrentreu informed the Bank that refurbishment of the properties would take longer than three months to finish and that Grindale would thereby inevitably breach clause 10.3 of the Facility Agreement. Further breaches ensued. PricewaterhouseCoopers (“PWC”) were instructed to produce a report which it did in November 2010. At Appendix 3 which was a paper prepared by Grindale, it was stated that “unfortunately, it appears that the deal purchased from the Bank of Ireland, had a severely inflated rent roll when originally offered to us”. [emphasis added] On 8 March 2011 the Bank wrote to Grindale notifying it of outstanding breaches of covenant under the Facility Agreement and demanding the repayment of the entire loan (the “Demand Letter”). Call on 8 March 2011 with Mr Keal 27. 28. A file note of a call between Mr Keal of the Bank and Mr Ehrentreu on 8 March 2011 has been disclosed. Mr Ehrentreu’s evidence is that he does not have a direct recollection of this conversation but accepts that the file note makes clear that they spoke after Grindale had received the Bank’s Demand Letter. It is not clear when exactly the note was made as it is dated about a week later. According to that note Mr Ehrentreu said: “AE inferred that they had been misled and would look to sue the Bank, mis- advised of the rent on the former OCM portfolio. Grindale would object to the appointment [i.e. of administrators] and had/would seek advice from Counsel.” “AE informed AK that he was not going to help in any way “Why should I? In the good times the Bank persuaded me to take a loan, misled me on information, you persuaded me, you pressurised me, incentives were given. Financially and commercially, Administration makes no sense – you don’t care about voids and insurance costs”.” Advice from Mr Fulda in March 2011 30. 29. Mr Fulda was a partner at Davies Arnold Cooper LLP (“DAC”). After receiving the Demand Letter, Mr Ehrentreu had a call with Mr Fulda, a solicitor with whom he had worked previously, and whom he was at the time instructing on a separate matter. Mr Ehrentreu sent him an email, on 8 March 2011, with some “explanatory notes for Grindale Ltd/Bank of Ireland”. On a subsequent call with Mr Fulda Mr Ehrentreu’s evidence is that he raised the possibility that Knight Frank had been negligent, and that Grindale might have a claim in negligence against Knight Frank. “My thinking was that Grindale had suffered a great loss as a result of Knight Frank’s apparently mistaken valuation, and that a claim might exist on this basis. Mr Fulda explained to me that Knight Frank had owed no duty of care to Grindale because Grindale had not ben Knight Frank’s client. He advised me that without such a duty of care any claim would be doomed to fail.” (paragraph 61 of his witness statement) 31. Mr Fulda in his witness statement confirms that this was his advice: DAME CLARE MOULDER DBE Approved Judgment Super Fast “I recall on or around March 2011 that I was instructed by Mr Ehrentreu in respect of the administration of Grindale and subsequently his own personal affairs. Mr Ehrentreu told me that he had received a demand for repayment of his loans from the Bank of Ireland. I recall that he asked me whether there was any basis for bringing a claim against the original valuer in negligence arising from the valuations which they had provided on a portfolio of properties that Grindale had purchased which Mr Ehrentreu considered may have been too high. My advice (in relation to which no privilege is waived) was that there was no contractual nexus with the valuer, and I considered it unlikely that he could successfully sue the valuer.” Administration of Grindale 10 March 2011 32. 33. 34. 35. The day after the Demand Letter, on 9 March 2011, the Bank applied to have Grindale put into administration. It alerted Grindale’s other creditors to its application. As a result, Clydesdale Bank plc trading as Yorkshire Bank, which had a debenture over Grindale, enforced its security and put Grindale into administration on 10 March 2011. In her witness statement Ms Greenwell sets out correspondence her firm has had with the former administrators. The former administrators were asked if they agreed with the following statement: “The Administrator cannot remember whether he was aware of any actual or alleged fraudulent activity on the Part of the Bank or any of its employees or representatives, or whether he had any cause to consider bringing legal proceedings against the Bank, during his time in office as joint administrators of Grindale.” The responses in correspondence were as follows: “Mr Underwood does not agree that this wording gives a totally accurate understanding of his position. Although it is true that he cannot remember the matter in detail, he believes that if he had been aware of actual or alleged fraudulent activity on the part of the bank that this is something that he would likely recall.” “Mr Green does not agree that the statement as drafted gives a complete picture of his view. Mr Green would agree that he does not recall being aware of any actual or alleged fraud. However, he would add to this that such a situation would be out of the ordinary and would likely involve various types of escalation within PwC. He is therefore of the view that, had he become aware of actual or alleged fraudulent activity, this would be something that he would recall.” “Mr Reed does not agree with the statement as drafted. Whilst it is technically true that he does not remember being aware of any actual or alleged fraudulent activity he would want to add that such activity would be unusual and he thinks he would recall if he had become aware of such activity during the course of the appointment […] He does not have a detailed recollection of the matter and this includes having no recollection of fraudulent activity. Given that Mr Reed thinks he would recall such an unusual development his conclusion is that he likely had no such suspicions of fraudulent activity.” Grindale was ultimately dissolved on 7 June 2014. Mr Levy’s involvement in 2017 DAME CLARE MOULDER DBE Approved Judgment Super Fast 37. 36. Mr Levy was a barrister in Manchester who was qualified to conduct litigation. He was instructed by Mr Ehrentreu in January 2017 in relation to an ongoing claim against Mr Ehrentreu on another matter. In his witness statement Mr Ehrentreu states: “70. In the course of briefing Mr Levy on the IG Index Litigation in my initial discussions with him in the January 2017, and in the course of explaining my financial circumstances to him, I mentioned that I had entered an individual voluntary arrangement (the “IVA”) in August 2016. Mr Levy was astonished to find that I had been forced to take this step. As I have said, we were old acquaintances in the community… He wanted to know how I had been reduced to such a parlous state. I therefore told him the story of Grindale’s collapse.” “71. Mr Levy was eager to explore whether there might be a claim after all. I was sceptical, since I had satisfied myself of what the position was, on the evidence available, back in 2011. And frankly, I had more regard for Mr Fulda’s acumen than Mr Levy’s. In light of the fact that Mr Levy would likely start working for me in the IG Index Litigation, however, I was happy to go along with the exploratory work he proposed. We set up a damages-based agreement (“DBA”) which would reward Mr Levy if a claim succeeded. As such, I did not have to put any money in up front.” 38. Mr Levy sent letters to Eddisons and PWC (these letters were apparently sent on 21 February 2017): “My client is contemplating proceedings relating to losses arising from professional negligence of parties with whom he had dealt.” “My client has concerns about the conduct of the administration of the company that may have caused him great financial loss.” In a letter dated 24 April 2017 Mr Levy wrote to the Bank on behalf of Mr Ehrentreu. In the letter he referred to the Schedule provided to Mr Ehrentreu on 3 November 2008 and referenced specifically the capital values of £7,459,250 and annual rental received of £396,300. He then contended that: “As it transpired, the valuation was inflated and the annual rent received for those properties was inflated. As a result of the inflation in value and the inflation of the statement of rent received, my client's business was damaged in that his business was fatally compromised causing personal loss to my client and resulting in personal injury by way of psychiatric damage.” He asked for copies of “the sources of all information contained in the spreadsheet concerning the properties” and “all valuations with details of the documents that were provided to the valuers.” 39. 40. 41. Mr Levy also wrote to Knight Frank on 24 April 2017: “My client is currently considering a claim for damages resulting from misrepresentation from the Bank of Ireland.” Meeting with Mr O’Brien in December 2017 42. On 19 December 2017 the evidence of Mr Ehrentreu is that he had a chance encounter with Mr O’Brien in the street outside a cafe. Mr O’Brien had been the manager of the OCM Properties (the “OCM Portfolio”) before Grindale had acquired them. 43. Mr Ehrentreu’s evidence (paragraph 77 of his witness statement) is that: DAME CLARE MOULDER DBE Approved Judgment Super Fast “As he [walked past Mr Ehrentreu] [Mr O’Brien] recognised me, and said “Hey, how are you mate? How you doing pal? How are you?” I recognised him too, and asked whether he knew that BOI had forced Grindale into insolvency in 2011. He replied: “Well they f*cked you twice, didn’t they?” “Well, they f*cked you, twice didn’t they?” (he said it twice). I asked him what he meant. He replied “Just do yourself a favour, if you want to find out what I mean mate, just get the old record of the portfolio in the Land Registry and get in touch with the receivers. Then, you will know what I mean mate.” In the moment I was not sure how to react, but I asked him for his mobile telephone number. Then we went our separate ways—I was still processing what had happened, but I assumed I would be able to contact Mr O’Brien again to get more details. When I tried to ring his number later on, however, I could not reach him. Either he deliberately gave me the wrong number, or he made a mistake.” Events following the meeting with Mr O’Brien 44. Mr Ehrentreu’s evidence is that: “78. My conversation with Mr O’Brien entirely changed my perspective and prompted me to reconsider Grindale’s transaction with BOI in respect of the OCM Portfolio. In particular, it was this conversation that first triggered my suspicion that Mr Kennedy might have lied to me about the 3 November 2008 Schedule. Mr O’Brien had said very firmly that BOI had “f*cked” me twice. I thought one of those instances could be the calling in of the loan in March 2011, but I was not at that point sure about the meaning of the other instance. When I considered over the next six months or so how I might have been “f*cked” by BOI in that regard, I contemplated for the first time whether it was possible that Mr Kennedy had lied about the valuation.” “79. As I developed suspicions that Mr Kennedy had lied about the valuation following my conversation with Mr O’Brien, I conducted my own investigations in 2018. For the first time, I had reason to obtain historic records from the Land Registry, along with the administrators’ reports on the Previous Owners. These documents indicated that the Previous Owners may have substantially overpaid for the OCM Portfolio properties in 2004-5. The documents further indicated that the administrators of the Previous Owners had assigned claims against “One Stop”, the property management company which had advised them in respect of their acquisition of the OCM Portfolio properties. The assignee of those claims seems to have obtained a settlement of c. £2.7 million (on the basis that the assignments provided for the assigning administrators to receive 10% of any sums recovered via the claims, and the administrators received around £270,000 per their reports).” [emphasis added] After Mr Ehrentrue had obtained the records from the Land Registry and previous administrators Mr Ehrentreu wrote to the Bank on 8 May 2018. The letter contained 3 complaints, the first two related to the application to put Grindale into administration and the administration. The third stated that he was provided with “misleading and deliberately wrong information” by the Bank regarding purchasing the OCM Portfolio. 45. Application to restore Grindale to the Register DAME CLARE MOULDER DBE Approved Judgment Super Fast 46. Mr Ehrentreu made a successful application to restore Grindale to the Register of Companies in order to bring a claim against the Bank. In his witness statement of 6 July 2018 he said: “I have carried out independent research and I allege that at least 13 of the properties were overvalued in terms of value and rental yield…”. (paragraph 18) “I can confirm that I have sought preliminary legal advice from a barrister who has confirmed that my claim has at least a 50% chance of success…”. (paragraph 22) On 25 October 2018 Grindale was restored to the Register of Companies in order to bring this claim. 47. Further Correspondence 48. In a letter dated 26 July 2019 Cooke, Young and Keidan (“CYK”) wrote to the Bank on behalf of Grindale contending that there had been a ‘potential fraud’ or an ‘apparent fraud’ and demanding copies of relevant documents, including “all communications between BOI and Knight Frank in relation to the valuations of (i) the OCM Portfolio and (ii) the Properties, in addition to all the actual formal valuations of the OCM Portfolio and the Properties commissioned by BOI (both by Knight Frank and by any other valuation expert engaged by BOI)”. 51. 50. 49. Mr Ehrentreu then instructed Collyer Bristow LLP (“Collyer Bristow”) to write to the Bank’s solicitors, DLA, to demand the documents, which they did on 27 May 2020. By this date the Claimant had obtained a desktop valuation of representative properties in the OCM Portfolio from Knight Frank. The letter placed particular weight on the new desktop valuation from Knight Frank which as stated in the letter ruled out the possibility of negligence on the part of Knight Frank and the figures in the spreadsheet as coming from Knight Frank: “However, what is clear is that the valuation provided for the Folly Lane properties on 8 November 2008 spread sheet. cannot be right. There can only be three possibilities: 1. Mr Kennedy forged the 8 November 2008 spreadsheet. 2. KFR had carried out a valuation of the properties at a much earlier date and certainly before the 2008 crash and Mr Kennedy dishonestly presented it as being current. 52. 3. KFR had carried out a 2008 valuation, which was woefully negligent. This seems to be very unlikely given their recent retrospective valuation of the same properties.” In its letter of 2 July 2020 Collyer Bristow responded to the Bank’s solicitors on the issue of limitation: “We have considered the history of the matter and there is nothing which at the time of the transaction by which our client acquired the OCM portfolio that suggested that your client had acted dishonestly or recklessly. That remained the position even when it became apparent that there were severe problems with the properties forming part of the portfolio and through the eventual Administration and Liquidation of Grindale. DAME CLARE MOULDER DBE Approved Judgment Super Fast Mr Ehrentreu was first alerted to the potential issue when in December 2017 he met in a Manchester street a gentleman who had managed the OCM portfolio before receivers were appointed by you client…”. Letter before action 30 June 2021 and thereafter the issue of the claim 53. 54. 55. 56. On 30 June 2021, Collyer Bristow sent DLA a formal letter before action on behalf of Super Fast (which by this time had taken an assignment of the claim). The letter stated that it was “to give you notice of Superfast’s claims against the Bank for damages arising from the deceit and fraudulent misrepresentation of the Bank, acting through its senior employee, Mr Gavin Kennedy.” By this date the Claimant had obtained a retrospective valuation of the properties in the OCM Portfolio from David Currie & Co., who were valuers appointed by the administrators of the OCM Portfolio to value the OCM Properties in 2008. At Mr Ehrentreu’s request they carried out a retrospective valuation of the OCM Properties at the time they were sold to Grindale in 2008. On 22 November 2021 DLA responded substantively to the letter before action, and only via this letter did the Bank disclose the 2007 KF Valuation and the September 2008 KF Revaluation. The Claimant brought the claim on 11 December 2023. Claimant’s allegations in PoC 57. The Claimant alleges that Mr Kennedy fraudulently misled Mr Ehrentreu by telling him that the figures he provided were taken from an up-to-date Knight Frank valuation, which was untrue. This fraudulent misrepresentation had the effect of exaggerating the value of the OCM Properties by c.17.5% overall. Mr Kennedy knew that what he had said was false, and he intended Mr Ehrentreu to rely on the falsehood. [PoC/51] Relevant Law Summary Judgment – CPR Part 24 58. The law on summary judgment was not in dispute. CPR provides that: “24.3 The court may give summary judgment against a claimant or defendant on the whole of a claim or on an issue if— (a) it considers that the party has no real prospect of succeeding in the claim, defence or issue; and (b) there is no other compelling reason why the case or issue should be disposed of at a trial.” 59. Both parties relied on the summary by Lewison J in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15]: i) The Court must consider whether the claimant has a “realistic” as opposed to a “fanciful” prospect of success: Swain v Hillman [2001] 1 All E. R. 91; ii) A “realistic” claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]; iii) In reaching its conclusion the Court must not conduct a “mini-trial”: Swain v Hillman; iv) This does not mean that the Court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, DAME CLARE MOULDER DBE Approved Judgment Super Fast particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]; v) However in reaching its conclusion the Court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No.5) [2001] EWCA Civ 550; vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] F. S. R. 3; vii) On the other hand it is not uncommon for an application under Pt 24 to give rise to a short point of law or construction and, if the Court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent’s case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant’s case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725. It was submitted for the Claimant that the Court must ask itself not whether there is “a clear prospect that new material will become available before the trial which is likely to give the claimants a real prospect of success” but rather whether there are “reasonable grounds… for believing that a fuller investigation of the facts may add to or alter the evidence relevant to the issue”: Okpabi v Royal Dutch Shell Plc [2021] 1 WLR 1924 at [127]-[128]. 60. Limitation 61. Section 31 (1) of the Limitation Act provides: “… where in the case of any action for which a period of limitation is prescribed by this Act either— (a) the action is based upon the fraud of the defendant; or (b) any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant; or (c) the action is for relief from the consequences of a mistake; DAME CLARE MOULDER DBE Approved Judgment Super Fast 62. the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.” The Defendants referred the Court to the summary of the applicable principles by Bright J in Upham v HSBC UK Bank PLC [2024] EWHC 849 (Comm): “586. Although both sides had a lot to say about limitation, the relevant legal principles for this case are both simple and well-established: (1) The burden of proof in establishing their case under section 32 was on the Claimants: Paragon Finance plc v D B Thakerar & Co. [1998] EWCA Civ 1249; [1999] 1 All ER 400, per Millett LJ at p. 418b-d. This is a passage cited as "authoritative" by the majority in the Supreme Court in Test Claimants in FII Group Litigation v HMRC [2020] UKSC 47, at [203] per Lord Reed PSC and Lord Hodge DPSC; see also [209(2)], [213(16)]. (2) Discovery of the fraud, for the purposes of section 32(1), means knowing that there is a worthwhile claim, i.e., having sufficient confidence in the facts it is necessary to allege to justify embarking on the preliminaries to issuing proceedings: Gemalto Holding BV v Infineon Technologies AG [2022] EWCA Civ 782, per Sir Geoffrey Vos MR, in particular at [45] and [53], applying in the context of fraud the reasoning in Test Claimants in FII Group Litigation v HMRC (above) at [192]-[193], [196] and [213(14)]. (3) The requirement of "reasonable diligence" for the purposes of section 32(1) means that the Claimants (the burden being on them) must show that they could not have discovered the fraud (in the sense just explained) without "exceptional measures which they could not reasonably have been expected to take": see again the "authoritative" passage from the judgment of Millett LJ in Paragon Finance plc v D B Thakerar & Co. (4) Although not necessary, it can be useful to consider whether, and if so when, something happened to put the Claimants on notice of a need to investigate: OT Computers v Infineon Technologies [2021] EWCA Civ 501, per Males LJ at [47]. This is sometimes referred to as the "trigger" for investigations, and in many cases can be identified when it is objectively apparent that something has gone wrong, which ought to prompt the Claimants to ask "why?" and investigate accordingly: Granville Technology Group Ltd v Infineon Technologies AG [2020] EWHC 415 (Comm), per Foxton J at [48]. [Upheld on appeal under the name OT Computers v Infineon Technologies [2021] EWCA Civ 501.]” [emphasis added] 63. Although the parties were agreed that: a. The burden of showing that it could not have discovered the fraud (without exceptional measures which it could not reasonably have been expected to take) was on the Claimant; and b. The requirements of “reasonable diligence” were as set out in sub paragraph (3) above the parties did not agree whether the discovery of the fraud means knowing that there is a “worthwhile claim” and the parties did not agree on what constituted the appropriate “trigger” for investigations. DAME CLARE MOULDER DBE Approved Judgment What is the “trigger”? Super Fast 64. 65. 66. In relation to the need for a “trigger”, the parties accepted that as stated by Males LJ in OT Computers (referred to above) there is in fact a single issue under s.32(1) in respect of reasonable diligence. At [47] of his judgment Males LJ said: “Second although the question what reasonable diligence requires may have to be asked at two distinct stages, (1) whether there is anything to put the claimant on notice of a need to investigate and (2) what a reasonably diligent investigation would then reveal, there is a single statutory issue, which is whether the claimant could with reasonable diligence have discovered (in this case) the concealment. Although some of the cases have spoken in terms of reasonable diligence only being required once the claimant is on notice that there is something to investigate (the “trigger”), it is more accurate to say that the requirement of reasonable diligence applies throughout. At the first stage the claimant must be reasonably attentive so that he becomes aware (or is treated as becoming aware) of the things which a reasonably attentive person in his position would learn. At the second stage, he is taken to know those things which a reasonably diligent investigation would then reveal. Both questions are questions of fact and will depend on the evidence. To that extent, an element of uncertainty is inherent in the section.” [emphasis added] The Defendants submitted (skeleton paragraph 23.3) that since the trigger necessarily occurs prior to the recognition that a party has a claim that starts the limitation period running, it cannot require an appreciation that any particular wrong has been perpetrated upon a claimant. There will instead have been a ‘trigger’ when “a reasonably diligent [claimant] would have been put sufficiently on inquiry to be prompted to ask some basic questions and demanded further information”: ERED v Treon [2021] EWHC 2866 (Ch) at [805]. For the Claimant it was submitted (paragraph 28 of its skeleton) that for the purposes of s.32(1)(a) the reasonably attentive claimant must be put on notice specifically of a potential fraud: a. This point is implicit in reasoning from Law Society v Sephton & Co [2005] QB 1013 and Gresport Finance Ltd v Battaglia [2018] EWCA Civ 540: the effect the trigger must have is to prompt the claimant to want to establish whether a fraud has been committed, and the trigger will only have that effect if it points to a possible fraud. b. The authorities also make the point explicit. In Gresport, Henderson LJ referred at [52(4)] to “the absence of anything to put them on enquiry as to Mr Battaglia’s honesty”. In Bilta (UK) Ltd (in liquidation) v SVS Securities Plc [2022] EWHC 723 (Ch), the Court said at [31(7)(b)] that “[T]here must therefore be an anterior ‘something’; to put a claimant on notice of the need to investigate if there has been a fraud”. In Horner v Allison, at [42] Aikens LJ defined the specific trigger issue before him as whether the claimant was “put… on enquiry that [the defendant] might have made such fraudulent representations so that [the claimant] ought to have followed the matter up”. In Libyan Investment Authority v JP Morgan Markets Ltd [2019] EWHC 1452 (Comm), at [30] the Court glossed the trigger issue under s. 32(1) in general as whether “there is something to put the claimant on notice of the need to investigate DAME CLARE MOULDER DBE Approved Judgment Super Fast whether there has been a fraud, concealment or mistake” (depending on which subsection applied). Discussion 67. 68. 69. 70. 71. The Claimant submitted that the reasonably attentive claimant must be put on notice specifically of a potential fraud: it was submitted that the effect the trigger must have is to prompt the claimant to want to establish whether a fraud has been committed, and the trigger will only have that effect if it points to a possible fraud. The Defendants accepted [Day 1 p21] that, there are instances in the authorities where it is said that it must be a trigger to investigate a fraud/concealment/mistake, but, it was submitted, that was because that is the substance of the analytical step; the judges in those cases are not trying to set a binding rule as to what the trigger has to look like. In my view although the Court may identify the first stage of whether there is anything to put the claimant on notice of a need to investigate, the Court has to apply the test of reasonable diligence laid down by Males LJ in OT Computers at [47]: “… although the question what reasonable diligence requires may have to be asked at two distinct stages, (1) whether there is anything to put the claimant on notice of a need to investigate and (2) what a reasonably diligent investigation would then reveal, there is a single statutory issue, which is whether the claimant could with reasonable diligence have discovered (in this case) the concealment. Although some of the cases have spoken in terms of reasonable diligence only being required once the claimant is on notice that there is something to investigate (the trigger), it is more accurate to say that the requirement of reasonable diligence applies throughout. At the first stage the claimant must be reasonably attentive so that he becomes aware (or is treated as becoming aware) of the things which a reasonably attentive person in his position would learn. At the second stage, he is taken to know those things which a reasonably diligent investigation would then reveal. Both questions are questions of fact and will depend on the evidence…”. [emphasis added] Law Society v Sephton at [116] relied upon by the Claimant does not in my view establish that the claimant must be put on notice of a possible fraud but was focussed on the requirement that reasonable diligence carries with it the notion that the claimant must desire to know and investigate. The relevant passage stated: “116. So far as the first step is concerned, I consider that the judge was right in his conclusion that it is inherent in s32(1) of the 1980 Act, particularly after considering the way in which Millett LJ expressed himself in Paragon, that there must be an assumption that the claimant desires to discover whether or not there has been a fraud. Not making any such assumption would rob the effect of the word “could”, as emphasised by Millett LJ, of much of its significance. Further, the concept of “reasonable diligence” carries with it, as the judge said, the notion of a desire to know, and, indeed, to investigate.” [emphasis added] The Claimant relied on Bilta (UK) Ltd (in liquidation) v SVS Securities Plc [2022] EWHC 723 (Ch), at [31(7)(b)] where in discussing the meaning of “reasonable diligence” Marcus Smith J said: DAME CLARE MOULDER DBE Approved Judgment Super Fast “It is inherent in the section 32 schema that there is an assumption that the claimant desires to discover whether or not a fraud has been committed, and that there must therefore be an anterior "something" to put a claimant on notice of the need to investigate if there has been a fraud, concealment or mistake: Law Society v. Sephton [2004] EWCA Civ 1627 at [116]; Gresport Finance v. Battalagia, [2018] EWCA Civ 540 at [41].” This This seems to me to be again focussed on what amounts to reasonable diligence and not a statement that a trigger requires notice of a possible fraud: Marcus Smith J went on in the immediately following subparagraph ([31(7)(c)]) to refer to the test laid down by Males LJ in OT Computers at [47] prefacing the reference with the following: “This distinction between (i) whether there is anything to put the claimant on notice of the need to investigate and (ii) what a reasonably diligent investigation would then reveal is a helpful analytical structure (which I will adopt), but it is important to note that this is not the statutory test…”. As to Gresport, another authority relied upon by the Claimant this was expressly referred to by Males LJ in OT Computers at [34]: “Gresport Finance Ltd v Battaglia [2018] EWCA Civ 540 is a further case in which the Paragon Finance test has been applied. Henderson LJ suggested at para 49 that another way of making the same point as Neuberger LJ had made was that, rather than making an assumption that the claimant desires to discover whether there has been a fraud, the concept of reasonable diligence only makes sense if there is something to put the claimant on notice of the need to investigate whether there has been a fraud, concealment or mistake (as the case may be). He emphasised at para 50 that it is a question of fact in each case whether the claimant could not with reasonable diligence have discovered the relevant fraud, concealment or mistake.” However having reviewed the authorities (including Gresport) Males LJ set out the test at [47] of his judgment (above). For their part the Defendants relied on ERED v Treon at [805]: “For these reasons I consider that a reasonably diligent investor would have put been sufficiently on inquiry to be prompted to ask some basic questions and demanded further information.” However I do not regard this statement as varying the test laid down by Males LJ nor did it purport to do so. Miles J expressly set out the law on this point at [768]- [769] of his judgment and this sentence relied on by the Defendants is merely part of his application of that test to the facts before him. The Defendant also relied on Foxton J in Granville Technology Group at [48]: “There will be many claims when it will be objectively apparent that something “has gone wrong” – where the claimant has lost property, failed to receive something it expected to receive, or suffered an injury of some kind – which event ought itself to prompt the claimant to ask “why?” and investigate accordingly…”. [emphasis added] However this was the first instance decision which led to the formulation laid down by Males LJ. I do not regard it therefore as a definitive statement of the nature of the trigger and I note that the relevant passage at [48] in full read: 72. 73. 74. 75. 76. 77. 78. DAME CLARE MOULDER DBE Approved Judgment Super Fast “There will be many claims when it will be objectively apparent that something “has gone wrong” – where the claimant has lost property, failed to receive something it expected to receive, or suffered an injury of some kind – which event ought itself to prompt the claimant to ask “why?” and investigate accordingly. However, where a claimant purchases goods on a market which has been rigged by a cartel, there may be nothing which ought reasonably to prompt the claimant to further enquiry. It is not necessary to explore what kinds of events might act as trigger in all such cases. In this case, the Defendants contend that it was the US and EU regulatory investigations…”. [emphasis added] The third authority referred to by the Defendants on this issue was Loreley Financing (Jersey) No 30 Ltd v Credit Suisse Securities (Europe) Ltd & Ors [2023] EWHC 2759 (Comm). Cockerill J addressed the issue of the “trigger” at [199]-[210] of her judgment: “199. This is an appropriate point to ask whether there was a “trigger” which would reasonably prompt L30 to investigate. I conclude without any real hesitation that there was.” “200. As for the contention by L30 that nothing thus far indicated wrongdoing, still less fraud on the part of CS and that all that had emerged was generalised concerns regarding the practices of banks in general which were insufficient to amount to a trigger, I reject that submission.” “201. Firstly, the focus here is not on precision but on a trigger – being on notice that there is something to investigate: a something which would have caused a reasonably attentive and diligent person to ask questions (cf. OT Computers [47]). What all of this did was not to highlight a case against CS alone nor indeed to point a finger at specific other banks. Rather it indicated the potential for claims in multiple directions…” [emphasis added] It seems to me that on the authorities it is wrong to say that a reasonably attentive claimant must be put on notice specifically of a potential fraud for a trigger to occur. However applying OT Computers the trigger is whether there is “anything to put the claimant on notice of a need to investigate” which is not merely being put on notice of “something to investigate”; it is as Cockerill J said “whether it is something which would have caused a reasonably attentive and diligent person to ask questions” and this is a question of fact. Accordingly in my view the Defendants put the matter too highly when they framed the question as whether “it [is] impossible that fraud is the reason this happened?” [Day 1 p8] or that: “One has to approach section 32 on the assumption, at the very least, that a fraud could have happened.” [Day 1 p18] In my view the Court cannot define in abstract when a trigger occurs: the Court applies the single test of “whether there is anything to put the claimant on notice of a need to investigate” in the sense of “something which would have caused a reasonably attentive and diligent person to ask questions”. The answer as to whether a trigger has occurred depends on an assessment of the facts and circumstances in the particular case: “… Although some of the cases have spoken in terms of reasonable diligence only being required once the claimant is on notice that there is something to investigate (the trigger), it is more accurate to say that the requirement of reasonable 79. 80. 81. 82. DAME CLARE MOULDER DBE Approved Judgment Super Fast diligence applies throughout. At the first stage the claimant must be reasonably attentive so that he becomes aware (or is treated as becoming aware) of the things which a reasonably attentive person in his position would learn. At the second stage, he is taken to know those things which a reasonably diligent investigation would then reveal. Both questions are questions of fact and will depend on the evidence. To that extent, an element of uncertainty is inherent in the section.” (Males LJ in OT Computers at [47]) [emphasis added] Thus in my view the Defendants put the position correctly when it was submitted [Day 1 p14]: “So one can see that a factual matrix can arise in circumstances that will require certain investigations to be reasonable and those investigations may not turn up a fraud. And one can see, on the other hand, that certain things may occur that may direct one down a different path revealing different facts and matters, reasonably, and that those ought reasonably to lead to the discovery of fraud.” 83. The investigation to follow any trigger 84. 85. I did not understand the law concerning the nature of the investigation at the second stage to be in dispute: “… Authoritative guidance on that topic was given by Millett LJ in Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400, 418: “The question is not whether the plaintiffs should have discovered the fraud sooner; but whether they could with reasonable diligence have done so. The burden of proof is on them. They must establish that they could not have discovered the fraud without exceptional measures which they could not reasonably have been expected to take. In this context the length of the applicable period of limitation is irrelevant. In the course of argument May LJ observed that reasonable diligence must be measured against some standard, but that the six- year limitation period did not provide the relevant standard. He suggested that the test was how a person carrying on a business of the relevant kind would act if he had adequate but not unlimited staff and resources and were motivated by a reasonable but not excessive sense of urgency. I respectfully agree.” (Test Claimants in FII Group Litigation v HMRC [2020] UKSC 47 at [203]) [emphasis added] It is an objective standard but one informed by the position of the actual claimant: OT Computers at [37]-[38] and [48]: “37. In the Hong Kong case of Peconic Industrial Development Ltd v Lau Kwok Fai [2009] 5 HKC 135, para 30, Lord Hoffmann NPJ preferred to leave open the question of “the extent to which the personal characteristics of the plaintiff are to be taken into account in deciding what diligence he could reasonably have been expected to have shown”, noting that “it does not follow that because an objective standard is applied, he must be assumed to have been someone else.” “38. Commenting on this decision in Hussain v Mukhtar [2016] EWHC 424 (QB), Martin Chamberlain QC (sitting as a deputy High Court judge) suggested that this did not mean that personal characteristics such as naiveté and inexperience in financial matters should be taken into account as to do so would involve a departure from the objective standard which the cases require. I would agree that personal traits or characteristics bearing on the likelihood of the particular DAME CLARE MOULDER DBE Approved Judgment Super Fast claimant discovering facts which a person in his position could reasonably be expected to discover, such as whether the claimant is slothful, naïve, shy, nervous, uncurious or ill-informed, are not relevant. But it does not necessarily follow, as Lord Hoffmann NPJ said in Peconic, that the claimant must be assumed to be someone or something which he is not.” “48. Third, while the use of the words could with reasonable diligence make clear that the question is objective, in the sense that the section is concerned with what the claimant could have learned and not merely with what he did in fact learn, the question remains what the claimant (or in the terminology of the section, the plaintiff) could have learned if he had exercised such reasonable diligence. That must refer to the actual claimant, in this case OTC and not to some hypothetical claimant.” Discovery of the fraud-statement of claim test/worthwhile claim 86. As referred to above, there was a difference between the parties on the legal test as to what amounted to discovery of the fraud for the purposes of s.32. Defendants’ Submissions 87. 88. It was submitted for the Defendants (skeleton paragraph 25) that historically there were two different tests the “Statement of Claim” test and the “Worthwhile Claim” test. It was submitted that the authorities indicate little practical difference although the Statement of Claim test has been regarded as placing the ‘discovery’ of the fraud slightly later than the Worthwhile Claim test in a manner more favourable for a claimant. It was further submitted that it was established that the “Worthwhile Claim” test applies to alleged mistake and deliberate concealment – subsections (c) and (b) and the Defendants submitted that recent authority establishes that it applies equally to fraud under s32(1)(a): Farol v Clydesdale Bank plc [2024] EWHC 593 (Ch) at [687] and Upham at [586]. It was submitted that in Seedo v El Gamal [2023] EWCA Civ 330 at [48] the point was not in issue but only part of the background analysis. Claimant’s Submissions 89. It was submitted for the Claimant that: a. In order to be said to have “discovered” the fraud, a claimant must have found out enough to advance a pleadable case in respect of the precise deceit at issue: Seedo v El Gamal at [48]: “[i]t can … be taken to be established that in a fraud case, time starts to run when the claimant has discovered enough to plead their case.” b. As such, a claimant must have enough material to satisfy the stringent rules for pleading fraud. 90. It was submitted for the Claimant that the authorities the Defendants cite emphasise that the distinction makes no real difference: Gemalto Holding BV v Infineon Technologies AG [2022] EWCA Civ 782 at [45], and Farol at [688]. Discussion DAME CLARE MOULDER DBE Approved Judgment Super Fast 91. 92. 93. 94. The Statement of Claim test and the Worthwhile Claim test have been described respectively as “sufficient knowledge to plead its claim” and “sufficient knowledge to justify embarking on the preliminaries to the issue of a writ” or “in the sense of recognising that a worthwhile claim arises”. “The Statement of Claim Test…requires that the claimant is in a position (i.e. has sufficient actual or constructive knowledge) to plead a complete cause of action, which in fraud cases entails the critical allegations that a representation has been made, that it was false and that the representor knew it to be false: see Barnstaple Boat Co. v Jones [2007] EWCA Civ 727 at [34]; Bilta (UK) Ltd v SVS Securities plc [2022] BCC 833 at [31(7)(h)].” (Loreley at [152]) In FII the Supreme Court adopted the Worthwhile Claim test in a case of mistake. However the Supreme Court declined to review the formulation in fraud cases: “191. The formulation adopted in Halford v Brookes [1991] 1 WLR 428, Haward v Fawcetts and AB v Ministry of Defence places the commencement of the limitation period slightly earlier than the fraud cases discussed earlier. The relevant time is when the claimant knows "with sufficient confidence to justify embarking on the preliminaries to the issue of a writ", rather than the point in time when he could plead a statement of claim. This is not the occasion on which to review the formulation used in the fraud cases, which reflects the special standards applicable to the pleading of fraud...” [emphasis added] In OT Computers at [26] the Court also declined to deal with the issue: “The state of knowledge which a claimant must have in order for it to have discovered the concealment (or as the case may be, the fraud or the mistake) has been considered in the cases. For the most part the statement of claim test has been applied: that is to say, a claimant must have sufficient knowledge to enable it to plead a claim…This was the test which the judge applied in the present case and his approach is not challenged on appeal. More recently, in the FII case [2020] 3 WLR 1369, where the issue was from what point it can be said that the claimant has discovered a mistake of law, the Supreme Court suggested that time should begin to run from the point when the claimant knows, or could with reasonable diligence know, about the mistake with sufficient confidence to justify embarking on the preliminaries to the issue of proceedings, such as submitting a claim to the proposed defendant, taking advice and collecting evidence. This may mean that time begins to run somewhat earlier than under the statement of claim test, but this is a point which need not be explored in the present case.” [emphasis added] In Gemalto Holding BV v Infineon Technologies AG [2022] EWCA Civ 782 the Court of Appeal said that the reasoning adopted in FII applied equally to fraud but that if there was a difference it would be found in the stricter rules of pleading in fraud. The Court of Appeal further stated that there is unlikely in most cases to be a real difference: “44. Undoubtedly, the reasoning adopted by Lords Reed PSC and Hodge DPSC applies equally to fraud, mistake and deliberate concealment. If there is a difference, it would have to be found, as they have said, in the stricter rules of pleading in fraud, something that is not applicable in competition cases (or to cases of deliberate concealment) …” DAME CLARE MOULDER DBE Approved Judgment Super Fast 95. “45. In my judgment, the parties were right to submit that, after FII, limitation begins to run in a deliberate concealment case when the claimant recognises that it has a worthwhile claim, and that a worthwhile claim arises when a reasonable person could have a reasonable belief that (in a case of this kind) there had been a cartel. Gemalto’s four propositions overcomplicate the position. The FII test must be applied with common sense. As the judge held, there is unlikely in most cases, as in this case, to be a real difference between the application of the statement of claim test and the FII test. Indeed, the statement of claim test is, perhaps, little more than a gloss on the FII test …” “47. … The question of whether a claim is worthwhile is not a complex balance of the chance of success as Mr Turner suggested. The limitation period is not postponed until the claimant can show that it is more likely than not to succeed. Of course, if the putative claim would be struck out as not disclosing a cause of action, it would be right to say that the claimant had not discovered that it had a worthwhile claim…That is why I say that I am far from sure that there is a real difference between the statement of claim test and the FII test so far as concealment cases are concerned.” [emphasis added] In Seedo the Court reviewed the authorities and stated (in effect) that the Statement of Claim test applies in fraud cases: “46. The Court [in Gemalto] was not therefore directly concerned with a claim based on fraud within s. 32(1)(a) LA 1980. But in the course of a wide-ranging historical survey the majority did say various things about such a case, particularly at [180]-[186]. There they referred to a number of decisions to the effect that time starts running in a fraud case where the claimants are “in a position to plead their own case”: see Biggs v Sotnicks [2002] EWCA Civ 272 at [64] per Arden LJ, Law Society v Sephton & Co [2004] EWHC 544 (Ch) (“Sephton”) at [44] per Mr Michael Briggs QC, and Peconic Industrial Development Ltd v Lau Kwok Fai [2009] HKCFA 17 per Lord Hoffmann NPJ. At [191] they said that it was not the occasion to review the formulation used in the fraud cases, which reflects the special standards applicable to a pleading of fraud. This test was referred to in Gemalto as “the statement of claim test”.” “47. The question in Gemalto was which of these two tests applied to a claim in a cartel case where the claimant relied on deliberate concealment within s. 32(1)(b) LA 1980. Sir Geoffrey Vos MR (with whom Green and Birss LJJ agreed) held that it was the FII test: the proviso to s. 32(1) is to be construed consistently as between mistake and deliberate concealment cases, and time begins to run in a deliberate concealment case when the claimant recognises that he has a worthwhile claim: see at [53]. Sir Geoffrey Vos said that there was unlikely in most cases to be a difference between the application of the statement of claim test and the FII test (at [45]), but if there were a difference for fraud cases it would have to be found in the stricter rules of pleading in fraud (at [44]).” “48. It can therefore be taken to be established that in a fraud case, time starts to run when the claimant has discovered enough to plead their case.” “49. This does not however answer the question what “the fraud” is which the claimant needs to have discovered. In most cases the answer is obvious. A claimant brings a claim alleging a fraud. If you want to know if that claim is barred the relevant inquiry is when the claimant knew enough to plead that claim. DAME CLARE MOULDER DBE Approved Judgment Super Fast What the majority judgment in FII makes clear is that a claimant can know enough to plead a claim without knowing whether it will succeed. This is a significant strand in their reasoning: see in particular at [177] where they say that the limitation period runs alike for claims which fail as for claims which succeed; at [196] where they say that it is in the nature of litigation that facts and law are commonly disputed and that until the court has resolved that dispute the parties can at best have only a reasonable belief that their assertions are correct; and at [199]-[202] where they make the point that questions of limitation are decided on the assumption that the claimant has the claim that he asserts, and the fact that the defendant disputes an element of the cause of action does not mean that the commencement of the limitation period is postponed until that dispute is resolved.” [emphasis added] In Farol v Clydesdale Bank Zacaroli J did not purport to change the test for fraud but appeared to apply the Worthwhile Claim test on the basis that “there is unlikely to be a difference in most cases”: “687. There has been some debate in the authorities as to whether the test is that the claimant must have sufficient knowledge to plead its case, or to justify embarking on the preliminaries to the issue of a writ, i.e. recognising that a worthwhile claim arises. It is now established that the worthwhile claim test is applicable for the purposes of s.32(1)(b) (where a fact relevant to the right of action has been deliberately concealed by the defendant) and s.32(1)(c) (where the action is for relief from the consequences of a mistake): see Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2022] AC 1 ("FII") ; and Gemalto Holdings BV v Infineon Technologies [2022] EWCA Civ 782; [2023] Ch 169 (“Gemalto”).” “688. The position in relation to s.32(1)(a) was expressly left open in FII (see Lord Reed and Lord Hodge at §191), but, in Gemalto, the Court of Appeal considered (obiter) that the logic of the reasoning of the Supreme Court in FII extended equally to fraud claims, under s.32(1)(a) . As Sir Geoffrey Vos MR noted in Gemalto (at §45), however, there is unlikely to be a difference in most cases. That includes, in my view, this one.” [emphasis added] In Upham Bright J said: “586(2). Discovery of the fraud, for the purposes of section 32(1), means knowing that there is a worthwhile claim, i.e., having sufficient confidence in the facts it is necessary to allege to justify embarking on the preliminaries to issuing proceedings: Gemalto Holding BV v Infineon Technologies AG [2022] EWCA Civ 782, per Sir Geoffrey Vos MR, in particular at [45] and [53], applying in the context of fraud the reasoning in Test Claimants in FII Group Litigation v HMRC (above) at [192]-[193], [196] and [213(14)].” [emphasis added] However it appears that the judge in Upham was not referred to Seedo v El Gamal [2023] EWCA Civ 330 and referred only to Gemalto. Further I note that in Gemalto it was said that “if the putative claim would be struck out as not disclosing a cause of action, it would be right to say that the claimant had not discovered that it had a worthwhile claim”. Accordingly when Bright J referred to a “worthwhile claim” as being “having sufficient confidence in the facts it is necessary to allege” that would mean having sufficient confidence to allege that a representation has been made, that it was false and that the representor knew it to 96. 97. 98. DAME CLARE MOULDER DBE Approved Judgment Super Fast 99. be false. It is for that reason that there may not be a difference in most cases. However on the authorities which are binding on this Court I proceed on the basis that the appropriate test is the Statement of Claim test. I further note that in order to plead fraud: “… The claimant does not have to plead primary facts which are only consistent with dishonesty. The correct test is whether or not, on the basis of the primary facts pleaded, an inference of dishonesty is more likely than one of innocence or negligence. As Lord Millett put it, there must be some fact ‘which tilts the balance and justifies an inference of dishonesty’. At the interlocutory stage, when the court is considering whether the plea of fraud is a proper one or whether to strike it out, the court is not concerned with whether the evidence at trial will or will not establish fraud but only with whether facts are pleaded which would justify the plea of fraud. If the plea is justified, then the case must go forward to trial and assessment of whether the evidence justifies the inference is a matter for the trial judge…”. (Flaux J in JSC Bank of Moscow v Kekhman [2015] EWHC 3073 (Comm) at [20] referred to in the White Book at 16.4.4) [emphasis added] The First Stage Defendants’ Submissions 100. It was submitted for the Defendants that: a. The core crystallising event on the Claimant’s part is the chance meeting with Mr O’Brien outside Starbucks, where Mr Ehrentreu is not provided with any new information. He is just given a pretty stark phrasing as to what Grindale was thinking about many years earlier; that it was the Bank that put it in the position and it was the Bank's fault that it ended up with a portfolio of properties that ultimately sank it. b. It is the Claimant’s case that it quickly became apparent to Mr Ehrentreu that the properties were far from the standard that he had originally concluded they were – a conclusion that, on the Claimant’s case, had been based upon the capital value representations in the Schedule. In addition, it acknowledges that Grindale was aware that the rental income was approximately 52% of that stated in the Schedule. In these circumstances, any reasonably diligent property investor would have concluded that there could have been a similarly substantial difference in relation to the capital values set out in the Schedule. (skeleton 35) c. Grindale did in fact draw this conclusion at the time. Mr Ehrentreu’s evidence is that he ‘realised that there must have been a problem with the valuation’ and that ‘the defects in the properties and the low rent rolls clearly suggested a problem with the valuation’. (skeleton 36) These conclusions are reflected in the contemporaneous documents -the note of the call with Mr Keal records that ‘AE inferred that they [Grindale] had been misled and would look to sue the Bank, mis-advised of the rent on the former OCM portfolio…’. d. What Mr Ehrentreu might in fact have believed is irrelevant for limitation purposes. In the light of the rental income only being approximately half that set out in the Schedule, as well as the other DAME CLARE MOULDER DBE Approved Judgment Super Fast issues with the properties acquired, any reasonably astute and diligent property investor would have investigated the apparent disparity in relation to both the rental and the capital values. (skeleton 37) e. On 9 March 2011 Mr Ehrentreu sent an email to a solicitor (Mr Fulda) in which he referred to the rental income disparity and stated that he would not have entered into the transaction if he had known the real rental income and that Grindale had been caused 'catastrophic losses'. In his statement, Mr Fulda refers to having been asked by Mr Ehrentreu for advice as to the prospects of a claim against Knight Frank in negligence. He says that his advice was that such a claim was unlikely to succeed because there was no contractual nexus. What is plain, however, is that Grindale had recognised that something had gone sufficiently wrong such as to warrant considering litigation and had in fact begun preliminary investigations. (skeleton 41) 101. 102. It was submitted for the Defendants that it was fanciful that by March 2011 Grindale had not recognised that there was a serious error with the values set out in the Schedule in relation to the properties that it had purchased from the OCM Portfolio. A reasonably diligent property investor ought then to have commenced investigations as to the cause of that error. (skeleton 43) It was further submitted for the Defendants that: a. Mr Levy was, at the very least, investigating the Bank’s role in the inclusion of ‘inflated’ figures in the Schedule in relation to both the rental income and the capital values. The reference to these being ‘inflated’ also connotes a belief of intentionality behind the use of those figures by the Bank. In circumstances in which Mr Levy plainly considered there to be grounds to investigate the role of the Bank, the Claimant cannot realistically contend that there had not by this time been a trigger for the carrying out of investigations. (skeleton 45) b. It is also notable that Mr Ehrentreu does not assert that there were any new developments between 2011 and 2017 to trigger Mr Levy to be ‘eager to explore whether there might be a claim after all’. Mr Levy was simply reacting to that material in the same way as the hypothetical reasonably diligent property investor relevant to the analysis under the Limitation Act 1980 ought to have done many years earlier. (skeleton 47) Claimant’s Submissions 103. It was submitted by the Claimant that: a. Grindale was aware, shortly after completing on the OCM Properties, that something had gone wrong. Yet that “something” was not a trigger for the purposes of s.32, since it did not put Grindale, and would not have put a reasonably attentive person, on enquiry as to the Bank’s honesty. It did not put Grindale on notice of a possible fraud. (skeleton 30) b. In considering what will put a claimant on enquiry of fraud specifically, when something goes wrong, it is crucial to keep in mind that fraud is inherently improbable. (skeleton 31) DAME CLARE MOULDER DBE Approved Judgment Super Fast c. In 2009 Grindale was aware that the rental values were lower than expected, that the condition of some properties was below what was expected and that vacancy levels were higher than expected but it was submitted that rental values did not feed directly into capital values, the condition of the properties only related to a small number of properties and the vacancy levels were not a question for the capital value, the question was the forecast occupancy level. d. In the circumstances the Claimant was not put on notice of fraud acting with reasonable diligence. The Claimant did consult a lawyer concerning a possible negligence claim against Knight Frank but was told that since Knight Frank did not have a relationship with the Claimant there could be no claim against Knight Frank. e. There was no reason in the circumstances for the Claimant to do more at that stage: no reason to do a Land Registry search, get a fresh valuation and/or investigate the former owners. Discussion Pre Administration 104. The test as stated above, is that: 105. “At the first stage the claimant must be reasonably attentive so that he becomes aware (or is treated as becoming aware) of the things which a reasonably attentive person in his position would learn.” It was submitted for the Defendants that they need to establish it is fanciful the Claimant will establish that the chance meeting outside Starbucks between Mr Ehrentreu and Mr O'Brien is the first occasion upon which Grindale should have thought about fraud by the Bank and which it should have investigated. [Day 1 p56] Problems with the Properties 106. The Claimant accepts in its evidence that Mr Ehrentreu thought something must have gone wrong with the Knight Frank valuation: “41. After completion, I realised that some of the properties were in a worse condition that I had expected. Most of the problems related to the properties in Warrington. Three buildings had no fire or security alarm systems. Some properties had a really bad smell and contained broken furniture.” “42. Further, more of the properties than I expected were vacant—around 80%. In the first six months after completion, the rental income from the properties was much lower than the levels indicated in the relevant column of the 3 November Schedule—about £175,000 on an annualised basis, as against £333,900.” “43. In light of these developments, I realised that there must have been a problem with the valuation. My inference was that Knight Frank must have made mistakes…”. [emphasis added] 107. The Defendants rely on the condition of the properties having affected the capital values. However the evidence of Mr Ehrentreu set out above suggests that the condition only affected “some of the properties” and the financial impact of the DAME CLARE MOULDER DBE Approved Judgment Super Fast defects is not evident so it is not clear on the evidence whether it had a significant effect on the capital values. 108. The Defendants submitted that the disparity in rent was not minor and it is something that was being laid at the door of the Bank by September 2010. The Bank relied on the contemporaneous email from Mr Mintz: “We were disappointed to learn that the actual rental values achievable for the newer OCM portfolio are in reality a lot lower than that originally purported by the bank when the deal was sold to us.” [emphasis added] 109. Mr Ehrentreu’s evidence is that the issues with the properties (both the condition and the lower rentals) were not so significant as to suggest that “something sinister” had happened: “44. As context, I should add that while the defects in the properties and the low rent rolls clearly suggested a problem with the valuation, the position post- completion was not so drastically out of line with what I could have expected as to suggest something sinister had happened. It is not unusual for tenants to move out when investment properties in this market are sold to a new landlord. To my mind, that explained at least part of the high vacancy rate and lower rent rolls.” [emphasis added] 111. 110. On a summary judgment the Court does not take at face value and without analysis everything that a claimant says in his statements before the Court. “In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents.” It is clear that the rental values were considerably lower than was anticipated as Mr Mintz stated. However the impact on the capital values of the condition of the properties and the vacancy rate is a matter which in my view does require full evidence and potentially expert evidence. Even if the capital values were affected by the condition of the properties and/or the lower rentals, the issue is then what a reasonable person would have done and learnt acting with reasonable diligence. 112. The Bank relied on the Appendix to the PWC report to submit that it was clearly laid at the Bank’s door in referring to “inflated” rental income and the portfolio being purchased from the Bank. [Day 2 p17] 113. However as discussed above this does not expressly make a link between the rentals and the capital values and there is no clear inference that one should attribute blame to the Bank merely because it has put together the sale of the properties and not unreasonable to conclude that the obvious person who may be to blame is Knight Frank. Events in March 2011 114. The file note of the call with the Bank on 8 March 2011 suggests that Mr Ehrentreu was aware of the possibility of a claim against the Bank and was considering litigation. “AE inferred that they had been misled and would look to sue the Bank, mis- advised of the rent on the former OCM portfolio.” 115. Whilst this file note does appear on its face to threaten action against the Bank (albeit on the basis of misrepresentation rather than fraud), on the same day as this call, Mr Ehrentreu consulted Mr Fulda, an experienced commercial lawyer it DAME CLARE MOULDER DBE Approved Judgment Super Fast appears only in relation to a possible claim against Knight Frank and not against the Bank. 116. Mr Fulda’s evidence is that: “I recall that he asked me whether there was any basis for bringing a claim against the original valuer in negligence arising from the valuations which they had provided on a portfolio of properties that Grindale had purchased which Mr Ehrentreu considered may have been too high. My advice (in relation to which no privilege is waived) was that there was no contractual nexus with the valuer, and I considered it unlikely that he could successfully sue the valuer.” 117. Further the issue (as advanced on this Application) is not Mr Ehrentreu’s actual knowledge but what a reasonable person would have done and learnt acting with reasonable diligence. In this regard it seems to me a crucial piece of evidence that Mr Ehrentreu raised the issue of the valuation and remedy with a lawyer. 118. On his own evidence Mr Fulda: 119. 120. 121. “Specialise[d] in commercial litigation and investigations, including civil fraud, and [has] over 30 years’ experience.” It was submitted for the Defendants that Mr Fulda was giving advice at a time of “stress”: Counsel referred to the “stressed scenario in which Mr Fulda is consulted.” In my view the significance of this evidence to the issue of what a reasonable person acting with reasonable diligence would have learnt is that legal advice was sought from an experienced lawyer in the relevant field and that lawyer did not identify or advise any action with regard to the Bank or even propose investigations. I do not accept the proposition that any such experienced solicitor consulted by a client on the verge of administration brought about by its failure to comply with covenants in a Bank facility agreement about possible legal action against one party would disregard the wider picture and fail to consider the possibility of protecting his client through action against the Bank, either because he was under pressure due to the impending administration or because his client only raised specifically the issue of negligence and Knight Frank. It is certainly an issue on which in deciding whether to grant summary judgment: “in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial.” I further take into account in relation to whether there had been a trigger by March 2011 that on the evidence currently before the Court, the administrators did not appear to have had any concerns at least of fraud. Whilst their subjective views or knowledge are irrelevant to the issue on this Application, these individuals were insolvency practitioners from the firm, PWC. 122. Both of these pieces of evidence may be a matter on which further evidence at trial may alter the evidence but in considering what a reasonably diligent person would have done, the evidence of Mr Fulda and of the administrators support a conclusion that there is a real prospect that the Claimant will establish that a reasonably diligent person would not have been taking further steps at this time. Mr Levy DAME CLARE MOULDER DBE Approved Judgment Super Fast 123. It was submitted for the Defendants that it was “obvious” to Mr Levy on the same facts that a claim might lie against the Bank. In relation to the issue of whether there was a trigger by March 2011 the Defendants submitted that it is notable that Mr Ehrentreu does not assert that there were any new developments between 2011 and 2017 to trigger Mr Levy to be 'eager to explore whether there might be a claim after all’ and that Mr Levy was simply reacting to that material in the same way as the hypothetical reasonably diligent property investor relevant to the analysis under the Limitation Act 1980 ought to have done many years earlier. (skeleton 47) 124. Mr Ehrentreu’s evidence in relation to Mr Levy was: “72.1. First, he did not have a clear idea of what the claim might be, or against whom it might lie. Given the time that had passed, his immediate concern was to ensure that documents were preserved, and to unearth anything that might be useful to set up a claim in future. I would describe his approach as scattergun. It is true that he wrote to BOI, in the terms of the letter Mr McNamee exhibits. Yet he also wrote, two months earlier, to Eddisons and PWC (these letters were apparently sent on 21 February 2017). On the same day he wrote to BOI (i.e. 24 April 2017) he also wrote to Knight Frank.” “72.2. Second, while I had entered the DBA and agreed that he should investigate possible claims, I did not review or even know of the letters themselves at the time he sent them. I only saw the letter to BOI when BOI provided it as part of pre- action disclosure, and I only obtained the other letters from Mr Levy more recently, in July 2024. Nor did Mr Levy send me any replies to the letters at the time (he has recently sent me a short response from Knight Frank dated 8 May 2017). It seems that he intended to see what came of the initial letters, and inform me of any leads that emerged; evidently none did. It was a series of classic “fishing expeditions”. Had he shown drafts of the letters to me in advance, I would of course have told him that it was futile to threaten a claim against Knight Frank. Mr McNamee is therefore wrong to say that I “instructed Mr Levy to write in the terms that he did” (not that Mr Levy in fact made any allegation suggesting fraud, as I explain immediately below).” “72.3. Third, to the extent that Mr Levy did discuss the specifics of a potential claim with me, he was focused on the possibility of professional negligence. His scattergun approach did not extend to any exploration of whether there might have been fraud. It is not something that occurred to him, and of course it had not occurred to me. I cannot sensibly comment in detail on the content of the letters, given that I did not see them at the time, but it is obvious that they reflect this state of affairs.” [emphasis added] 125. As referred to above, the issue on this Application in the way it was advanced, is not whether Mr Ehrentreu had actual knowledge (and thus his actual knowledge is not in issue) but whether Mr Levy’s response is indicative of the inferences that a reasonable person would have drawn and thus the action that a reasonable person would have taken (either in 2011 or 2017). It was submitted for the Defendants that although Mr Levy did not have a clear idea of what the claim might be, or against whom it might lie, this is not necessary for the trigger under s.32. Instead, the fact that Mr Levy did write to the Bank, on Mr Ehrentreu’s explanation ‘to see what came of the initial letters, and inform me 126. DAME CLARE MOULDER DBE Approved Judgment Super Fast 127. of any leads that emerged’, is a further indication of the existence of the trigger: a recognition of a potential claim against the Bank warranting investigation. (skeleton 46) It was further submitted for the Bank that the references to the valuation being inflated and the rent inflated indicates that fraud was a possibility: that one tends to refer to errors where one is thinking of negligence-type claims and that inflation of figures is rather more symptomatic of an intentionality behind that. [Day 2 p33] 128. However despite the references to the valuation being inflated, in none of the letters is there a suggestion that Mr Levy had a basis to believe that the Bank had acted fraudulently and no such allegation is raised in the letter to the Bank. 129. Whilst it is true that Mr Ehrentreu entered into a damages based agreement, the basis for that agreement is not known. Mr Ehrentreu’s evidence is that he did not know of the letters when they were sent. 130. The reasons why Mr Levy took these steps may require further evidence at trial but it would appear that Mr Levy was keen to help an old friend who by that time had lost his business and thus to explore whether there “might” be a claim. The fact that Mr Levy therefore sent these letters in early 2017 does not establish that he represents what a reasonably attentive person would have done in the circumstances prevailing in September 2009-March 2011 and there is a real prospect that the Claimant will establish that he did not so represent. Meeting with Mr O’Brien 131. Counsel for the Bank placed great emphasis in his oral submissions on the letter of 8 May 2018 sent by Mr Ehrentreu to the Bank [A/7/144]. It was submitted for the Bank that in this letter Mr Ehrentreu did not say that he did not think he had a claim until he bumped into Mr O'Brien. 132. However given that this was a letter setting out a number of complaints it seems to me not determinative that Mr Ehrentreu did not mention the meeting with Mr O'Brien in that letter. There could be many reasons why he did not want to identify or refer to Mr O'Brien at that stage. The Court does now have evidence from Mr Ehrentreu on the significance of his meeting with Mr O’Brien. At paragraph 78 of his witness statement he said: “My conversation with Mr O’Brien entirely changed my perspective and prompted me to reconsider Grindale’s transaction with BOI in respect of the OCM Portfolio. In particular, it was this conversation that first triggered my suspicion that Mr Kennedy might have lied to me about the 3 November 2008 Schedule. Mr O’Brien had said very firmly that BOI had “f*cked” me twice. I thought one of those instances could be the calling in of the loan in March 2011, but I was not at that point sure about the meaning of the other instance. When I considered over the next six months or so how I might have been “f*cked” by BOI in that regard, I contemplated for the first time whether it was possible that Mr Kennedy had lied about the valuation.” It was submitted for the Defendants that these remarks by Mr O’Brien were “no more than a question of some sort of attribution of blame”. It was submitted that Mr O'Brien is not someone that Mr Ehrentreu knows, not someone who worked for the Bank. He did not mention the fraud that is now pleaded. He did not mention 133. DAME CLARE MOULDER DBE Approved Judgment Super Fast 134. Mr Kennedy or the Schedule or the Knight Frank valuation. There is no suggestion that he had any inside knowledge of what the Bank was doing. [Day 1 p58] In my view the meeting with Mr O’Brien was key in that it did point the finger towards the Bank: “some sort of attribution of blame”. Mr O’Brien was not an employee of the Bank but on the evidence of Mr Ehrentreu he was someone who he had met in the course of dealings with the Bank in relation to the portfolio and was someone who was in contact with Mr Kennedy at that time. At paragraph 75 of his witness statement Mr Ehrentreu explained that: “[Mr O’Brien] had been the manager of the OCM Portfolio properties before Grindale had acquired them. I met him once in the course of the discussions about the purchase. Some time early 2009, he, Mr Kennedy and I had lunch together at the J S Kosher restaurant—the same place where Mr Kennedy had first brought up the OCM Portfolio. I am not certain whether Mr O’Brien, in managing the properties, was employed by the existing owners or by the company, which I know only as “One Stop”, which advised the owners on their original purchase of the OCM Portfolio Properties…”. 136. 135. Mr O’Brien could therefore reasonably be expected to be someone who could have knowledge of what had occurred and by attributing “some degree of intentionality around the Bank's conduct” this could reasonably cause Mr Ehrentreu to carry out investigations. It was submitted for the Defendants that not only was there no reference in the letter of May 8 2018 to the critical causative role that the meeting with Mr O’Brien played but that it was instead put down to Mr Ehrentreu having had a reason to not be dealing with this in the period between 2011 and 2017. In my view this is not an inference that can be drawn when the relevant passage is read in context. At the end of the letter Mr Ehrentreu stated: “I am fully aware that many of my complaints are subject to Limitation Act 1980. However, I am sure you are aware that this Act does not include fraudulent breach of trust or accusation of fraud. Furthermore, I do have a personal reason, an explanation for the delay of my complaint. Should the need arise, we will make a submission to court to explain my legal reason for the delay.” 137. 138. As referred to above, in that letter Mr Ehrentreu made three complaints to the Bank. In this passage concerning limitation Mr Ehrentreu refers firstly to the fraud exception and “furthermore” that he has a personal reason for the delay. This passage does not lead to an inference that he was aware of the fraud prior to the meeting with Mr O’Brien. Correspondence in 2019 and thereafter 139. It was submitted for the Defendants that the solicitors’ correspondence in 2019 and thereafter was “informative of the thought process that ought to have been going on in 2009 to 2011.” [Day 1 p71] 140. However as discussed in more detail below in relation to the investigation which would follow any trigger, the correspondence in 2019 and thereafter was after the meeting with Mr O’Brien and has to be read in that light. Attitude towards Mr Kennedy and the Bank DAME CLARE MOULDER DBE Approved Judgment Super Fast 141. Another factor to take into consideration is the evidence concerning the relationship between Mr Ehrentreu and the Bank and in particular Mr Kennedy. As referred to above, in OT Computers Males LJ said: “48. Third, while the use of the words could with reasonable diligence make clear that the question is objective, in the sense that the section is concerned with what the claimant could have learned and not merely with what he did in fact learn, the question remains what the claimant (or in the terminology of the section, the plaintiff ) could have learned if he had exercised such reasonable diligence. That must refer to the actual claimant, in this case OTC and not to some hypothetical claimant.” 142. Mr Ehrentreu’s evidence is that: “12. I met Mr Kennedy at the time that first loan with BOI was negotiated. He was BOI’s real estate manager in the northwest of England at the time, and he was the BOI representative who had charge of arranging the facility.” “16. Once the BOI facility was in place, I would meet with Mr Kennedy annually to discuss how the loan was going, how Grindale was complying with the covenants, how Grindale was performing more generally…”. 143. Mr Ehrentreu described his relationship with the Bank and Mr Kennedy as follows: “During the period in which BOI was a lender to Grindale, I had great trust in and respect for BOI as a reputable and indeed eminent bank. I also had at a personal level, great trust in and respect for my bank manager at BOI, Gavin Kennedy. The idea that Mr Kennedy would lie to me to lure Grindale into a doomed deal would have struck me as utterly improbable”. (paragraph 6) 144. Mr Ehrentreu referred in his witness statement to examples of his previous dealings with Mr Kennedy and said: “22. I mention these episodes because they help explain why I felt that my relationship with BOI, and with Mr Kennedy in particular, was one of mutual trust and respect. On the one hand, I felt that I could go to him with problems of this kind and expect him to do his best to help…”. 146. 145. The Defendants submitted [Day 1 p26] that Mr Ehrentreu having trust in the Bank and assuming that the Bank is not going to defraud him is not going to stop a trigger from happening for a reasonably attentive individual if the facts are such that they raise the question that they meet the threshold that we can see in the later authorities. It was further submitted for the Defendants [Day 1 p86] that this idea of the inherent improbability of a bank lying to you might work if one is in a village in the 1950s, but what we are dealing with here is a bank in 2009, so it was the other side of the financial crisis, and the idea that it is so inherently implausible that a manager in a bank might be dishonest, so inherently implausible that it can be discounted entirely even if you have facts that point to it being maybe something that has occurred. 147. However in my view the actual relationship between Mr Ehrentreu and Mr Kennedy is part of the fact pattern when considering what a reasonably attentive person would have discovered. Thus in considering the “attribution of blame” and what a reasonably attentive person would have learnt, it is relevant to take into account the relationship between Mr Ehrentreu and Mr Kennedy and therefore the DAME CLARE MOULDER DBE Approved Judgment Super Fast Claimant’s case is not based on whether banks or bank managers generally in 2009 might be dishonest and therefore fraud discounted but what a person exercising reasonable diligence would have learnt against the factual background of the relationship with Mr Kennedy and the Bank. It is against that factual context that one has to consider what the Claimant could have learned if it had exercised such reasonable diligence. 148. Conclusion on the first stage in the period September 2009-March 2011 149. “At the first stage the claimant must be reasonably attentive so that he becomes aware (or is treated as becoming aware) of the things which a reasonably attentive person in his position would learn.” (OT Computers at [47]) The Court asks “whether there is anything to put the claimant on notice of a need to investigate” and thus “something which would have caused a reasonably attentive and diligent person to ask questions”. (Loreley Financing at [201]) “What the claimant could have learned must refer to the actual claimant and not to some hypothetical claimant.” (OT Computers at [48]) 150. The Defendants’ case is based on the “actual trigger facts” that they say ought to have commenced the discovery process being in 2009, within months of Grindale coming into the properties, realising that the rents were lower, realising that the properties were of a lower quality. It was submitted for the Defendants that the reasonable response ought to have been a realisation on Grindale's case that it had been “sold a pup”, and to the question “Who sold us a pup?” that could only be the Bank. 151. Mr Ehrentreu’s evidence is that: 152. “Armed with what Mr O’Brien had told me, I had reason to undertake further investigations. After prolonged stonewalling by BOI, I was ultimately able to obtain disclosure of the September 2008 KF Revaluation and thereby to uncover BOI’s fraud against Grindale. The groundwork was thereby laid for the Claim.” (witness statement paragraph 9) I remind myself that whilst the Court does not take at face value and without analysis everything that a claimant says in his statements before the Court, in reaching its conclusion the Court must not conduct a “mini-trial”. Further in reaching its conclusion the Court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial. 153. Until the evidence of Mr Ehrentreu concerning the extent of the problems with the properties has been tested and/or expert evidence received, the Court is not able to evaluate the significance of the condition of the properties, the lower rental values and the occupancy levels on the capital values. Further in the circumstances where something appeared to “have gone wrong” with the valuation, a reasonably attentive person might seek legal advice (as Mr Ehrentreu did) and if having been provided with the facts, that legal advice did not suggest the possibility of a claim against the Bank or any investigations into the Bank, there is in my view a real prospect that the Claimant will establish that he has been reasonably attentive and as such when considering the things which “a reasonably attentive person in his position would learn” he was not on notice of a need to investigate the Bank, DAME CLARE MOULDER DBE Approved Judgment Super Fast particularly when that legal advice is considered against the factual background of the established relationship between Mr Ehrentreu and Mr Kennedy. 154. Although the call with Mr Keal in March 2011 suggests that Mr Ehrentreu was aware that something had gone wrong and the blame could be laid at the door of the Bank, that has to be considered against the evidence of the advice from Mr Fulda which was being sought at that time. Further the Bank’s case as advanced in its oral submissions, is that a trigger occurred shortly after the Facility Agreement was entered into/ by September 2009. If any trigger did not occur until March 2011, shortly before the administration, (as discussed below) it is more difficult for the Bank to establish certainly at the summary judgment stage, that it is fanciful that the Claimant would not have discovered the fraud during the administration and prior to December 2017. Trigger by April 2017 155. In the Defendants’ evidence the Defendants also advanced a case that the trigger had in any event occurred in April 2017 when Mr Ehrentreu took the decision to instruct Mr Levy in the first place; and instructed him to write to the Bank in the terms that he did. (paragraph 38 of McNamee) 156. However Mr Ehrentreu in his witness statement responded that the “instruction” only came about indirectly through a discussion with Mr Levy and he did not review or see the letters before they were sent: “70. In the course of briefing Mr Levy on the IG Index Litigation in my initial discussions with him in the January 2017, and in the course of explaining my financial circumstances to him, I mentioned that I had entered an individual voluntary arrangement (the “IVA”) in August 2016. Mr Levy was astonished to find that I had been forced to take this step…He wanted to know how I had been reduced to such a parlous state. I therefore told him the story of Grindale’s collapse.” “71. Mr Levy was eager to explore whether there might be a claim after all. I was sceptical, since I had satisfied myself of what the position was, on the evidence available, back in 2011. And frankly, I had more regard for Mr Fulda’s acumen than Mr Levy’s. In light of the fact that Mr Levy would likely start working for me in the IG Index Litigation, however, I was happy to go along with the exploratory work he proposed. We set up a damages-based agreement (“DBA”) which would reward Mr Levy if a claim succeeded. As such, I did not have to put any money in up front.” In oral submissions Counsel for the Defendants did not press this point focussing instead on the submission referred to above that in 2009-2011 a reasonable person could have drawn the same conclusions as Mr Levy did in 2017. I do not therefore propose to consider this as a separate time for the trigger. 157. Discovery of the Fraud 158. Section 32 provides that “the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.” DAME CLARE MOULDER DBE Approved Judgment Super Fast 160. 159. The Claimant must establish that Grindale “could not have discovered the fraud without exceptional measures which they could not reasonably have been expected to take.” It was submitted for the Defendants that once a trigger has occurred in the sense that there are facts and matters known to the reasonably diligent person at the time such as would have set them off on this investigatory course, the question is then is there a reasonable investigatory course that would have opened up the possibility of the fraud that is eventually pleaded. [Day 1 p20] It is important to restate (to the extent that a difference is intended by such submission) that the question at the second stage is what a reasonably diligent investigation would then reveal not whether there is “a reasonable scenario” which would have led to the discovery of the fraud, and bearing in mind that there is a single statutory issue, which is whether the claimant could with reasonable diligence have discovered the fraud. 161. 162. Further, as set out above, what amounts to discovery is not the possibility of the fraud that is eventually pleaded but the Statement of Claim test which: “… requires that the claimant is in a position (i.e. has sufficient actual or constructive knowledge) to plead a complete cause of action, which in fraud cases entails the critical allegations that a representation has been made, that it was false and that the representor knew it to be false.” (Loreley at [152]) 163. The Claimant submitted that it needed to have a pleadable case, which means it had to have the facts which could justify a pleading of dishonesty against the Bank: saying that “the Knight Frank valuation was wrong" is not sufficient. You have to have something that says that the Bank knew that and knowingly falsely misrepresented it. [Day 2 p66] 164. As also set out above in order to plead fraud: “The correct test is whether or not, on the basis of the primary facts pleaded, an inference of dishonesty is more likely than one of innocence or negligence. As Lord Millett put it, there must be some fact ‘which tilts the balance and justifies an inference of dishonesty’.” Defendants’ Submissions 165. 166. It is the Defendants’ case (skeleton paragraph 5) that if Grindale had acted with reasonable diligence, it would have discovered the claim that it now advances by no later than March 2011 when it entered administration. It was submitted for the Defendants that: a. If Grindale had acted reasonably and diligently and attentively following the trigger it would have obtained the publicly available documents that it later obtained, would have obtained the valuations that it later obtained, and those documents would have enabled it to draw conclusions in 2009 that are later drawn in the correspondence from 2018. b. Those are conclusions before any documents are provided by the Bank, which were sufficient for Mr Ehrentreu to state in his evidence for the restoration of Grindale, that he had obtained advice from a barrister of over 50 per cent chances of success. DAME CLARE MOULDER DBE Approved Judgment Super Fast c. Those are conclusions that enabled fraud to be alleged in the pre-action correspondence and if it is the Statement of Claim test that applies, that is fulfilled by that correspondence because the core limbs of a deceit claim are made out at that time. [Day 2 p43] Claimant’s Submissions 167. It was submitted for the Claimant that: a. The question of what a reasonably diligent investigation would have produced will almost always (as in this case) be a complex question of fact, and fundamentally unsuitable for summary judgment. b. For the reasons set out above no reasonable property developer would have wasted money on an investigation where the only apparent issue was a valuation by a third party who could not be sued by Grindale. c. Even assuming that the trigger to investigate went off in 2009, Grindale would have had only 21 months to assemble the material for a pleadable fraud claim before it ceased to trade. It took the Bank 29 months to disclose the Schedule to the Claimant from the date of the letter in which the Claimant first demanded such disclosure. Only the disclosure of the September 2008 KF Revaluation enabled the Claimant properly to plead fraud and ruled out the inherently more probable possibility that Knight Frank had been negligent. As such, it seems very likely that Grindale would not have been able to bring a claim while still trading - thereby raising the question of whether an administrator would have pursued the matter thereafter. (64(iv) skeleton) d. It is true that the initial investigations Mr Ehrentreu pursued after his meeting with Mr O'Brien were relatively straightforward in contrast with the efforts thereafter to obtain the documents held by the Bank and required for a pleadable claim. Yet the crucial point is that there would have been no reason for Mr Ehrentreu to take these steps without Mr O'Brien. Discussion 168. If I were wrong at the first stage of the analysis (the trigger) and it is fanciful to conclude that the Claimant has a real prospect of establishing its case that no trigger had occurred by 2009 or 2011, then the issue is whether the Claimant has a real prospect of establishing that Grindale “could not have discovered the fraud without exceptional measures which they could not reasonably have been expected to take” prior to December 2017. 169. Following that alleged meeting on 19 December 2017, Mr Ehrentreu appears to have taken the following steps (as set out in the letter of 30 June 2021 from Collyer Bristow): a. “The first step that Mr Ehrentreu took was to approach the valuers, David Currie & Co, who were valuers appointed by the administrators of the OCM portfolio to value the Properties in 2008. At his request they carried out a retrospective valuation of the Properties at the time they were sold to Grindale in 2008… that valuation… shows that the DAME CLARE MOULDER DBE Approved Judgment Super Fast properties were valued at £2.5 million less than the values ascribed to them in the schedule supplied to Grindale as being a KFR document.” b. “Mr Ehrentreu then carried out an investigation of the Land Registry in relation to the Properties. That analysis revealed that Grindale paid on average approximately 29.49% more for the Properties in 2009 than the former owners paid in or around 2004 / 2005. Grindale had purchased the Properties in a distressed sale amid a global financial crisis (whereas the economic conditions in 2004 /2005 were relatively benign) and that the former owners themselves appear to have overpaid for the Properties, having estimated their value using the UK house price index retroactively from the 2008 values per David Currie & Co’s report, by on average approximately 43.17%. The price achieved on the sale of the Properties following Grindale's administration equated to significant discounts to the amounts Grindale had paid in 2009…”. c. “Our client decided to obtain a valuation of representative properties within the OCM properties at the relevant time and instructed KFR to carry out a desktop valuation of 43-51 Folly Lane Warrington WA5 0ND as at 31 January 2009… Our client asked David Currie to comment upon these valuations and we attach their report dated 15 May 2020, which states their opinion that no competent valuer could have valued the Folly Lane properties as having a yield of 4.8 % in November 2008…”. 170. 171. In his evidence (paragraph 79) Mr Ehrentreu also referred to obtaining administrator’s reports on the previous owners of the OCM Portfolio: “As I developed suspicions that Mr Kennedy had lied about the valuation following my conversation with Mr O’Brien, I conducted my own investigations in 2018. For the first time, I had reason to obtain historic records from the Land Registry, along with the administrators’ reports on the Previous Owners. These documents indicated that the Previous Owners may have substantially overpaid for the OCM Portfolio properties in 2004-5. The documents further indicated that the administrators of the Previous Owners had assigned claims against “One Stop”, the property management company which had advised them in respect of their acquisition of the OCM Portfolio properties…”. I propose to consider the submissions for the Defendants set out above in turn. If Grindale had acted reasonably and diligently and attentively following the trigger it would have obtained the publicly available documents that it later obtained, would have obtained the valuations that it later obtained, and those documents would have enabled it to draw conclusions in 2009 that are later drawn in the correspondence from 2018. 172. The Defendants placed emphasis on the letter of May 2020 from Collyer Bristow. It was submitted that when one looks at the facts that those allegations are based upon, it is principally upon the material that is accepted to have been available in 2009, so the stark contrast between the rents received and the conditions of the properties. That is then combined with publicly available documents that essentially reinforce that material and that allow a bit of additional granularity. 173. This letter forms part of a series of letters and is relatively short. As such it cannot in my view be treated as setting out the entire basis of the case. It places particular DAME CLARE MOULDER DBE Approved Judgment Super Fast weight on a new desktop valuation from Knight Frank which as stated in the letter ruled out the possibility of negligence on the part of Knight Frank and the figures in the spreadsheet as coming from Knight Frank: “However what is clear is that the valuation provided for the Folly Lane properties on 8 November 2008 spread sheet. cannot be right. There can only be three possibilities: 1. Mr Kennedy forged the 8 November 2008 spreadsheet. 2. KFR had carried out a valuation of the properties at a much earlier date and certainly before the 2008 crash and Mr Kennedy dishonestly presented it as being current. 3. KFR had carried out a 2008 valuation, which was woefully negligent. This seems to be very unlikely given their recent retrospective valuation of the same properties.” [emphasis added] I accept the submission that if a trigger had occurred in 2009 Grindale could have obtained the publicly available documents from the Land Registry and the Companies House registry. However that would not advance the case much beyond the view that Mr Ehrentreu had already formed that something had gone wrong with the valuation. 174. 176. 175. The retrospective valuation from Knight Frank obtained in 2020 is unlikely to have been obtained by Grindale in 2009-2011 since at that time it is likely that Knight Frank was acting for the Bank. It was submitted for the Defendants that if there was a trigger back in 2009, then Grindale could have gone and obtained a valuation from whoever it had wished and there is no suggestion that that would have been extraordinary or impossible for it to do so. In my view Grindale could have obtained a valuation from another valuer but that would not necessarily have allowed Grindale to rule out negligence on the part of Knight Frank: Grindale might well have been faced with two competing valuations. Knight Frank’s negligence would not thereby have been ruled out, there would be nothing to “tilt the balance” towards the Bank and justify an inference of dishonesty. 177. 178. The key difference is that by the time of the letter of May 2020 the meeting with Mr O’Brien had occurred. The conclusions therefore that are drawn in the May 2020 letter are not therefore the same as would have been capable of being drawn in 2009-2011. The conclusions in the correspondence before any documents are provided by the Bank were sufficient for Mr Ehrentreu to state in his evidence for the restoration of Grindale, that he had obtained advice from a barrister of over 50 per cent chance of success. 179. The Defendants stressed that in his application to restore Grindale to the Register, Mr Ehrentreu’s statement as to success was made before Mr Ehrentreu had any documents from the Bank and submitted that the Statement of Claim test was met in “a matter of months and not longer”. 180. However when Mr Ehrentreu made his witness statement applying to restore Grindale to the Register and stating that he intended to bring a claim against the Bank, it was after the meeting with Mr O’Brien. Although therefore the Claimant did not have documents from the Bank, Mr Ehrentreu had by this time been alerted DAME CLARE MOULDER DBE Approved Judgment Super Fast to the possibility that the Bank had committed fraud by Mr O’Brien. Having had the meeting he was in a position to make the witness statement in those terms. Without either the meeting with Mr O'Brien or the documents from the Bank, Grindale lacked a factual basis to advance a case in fraud from which an inference of dishonesty was more likely than one of innocence or negligence. (I note for completeness that the witness statement is not the same as pleading a case in fraud and thus I am not expressing a view that there was sufficient to plead a case in fraud based solely on Mr O’Brien’s comments). The conclusions in the correspondence enabled fraud to be alleged in the pre- action correspondence and the statement of case test is fulfilled by that correspondence because the core limbs of a deceit claim are made out at that time. 181. The conclusions in the pre-action correspondence were based on a number of things not only the publicly available documents. Further there is an important distinction to be drawn between allegations raised in correspondence and the requirements to be able to plead a case in fraud. 182. After Mr Ehrentreu had obtained the records from the Land Registry and previous administrators Mr Ehrentreu wrote to the Bank on 8 May 2018. The letter contained an allegation that he was provided with “misleading and deliberately wrong information” by the Bank regarding purchasing the OCM Portfolio. However this letter was written after the meeting with Mr O’Brien. It cannot be inferred that it was therefore based solely on conclusions drawn from the publicly available documents. In a letter dated 26 July 2019 CYK wrote to the Bank on behalf of Grindale contending that there had been a ‘potential fraud’ or an ‘apparent fraud’. It was submitted for the Defendants that the allegations made in those letters appear principally to be based upon investigation of online Land Registry records. 183. 184. 185. However there is also reference in the letter to the meeting with Mr O'Brien and the significance of that meeting. At paragraph 26 of the letter, CYK stated: “Mr Ehrentreu was aggrieved at the circumstances in which Grindale had been placed into administration and ultimately dissolved. However in the short term he did not believe that there was necessarily anything suspicious about the circumstances of the administration. This changed in December 2017 as a result of Mr Ehrentreu bumping into by chance a gentleman who had managed the OCM portfolio on behalf of the original owners in Manchester city centre called David O'Brian…”. 186. The letter stated (paragraph 27) how Mr Ehrentreu decided "as a result of this conversation" to conduct his own investigations. Again the significance of the meeting with Mr O'Brien is clear. 187. The significance of the meeting with Mr O'Brien was repeated in the letter of 2 July 2020 from Collyer Bristow when it responded to the Bank's solicitors on the issue of limitation: “We have considered the history of the matter and there is nothing which at the time of the transaction by which our client acquired the OCM portfolio that suggested that your client had acted dishonestly or recklessly. That remained the position even when it became apparent that there were severe problems with the properties forming part of the portfolio and through the eventual Administration and Liquidation of Grindale. DAME CLARE MOULDER DBE Approved Judgment Super Fast Mr Ehrentreu was first alerted to the potential issue when in December 2017 he met in a Manchester street a gentleman who had managed the OCM portfolio before receivers were appointed by your client.” 188. The formal Pre-Action Protocol letter from Collyer Bristow was sent dated 30 June 2021 “to give you notice of Superfast’s claims against the Bank for damages arising from the deceit and fraudulent misrepresentation of the Bank acting through its senior employee, Mr Gavin Kennedy.” It was submitted for the Defendants that the important point to note is that the Bank had not given any documents by this stage, so this is in reliance upon the information that had been set out before: publicly available records, desktop valuations, the Knight Frank valuation, the discussion with David Currie. [Day 1 p80] 189. 190. The Defendants' submission ignores the significance of the meeting with Mr O'Brien which is expressly referred to in the correspondence (it is mentioned in the letter of 26 July 2019 and repeated in the letter of 30 June 2021): “Mr Ehrentreu was aggrieved as to the conduct of the Bank in selling him a portfolio that did not perform as it should have done and also at the manner in which it conducted itself leading up to the application for administration. Nevertheless, until 2017 it had not occurred to him that the Bank had misled him as to the value of the OCM Portfolio and its rental income. This assumption changed in December 2017 when, by chance, he bumped into a gentleman who had managed the OCM Portfolio on behalf of the original owners in Manchester city centre called David O'Brian, who had previously been introduced to him by Gavin Kennedy prior to GDL buying OCM portfolio as being the property manager of that portfolio on behalf of the owners of the properties. Mr. O'Brian informed Mr Ehrentreu that he had been deceived by the Bank and should carry out his own investigations.” 191. The Defendants’ submission also ignores the fact that as stated above, a valuation from Knight Frank as obtained in 2020 is unlikely to have been obtained in 2009- 2011 if Knight Frank were still acting for the Bank. 192. The alternative course absent the meeting with Mr O’Brien is that Grindale could have sought disclosure by the Bank. However as referred to above, in 2019 this took over two years from a letter on 26 July 2019 from Mr Ehrentreu’s lawyers until 22 November 2021. It is not fanciful to conclude that the Bank would not have provided the documents prior to the administration of Grindale and it is entirely unclear that the documents would have been provided once Grindale was in administration or dissolved. Conclusion on Discovery of the Fraud 193. 194. If I am wrong at the first stage of the analysis and the trigger did occur as early as September 2009, for the reasons discussed above, in my view there is a real prospect that the Claimant will establish that even if it had obtained the publicly available documents, this would not have been enough for it to satisfy the Statement of Claim test: there would need to have been something further. In 2017 Mr Levy only asked for documents: this, on the evidence of what actually occurred, took over two years so and if one assumes no meeting with Mr O’Brien then if disclosure by the Bank had been requested in September 2009, it is not DAME CLARE MOULDER DBE Approved Judgment Super Fast 195. fanciful to think that the documents would not have been forthcoming before March 2011 (a period of 18 months). It was submitted for the Defendants that when one looks at the facts that the allegations in the correspondence are based upon, it is principally upon the material that is accepted to have been available in 2009, so the stark contrast between the rents received and the conditions of the properties. 196. However this is not what is stated in the Pre-Action protocol letter (or (as set out above) in Mr Ehrentreu’s evidence). In the letter Collyer Bristow stated: “Within three months, Mr Ehrentreu began to have some significant concerns in respect of the OCM Portfolio.” “The rental income of the Properties was significantly below the figure indicated by the Bank, which had represented through the means of the purported KFR valuation that annual rental income in relation to the Properties was in the region of £333,900 whereas actual annual rental income equated to £175,000. Although this was of real concern to Grindale, it did not at that stage consider that the Bank had misrepresented the rental income. It considered that much of the shortfall was due to vacancy rates and believed that the financial crash had led to falling demand.” [emphasis added] 197. The condition of the properties is said in the letter to have been relevant to the covenant concerning the timing of refurbishment but is not expressly linked to the capital values: “The facility documentation contained a condition that Grindale would complete the refurbishment of the Properties within 3 months. However, post-completion it was discovered that some of the Properties were not up to the required Local Authority standards... For these reasons, Grindale informed the Bank that refurbishment would take longer than anticipated which meant that GDL would inevitably be in breach of the relevant condition in the facility documentation. On 2 November 2009, the Bank wrote a letter to Grindale confirming that the company was in breach of the loan conditions.” [emphasis added] In any event as stated above for the Claimant to plead a case in fraud “The correct test is whether or not, on the basis of the primary facts pleaded, an inference of dishonesty is more likely than one of innocence or negligence.” 198. 199. The correspondence in 2018-2021 did not have to meet the test for pleading a case in fraud. The correspondence all took place against the background of the comments from Mr O’Brien. In the letter of 30 June 2021, by reason of the Bank’s failure to respond to the substantive allegation in earlier correspondence, the Claimant drew an inference that it was not as a result of the negligence of Knight Frank (it also had the new desktop valuation from Knight Frank) but there was no such basis for this inference in 2009-2011. 200. A trigger is not necessarily a single event: “…there will be cases… where discovery of the relevant facts involves a process over a period of time as pieces of information become available. In such cases it may be difficult to identify the precise point of time at which a claimant exercising reasonable diligence could have discovered enough, either to plead a claim or (as the case may be) to begin embarking on the preliminaries to the issue of proceedings”. (OT Computers at [27]) DAME CLARE MOULDER DBE Approved Judgment Super Fast 201. 202. It is not fanciful that (assuming that the trigger did occur prior to Grindale being placed into administration) the Claimant will establish that any trigger did not occur by September 2009 but only in 2010 or 2011. If Grindale only had public records by the time of the administration it is not fanciful that nothing further would have been disclosed by the Bank during the administration and it would not have discovered the fraud prior to December 2017. The application to restore the Company to the Register was only in July 2018. 203. For all the reasons discussed above, if I am wrong on the first stage, I find that there is a real prospect that, applying the Statement of Claim test, the Claimant will establish that it “could not have discovered the fraud without exceptional measures which it could not reasonably have been expected to take” prior to December 2017. Conclusion on Application 204. For all the reasons set out above the Application for summary judgment is refused.