A High Court judge has dismissed a £68m claim against a Yorkshire-based firm over a failed investment scheme.

A total of 43 claimants, all companies in liquidation with a deficiency to creditors of more than £68m, sought to amend their particulars of claim against Lupton Fawcett LLP, Metis Law Lts and Metis Law Partners LLP, their former solicitors. The companies accused the firms of professional negligence.

The claimants argued if they had been ‘properly advised they would not have promoted various investment schemes, accepted investment monies and taken out loans, and would not have suffered substantial losses as result’. The schemes all failed. The claimants went into administration in 2019, then liquidation.

Lupton Fawcett sought to strike out or dismiss the claim against it. It argued there were ‘fundamental analytical flaws in the claimants’ case’.

The judgment in Afan Valley Limited (in administration) & Ors v Lupton Fawcett (a firm) & Ors said the claimants sought a ‘sum of not less than £68,370,803’ in damages from Lupton Fawcett. Damages against Metis were claimed ‘in the sum of not less than £57,021,610’.

The judgment acknowledged that the claimants ‘accept that the loss amount has been overstated in the pleading by some £14m off’ due to being time-barred.

However Mr Justice Sheldon summarily dismissed the claim against Lupton Fawcett saying that the claimants had failed to establish that they suffered any loss as a result of the firm’s allegedly negligent advice.

‘I also accept that the losses that are alleged to have been suffered by the claimants were not attributable to LF’s alleged negligence,’ the judge continued. 'A distinction needs to be drawn between the receipt of the moneys (the investment receipts and the loan monies) and the use to which they were put. It is the use to which these monies were put that is the cause of the losses that the claimants have sustained, not the receipt of the investment or loan monies themselves.

‘The receipt of the investment monies by the claimants was not itself “a loss causing damage”. At the time when the monies were accepted by the claimants, they did not cause any damage to them. Rather, they were monies that had a zero effect: penny in, penny out.’

The judge refused the amendments of the particulars of claim against Metis, other than those the firm did not object to, noting the pleading ‘is already prolix’ and the amendments ‘lack clarity and coherence’.

 

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