Goyal & Anor v BGF Investment Management Ltd (2023)

On 26 May 2023 Mr Justice Butcher handed down judgment in Goyal & Anor v BGF Investment Management Limited & Ors [2023] EWHC 1180 (Comm). David Mumford KC and Ryan James Turner acted on behalf of four of the defendants in successfully resisting a claim for damages for deceit and unlawful means conspiracy in excess of £40 million following a three-week trial in the Commercial Court.

The claims arose out of a transaction by which (in substance) a minority shareholder in Invenio Business Solutions Limited (“IBSL”) exited the company and BGF Nominees Limited (“Nominees”) invested in his place, with all other shareholders rolling over, at least in part, into a new holding vehicle. The Claimants unsuccessfully alleged that an investor on behalf of Nominees and the then Managing Director of IBSL had made fraudulent representations concerning their intentions in relation to a substantial shareholder’s employment in the company following completion of the transaction that induced him and his wife (another shareholder) to enter into the transaction.

The claims comprehensively failed. The First to Fourth Defendants succeeded on every factual or legal contention other than, in part, one legal argument about implied representations of present intention. Of most significance is the fact that the allegations of dishonesty made against the defendants failed and that the claimants sought to establish their case with unsatisfactory evidence that was, in numerous respects, rejected by the Court after cross-examination.

The judgment is notable for its analysis of two issues of law.

The first was whether implied representations of present intention not merely continue, but also “update”, so that the intention represented is not only the intention as at the date of the original representation. The importance of the point is that if they do, a change of intention prior to the representee acting on the representation may falsify the representation. Mr Justice Butcher held (at §§66-68) that whether a representation updates in this sense depends on the nature and content of the representation and the circumstances in which it was made.

The second was whether an intention that a person rely on a representation is an essential requirement of the tort of deceit or whether (as the editors of Chitty suggested) an expectation that they will rely on a representation is sufficient. Mr Justice Butcher held (at §§69-71) that an intention is required in all circumstances, although an expectation may provide an evidential basis to infer such an intention.

David and Ryan were instructed on behalf of the First to Fourth Defendants by Matt McCahearty, Robyn Tyson, Fred Snowball, and Marguerite Casanova at Macfarlanes LLP, with further assistance in the run up to and during trial from Eoin MacLachlan.

The Claimants were represented by Harish Salve KC and Peter Head of Blackstone Chambers and Chintan Chandrachud of Brick Court, instructed by Gresham Legal, and the Fifth Defendant was represented by Lesley Anderson KC and Paul Strelitz of Gatehouse Chambers, instructed by CMS.

Judgment can be viewed here.