Wirecard Bank AG v Allen Thomas Scott (2010)
The director, company secretary and an employee of a company which sold tickets for sporting events were liable for the torts of conspiracy to defraud by unlawful means and deceit where the company failed to deliver a single ticket it had sold for the 2008 Olympics. No one at the company had intended to acquire any tickets and the individuals in question had falsely represented that the tickets would be supplied by the event's main sponsors.
The claimant bank and credit card processing provider (W) brought claims against the defendants (S, M and T) for conspiracy, deceit and personal liability under the Company Directors Disqualification Act 1986 s.15. S was the director, M was the company secretary and T was an employee of a company (X) which sold tickets, obtained on the secondary market, for sports events. In October 2007 it started to sell tickets online for the 2008 Olympics. X sold the tickets before actually obtaining them, but promised 100 per cent guaranteed delivery. In November 2007, it sought to obtain W's services to process customers' payments. It also sought credit to enable it to purchase the tickets. W wanted confirmation that X had the backing of event organisers to sell tickets. In an email, M stated that the tickets for the Olympics were supplied by the event's main sponsors. That email had been approved by S and T. W agreed to provide the funds and process the payments. X, however, failed to deliver any of the tickets and W became liable to refund customers. W was entitled to reimbursement from X, but X was unable to repay and a liquidator was appointed. It was W's case that T was the moving force behind X. T had 25 years' experience in the ticketing business and had worked with M in a number of companies, but from December 13, 2007 he was disqualified from being a director under the Company Directors Disqualification Act 1986. That was not the first time T had been disqualified. Although T was paid the highest salary, he stated that S was solely responsible for the management of X and for acquiring tickets for the Olympics. M was responsible for X's general administration. He had made payments from the company account when instructed to do so by T, and stated that both S and T were responsible for the tickets. S claimed that he had had an agreement with a reliable supplier to provide the tickets, but the supplier had ceased trading. W argued that (1) the defendants had been part of a conspiracy to defraud by unlawful means; (2) they were induced to enter into the agreement with X by fraudulent misrepresentations as to the legitimate and honest nature of the business and X's relationship with the event's main sponsors; (3) all three defendants were involved in the management of X while T was disqualified and M and S knew that T was disqualified, but nevertheless acted on his instructions.
(1) It was clear that no one on behalf of X had intended to acquire tickets for the Olympics. T had said that he was not involved in the acquisition of tickets, and it was never part of M's responsibility to acquire tickets. By the time the agreement was made with W, T knew that S was not going to acquire the tickets; he had no relevant experience and had only been put forward as director so that T could conceal his own role. M knew that too. Further, there was evidence to suggest that the "reliable supplier" identified by S had been fabricated in an attempt to explain that someone intended to obtain tickets. (2) W had been induced to enter into the agreement by fraudulent misrepresentations. X agreed to supply tickets to customers before the tickets had been acquired and it had no agreement under which it was entitled to receive such tickets. However, M had represented that X intended to supply tickets that it had agreed to sell. X's website also stated that X ensured 100 per cent guaranteed ticket delivery. Further, M had falsely represented that there was an agreement or arrangement under which he had reason to believe that the main sponsors of the Olympics would make tickets available, but in reality he had no real expectation that any Olympics tickets were going to be made available, whether directly or indirectly, from any main sponsor. At the time of his email, M had known that T had been disqualified in the past and his experience involving T was not one where tickets were always delivered. Accordingly, the representations made were false and W, who had been concerned to know the risk they were accepting, had relied on them. (3) S was not managing X. He had no experience of sourcing tickets. However, s.15(1)(a) of the 1986 Act was satisfied in respect of T. He had been disqualified from December 13, 2007, but was clearly involved in the management of X, both directly and indirectly, throughout the period during which W were providing services to X. The fact that he was not a director did not preclude that conclusion, given the terms of s.15(4), R v Campbell Unreported January 1, 1984 applied. M was also involved in the management of X; his dealings with W in November 2007 indicated his level of responsibility. His responsibilities in relation to X also demonstrated that he had the degree of involvement required to satisfy the statute. He was also company secretary and signatory on X's bank account. M also satisfied s.15(1)(b); at a time when he knew T to be disqualified, he signed cheques when instructed to do so by T, without the leave of the court.
Judgment for claimants
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