Cabvision Ltd v Feetum & Ors

Representations made by a limited liability partnership do not, without more, impose personal liability on its members. A claimant alleging deceit must prove the necessary dishonest state of mind against each defendant individually; collective pleading and silence by defendants cannot supply that proof. An adverse inference may strengthen evidence already pointing towards dishonesty, but cannot create a case where none exists.

Personal liability for negligent misstatement requires evidence of an individual assumption of responsibility, including exchanges crossing the line between defendant and claimant. A solicitor’s duty is defined by the actual retainer. Receipt of documents during a limited execution retainer does not itself create a duty to advise on their wider implications. A breach causing loss entitled the claimant to damages, but recovery must reflect the loss actually proved.

Cabvision developed a taxi-based audiovisual advertising system. It entered into complex funding and licensing arrangements with Tower Taxi Technology LLP, promoted by the first three defendants. Cabvision alleged that the individual defendants dishonestly or negligently represented that the required minimum subscriptions had been achieved, causing it to complete the transaction and incur loss.

Cabvision also sued Dean & Dean, alleging that the firm had undertaken wider responsibilities in relation to completion of the scheme and had failed to identify that substantial subscriptions remained receivable. A separate costs retainer concerned disputes with the solicitors who had prepared the scheme documents. The issues were whether the individual defendants were personally liable, whether the firm owed the alleged completion duties, and whether the firm’s conduct in the costs proceedings caused recoverable loss.

1. Claims against the individual defendants. The claims in deceit failed. Statements made by Mr Sharp were statements on behalf of TTT, a body corporate with legal personality separate from its members. The individual defendants were not vicariously or derivatively liable for TTT’s representations. Personal liability also required proof that each defendant possessed the necessary dishonest state of mind. The evidence did not establish that any individual defendant knew the statements were false or was recklessly indifferent to their truth. The honest conduct of Mr Sharp and Mr Church did not support the contrary inference. An adverse inference from failure to give evidence could strengthen an existing evidential case, but could not reverse the burden of proof.
2. The negligence claims also failed. No sufficient evidence established either the alleged duty of care or breach. The Information Memorandum did not represent that the minimum level would fund the proposed commercial rollout. The minimum level had no demonstrated commercial meaning, and the major participants knew that part of the subscriptions remained receivable. The individual defendants had not assumed personal responsibility for the relevant representations. Under Williams v Natural Life Health Foods [1998] 1 WLR 830, the focus was on exchanges between defendant and claimant demonstrating such responsibility.
3. Claims against Dean & Dean. The firm had a costs retainer with Cabvision and breached its duty by representing in the costs proceedings that it acted for Cabvision while disregarding Cabvision’s instruction not to become involved. That breach caused Cabvision’s joinder to the proceedings. The recoverable loss was assessed at £45,000, allowing for expenditure Cabvision would probably have incurred even without the breach.
4. The alleged wider completion retainer was not established. The firm had been retained only to oversee execution of banking documents and had expressly excluded advice on their content or effect. Holding documents in escrow related to completion of the banking arrangements, not payment under the earlier software agreement. The continuing-duty argument was rejected, consistently with Gold v Mincoff Science & Gold [2001] Lloyd’s Rep PN 423. The additional loss claims were in any event unproved.