Clutterbuck & Anor v Al Amoudi

Fraudulent misrepresentation requires a clear representation of present fact or law, materiality, intended reliance, falsity, the requisite knowledge or recklessness, actual inducement and loss. Materiality and actual inducement are distinct. A presumption that a fraudulent representation was relied upon remains rebuttable.

A proprietary trust requires sufficiently clear evidence of the purpose for which money was transferred and the property to which it was directed. A Quistclose trust cannot attach to a mere reduction in the price paid for property where no identifiable fund is held.

Where alleged joint ventures, contributions and profit-sharing arrangements are unsupported by reliable documents and are inconsistent with contemporaneous dealings, the court may reject them.

The claimants, Amanda Clutterbuck and Ian Paton, brought claims in fraudulent misrepresentation, deceit and breach of trust against Sarah Mohammed Saleh Al Amoudi. The dispute concerned property transactions in central London, transfers totalling approximately £2.28m, refurbishment expenditure and the alleged transfer of six properties at an undervalue.

The claimants alleged that they and Ms Al Amoudi were parties to several joint ventures and that Ms Al Amoudi had represented that she had access to substantial Middle Eastern wealth and had secured Sharia mezzanine finance for the Hans Place development. Ms Al Amoudi contended that there were no such joint ventures and that payments and undervalues represented repayment of money owed to her by Mr Paton.

The court also considered a counterclaim concerning alleged loans, jewellery and documents entrusted to Mr Paton.

1. Claim. The claimants failed to establish the alleged joint ventures. The alleged Oriel Agreement was not proved and, in any event, there was no evidence binding Ms Al Amoudi to it. The contemporaneous documents showed that sophisticated property arrangements were documented when they existed, whereas the alleged arrangements involving Ms Al Amoudi were not.
2. Representations and inducement. The court accepted that fraudulent misrepresentation requires a clear representation, materiality, intended reliance, falsity, knowledge or recklessness, actual inducement and loss. Materiality and inducement are separate requirements. The claimants did not prove that the alleged representations about identity, wealth, Sharia finance or an arrangement fee were made or relied upon. The pleaded representations concerning identity and status were, in any event, only contextual and no direct relief was sought on them.
3. Security Properties. The transfers were made for the reasons recorded in the contracts: the cash paid represented the mortgage or other necessary payment, while the balance constituted part payment of monies owed by Mr Paton to Ms Al Amoudi. The evidence of financial pressure on Mr Paton and the solicitor-to-solicitor correspondence supported that conclusion. The transfers were not shown to have been temporary security arrangements.
4. Trust claims. The claim based on Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 failed. A reduced purchase price did not create an identifiable fund to which such a trust could attach. The alternative trust claims also failed because the alleged purposes and destination of the £2.28m and refurbishment payments were unclear and the purported Kiltybegs trust letters were created after the event.
5. Counterclaim. The claim for repayment of loans was insufficiently proved as to amount. The jewellery claim failed on credibility and evidential grounds. The documents claim was described as a straightforward conversion claim, and the judgment records that no defence appeared to exist, but the supplied text does not contain the final operative order.

First-instance judgment. The supplied judgment contains no subsequent appellate history.