SPL Private Finance (PF2) IC Ltd & 5 Ors v Farrell

Permission to appeal should be refused where proposed grounds merely challenge factual and dishonesty findings supported by the evidence and falling within the range open to the trial judge. A contractual duty requiring an investment manager to manage conflicts fairly can be fiduciary in character. Consent is not fully informed where decision-makers were not told the precise amount and origins of a conflicted payment. Waivers said to release fraud claims are strictly construed. Where the wording of a waiver letter differs from the signed release, the signed instrument governs. Serious delay in delivering judgment, though unsatisfactory, does not alone establish an appealable error.

Six investment claimants sued Arch Financial Products LLP, their investment manager, and Robin Farrell, Arch's chief executive. Following a lengthy trial, Mr Justice Paul Walker found that Arch had breached fiduciary and contractual duties and that Mr Farrell had dishonestly assisted those breaches. He ordered Mr Farrell and Arch to pay approximately £24.36 million, with indemnity costs. Arch did not pursue an appeal.

Mr Farrell applied for permission to appeal on grounds concerning Arch's fiduciary duties, the findings of dishonest assistance, alleged consent and disclosure, fresh evidence, delay in judgment, the pleaded case, and the construction of a 2009 waiver agreement.

The Court of Appeal unanimously refused permission to appeal. Lord Justice Vos gave the principal judgment, with which Lord Justice McFarlane agreed.

1. Fiduciary duty and fresh evidence. The duty imposed by the Investment Management Agreements requiring Arch to treat conflicts with the claimants fairly was fiduciary in character because it modified the normal fiduciary duties owed by an investment manager. The proposed new evidence had been available before trial and could not be introduced under the first rule in Ladd v Marshall.
2. Dishonesty and factual findings. The attacks on the trial judge's reasoning were unrealistic. He had addressed the evidence, rejected Mr Farrell's account, and considered the alleged commercial rationale and capital-gain explanation. The finding of dishonesty was within the band of decisions open to the judge on the evidence and had no real prospect of being overturned. The civil standard of proof for fraud had also been correctly applied. The issue was whether Mr Farrell had acted dishonestly within the test in Barlow Clowes, and the judge had found that he had.
3. Consent and disclosure. Disclosure of an unspecified seven-figure fee, made before the transaction and its mechanism were finalised, did not amount to fully informed consent to a £3 million payment. The decision-makers had not been told the precise amount or its origins, and the base prospectus was insufficient even if treated as final.
4. Judgment delay. A judge may consider and reconsider a judgment before handing it down. The nearly year-long delay was unsatisfactory, but did not provide a freestanding ground of appeal.
5. Waiver. Waivers must be strictly construed, particularly where they are said to release fraud claims, especially unknown fraud. Where the signed release differed from the wording of the preceding letter, the signed release governed. The court further observed that releasing unknown fraud by such wording would be very difficult, if not impossible.

• Court of Appeal (Civil Division): Mr Farrell's application for permission to appeal was refused; the court held that the proposed appeal had no real prospect of success: [2015] EWCA Civ 1004.
• High Court, Queen's Bench Division, Commercial Court: Mr Justice Paul Walker found Arch and Mr Farrell liable in relation to the investment transactions and ordered payment of approximately £24.36 million, interest and indemnity costs in a judgment delivered on 18 December 2014.