McEneaney & Ors v Ulster Bank Ireland Ltd & Anor

Permission to amend a pleading after expiry of the limitation period may be granted only where the proposed claim arises from the same or substantially the same facts as an existing claim. Fraudulent misrepresentation is not substantially the same claim as negligent misrepresentation, because fraud requires knowledge of falsity and moral obliquity. A proposed continuing duty to monitor an investment and advise withdrawal may constitute a new cause of action where it depends on a distinct factual investigation. Fraud must be clearly and specifically pleaded; rolled-up allegations of what a defendant knew or ought to have known are inadequate. Summary judgment is appropriate where the pleaded case has no real prospect of success, including where investors cannot realistically establish that they were clients of an investment manager under the applicable regulatory rules.

The claimants were investors in a property investment scheme involving Ulster Bank Ireland Ltd and Evans Randall Investment Management Ltd. They applied to amend their existing claims to add allegations of fraud, breach of trust, knowing assistance, continuing duties after investment, regulatory breaches and negligence.

The defendants resisted the amendments on limitation and pleading grounds. Evans Randall also sought summary judgment on the existing and proposed claims, contending that the claimants had no real prospect of establishing a regulatory or common-law duty. The central issues were whether the proposed claims were new claims for limitation purposes, whether they arose from substantially the same facts as the existing pleading, and whether the case against Evans Randall was arguable.

1. Fraud claims. The original pleading alleged negligent misrepresentation, not fraud. Fraud requires knowledge that the representation was false and moral obliquity. Those additional ingredients meant that the proposed fraud claims did not arise from substantially the same facts for the purposes of Civil Procedure Rules 1998, rule 17.4. The limitation period had expired, and permission to amend was refused.
2. The proposed fraud allegations were also inadequately particularised. Fraud must be pleaded clearly. Rolled-up allegations that the defendants knew or ought to have known matters, without distinctly pleading actual knowledge and the relevant representation, were insufficient.
3. Breach of trust. The proposed trust claims were new claims and were time-barred. The application forms stated that the funds would be commingled in a client money account and forwarded to the company. They did not support an arguable term that the money had to be retained until the offer closed. The proposed claims for breach of trust and knowing assistance or procurement were therefore refused.
4. Back-end claims. The original pleading did contain a sufficiently broad, though unsatisfactory, allegation of continuing duties. However, the proposed case that the Bank had to monitor the investment after payment and advise withdrawal or legal advice involved a different factual investigation and a new cause of action. It did not arise from the same or substantially the same facts and permission was refused. Limited amendments concerning pre-investment negligence were permitted.
5. Claims against Evans Randall. The claimants had not shown a proper factual basis for treating them as clients of Evans Randall under COBS. Evans Randall had no contractual relationship with, contact with, payment from or advisory relationship with the claimants. There was no real prospect of establishing regulatory or common-law duties owed by Evans Randall, or vicarious liability for the Bank’s conduct. Summary judgment was granted to Evans Randall.
6. The applications were therefore allowed only to the limited extent identified in relation to the Bank. The claimants were required to prepare a further draft excluding the refused amendments.

First-instance decision. The judgment itself records earlier transfer and consolidation orders by Flaux J and Eder J, but no appeal from those orders.