Alvarez v Moor & Anor

A person who makes fraudulent representations remains personally liable for deceit even when acting for a company. A company may also be liable where its agents make the representations on its behalf, and it may participate in a tortious conspiracy using unlawful means. Dishonesty is assessed objectively, having regard to the defendant’s actual state of knowledge or belief. Where fraud deliberately conceals the relevant facts, limitation may be postponed until the claimant discovers, or could with reasonable diligence have discovered, the fraud. A contractual promise by a company to repay money is enforceable according to its objective terms and does not ordinarily impose personal liability on its director or justify disregarding the company’s separate personality.

Mr Alvarez invested substantial sums with Shatton Industries Ltd after being told by Dr Moor and Mr Knoebl that Shatton had access to Federal Reserve-controlled investment programmes offering unusually high returns. The money was instead placed, without proper authorisation, into the Avento fund and lost.

Mr Alvarez claimed damages for deceit and conspiracy, restitutionary and trust-based relief, and payment under a later agreement by which Shatton allegedly promised to repay $2.31 million in return for notarised documents. The central issues were whether the representations were fraudulent, whether the defendants were jointly liable, whether the claims were in time, and whether the later repayment promise bound Dr Moor personally.

1. Deceit and dishonesty. The representations concerning Federal Reserve investment programmes, special access, security and expected returns were false, intended to induce investment, and relied upon by Mr Alvarez. All three defendants were jointly liable for deceit. Dishonesty did not require proof that the defendants themselves appreciated that their conduct was dishonest by ordinary standards; the relevant approach was that stated in Ivey v Genting Casinos (UK) Ltd [2018] AC 391.
2. Personal liability and conspiracy. Dr Moor could not avoid personal liability for fraud by asserting that he acted as Shatton’s director. The principle in Standard Chartered Bank v Pakistan National Shipping Corporation (Nos. 2 and 4) [2003] 1 AC 959 applied. The defendants had also conspired to obtain and misappropriate Mr Alvarez’s money by unlawful means. The conspiracy claim succeeded, although it added little to the deceit claim.
3. Trust-based claims. No judgment was entered on the pleaded trust claims. The judge nevertheless considered that the transactions were more simply analysed as creating an express trust over the investment funds, which Shatton and Dr Moor dishonestly breached. Mr Knoebl could potentially be liable as a third-party assister, but not as a direct trustee.
4. Contract. The later repayment promise was an offer by Shatton, not Dr Moor personally. It became binding when Mr Alvarez supplied the required notarised documents. Subsequent references to expected funding did not withdraw or modify the offer. The corporate veil was not disregarded, consistently with Prest v Petrodel Resources Ltd [2013] 2 AC 415.
5. Limitation and relief. The tort claims were in time because the fraud and the loss of the Avento investment were deliberately concealed until 2013. Judgment was entered for $2,054,007 in tort damages against all three defendants, with $1,257,624.98 interest. Judgment was entered against Shatton alone for $2.31 million under the repayment agreement, with $983,806.85 interest, subject to set-off. Costs were awarded on the indemnity basis, with £140,000 payable on account.

The judgment records and refuses an application by Dr Moor and Shatton for permission to appeal, on the basis that an appeal would have no real prospect of success.