Andrew James Barclay-Watt & Ors. v Alpha Panareti Public Limited & Anor.

A company which markets an investment package through trained sales agents may owe prospective purchasers a duty to warn of an obvious foreign-currency risk where it promotes the currency borrowing as a principal benefit. The fact that the loan is supplied by a bank does not remove that duty.

A director does not become an accessory to the company’s negligent failure to warn merely because he devised and closely managed the marketing. Where the tort depends on the company’s assumption of responsibility, there must be a sufficient common design to commit the omission that makes the conduct tortious. A respondent who seeks to revive a separately dismissed cause of action requires permission to appeal.

The claimants, unsophisticated United Kingdom purchasers, invested in Cyprus properties developed by Alpha Panareti Public Ltd (APP). APP marketed the purchases as buy-to-let investments supported by an exclusive Swiss-franc mortgage. The claimants were not warned that borrowing in Swiss francs exposed them to currency risk.

The Commercial Court held APP liable in negligence for failing to give that warning, but held that its director, Mr Ioannou, was not personally liable. APP appealed. The claimants cross-appealed on Mr Ioannou’s liability and, by a Respondents’ Notice, sought to resurrect a dismissed misrepresentation claim concerning the properties’ lettability.

The central issues were APP’s responsibility for the salesmen’s statements, the duty to warn of currency risk, the procedural status of the Respondents’ Notice, and whether a director could be an accessory to the company’s negligent tort.

1. Appeal and cross-appeal dismissed. APP remained liable in damages for negligently failing to warn the claimants of the currency risks of the Swiss-franc mortgage. Mr Ioannou incurred no personal liability.

2. The judge was entitled to find that APP had authorised its agents and sub-agents to make the relevant statements. APP had recruited agents through contractual arrangements, supplied promotional material, trained salesmen and incentivised sales. Formal categorisation of the salesmen, and whether they owed APP fiduciary duties, did not matter. APP promoted the mortgage as an integral and exclusive feature of its investment package. Advising on its benefits carried a duty and authority to warn of its detriments and risks.

3. The risk from borrowing in Swiss francs while expected income was in sterling or Cyprus pounds was obvious to APP and the salesmen. The Central Bank circular confirmed that conclusion but was not essential to it. APP could not avoid responsibility by saying that the Bank had provided the mortgage product or explained its mechanics at training sessions.

4. The claimants could not use a Respondents’ Notice to challenge the dismissal of their separate lettability claim without permission to appeal. Under Wolff, that challenge sought a different order for damages on a different cause of action. Permission had been refused and there was no basis to revisit that decision.

5. The three conditions for accessory liability stated in Fish & Fish were assistance, a common design that the tortious act be committed, and a tort against the claimant. Their application is fact-sensitive. They were developed in cases of strict liability and did not determine liability for a negligent failure to warn where the primary tort depended on APP’s assumption of responsibility.

6. Mr Ioannou had neither assumed responsibility to the claimants nor had personal dealings with them. There was no conscious decision, shared with APP, not to give the warning. A common design to market the properties without a warning could not, on these facts, establish accessory liability without expanding personal exposure of directors and senior managers incompatibly with limited liability. It was therefore unnecessary to decide whether he also acted within a director’s narrow constitutional-role defence.

• Court of Appeal (Civil Division): dismissed APP’s appeal against liability and the claimants’ cross-appeal seeking to establish Mr Ioannou’s personal liability: [2022] EWCA Civ 1169.

• High Court, Commercial Court: held APP liable for negligently failing to warn of the Swiss-franc currency risk, but dismissed the claims against Mr Ioannou personally: [2021] EWHC 1327 (Comm).