Carey Street Investments Limited (in liquidation) & Anor v Grant Timothy Brown & Anor

The Court of Appeal dismissed the appellants' challenge to the Deputy High Court Judge's decision that there had been no fraudulent breach of fiduciary duty by Mr Brown or Equity Trust such as would engage the extended limitation period in section 21 of the Limitation Act 1980. The court treated the central issue as whether Mr Brown was dishonest (including blind-eye knowledge) when he approved transfers of New Court and Ludgate House and other payments, and applied established tests for dishonesty derived from Ivey v Genting Casinos and Armitage v Nurse.

Having reviewed the facts and the trial judge's findings, the court concluded that the judge was entitled to find that Mr Brown honestly believed the transfer prices reflected market value (or that they were justifiable market values), and that any breaches of duty identified were not fraudulent for the purposes of s 21. The judge's factual findings on valuations, reliance on third-party advisers (Buckingham, DTZ, Colliers and others), and Mr Brown's state of mind were not shown to be perverse or unsupported, so appellate intervention was refused.

The Court of Appeal therefore upheld that any non-fraudulent breaches were time-barred and dismissed the appeal in relation to the transfers and the remaining causes of action addressed by the judge.

This appeal arose from claims brought by the liquidators of two companies (Carey Street Investments Limited and 245 Blackfriars Road Property Investments Limited) against a former director, Mr Grant Brown, and his employer Equity Trust (Jersey) Limited. The claimants alleged that Mr Brown had breached his duties as director in approving transfers of properties (New Court and Ludgate House) at undervalue, declaring a dividend, agreeing management charges and retrospective interest, and leaving part of a transfer price outstanding, all in circumstances said to have been intended to minimise UK tax liabilities. They also alleged Equity Trust was vicariously liable or a shadow/de facto director.

• Nature of the claim: claims for breaches of directors' fiduciary duties and associated relief; the claimants relied on section 21 of the Limitation Act 1980 to avoid ordinary limitation periods on the basis of fraudulent breach.
• Procedural posture: appeal from the High Court (Business and Property Courts (ChD), Robin Vos DJ) ([2023] EWHC 968 (Ch)) to the Court of Appeal ([2024] EWCA Civ 571).
• Issues framed: whether Mr Brown had acted fraudulently/dishonestly (including blind-eye knowledge) so as to engage s 21; whether up-to-date independent valuations were in fact obtained or deliberately avoided; whether specific payments (dividend, management charges, retrospective interest) and the retention of part of the purchase price involved dishonest conduct; and whether Equity Trust could be vicariously or constructively liable as shadow or de facto director.

Court's reasoning:

• The Court of Appeal summarised and applied the correct appellate standards for challenging findings of fact and evaluative judgements, emphasising the narrow circumstances in which a trial judge's findings should be disturbed.
• The court accepted the trial judge's detailed factual findings that, on the balance of probabilities, Mr Brown believed the transfer prices either equated to or were justifiable as the market values; that he relied on valuation advice and on property specialists (Buckingham, DTZ, Colliers); and that although there were breaches of care (for example by failing to obtain independent valuations), those breaches were not fraudulent for the purposes of s 21.
• The court upheld ancillary findings that Mr Brown did not act dishonestly in relation to the dividend, management charges and retrospective interest, and that the claimants had not established the requisite state of mind (including blind-eye knowledge) needed to avoid limitation.
• The court therefore concluded the extended limitation period in s 21 did not apply and the claims were time-barred; it dismissed the appeal. The court left other grounds (values assessed by the judge, and detailed questions about Equity Trust's liability) unnecessary to resolve in light of the principal conclusions.

Notable factual findings by the judge, upheld on appeal, included values fixed by expert evidence: New Court valued at £65,179,584 as at 19 July 2005 and Ludgate House valued at £87,665,000 as at 1 August 2006. The judgment reiterated the limited scope for appellate interference with fact-finding and evaluative assessments.

The appeal was dismissed. The Court of Appeal upheld the trial judge's factual findings that Mr Brown honestly believed the transfer prices (for New Court and Ludgate House) were market values or justifiable market values and that, although there were breaches of duty of care, those breaches were not fraudulent for the purposes of section 21 of the Limitation Act 1980. Because no fraudulent breach was found, the extended limitation period did not apply and the claims were time-barred; there was no basis to disturb the trial judge's assessments of credibility and motive.

Appeal from the High Court of Justice, Business and Property Courts (ChD), Deputy High Court Judge Robin Vos: [2023] EWHC 968 (Ch); appeal heard by the Court of Appeal (Civil Division) resulting in [2024] EWCA Civ 571 (this judgment).