Wharf Land, the investment firm run by former Tory MP David Mellor and Douglas Maggs, has been found jointly liable in a £2m fraudulent misrepresentation case.
Wharf Land is among five parties that were chased for the return of £1.4m plus £600,000 in interest and costs by Russian investor Pavel Lisitsin. Parties included Maggs, agent Eco3 Capital, and Eco3 directors Alexander Shadrin and Charles Balfour.
Mellor was not named as a defendant in the case.
On Thursday, the high court ruled in favour of Lisitsin in his damages claim over a development site near Reading, Berkshire.
Lisitsin had argued that his firm, Ludsin Overseas, invested £2m in 2005 to help fund the £12.3m purchase of Sandford Farm, but that this cash was instead used to buy the site for £9.3m before immediately being sold on to him and other investors for the higher price.
High court deputy judge Vivien Rose said: “I find that Shadrin and Eco3 did fraudulently misrepresent to Ludsin the nature of the transaction I also find that in making those misrepresentations, Shadrin and Eco3 acted as agents for Wharf Land Investments, Maggs and Balfour and that those defendants knew about and connived in the making of those misrepresentations.”
The SPV that owned Sandford Farm later collapsed into receivership and Lisitsin lost his investment. The farm was then sold to Woodley Developments, of which Lisitsin claims Maggs and Balfour are directors.
After securing consent for a residential redevelopment, the site was sold to Taylor Wimpey for £27m.
