The legal battle between Russian investor Pavel Lisitsin and Wharf Land Investments over a Reading development site today moved to the Court of Appeal.
In July last year, Deputy Judge V Rose found in favour of Lisitsin’s company, Ludsin Overseas, in his claim against parties including: property manager Wharf Land Investments; one of its directors, Douglas Maggs; the agent that recruited him to invest, Eco3 Capital Ltd; and Eco3’s directors, Alexander Shadrin and Charles Balfour. The judge found them jointly and severally liable to pay Ludsin £1.4m in damages.
Lisitsin successfully claimed that, when he invested the money to help fund the £12.3m purchase of Sandford Farm, he was not told that it was in fact being bought for £9.3m, then immediately sold on to an SPV to achieve a “turn” of £3m.
Today, the defendants launched an appeal against that ruling, arguing that the judge was not entitled to make a finding of fraud against them.
Opening the appeal on behalf of Eco3 and Shadrin, Malcolm Bishop QC said that the defendants in the action are respected figures in the London business community and men of “impeccable antecedents”.
He said that Dr Shadrin denies making any false representation to Lisitsin, and alternatively maintains that, if any representation he made was incorrect, it was made in good faith on the basis of what he had been told by the promoters of the scheme. He said that Dr Shadrin himself lost “substantial sums” in the scheme.
He argued that the judge failed to find a necessary ingredient to prove fraudulent misrepresentation – an intention to deceive.
He said that the £9.3m was a “special price” only available to Maggs and Wharf Land, and that when he told Lisitsin that the purchase price was £12.3, it was his genuine belief that that was the price available to Lisitsin as an investor.
Denying that this involved a “secret profit” for Wharf Land, he said that it was instead a case of a promoter “utilising his expertise” to get a deal only available to him.
He said: “There was in fact no false representation. The site was never in truth available for that sum. At the time the representation was made, Dr Shadrin knew the price available to Mr Maggs and also knew that that price was not available to him. He imparted to Mr Lisitsin the price which he was able to acquire it for.”
Wharf Land and Mr Maggs are separately represented in the appeal, which is scheduled to last for two days.
After the site was sold, the new owner Woodley Developments was able to secure planning permission for residential development and sold the site on to Taylor Wimpey for £27m in August 2010.
Ludsin Overseas Ltd v Eco3 Capital Ltd and others Court Of Appeal (Arden, Jackson & McFarlane LJJ) 5 March 2013
Mark Cunningham QC and Gregory Banner (instructed by Wallace LLP) for the claimant
Malcolm Bishop QC and Sarah O’Kane (instructed by WI Legal) for the 1st and 2nd defendants (Eco3 and Shadrin)
Mark Warwick (instructed by Jeffrey Green Russell) for the 3rd, 4th and 5th defendants
The legal battle between Russian investor Pavel Lisitsin and Wharf Land Investments over a Reading development site today moved to the Court of Appeal. In July last year, Deputy Judge V Rose found in favour of Lisitsin’s company, Ludsin Overseas, in his claim against parties including: property manager Wharf Land Investments; one of its directors, Douglas Maggs; the agent that recruited him to invest, Eco3 Capital Ltd; and Eco3’s directors, Alexander Shadrin and Charles Balfour. The judge found them jointly and severally liable to pay Ludsin £1.4m in damages. Lisitsin successfully claimed that, when he invested the money to help fund the £12.3m purchase of Sandford Farm, he was not told that it was in fact being bought for £9.3m, then immediately sold on to an SPV to achieve a “turn” of £3m. Today, the defendants launched an appeal against that ruling, arguing that the judge was not entitled to make a finding of fraud against them. Opening the appeal on behalf of Eco3 and Shadrin, Malcolm Bishop QC said that the defendants in the action are respected figures in the London business community and men of “impeccable antecedents”. He said that Dr Shadrin denies making any false representation to Lisitsin, and alternatively maintains that, if any representation he made was incorrect, it was made in good faith on the basis of what he had been told by the promoters of the scheme. He said that Dr Shadrin himself lost “substantial sums” in the scheme. He argued that the judge failed to find a necessary ingredient to prove fraudulent misrepresentation – an intention to deceive. He said that the £9.3m was a “special price” only available to Maggs and Wharf Land, and that when he told Lisitsin that the purchase price was £12.3, it was his genuine belief that that was the price available to Lisitsin as an investor. Denying that this involved a “secret profit” for Wharf Land, he said that it was instead a case of a promoter “utilising his expertise” to get a deal only available to him. He said: “There was in fact no false representation. The site was never in truth available for that sum. At the time the representation was made, Dr Shadrin knew the price available to Mr Maggs and also knew that that price was not available to him. He imparted to Mr Lisitsin the price which he was able to acquire it for.” Wharf Land and Mr Maggs are separately represented in the appeal, which is scheduled to last for two days. After the site was sold, the new owner Woodley Developments was able to secure planning permission for residential development and sold the site on to Taylor Wimpey for £27m in August 2010. Ludsin Overseas Ltd v Eco3 Capital Ltd and others Court Of Appeal (Arden, Jackson & McFarlane LJJ) 5 March 2013Mark Cunningham QC and Gregory Banner (instructed by Wallace LLP) for the claimantMalcolm Bishop QC and Sarah O’Kane (instructed by WI Legal) for the 1st and 2nd defendants (Eco3 and Shadrin)Mark Warwick (instructed by Jeffrey Green Russell) for the 3rd, 4th and 5th defendants
