Judgment has been reserved in Russian investor Pavel Lisitsin’s £1.4m High Court damages claim, in which he alleges that he was induced by misrepresentations into making a “pump-priming” investment in a development site near Reading.
Deputy Judge V Rose is taking time to consider her ruling following a week-long trial of the action, in which the court heard Mark Warwick QC – counsel for Wharf Land Investments, its director Douglas Maggs and fellow defendant the Honourable Charles Balfour (the Wharf defendants) – insist that his clients made no misrepresentation.
Lisitsin’s company, Ludsin Overseas Ltd, claims 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 a special purchase vehicle (SPV) to achieve a “turn” of £3m.
Lisitsin says he was induced by this and other misrepresentations to invest £2m in the purchase in 2005, and that all of this money has now been lost.
However, Mr Warwick said that each of the Wharf defendants “reject the allegation of fraudulent misrepresentation”.
He said that the basic deal that Mr Maggs put together involved a sale by the owner of the site to a company nominated by him at a price of about £9.5m, and then a resale at a price of about £12.25m to a new SPV.
He continued: “Investors would be able to participate in the SPV, not in the initial sale. The site had very significant planning potential, and it was anticipated the investors would benefit from the increase in the value of the site, generated by realising that planning potential. The initial sale price was significantly lower than the open market value of the site, which was about £12.5m. Mr Maggs had the personal opportunity, as the result of lengthy dealings with the Site, to acquire it at a discount.
“The Wharf defendants did not misrepresent the price at which the site ‘was in truth available’, and certainly were not fraudulent. The Site was not ‘in truth available’ to investors for a price less than about £12.25m.”
He said that the Wharf defendants did not know that Ludsin was one of the investors, that each of his clients acted honestly in relation to the disclosure of the sale and sub-sale of the site and that, in any event, any loss sustained by Ludsin in 2009 was not caused by the misrepresentation alleged against them.
Mr Warwick said that, if any of the Wharf Defendants is held liable to Ludsin, then it will seek indemnity or contribution against the law firm Forsters, one of the initial defendants to the action which settled the claim against it with the payment of £600,000.
Ludsin is also suing the agents that recruited it to invest, Eco3 Capital Ltd, and its director Dr Alexander Shadrin, who also deny misrepresentation and the additional claims against them of breach of contract and fiduciary duty.
