The Connaught Income Fund, Series 1 v (Capita Financial Managers Ltd & Anor
2014
COMMERCIAL COURT
United Kingdom
CORAM
- HIS HONOUR JUDGE MACKIE QC
Areas of Law
- Civil Procedure
- Banking and Finance Law
- Corporate Law
2014
COMMERCIAL COURT
United Kingdom
CORAM
AI Generated Summary
His Honour Judge Mackie QC decided an expedited summary judgment application concerning whether the Connaught Income Fund, Series 1, acting through its joint liquidators, could sue Capita and Blue Gate on claims assigned by over 1,000 investors who collectively subscribed about 75 million. Capita operated the Fund until September 2009, when Blue Gate became operator until winding-up by High Court order in March 2012. The defendants argued the assignments and proceedings were invalid for multiple reasons: CPR PD 7A 5A did not permit suit in the firm name; dissolution and Partnership Act s.38 barred post-dissolution assignments; the Capita claim was in the wrong name; FSMA s.138D/s.150 rights could not be assigned to a non-private person; and the liquidators lacked statutory power. Rejecting each, the court held PD 7A 5A is procedural and should be read broadly under CPR 1; Section 38 concerns partners, not liquidators; at the suit of does not bar assignment; RAR reg. 6 does not apply to legal assignees; and Insolvency Act Schedule 4 para. 13 empowers liquidators to accept assignments and sue. The Fund may proceed.
Judgment
Judge Mackie QC:
This application for summary judgment by the claimant (“the Fund”) against both defendants (“Capita”, and “Blue Gate”) is about whether the Fund can bring the claims it makes in this action on the basis of assignments. These assignments are from over 1,000 retail investors who subscribed some £75 million to the Fund prior to its insolvent liquidation on 3 December 2012. Many investors were limited partners in the Fund but many are not.
The hearing last week was expedited to minimize the investors’ exposure to a limitation risk if the application fails. There are helpful witness statements from Mr Bouchier, the Fund’s joint liquidator, Mr. Byrne Hill of Capita’s solicitors and Mr Mullarkey, a director of Blue Gate, but there are no disputes about the facts on the application.
Mr Powell QC for Capita and Mr Christie QC for Blue Gate have submitted in different ways that since this is an application for summary judgment I am concerned only with whether their arguments have a real prospect of success. That approach would frustrate the purpose of the application and I will deal with the issues as though it were the trial of the points concerned.
Facts and background to the action
The Fund was an unregulated collective investment scheme set up as a limited partnership. Capita was its operator from launch in April 2008, and Blue Gate was its operator from September 2009 until winding-up. The limited partnership was formed in April 2008 and registered pursuant to s. 8 of the 1907 Act on 10 April 2008. It was initially named “ The Guaranteed Low Risk Income Fund, Series 1 ” and renamed “ The Connaught Income Fund, Series 1 ” on 01 October 2009. On 3 March 2012 it was wound up by order of the High Court and joint liquidators were appointed.
The Particulars of Claim allege that the Defendants unlawfully promoted the Fund to the investors who became partners in it (in breach of s.238 and s.241of the Financial Services and Markets Act 2000 (“ FSMA ”), and that they were responsible for promotional literature which was misleading.
The Fund sues “in its capacity as the [legal] assignee of the claims against the defendants enjoyed by the Investors identified in the schedule to the [Particulars of Claim] as having assigned their claims’ The Investors include individuals as well as ‘internet investment platforms’ and the trustee of an exempt unit trust. They invested in the Fund at various stages between April 2008 and 3 December 2012 w