14th January 2022
Date: 14th January 2022
Neutral Citation:  EWCA Civ 23
Court: Court of Appeal
In an important judgment handed down by the Court of Appeal this morning, Alexander Wright and Ed Jones, acting for the claimant Mike Tuke, have successfully resisted an appeal that raised the “novel” issue as to whether or not an innocent victim of fraud is required to give credit not only for any money received in a fraudulently induced transaction, but also the “time value” putatively earned on that money.
Following a three week Commercial Court trial, Jacobs J had in Tuke v Hood & Anor  EWHC 2843 (Comm) held that Mr Hood, the former owner and proprietor of world-renowned classic car dealer JD Classics Limited (“JDC”), was liable in deceit and dishonest assistance to compensate Mr Tuke for transactions involving nearly thirty classic cars. At a consequentials hearing in January 2021 ( EWHC 74 (Comm)), damages were assessed in the sum of c. £11.1 million. That figure included damages for “loss of investment opportunity” in the sum of c. £6.9 million. The balance of c. £4.2 million was awarded by way of “base damages”, based on the difference between the consideration paid (including the market value of any cars part-exchanged) by Mr Tuke, and what Mr Tuke received in cash and cars.
The loss of investment opportunity claim arose because Mr Hood had deceived Mr Tuke into entering into a transaction which saw him take out an £8,000,000 loan to purchase 5 Jaguar racing cars, as to which Mr Hood had dishonestly misrepresented both their value and ownership. To repay the loan, Mr Tuke was forced to sell many of his classic cars, including those he held as investments (the “Investment Cars”), predominantly through transactions fraudulently induced by JDC. The market for classic cars subsequently rose significantly but, as a result of Mr Hood’s fraud, Mr Tuke had had to liquidate the Investment Cars earlier and therefore missed out on their capital appreciation.
At first instance, Jacobs J accepted that that gave rise to a compensable head of loss, and awarded Mr Tuke damages for that lost investment opportunity calculated on the basis of the difference between the market value of each Investment Car at the point of sale and its market value in 2020, with a 25% reduction for uncertainties.
On appeal, Mr Hood contended that Jacobs J’s assessment should have accounted for the benefit that Mr Tuke gained over time by receiving cash for the Investment Cars, calculated in the same way as either compound or discretionary interest.
The court unanimously dismissed the appeal. Andrews LJ gave, in summary, the following reasons:
Coulson LJ delivered a short concurring judgment underscoring in particular that if a fraudster was allowed to “…reduce his or her ultimate liability to the victim by obtaining credit for the “time value” of the money” that “…would only encourage the fraudster to hide the deception for as long as possible” (§62). Baker LJ agreed with both judgments.
Alexander and Ed were instructed by Phillip Sharpe and Daniel Lewis of Wilmot & Co Solicitors LLP, which has one of the country’s leading practices for classic car litigation.
For help and advice talk to a member of our clerking team. They can advise on the best options for your matter.
Call: +44 (0) 20 7842 5555