Jason Robinson and Julia Gibbon represented the successful claimants in this civil fraud dispute between the founders of and two investors in a start-up company, IHPL, which sells the fitness bike “CAR.O.L”. By a judgment handed down today, following a 6-day trial in July 2022, the Court found that both Defendants (the founders) were responsible for various fraudulent misrepresentations and breaches of warranty that induced the Claimants to invest a total of $2.5m into the company.
In particular, the Court found that the Defendants failed to explain to the Claimants, prior to their investment, that the founders’ relationship with the company’s existing investors had broken down and become acrimonious, that existing investors were unwilling to invest further in the company except on certain conditions, and that company funds had been serially misused by the founders to finance personal expenses and gifts/gratuities for friends and family. The Defendants concealed these facts, amongst others, from the Claimants and in so doing made various misrepresentations in their answers to a “Founder’s Questionnaire” completed by each of them as a condition to the Claimants’ investments.
In its 264-paragraph judgment, the Court provided an authoritative restatement of the key principles of liability and quantum applicable to claims for fraudulent misrepresentation and breach of warranty (paragraphs 152 to 158 and 254). The judgment also contains a salient reminder of the caution with which the Court will approach witness evidence in acrimonious commercial disputes: the learned Judge found that the Defendants’ evidence appeared to have been the product of work done in preparation for the hearing to justify their actions by reference to documents rather than reflecting their state of mind at the material times (paragraph 27).
Jason Robinson and Julia Gibbon were instructed by Matthew Bunting and Manthi Wickrama-sooriya of Quinn Emanuel Urquhart & Sullivan.
Please click here to view a copy of the judgment.