The High Court has delivered a landmark judgment in favour of claimants in a long-running group fraud action case.
The dispute involved 435 claimants who invested in student accommodation and holiday properties across the UK between 2012 and 2019, including student accommodation in Leicester, Loughborough and Stoke.
A ten-week trial of ten test cases began in April 2024, overseen by Mr Justice Foxton in the Commercial Court. Claims were brought for deceit, unlawful means conspiracy, fraudulent misrepresentation, and violations of the Financial Services and Markets Act 2000 (FSMA), including that the investments were UCIS, with damages estimated at £45m.
Properties were sold by companies owned or controlled by the first and second defendants, Nicholas Spence and Derek Kewley. Sales of the properties then took place through marketing and estate agency companies owned or controlled by the third defendant, Andrew Crump.
Investors were promised fixed returns over set periods of time, which did not materialise and were indeed fraudulent.
With a number of the companies involved now insolvent, the claimants sued Spence, Kewley and Crump personally for their roles in events, as well as a number of companies within their control.
Legal action was initiated legal action in February 2021, with claimants able to obtain a Worldwide Freezing Order (WFO) against the main defendants to prevent the dissipation of assets. The WFO was contested by the defendants, who sought to have it discharged or fortified. However, the claimants successfully defended against these challenges, including in the Court of Appeal in 2022.
Over the years, the claimants also pursued asset disclosure both in the UK and in Florida, where Spence resides. Kewley was also found to have been in contempt of court for his “stark failures to provide truthful asset disclosure” after the WFO and was sentenced to 5 months’ imprisonment, suspended for two years by a separate judge in a hearing post-trial.
Defendants argued that they had acted in good faith and that any losses were part of the natural risks associated with property investments.
The judgment granted the claimants various forms of relief, including:
- Damages for deceit and unlawful means conspiracy.
- Rescission of certain leases due to fraudulent misrepresentation.
- Recovery of all monies paid under the now-declared UCIS investments.
- Compensation under FSMA for engaging in unregulated investment schemes.
The amount of damages is set to be determined at a future hearing.
