Navigating Deceit in Legal Claims

By 14th March 2024 No Comments


Image of hand signing a contract

Taylor Hampton assists with Legal Matters

The concept of deceit in legal claims

In a recent case Old Park Capital Maestro Fund Limited v Old Park Capital Limited (in liquidation) before Mr. Justice Richards, the High Court’s has made an important ruling on the subject of deceit in legal claims. The court has ruled explicitly on the importance of “completeness” regarding representations to investors. This dispute is around allegations by the now insolvent fund against its asset manager, Bruno Pannetier. The allegation was that funds were placed into high-risk investments without proper disclosure, thereby acting in deceit and breaching contractual and fiduciary duties.  

Pivotal in this case was the stated investment approach outlined in the Offering Memorandum in relation to the fund. The court determined that this approach required a more precise representation of the fund’s investment strategies. To be transparent, the memorandum needed to disclose that the fund would partake in high-risk investments. Essentially, as part of an agreement inside a Consortium that comprised companies including Old Park Capital and Kingsway Asset Management, the Fund made an investment in Kingsway Commercial Paper. The investment was supposed to serve an undisclosed role for the creation and management of the Fund by giving capital to Kingsway, which would thereafter distribute these funds to other Consortium members. As it would turn out, Kingsway Asset Management, lacked liquidity and failed, leading to the fund’s insolvency.  

What the claimant argued 

The claimant (the “Fund”) argued that although they read through the description of the memorandum they “did not seek to comment on, or influence, the description of the investment strategy in the Offering Memorandum since that was the area of expertise rather of the investment managers rather than theirs”. They further argued that the officer’s true reasoning for the failed investment was that it was a vehicle to purchase Kingsway Asset Management Commercial Paper and not therefore acting in the best interest of the fund.  

What the defendant argued

The defendant, on the other hand, argued that they truly believed the representations made were truthful. However, the court found as the defendant had significant experience and expertise in investment banking, as well as a hand in drafting the fund’s objectives, they knew that the memorandum did not fully or properly disclose the fund’s investment strategy. This strategy, known as “Maestro,” aimed to exploit price discrepancies across different markets but also had the ability to invest in illiquid assets, such as problematic commercial papers.  

Legal precedent in deceit cases 

This deceit claim was dependent on whether or not Pannetier had purposefully or negligently misrepresented the fund’s investment strategy by leaving out essential information about the nature of these investments, particularly in the investments in high-risk sectors like commercial papers. The court used the landmark case Derry v Peek to define fraudulent misrepresentation. This case highlights that fraudulent misrepresentation can be defined as “a statement known to be false or a statement made recklessly or carelessly as to the truth of the statement.” With this in mind, the court determined that Pannetier’s omission of details was not just a simple mistake but a deliberate choice to avoid dissuading investors with unappealing and realistic details.  

What qualifies as false representation  

The court ruled that it was a requirement that the false representation must have been made dishonestly and that the person making the representation must have intended it to be relied on. A final element is that the claimant must have suffered a loss. 


In order for a representation to be considered “complete” and genuine, it must contain all pertinent information about the planned investments of the fund, particularly if such investments significantly depart from the intended strategy. A successful fraud claim was made after the court found that Pannetier had misled investors by concealing the fund’s involvement in high-risk, illiquid investments. This case emphasizes the need for total transparency and the legal ramifications of giving investors inaccurate representation.

For more information

For more information on deceit and half-truths in cases of fraud, please contact [email protected].