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Andrew Brown and others v InnovatorOne Plc and others [2012] EWHC 1321 (Comm)

28 May 2012

Brendan McGurk was part of the counsel team that successfully defended Collyer Bristow Solicitors against an alleged £50 million investment fraud. The litigation - known as the Innovator litigation - was a class action claim heard by Mr Justice Hamblen over 4 months in the Commercial Court, brought by more than 550 High Net Worth Investors, each of whom invested substantial sums into one or more of the Innovator Technology schemes. Investors had sought to avail of a very generous tax break under the Capital Allowances Act 2001, designed to encourage investment in British start-up technologies. Investors borrowed 80% of their investment and became partners in LLPs which would acquire and oversee the exploitation of particular technologies. Collyer Bristow acted for Innovator Plc, the company that brought these technology schemes to the investment market. In the event, none of the schemes succeeded and HMRC refused to allow full relief on the geared investments. Investors alleged that Innovator was an elaborate fraud and further alleged that two former partners of Collyer Bristow had either conspired to defraud investors or dishonestly assisted in breaches of trust said to consist in the payment away of investment monies. A series of other claims were brought, including under sections 26-30 of the Financial Services and Markets Act 2000 ("FSMA 2000"). The claims failed in their entirety.

The decision is important in so far as it contains a much-needed discussion of what satisfies the definition of a 'collective investment scheme' under section 235 of FSMA 2000. The decision is also important in so far as it clarifies the relationship between the remedial structure contained within FSMA 2000 and common law claims that might be brought in light of alleged breaches of duty under the FSMA scheme.

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Brendan McGurk