BAILII
British and Irish Legal Information Institute


Freely Available British and Irish Public Legal Information

[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]

England and Wales High Court (Commercial Court) Decisions


You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Home Long Income Fund v Knight Frank Llp [2025] EWHC 1345 (Comm) (03 June 2025)
URL: http://www.bailii.org/ew/cases/EWHC/Comm/2025/1345.html
Cite as: [2025] EWHC 1345 (Comm)

[New search] [Printable PDF version] [Help]

Neutral Citation Number: [2025] EWHC 1345 (Comm)
Case No: CL-2024-000-552

IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
03 June 2025

B e f o r e :

CHARLES HOLLANDER KC
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT

____________________

Between:
HOME LONG INCOME FUND
Claimant
- and -

KNIGHT FRANK LLP
Defendant

____________________

Anneliese Day KC and William Harman (instructed by DAC Beachcroft LLP) for the Defendant
Sam O'Leary (instructed by Macfarlanes LLP) for the Claimant

Hearing 22-23 May 2025

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:30 on Tuesday 03 June 2025.

    CHARLES HOLLANDER KC:

    The Applications

  1. There are two applications before the Court: (a) an application for a stay or extension of time for service of the Particulars of Claim until 31 December 2025 by the Claimant (the "Fund") (the "EoT Application"); and (b) a strike out application by the Defendant ("Knight Frank") (the "Strike Out Application").
  2. The Fund is an open-ended investment company ("OEIC") authorised by the Financial Conduct Authority (the "FCA"). As an OEIC, the Fund is governed by the Open-Ended Investment Companies Regulations 2001 (the "OEIC Regulations") and the rules and guidance in the Collective Investment Schemes Sourcebook in the FCA Handbook ("COLL").
  3. The Fund's sole director is Alvarium Fund Managers (UK) Limited ("Alvarium"). As director, Alvarium may exercise all the powers of the Fund subject to the provisions of the OEIC Regulations, COLL and the Fund's instrument of incorporation. Alvarium is also the Fund's Authorised Corporate Director ("ACD") and Authorised Fund Manager ("AFD") for the purposes of COLL.
  4. Knight Frank is a leading independent real estate consultancy operating in more than 50 territories around the world.
  5. By a letter dated 6 September 2018, Alvarium engaged Knight Frank to provide valuation services in respect of properties held by the Fund (the "Engagement"). Knight Frank's first valuation report for Alvarium was issued on 9 November 2018. Thereafter, Knight Frank issued valuation reports on a quarterly basis. Knight Frank's final valuation report before it terminated the Engagement was issued on 3 January 2023. Clause 3 of the Engagement provided that the valuations would be done in accordance with COLL and the valuations would cover the matters referred to in COLL 8.4.11R and Knight Frank would be an Appropriate Valuer and Standing Independent Valuer in accordance with COLL. Clause 7 of the terms and conditions attached to the Engagement provided that no liability was accepted to any third party and Clause 12 of the Engagement provided that Alvarium had instructed Knight Frank to inspect the properties externally only due to the sensitive nature of the occupants on an annual rolling basis.
  6. In November 2022, a report was published by a short seller, Viceroy Research LLC, making serious criticisms of Home REIT, a sister fund. The report was scathing of Alvarium. It flagged up the fact that Knight Frank had only valued on the basis of external inspections. Concerns as to the conduct of Alvarium continued through 2023.
  7. In February 2024, the FCA commenced investigations into Alvarium's provision of services to Home REIT and the Fund. The FCA placed further restrictions on the Fund on 3 April 2024.
  8. A substantial majority of the Fund's investors communicated to the ACD that they no longer supported the Fund's management team. This led to the ACD serving notice to terminate its appointment on 26 February 2024. The process of replacing the ACD has apparently been complex and time consuming and a replacement ACD is due to start on 30 June 2025.
  9. The Fund say that they have encountered serious difficulties with Alvarium and the running of the Fund, and they have equally had serious difficulties in obtaining documents and information.
  10. The Fund, and its investors, take the view that Alvarium have mismanaged the Fund and, in effect, are wrongdoers. That has given rise to difficulties in that the Fund say (i) the authority of the ACD was required to commence proceedings and (ii) Alvarium have not co-operated in the investigations to date as to the management of the Fund. The Investor Group says it has made considerable efforts since October 2023 to obtain access to the Fund's documents and to otherwise protect the Fund's interest in the absence of a properly functioning ACD. These efforts have included correspondence in October and November 2023 between Macfarlanes and Alvarium's then solicitors, Howard Kennedy (subsequently replaced by Herbert Smith Freehills) and attempts on behalf of various members of the Investor Group to exercise rights granted to them under side letter agreements entered into (at the time of investment) with the ACD and the Investment Advisor to request the ACD to provide documents relating to the Fund. It remains the position that the documents in question have not been provided to the Investor Group or to Macfarlanes. Counsel for the Claimant said the position was that the Fund did not have a functioning ACD.
  11. On 16 August 2024, Knight Frank received a letter from Macfarlanes LLP ("Macfarlanes") stating that it was acting for investors who together held 98% of the investments in the Fund (the "Investor Group") and asserting that the Fund's net asset value decreased by 61% during the period Q2 2022 to Q2 2023 and the gross property value decreased by 60% over the same period "primarily owing" to the discovery that the value of the Fund's property portfolio (and rental yields) had been "greatly overstated". Macfarlanes said it was writing in relation to "potential claims that the Investor Group and/or the Fund may have against Knight Frank".
  12. By letter dated 27 August 2024 DAC Beachcroft LLP ("DACB") for Knight Frank stated that it was not prepared to enter into a standstill agreement as requested by Macfarlanes.
  13. A further letter on 29 August 2024 from Macfarlanes stated that the Investor Group was not only investigating claims that it might have, but also "claims that may be brought" and it was arguable that the Fund could bring claims against Knight Frank arising out of the Engagement or the valuation reports and it was more than arguable that Knight Frank owed the Fund a duty of care in its role as valuer of the Fund's properties. The Investor Group accepted that any claim for unlawful means conspiracy or procuring a breach of contract was necessarily speculative at this stage. Nonetheless, Macfarlanes alleged that there were grounds to argue that Knight Frank was liable for procuring breach of contract and/or unlawful means conspiracy. The correspondence provided no real basis for these allegations.
  14. Commencement of Proceedings

  15. On 8 January 2025, Macfarlanes sent a letter to DACB stating that the Investor Group had issued a Claim Form against Knight Frank on behalf of the Fund on 1 October 2024. Macfarlanes also informed them that the Fund had not authorised the Claim Form when it was issued but that the Investor Group requisitioned an extraordinary shareholders' meeting ("EGM") on 24 October 2024, at which the Fund ratified the Claim Form and authorised Macfarlanes to act for the Fund in respect of its claims against Knight Frank on 18 December 2024. Macfarlanes invited Knight Frank to agree to a stay of proceedings until 31 December 2025 to allow a proper investigation of the claims against Knight Frank as well as investigation of potential claims vesting in the Fund and/or the Investor Group against Alvarium. This invitation was refused.
  16. The Claim Form was served on 28 January 2025. It pleads claims against Knight Frank pursuant to the three causes of action that Macfarlanes identified in correspondence in August and September 2024, namely procuring breach of contract, unlawful means conspiracy and negligence.
  17. On 31 January 2025, Knight Frank served an Acknowledgement of Service. The Fund issued the EoT Application on 31 January 2025 and Knight Frank issued the Strike Out Application on 13 February 2025.
  18. The Strike Out Application

  19. Knight Frank apply to strike out the Claim Form on the basis that: (a) the Fund was not in a position properly to formulate its claims when the Claim Form was issued; (b) the Fund had not authorised the Claim Form when it was issued; and/or (c) the Claim Form fails to set out a concise statement of the nature of the claim.
  20. No legitimate basis for claim?

  21. In Nomura International plc v Granada Group Ltd [2008] Bus LR 1, Cooke J held at [37] and [41] that:
  22. i) It is an abuse of process to issue a claim form for the illegitimate benefit of seeking to stop the limitation period running and thus deprive the defendant of a potential limitation defence if the claimant is not in a position properly to formulate a claim.

    ii) In such circumstances, the claimant will have no present intention of prosecuting proceedings and its actions would amount to seeking to unilaterally achieve an extension of time beyond that allowed by statute for the commencement of an action.

    iii) The illegitimate benefit achieved can only be nullified by striking out the proceedings so as to deprive the claimants of its putative advantage. No other sanction is suitable.

  23. At [48], Cooke J emphasised that it is the inability properly to formulate a claim at the time of issue which is decisive; see also Willmott Dixon Holdings Ltd v Karakusevic Carson Architects LLP [2024] EWHC 3449 (TCC) per Jefford J at [15]; USAF Nominee No. 18 Ltd v Watkin Jones & Son Ltd [2021] EWHC 3173 (TCC) at [23].
  24. One of the important changes in the CPR was to require the Claim Form to be endorsed with a Statement of Truth. Thus before pleading any factual allegation, the pleading party must: (a) believe the assertion to be true; (b) intend to support it with evidence at trial; and (c) either have reasonable evidence for the assertion, or a reasonable basis for the belief that the evidence will be available at trial. See Duchess of Sussex v Associated Newspapers Ltd [2021] EWHC 1245 (Ch) per Warby LJ at [54] and [63]-[65]. This reflects the fact that the purpose of a statement of truth is to discourage the pleading of cases which are unsupported by evidence and which are put forward in the hope that something might turn up: Clarke v Marlborough Fine Art (London) Ltd [2002] 1 WLR 1731 per Patten J at [21].
  25. Moreover, the claim for unlawful means conspiracy is a serious allegation. It may not be subject to the same professional restrictions as obtain when pleading fraud, but as a serious allegation it should not be put on the record without good reason. Equally, procuring breach of contract is an intention tort and thus involves a serious allegation.
  26. Knight Frank submit that it is clear from the correspondence with Macfarlanes that at the time of the issue of the Claim Form on 1 October 2024 the Fund was not in a position to formulate a claim in relation to any of these causes of action and that is obvious from the correspondence with Macfarlanes. Both the letters of 29 August 2024 and 5 September 2024 refer to the claims as being speculative.
  27. No authority?

  28. Knight Frank say the Claim Form was issued without the Fund's authority. This is common ground. The Claimant says it has been ratified since then.
  29. In Adams v Ford [2012] 1 WLR 3211, the Court of Appeal held that in principle it is a misuse of the process of the Court for a law firm to issue proceedings in the name of a person who has not given it authority to do so (per Toulson LJ at [39]). However, there may be circumstances where the issue of proceedings would not be abusive even though the firm lacked authority to issue them (per Toulson LJ at [40]). In that case, some but not all of the 273 Claimants had authorised the claim at the date of issue but there were circumstances which justified the course taken.
  30. The Claim Form was sent to the Court under cover of a letter from Macfarlanes explaining that Macfarlanes did not have authority to act on behalf of the Fund, referring to the process of replacing Alvarium as the Fund's ACD and setting out the intention to pass an extraordinary resolution to adopt or ratify the claim on behalf of the Fund. An EGM of the members of the Fund was duly convened on 18 December 2024 to consider a number of resolutions including a resolution adopting the Claim Form and authorising Macfarlanes to represent the Fund in respect of its claim against Knight Frank, which resolutions were passed.
  31. The Fund says that in the present case it was necessary for an EGM to be convened in order to pass a resolution authorising the proceedings.
  32. Breach of CPR 16.2(1)(a) Application

  33. Knight Frank further invites the Court to strike out the Claim Form (alternatively, such part as the Court thinks fit) pursuant to CPR 3.4(2)(c) in circumstances where it fails to set out a concise statement of the nature of the claim as required by CPR 16.2(1)(a) for the reasons already set out above.
  34. EoT application

  35. By Application Notice dated 31 January 2025 the Fund apply for the proceedings to be stayed until 31 December 2025 or, alternatively that the time for service of the Particulars of Claim be extended until 31 December 2025.
  36. The Fund says there are good reasons why they seek a stay or extension of time:
  37. i) Although the nature of the claims can readily be identified, those acting for the Fund are hamstrung by a lack of access to the Fund's documents. It would be undesirable to require the Fund's advisers to plead its case now without having the benefit of full access to the Fund's documents (as a result of the non-cooperation of its outgoing ACD).

    ii) Further, it is inevitable that any Particulars of Claim prepared at this stage would be subject to extensive pleading amendments once the Fund's advisers gain access to the Fund's documents.

    iii) Finally, a stay or extension of time would allow the parties to comply with the Pre-Action Protocol for Professional Negligence. At present, Knight Frank has engaged only superficially with the Fund's claims and Macfarlanes' letter of 5 September 2024.

    Abuse: no basis for issue of claim form

  38. Nomura provides that as at the date of issue of the Claim Form the claimant must have a genuine intention to proceed with the claim and a reasonable basis for making the allegations. Otherwise (i) the claimant will not be in a position to sign a Statement of Truth on the Claim Form and (ii) the claimant will be seeking to subvert the law on limitation.
  39. A reasonable basis for making a claim does not require the claimant to be able to plead a case with particularity. Cooke J refers at [37] to the "essence of the claim":
  40. "In my judgment, when regard is had to these authorities the key question must always be whether or not, at the time of issuing a writ, the claimant was in a position properly to identify the essence of the tort or breach of contract complained of and if given appropriate time to marshall what it knew, to formulate particulars of claim. If the claimant was not in a position to do so, then the claimant could have no present intention of prosecuting proceedings, since it had no known basis for doing so. Whilst therefore the absence of present intention to prosecute proceedings is not enough to constitute an abuse of process, without the additional absence of known valid grounds for a claim, the latter carries with it, as a matter of necessity, the former. If a claimant cannot do that which is necessary to prosecute the claim by setting out the basis of it, even in a rudimentary way, a claimant has no business to issue a claim form at all "in the hope that something may turn up"
  41. What that involves, in my judgment, is that if asked at the date of issue "why are you making a claim for this cause of action" the deponent to the Statement of Truth would be able succinctly to explain the basis for the claim, at least in general terms.
  42. Counsel for Knight Frank submits that the Claimants cannot fulfil this test. She points to the correspondence from Macfarlanes, and submits that they were unable to point to any remotely cogent basis for a claim, and themselves made clear in correspondence that the claims against Knight Frank were speculative.
  43. Counsel for the Claimant submits that there was never any difficulty in pleading a claim and the position now is the same as the position was at the date of issue of the Claim Form. He submits, putting the matter at the relatively high level required, the claim is based on the following:
  44. i) On the one hand Knight Frank made clear that they knew Alvarium were required to comply with COLL, and the inspections were geared to COLL obligations, which required internal inspections, yet they accepted instructions to value without internal inspections.

    ii) Knight Frank thereby must have known that they were assisting Alvarium to breach their COLL obligations to the detriment of the Fund.

    iii) The substantial difference between prior and subsequent valuations raises an inference of negligence.

    iv) Merely because Knight Frank excluded liability to anyone other than Alvarium did not mean that such a provision would be effective in law against the Fund who stood to suffer the loss.

  45. I have to say that on present material I have considerable scepticism as to whether these allegations give rise to a claim against Knight Frank. But it seems to me that on the present application I am concerned with abuse. The Claimant says it can plead, and could on 1 October 2024 plead, Particulars of Claim which properly support these causes of action, intend to proceed with them, and have explained the essence of those causes of action in the present case. So, in my judgment, this is not a case of abuse. Whether these causes of action against Knight Frank can survive an application for reverse summary judgment depends on evidence not presently before me. So the proper course in my judgment on this aspect of the application, is to require the Claimant to plead Particulars of Claim and for Knight Frank to decide on the basis of the case pleaded whether to make an application for reverse summary judgment or otherwise to apply to strike out the claim.
  46. The authority issue

  47. Knight Frank point out that as at 1 October 2024 Macfarlanes did not have authority to act for the Fund, and thus a subsequent EGM was needed to ratify their authority. They point out that the Investor Group had known that there were problems with Alvarium since late 2022 and thereafter the problems increased. There is no proper explanation, they say, as to why they waited until limitation was about to expire before taking steps to obtain authority to issue proceedings in late 2024. There were a variety of steps which could have been taken. No good reason had been shown why the Court should take the exceptional course of permitting the proceedings to continue where they were commenced without authority. They have brought the problems on themselves by waiting until the last possible moment before taking steps to resolve the position.
  48. Counsel for the Claimant emphasised that the decided cases are often about circumstances where the solicitor has authority for some but not all of a large group, and where the Court is concerned that the Statement of Truth verifying the authority of the solicitor is not in fact true. Adams was such a case. He submitted that the principle was one of abuse, and about authority, and the Court is not on such an application concerned with whether matters could or might have been done differently.
  49. He pointed out that in the present case the solicitor had written explaining the position at the same time as the Claim From was issued, so there was no question that the Claim Form was misleading, that the person who should have commenced proceedings was Alvarium, but they were not properly functioning as ACD at the time, that 98% of the shares in the Fund were held by the Investor Group, that they requisitioned an AGM, which took 8 weeks, and the EGM passed the relevant motions overwhelmingly . He referred me to Adams at [40] where Toulson LJ gave the following example:
  50. "However, there may be circumstances where the issue of proceedings would not be abusive in that sense, even though the firm lacked formal authority to issue them. Suppose that a firm received instructions on behalf of a corporate body or association whose governing instrument required certain procedures to be followed before the issue of legal proceedings. Suppose further that a limitation deadline was looming, that there was insufficient time for those procedures to be completed, but the chairman of the body instructed the firm to issue proceedings, confident in the belief that it was in the claimant's interest to do so and that the necessary procedures would be completed before it was time for the proceedings to be served. I do not believe that it would be an abuse of the process of the court for the firm to issue proceedings in such circumstances."
  51. He submitted that the present case was very similar to the example given.
  52. I accept those submissions. Again, the emphasis must be on abuse. It seems to me that the conduct of the applicant may be relevant to abuse, but not in the same way as (say) on an application for relief against sanctions. I do not consider the conduct of the Claimants in that regard was abusive.
  53. CPR 16.2.1 (a)

  54. I do not think the Claim Form is defective in any material sense. I do not accept this complaint put forward by Knight Frank.
  55. EoT Application

  56. In my judgment Knight Frank is entitled justifiably to complain at the fact that almost eight months after the issue of the Claim Form, there has been no progress and the Claimant is asking for further extensions till the end of the year for the Particulars of Claim notwithstanding that limitation may well, at least in part, have expired. The Claimant says, and must say, that it is in a position to plead Particulars of Claim now. Given my reservations as to whether these claims will survive a summary judgment application, Knight Frank is entitled to be put in the position where they can see the Particulars of Claim and decide whether they wish to apply to get rid of the claim. I do not think in the circumstances there should be further extensions unless there is some major unforeseen problem, which is why I consider there should be an "unless" order.
  57. I have been told that the new ACD is due to arrive on 30 June 2025. That informs the date specified in the "unless" order.
  58. For the same reasons I do not grant a stay.
  59. Conclusion

  60. Thus I will order that (i) the strike out applications are dismissed (ii) the stay application is dismissed (iii) the EoT application is allowed to the extent set out in (iv); (iv) unless the Claimant serves Particulars of Claim by 4pm on Friday 4 July 2025, the Claim be struck out.
  61. The case was well argued on both sides.
  62. I will give judgment remotely and will deal with consequential matters on paper unless either party requests an oral hearing.

About BAILII - FAQ - Copyright Policy - Disclaimers - Privacy Policy amended on 25/11/2010