![BL-2021-002293 - [2025] EWHC 678 (Ch)](https://backend.juristeca.com/files/emisores/logo_O3rEzCI.png){kind=logo}
The defendant’s factual case on limitation
The defendant’s factual case on limitation
Putting aside for the time being the fact that FCGPL did not exist for much of the period since the events put in issue by this claim, two separate questions fall to be considered. The first is whether the defendant deliberately concealed a fact relevant to the right of action pursued by the claimant. Then the second is whether the claimant discovered the concealment, or could with reasonable diligence have discovered it, more than six years before the claim was issued. The defendant’s application seeks the determination of these issues by way of summary judgment. The focus of the submissions was almost entirely on Mr Horlick’s (and, by extension, the claimant’s) knowledge and, thus, on the second of those questions.
The points relied on by the defendant are the following.
First, the defendant makes reference to the way in which Ms Vials explains the case on limitation in her second witness statement. She says this:
‘109. The essential facts concealed by Mr Flohr may be summarised as being his use of Parallel Comprendium Structure to acquire and, thereafter, manage former Comdisco entities to his considerable personal profit. In this regard, the Claimant alleges that the acquisition of Comdisco Germany was particularly profitable for Mr Flohr (the profit being €93-131 million, see Paragraph 35(ii)(e) of the PoC). This is expressed in the PoC as follows:
By Paragraph 67 of the PoC, the Claimant refers to the facts and matters set out at Paragraphs 35 and 41 of the PoC (i.e. the breaches of duty and the failure to inform Mr Horlick of the completion of the Comdisco Germany acquisition, whether ABN provided funding and the profit made on acquisition) and alleges that Mr Flohr failed to disclose to the Claimant the fact and true operations of the Parallel Comprendium Structure, the source of the funds used to complete the Comdisco Germany transaction and the profits that he made from the transactions.’
. Further, by Paragraph 69 of the PoC, the Claimant avers that each of the breaches of contractual and fiduciary were deliberate and committed in circumstances where they were unlikely to be discovered for some time. As such, each breach of duty is alleged to be a concealment of the facts involved in that breach of duty (pursuant to Section 32(2) of the Act).
By reason of his duties to the Fund, Mr Flohr was bound to disclose (at least) the essential facts identified above and the Fund alleges his continuing failures so to do were deliberate concealments.
As I have referred to above, by Paragraph 63 of the PoC, the Fund also alleges that Mr Flohr utilised his position to cause the exit of staff and individuals from Comprendium UK and its subsidiaries. The effect of their removal was to delay the exposure of Mr Flohr’s breaches. …
Subsequently, the Fund alleges Mr Flohr continued to conceal the facts relevant to its rights of action when enquiries were made of him in May 2010 by Mr Horlick (see Paragraph 64 of the PoC) and in 2013 during a course of correspondence between lawyers for Mr Horlick and Mr Flohr (see Paragraphs 65-66 of the PoC (“the 2013 Correspondence”)). …
Further, the Claimant also alleges an additional act of concealment as follows. On or around 30 November 2005 (which was the date Mr Flohr and Mr Horlick had signed an agreement for Umbra and Equity Management to declare all their mutual receivables and payables forgiven) during a meeting at Mr Flohr’s house in Walton Road, Mr Horlick asked Mr Flohr what happened with his potential Comdisco Germany acquisition. Mr Flohr had replied to Mr Horlick stating that the deal never got off the ground as planned, which Mr Horlick took to mean that Mr Flohr did not acquire Comdisco Germany as expected. Given their relationship of trust and confidence, as well as Mr Horlick’s lack of knowledge as to the true purpose of the Parallel Comprendium Structure, Mr Horlick had no reason to probe Mr Flohr further on an issue that was clearly sensitive to him.’
I have explained above that I would strike out some of the allegations which are referred to above (in relation to the claim that Mr Flohr frustrated the business of Comprendium UK in not complying with a representation he made to Mr Horlick), but I will consider the limitation arguments on the footing that I may be wrong in what I have said in that regard.
As far as the allegation mentioned by Ms Vials at paragraph 114 of her second witness statement is concerned, the claimant seeks by its amendment application to introduce this point by a new paragraph 63A. I will mention this further below.
The defendant’s contention is that the facts relied on by the claimant in support of the claim set out in the particulars of claim were known to it, or could have been discovered by it with reasonable diligence, at all material times. Furthermore, he contends that this can be demonstrated at this juncture, before a defence is filed, on an application for summary judgment.
The knowledge relied on by the defendant for these purposes is that of Mr Horlick. Mr Horlick was a director of the Fund’s investment manager, among other roles, in the period up until 2008. In relation to these questions in the period up until then, it was not suggested that any question of attribution arises, as both the claimant partnership itself and its general partner, FCGPL, were in existence. The question whether the knowledge of Mr Horlick is relevant to the question of limitation in the period after 2010 and, if so, how, arises in relation to his knowledge after he had ceased to be involved with the Fund, and after both the claimant and FCGPL had been wound up.
Mr Cohen went through the documents relied on by the defendant in regard to limitation in essentially chronological order. He based his submissions on the statement of the claimant’s case on limitation as set out in Ms Vials’ evidence, as I have summarised above. He submitted that the particulars of claim themselves contain an admission that Mr Horlick knew of what is described as the Parallel Comprendium Company Group. For instance, the case on the agreement allegedly reached in Munich in 2002 relies on Mr Flohr having told Mr Horlick that he intended to make a bid for Comdisco Germany.
Mr Cohen then relied on a series of documentary evidence concerning Mr Horlick’s knowledge of the alleged parallel structure:
Mr Flohr sent emails to Mr Horlick on 5 and 14 November 2002, attaching a draft confidentiality agreement in relation to the acquisition of Comdisco Germany, copying ABN Amro, and thus consistent with the claimant’s pleading of the two men’s alleged Munich agreement but showing that Mr Horlick was kept informed of the progress of the deal. The attached draft agreement refers to Comprendium Investment SA. Ms Vials gives evidence that Mr Horlick did not read the emails or the attachment, evidence which Mr Cohen describes as unsatisfactory. Not only is it the evidence of a solicitor rather than the person with contemporaneous knowledge himself, but it is inherently incredible that Mr Horlick could remember whether he opened and read an attachment to an email received two decades ago.
On 3 June 2003, Mr Horlick was sent an internal Comprendium UK document on the ‘new Comprendium structure’. This referred to the holding company of the ‘Comprendium Leasing Group’, being a company in the Swiss canton of Zug. Mr Cohen submits that this document shows that those involved with Comprendium UK knew that Mr Flohr’s other business activity was in leasing activity, unlike Comprendium UK which was in the business of document management systems. Ms Vials in response says (other than that Mr Horlick looked at the document only cursorily) that, ‘the precise scope of Comprendium UK’s business will require extensive analysis and evidential explanation’, saying that Mr Astaire (for the defendant) had provided no evidence to support the contention that Comprendium UK was not involved in leasing activity. Mr Cohen suggested that it is incredible that Mr Horlick is unable to explain why Comprendium UK might have been involved in computer leasing.
A further document in evidence and which was possibly attached to the internal document sent to Mr Horlick above is headed ‘Comprendium Restructuring’, and ‘Final Heads of Agreement – Confidential’, unsigned but with provision for both Mr Flohr and Mr Horlick to sign it. This states that the preference shares are to be restructured as between nCoTec ventures Ltd (the original name of the Fund’s investment manager, later called Frontiers Capital Ltd) and EGE, being Mr Flohr’s service company. This was said to be ‘partly in consideration for hosting revenues etc payable to Comprendium Software from Comprendium Finance’ and thus, submits Mr Cohen, shows that the Swiss company was in fact a customer of Comprendium UK. This is also shown in a spreadsheet attached to a financial report to the board dated 13 October 2004.
Mr Cohen then pointed out that Ms Vials accepts that Mr Horlick knew of the acquisition of Comprendium Finance SA. It is also pleaded that he knew of the existence of that company and (in a proposed amendment to the particulars of claim) of Comprendium Finance SA, but also pleaded that Mr Horlick believed they were for the limited purpose of helping Mr Flohr or his service company to make investments into Comprendium UK. Mr Cohen submits that this is inconsistent with the confidentiality agreement mentioned above, which was sent to Mr Horlick.
There was then a board meeting for Comprendium UK held in Munich on 25 August 2004, at the offices of Comprendium Financial Services, at which Mr Flohr and Mr Horlick were present together with the UK company’s CEO, Giovanni Bindoni. It is submitted that Mr Horlick has given no explanation of what he understood the German Comprendium company to be.
Mr Horlick sent Mr Flohr an email dated 15 October 2004, saying:
‘I have spent a lot of my time on this fucking company Comprendium over the last 24 months and if I'm totally honest I think it has not had enough of your attention since you did your deal with Comdisco.
I am trying to come up with a way of saving this business but I need TOTAL COMMITMENT FROM SOMEONE ON YOUR SIDE or FROM YOU if we are going to save this thing. I had long conversations with Bing and Hans yesterday, we agree to find an insolvency practitioner and when I call Hans today at 2pm German time he says “Oh I was busy in a meeting” and “Anyway Thomas thinks this could damage the Comprendium name”.
THIS PISSES ME OFF.
If we save the Comprendium business the way I am suggesting then the Comprendium name will be a lot less damaged than if a quite large business goes down the pan completely along with 120 people.’
Mr Cohen submitted that this shows Mr Horlick knew the Comprendium name was being used by Mr Flohr, and that he was interested in that name, and that a deal with Comdisco had been done.
An investment approval paper dated 25 October 2004 was apparently written by Mr Horlick, making the case for an additional secured loan facility to be granted by the fund to Comprendium UK. This shows that Mr Bindoni had departed the company and been replaced by Mr Jürgen Bremer, said to be a veteran of Siemens, ‘now employed by Comprendium Investments, Flohr’s leasing subsidiary’. Ms Vials suggests that the paper was written by a more junior team member, and that this meant ‘no more than the fact that Comprendium Investments was Mr Flohr’s personal company and that Mr Flohr was known to have a background interest in leasing’.
In an email to Mr Flohr on 2 December 2004, when Mr Flohr had expressed a wish to be released from a guarantee to Credit Suisse in relation to Comprendium UK, Mr Horlick suggested the guarantee might be able to be ‘transferred back to your finance company in 2005’. Mr Cohen suggested that this must be a knowing reference to what was formerly Comdisco Switzerland.
Mr Cohen relied on the trade mark purchase agreement, where the company name, ‘Comprendium’ was sold together with the trade mark registrations (and applications for registration) for the sign, ‘Comprendium’ in Germany, the EU and the USA. A recital to this document states in terms that the Swiss-based purchaser (i.e. Comprendium Investment SA) has been using the trade marks without consent. There is an email from Mr Horlick dated 23 February 2005 acknowledging this agreement.
Mr Cohen referred also to information in the public domain, which it is said Mr Horlick would have been capable of easily discovering. These include information about the acquisition of Comdisco Switzerland by Comprendium Investment SA which is (or was at the material times) available on the SEC website, with links to Comdisco’s 10K filings available also on the Comdisco website. Then, there was a press release from ABN Amro on 1 May 2003 about the acquisition by Comprendium Investment SA of Comdisco Germany. I was also referred to an article in the Chicago Daily Herald on the same date referring to a sale of Comdisco’s German leasing unit to ‘Munich-based Comprendium Investment GmbH’. There were other documents to similar effect.
The claimant also seeks to introduce by amendment a new paragraph 63A into the particulars of claim. The draft provides as follows:
‘63A. On or around 30 November 2005, during a meeting between Mr Flohr and Mr Horlick at Mr Flohr’s house at Walton Place, Knightsbridge, Mr Horlick asked Mr Flohr what happened with the Comdisco Germany transaction. Mr Flohr stated that the deal never got off the ground.’
Mr Cohen was scathing of this proposed amendment, seeking as it does to add for the first time a further act of alleged deliberate concealment later than those currently pleaded, and within six years of the winding up of the claimant and the general partner. He submitted that it was inherently incredible that Mr Horlick could have remembered such a statement by Mr Flohr for the first time now after so many years have passed, and that it has been pleaded only because the claimant perceives that it has a limitation problem, and no plausible explanation is provided by Ms Vials as to why it has now emerged. This is especially so as Mr Horlick appears to admit that he knew as at May 2010 that Mr Flohr had acquired Comdisco Germany, yet does not indicate how and when he found this out. Mr Cohen also suggested that the allegation was irrelevant as it did not suggest that Mr Horlick did not know of the use by Mr Flohr of the use of the Comprendium name to run a leasing business. Furthermore, the allegation would have been relevant on limitation purposes to the personal claim issued by Mr Horlick and based on the agreement allegedly made with Mr Flohr in Munich in October 2002, which was discontinued in 2022.
There was then contact between Mr Horlick and Mr Flohr in 2010, after the claimant Fund had ceased business, when Mr Horlick asked whether his alleged €500,000 personal loan might be repaid, indicating that he would take half up front together with an investment in VistaJet (in which Mr Flohr was by then invested). Mr Flohr then asked for assistance in dealing with a claim brought against him in the Swiss Arbitral Courts by Mr Erwin Stern, former CEO of Solsys. Mr Horlick complains that Mr Flohr told him he was unable to repay the loan because he was at the time illiquid, and later denied that he had ever agreed to repay it. The claimant alleges that this constituted further concealment on Mr Flohr’s part. Mr Cohen submitted that Mr Flohr’s written responses to Mr Horlick’s requests for payment were not concealing anything.
Ms Vials then says this at paragraphs 179 to 180 of her second witness statement:
‘179. In May 2013, three years after the Stern Proceedings, Mr Horlick had a conversation with Mr Stern, in which Mr Stern made various allegations against Mr Flohr, including that Mr Flohr may have made a profit of circa of €300m on the Comdisco Germany Acquisition and used Comprendium companies to do so. Mr Horlick was sceptical as to that allegation, being mindful that Mr Stern had been unsuccessful in pursuing his own claim against Mr Flohr at the Arbitral Proceedings. As a result, Mr Horlick viewed Mr Stern’s allegations with caution.
Mr Horlick was, nevertheless, motivated to query the position with Mr Flohr because, at the time, he believed that money was due to him personally, including, at least, the repayment of the €500K Personal Loan. Mr Horlick, therefore, instructed Dr Geza Toth-Feher, a former German lawyer, friend and business partner of Mr Horlick’s, to correspond with the Defendant’s legal representative, Dr Luka Müller-Studer of MME Partners in Switzerland.’
The first letter from Dr Toth-Feher is dated 9 September 2013. In that letter, he indicates that Mr Horlick has asked his investment advisory company, CBE, to review a number of transactions, including the acquisitions of Comdisco Switzerland and Deutschland by Comprendium Investment SA. It requests a meeting with Mr Flohr, saying ‘the circumstances surrounding these various related transactions may give rise to certain compensation and damage claims that Mr Horlick has against yourself’.
A further letter was then sent on 21 October 2013. This refers to the discussion between the men in 2010 about repayment of the personal loan, and goes on:
‘5. You will also recall that you made an agreement with Mr. Horlick at the Oktoberfest in 2002 for him to assist you in raising funds for the acquisition of Comdisco Germany. You will recall that you offered him 20% of the profits on the deal. While this agreement was never documented Mr. Horlick (misguidedly as it turns out) proceeded on the basis that you were a man of your word. Mr. Horlick expressed his concerns that you were supposed to be running Comprendium, which Mr. Horlick had financed ultimately in an amount of nearly €8m; to alleviate his concerns you promised that if the transaction was successful, Comdisco Germany could become a customer of Comprendium and you would ensure that at least €10m of business was contracted with Comprendium. …
You will be aware that the acquisitions of Comdisco Switzerland and Comdisco Germany were structured using the name, trademarks and intellectual property of the Comprendium Group without the agreement of Mr. Horlick or his funds or the Board of Comprendium. You will also know that you falsely misrepresented to Mr. Horlick the reasons why Mr. Horlick should agree to transfer the names and IP of Comprendium to you for effectively zero consideration when the core business of Comprendium failed, which he blames largely on your responsibility for the lack of any management oversight whatsoever of the business.
It is clear that in your personal dealings with Mr. Horlick and in your dealings with Mr. Horlick in his capacity as a Director of Frontiers Capital regarding the Comprendium Group, and your related dealings with [others] regarding Comprendium and Comdisco, you have demonstrated a repeated pattern of deliberately deceptive behaviour which in the case of the allegations surrounding the auction of Comdisco Germany amount, if proven, may very well amount to criminal offences.’
A further, more detailed, letter was then sent by Dr Toth-Fether on 5 November 2013. It is necessary to set it out in some detail. After referring to Mr Stern’s claim, he says:
‘…Mr Horlick's claims are of an entirely different nature, namely the provision of many millions of Euros of capital to Mr Flohr and his companies. It is this capital and Mr Horlick's provision of financial advice and assistance that provided Mr Flohr with the platform with which he has been able to enrich himself.’
The letter goes on to refer to the €500,000 personal loan and says:
‘Mr Daniel Quarcoopome, an old friend and “fixer” of Mr Flohr's, has provided extensive background regarding Mr Horlick's claims. It is interesting that, according to Mr. Quarcoopome, at the time that Mr Flohr asked for the loan from Mr Horlick he was basically out of cash and was being sued by Comdisco Inc, his former employer.
It is Mr Horlick's loan, and his company's investments in Comprendium, that provided Mr Flohr the breathing space to continue his business activities at all and to settle his dispute with Comdisco.’
Dr Toth-Feher states that Mr Flohr had agreed to act as executive chairman of Comprendium UK and devote substantially all his time to the business but did no such thing. There is a complaint that Comdisco Switzerland was acquired through Comprendium Investment SA without any information being given to the board of Comprendium UK. After referring to the October 2002 Munich agreement and to the serious financial difficulty subsequently experienced by Comprendium UK, the letter continues:
‘Mr Horlick had wanted to go for an immediate winding up of the business not knowing that in fact the Comprendium business was now closely intertwined with the business of Comdisco Switzerland and Comdisco Deutschland. In effect Mr Flohr completely breached his fiduciary duties towards Comprendium and its lead investor, Mr Horlick, fraudulently misrepresented the state of affairs of the Comprendium group of companies and failed to fulfil his promise to fund the ongoing Comprendium business despite being in a position to do so. These actions and misrepresentations by Mr Flohr led to a total loss of investment in the amount of €7.5m.’
The letter continues by asserting that Mr Flohr had entered into other agreements similar to the Munich agreement with others (an allegation also made at paragraph 39 of the particulars of claim). It then continues before its conclusion requesting settlement discussions by saying that:
‘…it is clear to Mr. Horlick that your client has demonstrated a repeated pattern of deliberately deceptive behaviour which would weigh heavily with a court. This is before consideration of the other very serious allegations which have been made by Mr Horlick's witnesses against Mr Flohr with respective [sic] to the acquisition of Comdisco Deutschland in particular.’
The particulars of claim state, at paragraph 66(iv) that, ‘Dr Luka Muller-Studer made clear in correspondence dated 18 October 2013, 21 October 2013 and 29 November 2013 that there was no basis to the claims advanced by Mr Horlick’. Ms Vials suggests in her second witness statement that Dr Muller-Studer’s responses are a further act of deliberate concealment on Mr Flohr’s part. She says, ‘Plainly, these later concealments [i.e. referring also what was said by Mr Flohr in 2010] are particularly relevant if the Court determines that Mr Horlick’s knowledge at the time of the concealments is capable of being attributed to the Fund.’