Claims against lending banks ruled 'unsustainable'
Film partnership investors lose claims against lending banks after judge rules them 'unsustainable'.
The High Court in England has granted applications by two banks to strike out a number of lender claims in a case that is part of what is known as the "Ingenious litigation".
The claims were brought by four individual investors who had taken out loans with the banks to fund investments in schemes marketed under the name "Ingenious" as tax-efficient vehicles through which individual taxpayers could contribute funds to limited liability partnerships (LLPs) for investing in films, offsetting their share of the LLPs' losses against other taxable income.
After HMRC did not accept that the schemes worked as intended and disallowed the losses claimed by the LLPs, a large number of investors issued claims to seek to recover their various losses. The claims were made against a range of defendants, including banks and independent financial advisers (IFAs).
In relation to the claims against Coutts & Co and NatWest, the investors brought claims for breach of contract (based on terms said to be implied into contracts between them and the banks), claims for negligence based on duties of care owed in tort, and claims based on the banks being vicariously liable for breaches of duty by the firm of independent financial advisers (IFA firm) that introduced the investors to the schemes and advised them on their investments.
Nugee J considered the banks' applications to dispose of the claims to be "well-founded" and accepted the bank' arguments He was satisfied the investors' claims were unsustainable, not supported by the evidence and should not be permitted to go to trial.
The contractual and tortious claims were struck out and summary judgment was granted against the investors on the vicarious liability claims.