Mark William Taylor & Anor v Bank Of Scotland Plc
[2023] EWHC 3185 (Ch)
Christopher Bernard Upham & Ors v HSBC UK Bank plc
26 April 2024
[2024] EWHC 849 (Comm)
High Court
People invested in a film scheme promising tax breaks, but it failed. They sued the bank (HSBC) that helped create it. The court decided the bank didn't lie or cheat, and the investors waited too long to sue.
Key Facts
- •Investors sued HSBC for losses incurred after a tax-deferral scheme ('Eclipse') designed by HSBC employee Mr. Bowman and promoted by Future Films failed.
- •The Eclipse scheme involved investing in LLPs linked to film rights, using loans to leverage tax relief.
- •HMRC successfully challenged the scheme, arguing it wasn't genuine trading.
- •Investors claimed HSBC made false representations about the scheme's approval by a tax QC, its trading nature, and profit prospects.
- •HSBC denied wrongdoing, arguing the representations were opinions, not facts, and lacked dishonesty.
Legal Principles
Deceit requires a false representation known to be false, or made recklessly or without belief in its truth.
Derry v Peek (1889) 14 App Cas 337
Representations of opinion imply the representor has reasonable grounds for that opinion.
Brown v Raphael [1958] Ch 636
Joint tortfeasance requires a common design or shared intention.
Sea Shepherd UK v Fish & Fish Ltd [2015] UKSC 10
Unlawful means conspiracy requires a combination to use unlawful means to injure, with knowledge of unlawfulness.
Kuwait Oil Tanker Company SAK v Al Bader [2000] EWCA Civ 160
Dishonest assistance requires a breach of trust and dishonest assistance in that breach.
FSMA COB 2.1.3R requires reasonable steps to ensure clear, fair, and not misleading communication to customers.
Financial Services and Markets Act 2000
Limitation Act 1980: In fraud cases, limitation starts when the claimant discovers or could with reasonable diligence have discovered the fraud.
Limitation Act 1980, section 32
Causation requires a direct link between the defendant's actions and claimant's losses. Mitigation principles apply.
British Westinghouse Electric And Manufacturing Co. Ltd. v Underground Electric Railways Company of London Ltd. [1912] AC 673; Koch Marine Inc v D’Amica Società di Navigatione, The Elena d’Amico [1980] 1 Lloyd’s Rep 75
Outcomes
Claims against HSBC dismissed.
The court found that the representations made regarding the tax QC's advice were not false, and even if incorrect, were made innocently. There was no dishonesty proven. The claims were also time-barred.