- March 22, 2013
- Posted by: Josiah Hincks Solicitors
- Category: Business Law Updates
Members of a prominent family who borrowed more than £50 million on the security of a high-end portfolio of London properties have failed to convince the High Court that they were unfairly treated by their bank. Opening the way for the bank to seek possession of the properties, the court dismissed ‘myriad defences’ put forward by the family and ruled that it was a simple case of contractually enforceable debt.
The portfolio had been established through a family-controlled network of single purpose offshore companies and the family had for some time benefited from substantial increases in property values. However, that position was changed by the collapse of Lehman Brothers and the family subsequently failed to provide repayment or alternative collateral satisfactory to the bank. More than £50 million that had been lent on a five-year facility remained outstanding, together with substantial interest.
In defending the bank’s claim for possession, members of the family and their corporate vehicles argued, inter alia, that they had relied upon misrepresentations made by the bank and that the bank had breached the facility agreement. The protections contained within the Unfair Contract Terms Act 1977 and the Consumer Credit Act 1974 were also relied upon.
Rejecting all those defences, the court ruled that, although the family had resisted the bank’s case ‘tooth and nail’, it was ‘in reality a simple debt and possession claim enforceable in accordance with the terms of the parties’ written contracts’. In the absence of agreement, the financial consequences of the court’s decision will be ruled upon at a later date.