Liquidators’ claim against bank fails

The liquidators of Stanford International Bank pursued claims against HSBC alleging both damages and also seeking compensation for dishonest assistance in that the bank should have frozen accounts earlier than it did, resulting in losses in excess of £118m.

The bank applied to strike out the claims and was successful in striking out the dishonest assistance claim, but not the loss claim in the High Court. Both parties appealed that decision.

The Court of Appeal found in favour of the bank in that the bank did not owe any duty to the company’s creditors, only to the company, who had not suffered a loss due to the fact that the money released by the bank had been used to reduce down the company’s creditors. The result of the bank’s actions were balance sheet neutral to the company, reducing both its assets and its liabilities by a commensurate amount.

The Court of Appeal therefore overturned the High Court decision and struck out the loss claim against the bank. As for the dishonest assistance claim, the Court of Appeal rejected the liquidators' appeal against the judge’s decision to strike out the claim on the basis that the liquidators had not pleaded dishonesty against any natural persons, only against the bank as an institution.

Stanford International Bank Limited (In Liquidation) v HSBC Bank Plc [2021] EWCA Civ 535

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