The High Court has recently dismissed claims against Coutts & Co and Royal Bank of Scotland plc ("the Lenders") in a high profile case brought by well-known footballing professionals whose investment in Spanish properties in 2004 went sour after the property boom later crashed.

In so doing, the established principles under the spousal/surety cases of Barclays Bank v O'Brien and Royal Bank of Scotland v Etridge, have been considered but not extended.

The Claimant footballers' had since repaid the loans in full, but the properties had been sold for substantially less than they had paid, and they sought damages for the losses. It was their case that they had been induced through undue influence, breaches of trust and fiduciary duty, and misrepresentation to purchase the apartments by their financial advisers Kingsbridge Asset Management Limited ("Kingsbridge").

In earlier proceedings, they successfully obtained default judgment against Kingsbridge. However they failed to enforce their judgment or recover their losses when Kingsbridge went into liquidation, and their professional indemnity insurers also failed to pay on the basis of the fraud.

The Claimants therefore turned their attention to the Lenders by seeking to establish a secondary liability arising from either:

(i) a joint enterprise between Kingsbridge and the Lenders in promoting the apartments; or

(ii) an agency relationship between those parties in arranging the loans enabling the purchase; or

(iii) the Lenders being on notice of Kingsbridge's wrongful acts.

The Lenders successfully sought to strike out those claims.


In relation to notice, the Court considered the well known cases of O'Brien and Etridge. The Claimants' case was that the Lenders were fixed with notice of Kingsbridge's wrongdoing, which should have led them to acquire actual notice.

The Lenders argued otherwise, as that would significantly widen the decisions in O'Brien and Etridge.

The court confirmed that the approach in those cases was an unusual one, based on a wider policy concern to adapt the equitable principle of notice so as to (i) reduce the likelihood of a person who has no involvement with a business, for which the bank lends money entering into an unwise suretyship, and (ii) ensure the necessary steps are taken by the lender to reduce that happening. Otherwise the surety is able to set aside the transaction.

Further, in Etridge, domestic lending was distinguished from commercial lending, as different considerations would apply in each scenario. In that case Lord Nicholls noted that 'those engaged in business can be regarded as capable of looking after themselves and understanding the risks involved in the giving of guarantees'.

The Lenders argued that, extending these well-established principles to cover the instant case of lending to the clients of IFA's would be a whole new development of law away from the special category of spousal security cases. The judge agreed that the Etridge principles were confined to surety transactions and had no relevance to this case and, in any event, would not assist the Claimants as such claims did not create an entitlement to damages.


The court had no difficulty in finding that the Claimants' case had no solid legal foundation and therefore no prospect of success. It is not unusual though, when a claimant is up against an impecunious party, to look further to those with deeper pockets to try and engineer a case against them.

However, asking the court to go beyond well established principles in order to assist is unlikely to be successful.

Brian Deane, Danny Murphy, Robert Savage, Jason Wilcox v Coutts & Co, The Royal Bank of Scotland plc [2018]EWHC 1657(Ch) (5 July 2018 (Chief Master Marsh)