City law firm Speechly Bircham has secured a landmark ruling for supermodel and entrepreneur Elle Macpherson against the liquidated Isle of Man bank Kaupthing Singer & Friedlander (KSF), which brings a little-known legal principle dating back 300 years into the spotlight.
The case saw Miss Macpherson take the liquidators of KSF to the Isle of Man High Court, following their refusal to allow her to ‘set off’ deposits she had with the bank against money owed by her nominee company to KSF for a mortgage on a house in London.
Miss Macpherson had set up the Isle of Man registered nominee company in 2006, to allow her to purchase the property while keeping her address private. On deciding to sell the house in September 2009, Miss Macpherson tried to offset the amount she had personally deposited with KSF against the money her nominee company still owed KSF for the mortgage. KSF’s liquidators refused a ‘set off’ because the borrower was a company — albeit owned by Miss Macpherson — whilst the deposit was held in her personal capacity.
Speechly Bircham successfully won the case on the basis of English case law and a legal principle that had not been used successfully in this way on behalf of a claimant since the 1870s. The Judge ruled that Miss Macpherson and her company were "in-equity" one and the same.
Charles Gothard, Speechly Bircham’s Head of International Tax and Trusts, commented: “It is expensive and stressful to go to court against major institutions, especially where the law is as ancient as with equitable ‘set off’. We hope this verdict will throw a lifeline to a lot of people caught up in complex battles with insolvent banks and lenders.”
“At a time when bank insolvencies are on the rise, we are grateful that we have been able to shed new light on this and show individuals they have more options than they may have thought. Miss Macpherson’s case highlights the importance of looking beyond statutory and dry legal rights, to the intentions and equities that underpin relationships with banks, particularly where there are complicated connections between lenders, individuals and the companies they control.”
Commenting on the ruling, Miss Macpherson said: “The team at Speechly Bircham, Mr John McDonnell QC and local counsel Moroneys all worked hard to argue complex and ancient equitable principles in the context of modern law.” “I am very grateful for the tenacity and commitment of Counsel and the brilliant team at Speechlys who provided clear insight and were able to establish a robust defence in this difficult case. I am extremely pleased with the ruling."
