Lloyds Bank. Why the surprise?
19 September 1995
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The press has described the decision against Lloyds Bank as astonishing. And it was an astonishing case but in my opinion the judge's carefully reasoned finding for the plaintiffs was the least astonishing feature. It was inevitable the plaintiffs would win on the claim. More surprising was that Lloyds Bank should have contested this part of the action and that the success should have been greeted with scepticism.
In July 1988 Julia Verity and Richard Spindler went to Lloyds manager Maurice Hunt with their scheme to buy and renovate a house to earn around £10,000, the scheme that eventually left them with nothing and heavily in debt. Julia had been given a pamphlet by Lloyds, Starting your business, which in effect asserted that anyone starting a business need look no further than their Lloyds bank manager for advice on virtually every financial aspect.
The plaintiffs claimed that the first meeting at which Mr Hunt's advice was sought was on 4 July 1988 at the bank's Old Beaconsfield branch. Mr Hunt initially denied any such meeting took place. The difficulty for Lloyds was that Mr Hunt's expenses claim suggested otherwise; he claimed expenses for travelling to Henley for the plaintiffs' affairs on 4 July 1988. There was no other meeting this could relate to. The judge said: "I have grave doubts about Mr Hunt's ability or inclination to keep full and accurate contemporaneous records at the material time. It is impossible to reconcile his expenses claim for July 1988 with PMC notes for the same month."
The judge accepted Julia Verity's account of the transactions with the bank almost in full. As her claim was that Mr Hunt advised her on every aspect throughout the critical time, judgment unsurprisingly went to the plaintiffs, supported by evidence from Chilton Taylor, chartered accountant at Baker Tilly, that the business idea was fundamentally unsound not to say reckless.
I am afraid that we built the case preparation into an ambush for Lloyds Bank. I was preceded by other solicitors one of whom obtained a barrister's opinion that there was no chance of success in an action against Lloyds. I included material of the plaintiff's affairs by this solicitor in the witness statements to Lloyds' solicitors and they called the solicitor as part of their case. Instead of undermining the plaintiffs' case the solicitor's evidence had the opposite effect. The judge said: "In these circumstances I feel it is impossible to say there is necessarily a material inconsistency between what the plaintiffs are now saying about Mr Hunt's role and what they told [the solicitor] when they first went to see him...On the contrary, I felt that, if anything, the straightforward way in which [Mrs Verity] countered these criticisms only added to her impressiveness as a witness."
Probably the most interesting feature is yet to come - the defendant's counterclaim. I sat in Judge Taylor's court in Leeds on 4 September as counsel for Lloyds Bank insisted the plaintiffs amend their defence to the counterclaim, the one area we had not thought through to the end. With the claim dealt with and awaiting judgement I was kicking myself that we had not attacked the counterclaim as vigorously as we should. Lloyds Bank now insisted we remedy that. We certainly shall. I predict Verity and Spindler v Lloyds Bank will in due course be a House of Lords authority.