Lovells steers Barclays to Lords ‘duty of care’ victory

Lovells has won a major House of Lords victory for Barclays over the bank’s duty of care in situations where a freezing order has been made.

Litigation partner Jon Holland acted for Barclays, instructing Fountain Court Chambers co-head Michael Brindle QC, to bring the bank’s appeal against a November 2004 decision of the Court of Appeal.

The dispute between Barclays and the Commissioners of Customs & Excise arose after the commissioners secured freezing injunctions against two companies that owed large sums of unpaid VAT.

The commissioners claimed that Barclays was negligent in allowing payments out of the companies’ accounts after the freezing order had been made and sought damages of more than £2m in respect of the sums paid out.

On 21 June Lords Bingham of Cornhill, Hoffmann, Rodger of Earlsferry, Walker of Gestingthorpe and Mance ruled that the bank did not owe a duty of care to the commissioners as a third party.

The Lords said that imposing such a duty would be a step too far and that Customs & Excise was unable to find relevant case law to support its position.

The HM Revenue & Customs Solicitor’s Office instructed 11 King’s Bench Walk’s Philip Sales as lead counsel.