First National Bank takes action against Loxleys

TWO solicitors from London firm Loxleys and a bankrupt former client are being sued by the First National Commercial Bank over alleged u1.4 million losses from a property loan.

The writ alleges that Loxleys partner Roger Dines and consultant Frank Brandt gave false replies to questions relating to the application for the loan.

The bank claims it ran up total losses of u1,459,283 as a result of the lawyers' replies.

Reynolds Porter Chamberlain, acting for the Loxleys defendants, says it is too early to comment as a defence has not yet been served.

Stewarts is acting for the bank. A partner says: “The case is very complex. I can't make any comment on it.”

The writ claims that in May 1988 the client, Shiraz Virji, asked for a loan to buy several London domestic properties, at least one of which was owned by a Liechtenstein-based trust called Sodato.

Brandt and Dines were trust-ees and Virji was a beneficiary of the trust, the writ alleges.

In June 1988 the bank told Loxleys it would make a loan provided Virji gave an unlimited personal guarantee.

In August 1988, in response to enquiries before contract, Loxleys replied that it knew of no adverse rights affecting the Liechtenstein-owned London property at Hillcrest Road, and that the property was vacant.

The bank then lent Virji u1.2 million.

But the bank claims the solicitors' replies were false because Virji's wife and her children were in fact living at 18 Hillcrest Road from around June 1988.

The solicitors were negligent in wrongly assuming that the house was vacant, the bank alleges. If it had known, it claims it wouldn't have made the loan.