LBI HF (In Winding Up Proceedings) v Stanford & Anor

On a renewed application for permission to appeal, an appellant must show a real prospect of overturning factual findings on which dependent legal grounds rely. A purported agreement to provide loan finance is not binding where the parties, scope or essential lending terms remain uncertain. An agreement to lend without agreed duration, interest and repayment terms is no more than an agreement to agree. A misrepresentation claim requires proof that the representation was made to, or intended to be relied on by, the claimant. A representation made to a company does not become one made to its shareholder merely because it might be passed on. A trial judge remains entitled to assess witness credibility where counsel was stopped from rebutting an allegation of dishonesty that the judge did not adopt.

LBI obtained judgment against Mr Stanford for sums exceeding £23 million under two loan agreements, with enforcement orders concerning security over properties. After a 12-day trial, Asplin J dismissed Mr Stanford’s counterclaim against LBI and his Part 20 claim against Landsbanki Luxembourg SA. The claims concerned an alleged agreement to finance phases of a property joint venture and an alleged representation about LBI’s creditworthiness. Asplin J also rejected the claims on factual and legal grounds. Permission to appeal was refused below by Asplin J and Floyd LJ. Richards LJ considered the renewed application, focusing on whether the proposed appeals against the critical factual findings had a real prospect of success.

Application refused. The proposed grounds of appeal did not have a real prospect of success. The Court of Appeal therefore did not need to consider the dependent legal grounds.

1. The alleged TFI Agreement was not shown to have been made with the members of the K Group. Asplin J was entitled to find that, if an agreement existed, it was between Landsbanki Luxembourg SA and TFI. The documentary evidence was consistent with an intention to fund a company participating in the joint venture, and the absence of any written agreement for phases 2 and 3 was significant.
2. Even assuming an agreement with the K Group, the parties were insufficiently certain. Under the Luxembourg law common ground identified at trial, a binding contract required actual agreement, clearly identified parties, determined or determinable main obligations, and a common intention to create legal relations. The judge was entitled to find those requirements unsatisfied.
3. The alleged obligation to finance phases 2 and 3 was also too vague. No agreement had been reached on the duration of the loans, interest rates or repayment terms. As a matter of English law, an agreement to lend without agreed lending terms was no more than an agreement to agree and was unenforceable.
4. The alleged bond representation was made, for legal purposes, to TFI rather than to Mr Stanford personally. The possibility that a representation might be passed to a shareholder did not establish that it was passed on for that shareholder to rely upon it. The judge was entitled to find no sufficient prospect of overturning that factual conclusion.
5. It was unnecessary to determine the remaining grounds, including the issues concerning the Misrepresentation Act 1967 and the Statute of Frauds Amendment Act 1828. The judge’s refusal to hear further submissions directed at counsel’s allegation that Mr Stanford had advanced a dishonest case did not make her credibility findings unfair. She had not adopted that allegation and was entitled to assess the witnesses by reference to the evidence as a whole.

1. High Court (Chancery Division): Asplin J, following a 12-day trial, dismissed Mr Stanford’s counterclaim against LBI and his Part 20 claim against Landsbanki Luxembourg SA by order dated 22 January 2015.
2. Court of Appeal (Civil Division): Asplin J and Floyd LJ refused permission to appeal. Richards LJ refused the renewed oral application on 21 January 2016.