The Judicial Committee of the Privy Council has today handed down its judgment in Magner and T&T Trustees v Royal Bank of Scotland International Ltd dismissing the appeal. Andrew Mitchell QC and Nicholas Medcroft QC acted for the successful Respondents, RBSI, instructed by Guy Stagnetto QC of TSN Solicitors.
The proceedings arise out of the notorious collapse in 2010 of Marrache & Co, a firm of solicitors which had its headquarters in Gibraltar, with a financial deficit of £28m. It transpired that the three brothers who ran the firm had plundered millions of pounds from the firm’s client accounts including from accounts held with RBSI. The Appellants were among the clients of Marrache & Co who lost money as a result of the fraud. They brought a claim against RBSI for dishonest assistance. The Appellants appealed to the Privy Council after the Court of Appeal overturned a judgment in their favour and refused a retrial.
The decision is significant for two reasons. First, the Board clarified the meaning and effect of section 85 of the Solicitors Act 1974. In important dicta, Lord Hodge stated that the provision discloses an intention by Parliament that, as a general rule, a banker is entitled to act upon the solicitor’s instructions relating to a client account without inquiring into the propriety of those instructions. The banker does not owe duties to the solicitor’s clients as a trustee of their funds.
Second, the Board stated the test that an appellate court should apply when deciding whether to order a retrial. This is the first time that the Privy Council has addressed this issue in relation to civil appeals. The Board went on to give valuable guidance on the factors which can be taken into account when assessing what the interests of justice require.
A copy of the judgment can be accessed here.