Mr Justice Laddie struck out the claims bought on behalf of BCCI (Overseas), a Cayman Islands registered subsidiary, against Ernst & Whinney, a firm which later became Ernst & Young. BCCI was closed by regulators in 1991 after massive long-term frauds were discovered, leaving the bank with debts of more than $10 bn.
Chris Morris, lead liquidator, said yesterday: "We consider this judgment a very satisfactory result for the creditors of BCCI. We thought that the original Order was mistaken and we are pleased that the position taken by the liquidators has been vindicated."
Nick Land, senior partner at Ernst & Young, commented: "I am dissappointed that the Court of Appeal have overturned Mr Justice Laddie's original ruling, but the Court have not found that a duty of care was owed by Ernst & Whinney to BCCI (Overseas) and I am confident that this claim will fail when the facts are fully examined at trial."
Mr Morris is also suing Price Waterhouse, the auditors to other parts of BCCI. The claims against the two accountancy firms amount to more than pounds 1.8bn.
The liquidators are also suing the Bank of England in its role as co- regulator of BCCI. They lost the first round in court, but intend to pursue an appeal in May or June. Mr Morris's lead counsel for the case will be Lord Neill, a former master of All Souls College, Oxford, and chairman of the new committee on standards in public life.
Mr Morris is set to make a second payment to BCCI's thousands of creditors this June. The liquidators have already paid out over pounds 1 billion to former customers, and the next payment could equal that. All told they have raised around pounds 1.8bn, having incurred costs of over pounds 130m in the process, much of that in legal fees.
It's a busy time for insolvency practitioners, despite the bouyant economic conditions in the UK. Yesterday the courts appointed a third liquidator to Mr Morris's team, because he and Steve Akers are so busy on other cases.
The Deloitte partner Ralph Priest is the new man. One of his recent jobs was receiver to West Heath, the old school of Diana, Princess of Wales, on behalf of the Charity Committee. Mr Priest put the school on the market yesterday, in Country Life magazine.
Richard Branson's Virgin group is seeking an injunction to prevent an escort agency launched in London a year ago called "Virgin Escorts" from using the Virgin name. Virgin Escorts was registered as a company in High Holborn, London, in February 1997 by Robert Brown of Kingston Upon Thames, Surrey, and Michael Brown of Inverness Terrace, London.
The writ lodged in the High Court last week says that "the Virgin name is one of the best known brand names in international business". Use of the Virgin name by the escort agency would "infringe the plaintiff's registered trademarks ... and the use of the sign would take unfair advantage of and would be detrimental to the distinctive character and repute of the plaintiff's Virgin mark".
The escort and dating agency was also guilty of "passing off" its services as those of Mr Branson's companies, the writ said. The plaintiffs said that, prior to the issue of the writ, the defendants refused to undertake not to continue using the name. The writ demands that the defendants stop using the Virgin name or anything like it, and claims damages of up to pounds 10,000.
More Lloyd's names are preparing to follow the 66 who launched legal action last week against Norwich Union Life Insurance, over guarantees the company sold to names in the 1980s. The 66 who have served a writ on the Norwich, represented by solicitors Harkavys, belong to a 200-strong action group, and more of the group are now expected to go to law. The case centres around guarantees, linked to life assurance policies, that Norwich provided to names for their use in the Lloyd's market, just as giant asbestos claims and "spiral re-insurance" were to push the market to the point of bankruptcy.
No figures are mentioned in the writ, but some sources speculate each name is seeking to escape debts on average of around pounds 100,000. The names are claiming that since Norwich had two subsidiaries involved in the Lloyd's market, Norwich Winterthur Reinsurance and Stronghold Insurance, the respective heads of those businesses should have known about the likely problems in the Lloyd's market. The executives named in the writ are Michael Falcon, chairman of both NU Life and Norwich Winterthur, and Allen Bridgewater, chief executive of NU Life and also a director of the two Lloyd's businesses.Reuse content