Q&As

Can you provide case law on a scenario where an enforcement of security has been challenged by a borrower and the borrower then sued the bank for loss of opportunity?

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Produced in partnership with James Hall of Gatehouse Chambers
Published on LexisPSL on 12/07/2019

The following Banking & Finance Q&A produced in partnership with James Hall of Gatehouse Chambers provides comprehensive and up to date legal information covering:

  • Can you provide case law on a scenario where an enforcement of security has been challenged by a borrower and the borrower then sued the bank for loss of opportunity?
  • Breach of contract
  • Breach of duty of care/contractual negligence/negligent misstatement/breach of statutory duty under the Financial Services and Markets Act 2000
  • Deceit; negligent misrepresentation
  • Other causes of action

Can you provide case law on a scenario where an enforcement of security has been challenged by a borrower and the borrower then sued the bank for loss of opportunity?

There appears to be no reported case where, in this sort of scenario, the borrower has succeeded in suing the bank (for examples of failed attempts to do so, see eg Deutsche Bank (Suisse) SA v Khan and Commercial First Business Ltd v Atkins).

The posited scenario also contains quite a number of variables:

  1. what kind of borrower?

  2. what kind of lending?

  3. what kind of security?

  4. how was the enforcement challenged (and with what degree of success?)?

  5. what sort of opportunity was lost, and how?

This Q&A assumes that the borrower can successfully demonstrate that enforcement of the security was somehow improper and that it caused a loss of opportunity to make money from the asset over which security was held. That could, in principle, give rise to a claim against the lender/bank, on one of the following bases:

Breach of contract

If the borrower has successfully challenged the enforcement of the security, then this may well have been on the basis that the lender’s right to enforce had not arisen. The purported exercise of that right may be a breach of express (or even implied) contract terms between the parties; though the bank’s/lender’s standard conditions may also purport

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