Much water has flowed under the bridge since the 2008 financial crisis but the courts are still dealing with the fall-out. One such case that raised important issues relating to disclaimer clauses involved a company that was left holding worthless bank securities with a face value of Euros 27 million.
Subordinated loan notes were issued in a fund-raising effort by an apparently stable bank. The securities were marketed in a ‘road show’ and potential buyers were given an investor presentation pack. The company invested heavily in the notes, which were rendered valueless when the bank went bust in the crisis.
In suing the bank for its money back, the company argued that the presentation seriously misrepresented the extent of the bank’s non-performing loans. The company’s claim was upheld by a judge and it was awarded Euros 26,421,585, the discounted sum that it had paid for the securities.
In upholding the bank’s challenge to that decision, however, the Court of Appeal found that a disclaimer contained within the presentation was effective to exclude liability for misrepresentation. The bank was entitled to include the disclaimer in respect of statements made in the presentation and to rely upon it as a complete answer to the company’s claim.