The Court of Appeal have upheld a decision that the arranger of a syndicated investment did not make implied representations or owe a duty of care to disclose misleading information in an information memorandum where they believed the error to be of no importance. The IFE Fund had purchased bonds and warrants as part of a provision of syndicated credit facilities in an acquisition; it later transpired the target’s financial position was not as shown in the audited accounts. The court upheld the finding that there was no express representation that the bank would review the information before the claimant acquired the bonds. There was of course an implied representation of good faith (which was not breached) but there was no duty of care by the bank to the claimant.
The defendant bank had had cause to doubt the reliability of the audited accounts after receiving two reports from investigating accountants but as the claimant could not establish the bank had actual knowledge of information which had caused the two reports to be misleading, the first instance decision was correct that there had been no duty of care.
The case is linked on BAILII, here.
