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Deutsche Bank vs Khan and others.

Posted on 30/01/2014 · Posted in Expert Witness, Financial Litigation, Uncategorized

The Defendants (‘Khan’) consisted of 5 members of the same family, all prominent commercially and politically in Pakistan, and a number of family controlled property companies. The Claimant bank brought proceedings against the individual and corporate defendants who were in debt with the Deutsche Bank (‘Deutsche’ ) and for possession of properties charged to Deutsche as security.

In 2007/8 Deutsche had lent more than £50m to the corporate defendants on a 5 yr facility secured by a first charge on a number of high value residential properties.After London property prices fell, following the collapse of Lehman brothers, Khan failed to service or repay the borrowings or to provide satisfactory collateral to Deutsche. Nearly all the capital, along with substantial interest, remains outstanding and unpaid.

Democracy is when the indigent, and not the men of property, are the rulers.”

In their defence, Khan relied upon misrepresentations allegedly made before the facility agreementwas signed and alleged breach of it. Further they said Deutsche refused to allow drawdown of £10m of the loan, and having required Khan to agree to new conditions upon which those funds would be released, Deutsche refused to honour them, and having misled Khan into signing a supplemental agreement which varied those conditions. Khan counterclaimed on the basis that, if they had not been misled or the agreement breached, they could and would have used those funds to develop the 2 houses which would have sold for a very substantial profit. It was also said that Deutsche misrepresented the returns available on investment products sold to Khan as part of the facility and was liable in damages.

In giving judgement for Deutsche, Mr Justice Hamblen held that Deutsche’s obligation to make the facility available was subject to a condition precedent that there were satisfactory valuation reports for each property. This condition was not fulfilled and Deutsche was not obliged to advance any money under the agreement. Deutsche did not know, nor should have known, of any mistake on Khan’s part, and it was not liable to be set aside for the unilateral mistake. There was no warranty by Deutsche that the investment product would provide a particular return and therefore no claim to damages. Further claims made by Khan that various clauses relied upon by Deutsche fell under the Unfair Contract Terms Act or Consumer Credit legislation were not upheld.

Link: Deutsche Bank (Suisse) SA v Khan & Ors [2013] EWHC 482 (Comm)

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