Bank Liability For Misleading Marketing Materials

Introduction

In Spencer v Irish Bank Resolution Limited (in special liquidation) ([2016] IECA 346), the Irish Court of Appeal handed down an important judgement that deals with the scope of a lender's duty of care and potential liability for misrepresentation when promoting an investment opportunity to clients. The case concerned the promotion by the bank of a property development scheme, which ultimately proved unsuccessful.

Why is this decision important?

The case is important for the following reasons:

(a) The Court of Appeal held for the plaintiff, even though the High Court had found aspects of his evidence to be "unreliable and frequently inconsistent". It is, therefore, one of those exceptional cases where the appeal court (which does not hear oral evidence) reached a view of a witness's credibility even though it had not heard his evidence directly.

(b) The fact that the lender was, at the time, a licensed bank made the court even more highly critical of the bank's marketing materials. The court made a number of telling observations, some of which are highlighted below.

Summary of facts

The plaintiff invested €2 million in a scheme...