A property developer who struggled to repay a £75m loan from Royal Bank of Scotland after spending part of it on a yacht, a jet and fast cars has lost a lawsuit against the lender.
Oliver Morley sued RBS in the High Court over the loss of part of his property portfolio, which had been used as collateral to help secure the loan in 2006.
He claimed that after he struggled to repay the loan when it was due in 2009, RBS placed him under “unlawful and illegitimate pressure” to transfer assets to the bank’s West Register unit, which handled property from distressed borrowers and was part of its now-defunct Global Restructuring Group.
GRG’s notorious division has been accused of exploiting businesses following the 2008 financial crisis by pushing the companies to restructure and then profiting from buying assets at heavily reduced prices. RBS denied wrongdoing.
However, on Monday Mr Justice Kerr dismissed Mr Morley’s entire lawsuit and ruled that RBS was not at fault and had not intimidated the borrower or subjected him to economic duress. “The bank’s duty of skill and care did not require it to negotiate the restructuring any differently from the way it did so,” the judge added.
The judge noted that in 2006 the original RBS loan of £75m had included £15m-£20m for the personal use of Mr Morley who was then aged 35 and single.
“He had worked hard to build up his business and he wanted to enjoy this new, albeit borrowed personal wealth,” the ruling said.
“He did not put any of it aside for a rainy day. He spent it on South African mining investments, property, cars, a yacht and a jet. These assets turned out not to be very liquid when the impact of the downturn hit home,” Mr Justice Kerr added.
“As the claimant said in evidence, no one was buying yachts or lending much against properties in 2010,” the judge said adding if Mr Morley had kept £5m in reserve he might have retained ownership of his property portfolio.
Mr Morley’s spokesman declined to comment. RBS welcomed the ruling.
It said: “The judge found that the bank dealt with Mr Morley — a sophisticated business customer — in accordance with the terms of their contractual agreement following a breach of covenant and in a manner that was rationally connected to its commercial interests.”
An investigation by the Financial Conduct Authority in 2018 concluded that there were “widespread and systematic” problems at GRG but found no evidence that RBS artificially pushed healthy companies into distress and no evidence of dishonesty by senior individuals.
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