A prominent Pakistani family of property investors has hit back in its ongoing legal battle with Deutsche Bank.
The bank is suing the family of Senator Waqar Ahmed Khan, the former Pakistani minister for privatisation, and his father, Senator Gulzar Ahmed Khan, for repayment of a £50m-plus loan made in 2007 secured on the property known as Dryades on Bishops Avenue, bought for £12m, and six flats in Knightsbridge bought for a total of almost £12.3m during a period of property investment in 2004 and 2005.
However, the Khan family and a number of its companies – who have secured planning permission to demolish Dryades and build a 45,000 square foot mansion in its place – are counter-claiming that the bank was guilty of misrepresentation prior to the loan facility agreement as well as in breach of consumer protection and financial services legislation.
Outlining the family’s case in written submissions, Nigel Jones QC told Hamblen J: “Each side sees this case differently. The Bank wishes to characterise it is a simple case of a bank making a loan and calling it in, of the borrowers failing to repay it and of the bank seeking a money judgment and possession of security properties.
“The Borrowers see it as a case of a bank making material misrepresentations and acting in breach of contract, and causing the borrowers significant financial loss. On any view, say the defendants, the documents obtained on disclosure are sufficient to reveal that the Bank first conducted itself incompetently and then badly.”
He claimed misled his clients into signing the agreement by misrepresenting its willingness to lend, and its consent for a significant proportion of the loan to be used for the development of Dryades.
Alternatively, he argued that, if the judge finds the bank acted bona fide prior to the agreement, it later allowed the process to be derailed by refusing to permit the drawing down of the full extent of the funds, in breach of contract.
He alleged that the bank made express and/or implied oral representations to induce the Khan family to enter into the agreement, including that it was able and willing to to provide an overall finance facility to cover all of the funding requirements of the family, and in particular to provide development financing in respect of Dryades and 58 Bishops Avenue.
Hamblen J is being asked to decide issues of liability in the case, during a trial scheduled to last three weeks. Issues of damages will be dealt with at a subsequent trial if they cannot be agreed between the parties.
The hearing, scheduled to last three weeks, continues.
Deutsche Bank (Suisse) SA v Khan and ors Commercial (Hamblen J) 22 January 2013
Raymond Cox QC (instructed by Simmons & Simmons LLP) for the claimant
Nigel Jones QC (instructed by Richard Slade & Co) for the defendants