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The High Court dismissed a claim by multiple investors against a bank in respect of its role in marketing a film investment scheme intended to enable individual UK taxpayers to defer their tax liabilities, which was successfully challenged by HMRC: Upham & Ors v HSBC UK Bank plc [2024] EWHC 849 (Comm).

The claimants alleged that they had invested in the scheme on the basis of fraudulent misrepresentations in an information memorandum, of which one of the bank's employees was aware, given his role in devising the scheme and marketing it. The court concluded that the representations made by the bank and the scheme's promoter were statements of opinion, which they had reasonable grounds to believe in, and were not false or dishonest. Furthermore, the court ruled that the claims were time-barred under the Limitation Act 1980 (LA 1980).

The decision will be of interest to financial institutions for its consideration of blind-eye knowledge in deceit claims. The court did not accept that the bank's employee shut his eyes to the truth or intentionally abstained from inquiring into it. It rejected the suggestion that it was part of the bank's role, in marketing the scheme, to ensure that the scheme's structure as implemented was suitable. It was not incumbent on the bank to be more sceptical or to check the final terms of the scheme, and it was entitled to assume that these checks would be undertaken by the promoter of the scheme and its lawyers. Where a bank is marketing an investment scheme to investors and independent financial advisers, the scope of its duties will inevitably be defined by the relevant contractual documentation. However, this case provides a helpful illustration of how the allocation of respective responsibilities will limit the steps a bank is expected to take and impact whether it is considered to have acted dishonestly in not making extended enquiries.

The decision also provides interesting analysis of the nature of representations that can be made to potential investors. It is a reminder that a statement of opinion can give rise to a misrepresentation if it amounts to a statement of fact and underscores the need for banks to ensure that they have reasonable grounds for the opinions they express to investors.

We consider the decision in more detail below.


A group of investors brought a claim against HSBC plc (the Bank) in relation to the Bank's role in marketing a film investment scheme known as "Eclipse". Eclipse was intended to enable individual UK taxpayers to defer their tax liabilities for several years, by investing in LLPs associated with the film industry. The scheme was successfully challenged by HMRC, with the result that the investors did not succeed in deferring their tax liabilities. The investors sought to recover their alleged losses from the Bank. Given the size of the claimant group, sample witnesses were selected to give evidence at trial.

The investors claimed that they had invested based on representations that the scheme's structure had been approved by a tax QC. However, they argued that the implemented structure was materially different from the one approved by the QC, rendering the representations false. They further alleged that these false representations were made dishonestly and/or deceitfully, and that the Bank, through its employee Mr Neil Bowman, was aware of and actively involved in this deceit.

The key representation in question was found in the Information Memorandum provided to investors, which stated that the scheme's business had been structured based on tax advice from a QC and a law firm, and that the scheme was expected to work as outlined. A summary of the scheme was also provided as a note presented to investors by Mr Bowman (Mr Bowman's Note).

The investors argued that this representation was false because the terms on which the Eclipse scheme was implemented were not consistent with the information and assumptions given to the tax QC and did not comply with his advice.

The investors also alleged that the Bank was liable for misrepresentations made by the scheme's promoter, Future Films, and that the Bank had dishonestly assisted Future Films in breaching its fiduciary duties to the investors.

The Bank disputed these allegations, arguing that the investors' case was based on misinterpretations of the representations made and that there was no evidence of dishonesty or deceit on its part. The Bank also argued that the claims were time-barred under the LA 1980.


The court held that the claims of all the claimants failed. The key elements of the decision which are likely to be of interest to financial institutions are outlined below.

Relevant representations

The court held that the claimants failed to analyse properly the legal significance of the statements made to them before they invested in Eclipse.

While the court accepted that representations regarding the tax QC's advice were made by both Future Films and Mr Bowman (on behalf of the Bank), it did not accept that the relevant representations were precisely the same as the core complaint labelled by the claimants as the "Advice Representation", which was made in the following terms:

“The business of the Eclipse Partnerships had been structured on terms, and would be conducted, pursuant to advice provided by leading tax counsel, Jonathan Peacock QC, and law firm DLA… and accountants KPMG, also both tax specialists…”

The court noted that the words actually used in the Information Memorandum and in Mr Bowman's Note were approximate to the alleged Advice Representation, but not identical to it, and it was critical of the claimants' failure to consider whether the words used constituted representations of fact or of opinion. In the court's view, the representation that the Eclipse structure was consistent with the structure that had been the basis of the legal advice might at first sight appear to be a representation of fact, it was in reality a representation of opinion.

The court concluded that both Future Films and Mr Bowman (on behalf of the Bank) represented an opinion that the structure on which the tax QC had advised was the same as the actual structure adopted (whether directly or indirectly in the Information Memorandum/Mr Bowman's Note), and also impliedly represented that they had reasonable grounds for holding this opinion (per Brown v Raphael [1958] Ch 636).

Reliance and falsity

The court held there could be no question that Future Films and Mr Bowman intended that the representations should be relied on by potential investors, and was persuaded by the evidence of the claimants' sample witnesses that each of them did, in fact, rely. However, the claimants failed to make out their case that the representations were false.

The claimants did not directly address the question of either Future Films' or Mr Bowman's opinion as to whether the investment would work as per the tax QC's advice. However, the claimants made submissions to the effect that they knew or shut their eyes to the fact that what they said was false. The court inferred from this an allegation that Future Films and/or Mr Bowman did not in fact have the represented expectation/opinion.

The court held that Future Films and Mr Bowman had reasonable grounds for believing that the scheme, as implemented, was consistent with the basis on which Mr Peacock QC had advised. In particular, the court concluded that both defendants had relied on the views of Future Film's tax solicitors (DLA) on the suitability of the transaction documents.

Accordingly, the court held that the representations were not false.


The claimants alleged that Future Films and the Bank shut their eyes to the truth - meaning either that they had blind-eye knowledge, or were reckless (and, therefore, dishonest) as to whether the structure as implemented was consistent with the basis on which the tax QC had advised. They said that it was part of the Bank’s role under its agreement with Future Films to check that the structure as implemented was suitable, and that this meant that the Bank should itself have asked DLA to review the transaction documents.

The court was satisfied that Future Films acted honestly, at least up to May 2006, after which there was some understanding by one individual at Future Films that it was at least doubtful whether the scheme satisfied the requirements of the tax QC. There was no evidence as to whether this was reported to anyone else within Future Films and the claimants did not place any reliance on this (the court commented that this was perhaps because the claim was not against Future Films but against the Bank).

The court did not accept that Mr Bowman was shutting his eyes to the truth or intentionally abstaining from inquiring into it, finding that there was no basis for the claimants’ case that the Bank had blind-eye knowledge. In particular:

  • Mr Bowman attended the first meeting with Disney and was provided with heads of terms, but was not involved in the drafting process.
  • The first draft of the transaction documents unequivocally provided for the structure advised by the tax QC.
  • The court did not consider it incumbent on Mr Bowman to be more sceptical or to check that the final terms were suitable; and the fact that he expressed the view that they should be checked did not mean that it was up to him to do this. The party giving instructions to DLA was Future Films and DLA did not report on the drafting to the Bank (which was not their client). Mr Bowman did not even receive copies of the drafts.
  • Mr Bowman was entitled to assume that Future Films would check that the draft transaction documents were suitable and consistent with the requirements of the tax QC.

The court considered the standard of proof in cases of civil fraud, citing Secretary of State for the Home Department v Rehman [2001] UKHL 47[2003] 1 AC 153 and Re B (Children) (Care Proceedings: Standard of Proof) [2008] UKHL 35[2009] AC 11. However, the court did not find it difficult to decide the claimants' case in deceit and its decision did not depend on the incidence or standard of the burden of proof.

Accordingly, the court found that neither Future Films nor Mr Bowman was dishonest. In any event, the claimants' claims were time-barred and the claimants could not rely on s.32(1)(b) of the LA 1980 (ie deliberate concealment) because of the court's findings in relation to the claimants' deceit claim.

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Julian Copeman

Partner (Non-resident Partner, Hong Kong), London

Julian Copeman
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Ceri Morgan

Professional Support Consultant, London

Ceri Morgan

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Julian Copeman photo

Julian Copeman

Partner (Non-resident Partner, Hong Kong), London

Julian Copeman
Ceri Morgan photo

Ceri Morgan

Professional Support Consultant, London

Ceri Morgan
Julian Copeman Ceri Morgan