Primeo Fund (in Official Liquidation) (Appellant) v Bank of Bermuda (Cayman) Ltd and another (Respondents) (Cayman Islands)

Primeo Fund (in Official Liquidation) (Appellant) v Bank of Bermuda (Cayman) Ltd and another (Respondents) (Cayman Islands)

The reflective loss rule does not bar Primeo's claims for losses suffered from direct investments in BLMIS prior to the Herald Transfer, as those losses were not suffered in its capacity as shareholder in Herald and accrued before it became a shareholder. The rule is substantive and applies at the time the loss is suffered, not when proceedings are brought. The Herald Transfer did not extinguish Primeo's accrued causes of action. The rule only applies where the same wrongdoer is liable to both the shareholder and the company, which was not established for claims against R1 or for indirect investments via Alpha. Therefore, Primeo's appeal on the application of the reflective loss rule is...

Citation
[2021] UKPC 22
Parties
Appellant: Primeo Fund (in Official Liquidation); First Respondent: Bank of Bermuda (Cayman) Ltd; Second Respondent: HSBC Securities Services (Luxembourg) S.A.
Jurisdiction
United Kingdom
Judgment Date
09 August 2021
Procedural Posture
Civil Appeal / Judgment on Preliminary Issue (reflective Loss Rule) From the Privy Council
Outcome
Appeal allowed (on the reflective loss rule issue)
Legal Topics
Reflective Loss Rule, Shareholder Claims, Breach of Duty, Custodian and Administrator Liability, Double Recovery, Assignment of Claims
Company Law Tort Law Contract Law Reflective Loss Rule Shareholder Claims Breach of Duty Custodian and Administrator Liability Double Recovery +1 more

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Parties

Primeo Fund (in Official Liquidation)

Appellant

Bank of Bermuda (Cayman) Ltd

First Respondent

HSBC Securities Services (Luxembourg) S.A.

Second Respondent

Procedural Posture

Civil Appeal / Judgment on Preliminary Issue (reflective Loss Rule) From the Privy Council

Legal Issues

  1. 1 Whether the reflective loss rule bars Primeo's claims against its administrator and custodian for losses suffered as a result of investments with BLMIS
  2. 2 Whether the timing of loss or the time of bringing proceedings determines the application of the reflective loss rule
  3. 3 Whether the Herald Transfer extinguished Primeo's accrued causes of action

Ratio Decidendi

The reflective loss rule does not bar Primeo's claims for losses suffered from direct investments in BLMIS prior to the Herald Transfer, as those losses were not suffered in its capacity as shareholder in Herald and accrued before it became a shareholder. The rule is substantive and applies at the time the loss is suffered, not when proceedings are brought. The Herald Transfer did not extinguish Primeo's accrued causes of action. The rule only applies where the same wrongdoer is liable to both the shareholder and the company, which was not established for claims against R1 or for indirect investments via Alpha. Therefore, Primeo's appeal on the application of the reflective loss rule is...

Court Disposition

Appeal allowed (on the reflective loss rule issue)

Orders

  • Primeo's appeal in relation to the application of the reflective loss rule is allowed to the extent explained in the judgment.
  • The case may proceed to address remaining issues including causation, limitation, and contributory negligence.