SUPERMODEL Elle ‘The Body’ Macpherson’s landmark ruling against the liquidators of the island’s collapsed Kaupthing Singer & Friedlander bank has been overturned on appeal.
Liquidators of KSF (IoM) last year brought a claim against Britain’s Next Top Model presenter Miss Macpherson in the island’s High Court but the catwalk legend’s legal team, including advocates from Douglas law firm Moroneys, won her case by invoking a legal principle dating back 300 years.
Now the appeal court has overturned the judgment of Deemster Andrew Moran QC.
The liquidators had refused to offset Miss Macpherson’s deposit with the now-insolvent bank against money owed by her nominee company to the bank for a mortgage on a house in London.
The Australian beauty, who first earned her title as ‘The Body’ in the 1980s with her appearances on the cover of Sports Illustrated annual Swimsuit Issue, set up an Isle of Man nominee company Light House Living Ltd in 2006, to allow her to buy the property, while keeping her address private.
When she decided to sell the house in September 2009, she attempted to offset her £2.54 million deposit with KSF against the £7.8 million which her nominee company still owed for the mortgage.
But liquidators refused such a ‘set-off’, because the borrower was a company – albeit one owned by Miss Macpherson – whereas the deposit was held in her personal capacity.
This raised a legal issue apparently not previously determined by any court.
In his judgment delivered in December last year, Deemster Moran determined the ‘equitable argument’ in Miss Macpherson`s favour and ordered that the sum due from the bank to Miss Macpherson had been set off against the debt due from LHL to the bank on that date.
But Appeal Court judges Geoffrey Tattersall QC and Deemster David Doyle ruled that Deemster Moran had erred in concluding that there was a debt due from Miss Macpherson to the bank.
They said: ‘In conclusion we are not satisfied that section 22 applied to the dealings between the bank and the respondents and are not satisfied that the sum due to Miss Macpherson from the bank in respect of the deposits [£2,541,680.09] was automatically set off against the sum due from LHL to the bank in respect of the mortgage loan [£7,801,727.19] so that only the net balance [£5,289,125.52] was due from LHL to the bank.
‘The appellants’ appeal thus succeeds.’
The liquidators are now seeking an order for the repayment of the money together with interest by Miss Macpherson and LHL on the proceeds of sale which were property of the bank.