The appellant was a property dealer and the respondent was a foreign exchange broker, who had a personal spread-betting account with IG Index. In August 2009, a third party informed the appellant of a deal offered by the respondent that involved a bet on the movement in the value of shares in Royal Bank of Scotland (RBS). The defendant claimed to know people who sat in on meetings between the heads of RBS and officials from the government, and it was expected the Chancellor would make a public statement which would have an effect on the share price of RBS. Following an initial telephone conversation, there was a meeting in early September 2009 at which the respondent confirmed that he could supply the appellant with this information and was willing to include his money in a bet based on that information. The appellant then transferred to the respondent’s bank account four payments totalling £620,000 between September and December 2009. In the event, nothing came of the proposal. According to the appellant, in late January or February 2010 he was informed by the respondent there was no longer expected to be a public statement about RBS and that he would return the money but, in March 2010, he was then told by the respondent that the money had been paid by mistake to the third party who became bankrupt. The appellant failed in his attempts to recover the money from the trustee in bankruptcy and brought proceedings against the respondent. The agreement between the parties was illegal because it sought to take advantage of insider dealing in shares and the pleadings were drafted in terms which plainly set out the nature of that agreement. Even though the agreement could not be and was not carried out because the expected inside information was not forthcoming, at first instance it was held that the appellant’s claim was still barred by illegality because he had of necessity to rely on the agreement pleaded. Further, even though the doctrine of locus poenitentiae had no application where there was no voluntary withdrawal from the agreement before it was performed, the position would have been different if the appellant had withdrawn from the agreement before its performance became frustrated. The appellant appealed.
William McCormick QC and Faisel Sadiq (30 Ely Place, London EC1N 6TD, phone 020 7400 9600, e-mail firstname.lastname@example.org), instructed by Dale Langley Solicitors represented the defendant (60 Lombard Street, London, EC3V 9EA, phone 020 7464 8433, e-mail email@example.com).