[2025] UKUT 00185 (TCC)

As set out above, Gleeson J said in Forster that if a lay client provided a lawyer with a statement of facts, and “that statement of facts does not correspond to the truth as he knows it to be, he cannot rely for any purpose on the advice which he has received because he knows it to be based on false premises”.

We have already found as facts that:

Since Mr Arden gave Mr Lane an incomplete and incorrect picture of the facts, and did not ask for advice on the Q3 Update, then, to borrow the phraseology from Forster, it is not open to him to say he was not “knowingly concerned” on the basis that he had relied on that advice.

We considered whether the same was true for Mr Donaldson. He had not been at the meeting with Mr Lane, and was not copied on the email from Ms Roberts; he also did not attend the Disclosure Committee on 16 October 2018, where the meeting was discussed. However, Mr Arden told him about the meeting the day it had happened. Mr Donaldson said in his witness statement that:

“My clear understanding from the conversation with Mr Arden was that until Deloitte's work had been concluded and discussions to agree the final capital position with the PRA had taken place no market announcement was necessary. In other words, it was my understanding that the Bank did not need to make any specific disclosure about the RWA Issue in the Q3 Announcement and I relied on that advice.”

Mr Donaldson agreed in cross-examination that he didn’t know whether or not Mr Lane was shown the draft Q3 Update, but said he trusted Mr Arden and Ms Roberts. He also agreed that his understanding of Linklaters’ advice was that “there was no need to say anything until [the Bank] had corrected matters with the PRA”.

We find as a fact that Mr Donaldson understood from his conversation with Mr Arden that Linklaters had advised that “no market announcement was necessary” about the RWAs until Deloitte had finished its work and the Bank had discussed the outcomes with the PRA. However, he did not understand that Linklaters had advised that the Bank could report a RWA figure in its Q3 which it knew to be materially incorrect. The two are different. This is thus not a case where, as Gleeson J put it, Mr Donaldson had “obtained independent advice that the activity concerned is not in contravention of the law”. The advice he knew the Bank had received related to whether or not the Bank had to make an announcement (so as to comply with the MAR), not about whether the Bank could continue to provide the market with a figure it knew to be wrong.