After a dispute lasting over four years, the Supreme Court has ruled that independent charity Corra Foundation is not to receive over £3.5m (plus interest) from Lloyds Banking Group.
The Supreme Court overturned a Scottish Appeal Court decision in favour of the Foundation that the Banking Group was wrong to reinterpret a covenant between itself and the Foundation. The covenant, created in 1985, entitles the independent grant-making trust to receiving a share of 1% of the Banking Group’s pre-tax profits, averaged over a three year period.
In 2010, the Foundation mounted a legal challenge after the Banking Group claimed that, using its new way of interpreting the covenant, it only owed £38,920, while the Foundation, calculating its entitlement in the way it had been in the previous 25 years, maintained the correct sum was over £3.5m.
After a first hearing, Lord Glennie ruled in favour of the Banking Group at the Court of Session in June 2011, but that decision was later overturned by three Appeal Court judges in December 2011. Lloyds Banking Group went on to appeal to the Supreme Court, which heard the case in November 2012. There is no further appeal available to any party.
Mary Craig OBE, Chief Executive of the Foundation, commenting on the ruling, said:
“After over four years trying to resolve this situation, Trustees are dismayed and bitterly disappointed by the decision by the Supreme Court, especially after the Scottish Appeal Court had ruled in our favour. Regrettably, there is no other appeal route open to us and, reluctantly, we must accept the decision.
“Throughout this time, the Trustees have acted on the basis of advice from eminent Senior Counsel in London and in Edinburgh. On various occasions, Lloyds Banking Group had the opportunity to bring matters to a close, particularly when the Inner House of the Court of Session vindicated the position of the Foundation. Instead, the Banking Group forced the appeal to the Supreme Court and the Trustees had no alternative but to participate in that appeal process.
“However, it is now time for the Foundation to look forward. Life has moved on for us over the period of this dispute and today’s decision marks the start of a new chapter for us. In 2019, the formal covenant will end after the Banking Group invoked its right to terminate it in 2010. Since then, Trustees have been actively considering how best to secure long term funds for the Foundation, irrespective of the outcome of this court action. With the uncertainty caused by this dispute now behind us, we will be able to turn our full attention to detailed planning for the future.”