Lloyds TSB Foundation for Scotland has called on Lloyds Banking Group to rethink its last minute decision to appeal against a Court ruling awarding over £3.5m to the Foundation, calling the decision “ill-judged, oppressive and unnecessary”.
The Foundation had raised an action in the Court of Session against the bank, following a dispute over the money it was due under the terms of a covenant entitling it to a share of Lloyds’ profits.
The Foundation is entitled, under the covenant, to a share of one per cent of the Group’s pre-tax profits on an annual basis.
However, in March last year, it was forced to mount a legal challenge against the Group’s re-interpretation of the covenant. Lloyds had claimed the Foundation was due only £38,920, while the Foundation maintained the correct sum was more than £3.5 million.
After the first hearing the judge – Lord Glennie – ruled against the Foundation. But the Foundation appealed and, on 29th December 2011, three appeal judges from the highest appeal court in Scotland overturned that decision and ordered Lloyds Banking Group to pay £3,543,433 to the Foundation. However, Lloyds is now appealing to the Supreme Court in London.
Mary Craig OBE, Chief Executive of the Foundation, speaking after hearing the news, said:
“To have had a judgement in favour of our position with regard to the monies due to the Foundation from Lloyds Banking Group only to have them appeal at this late stage is extremely disappointing. Charities have had their hopes raised that we would be back in funds this year and this decision puts paid to that.
“Questions must now be asked as to why a major institution of its size, owned in part by the taxpayer, feels the need to pursue a charitable organisation in this way. Three judges, including the Lord President, Lord Hamilton, ruled unequivocally in favour of the Foundation at the end of 2011. The only outstanding matters remaining to be settled are that of costs and the rate of interest that Lloyds was to pay on what it owed to us.
“Despite that, today we now find ourselves back in limbo as Lloyds Banking Group seeks to tie us up in court action for at least another year, with additional legal costs and more time wasting.
“But worse still, this shameful turn of events means that monies due to us will be held back for a third year until this further appeal is heard and decided – and that is money we should be awarding to Scotland’s hard-pressed charities, now and in the future, as they are crying out for support at this difficult time. If we don’t have that income, we will be limited in what we can give by way of grants for the foreseeable future.
“I would urge Lloyds to think carefully about pursuing this plan of action and to show their support for Scotland’s communities by withdrawing their appeal. I would also urge others to ask what lies behind this decision which is, at best, misguided and, at worst, ill-judged, oppressive and unnecessary.”