UK: England and Wales: the reflective loss principle and former shareholders

Judgment was delivered yesterday by Sir Nigel Teare, sitting as a judge of the High Court, in Allianz Global Investors GmbH & Ors v Barclays Bank Plc & Ors [2021] EWHC 399 (Comm). I note the decision here because of the discussion it contains of the rule against reflective loss, most recently considered by the UK Supreme Court in Sevilleja v Marex Financial Ltd (Rev 1) [2020] UKSC 31. The trial judge held that the rule against reflective loss - sometimes called the rule in Prudential Assurance Co. Ltd v Newman Industries [1982] Ch. 204 - did not bar claims by former shareholders against third parties for damages in respect of losses that had been transferred or passed on to them by the company. The context was, the trial judge noted, one where the company would not be expected to be dealing with a claim for compensation in respect of those losses.