Speechly Bircham said it secured a “landmark ruling” for Macpherson against KSF – whose Icelandic parent collapsed in the financial turmoil – by using an obscure legal principle dating back 300 years to the reign of Queen Anne.

The case also demonstrates how the financial industry is still feeling the aftershocks of the collapse of Icelandic banks, and the claims made by depositors for moneys they held in offshore branches of these institutions.

Macpherson took liquidators of KSF to the Isle of Man High Court, after they refused to let her “set off” deposits she had with the bank against money owed by her nominee company to KSF for a mortgage on a house in London.

“It is expensive and stressful to go to court against major institutions, especially where the law is as ancient as with equitable ‘set off’. We hope this verdict will throw a lifeline to a lot of people caught up in complex battles with insolvent banks and lenders,” Charles Gothard, Speechly Bircham’s head of international tax and Trusts, said in a statement after the case.  

Macpherson had set up the Isle of Man registered nominee company in 2006, to allow her to purchase the property while keeping her address private. When she decided to sell the house in September 2009, she tried to offset the amount she had personally deposited with KSF against the money her nominee company still owed KSF for the mortgage. However, KSF’s liquidators refused this arrangement because the borrower was a company – albeit owned by Miss Macpherson – whilst the deposit was held in her personal capacity, Speechly Bircham said.

However, Macpherson won the case on the basis of English case law and a 300-year-old legal principle that had not been used successfully in this way on behalf of a claimant since the 1870s. The judge in the matter ruled that Miss Macpherson and her company were "in-equity" one and the same.

“Miss Macpherson’s case highlights the importance of looking beyond statutory and dry legal rights, to the intentions and equities that underpin relationships with banks, particularly where there are complicated connections between lenders, individuals and the companies they control,” Gothard said.