The purchase of properties abroad is a process that can be replete with disputes and financial losses for the unwary or unadvised. Whilst some foreign countries have presented few issues, others have had more chequered histories.

Recently, investors went to court to recover their losses resulting from a failed holiday resort in Cabo Verde. The promoters of the failed scheme had instructed the UK bank they dealt with to open a 'segregated client account' to hold investors' money. The account had restrictions on making withdrawals but did not specifically identify the investors whose money was held in it.

When the scheme foundered, those who lost their investments argued that they could rely on the promoters' instructions and that the money in the account was effectively held on trust for them. The bank argued that the client account did not identify any investors, just a class of beneficiaries, and that the investors could not rely on a contract between the scheme promoters and the bank, because they were not a party to it.

Both of the bank's arguments were dismissed by the Court of Appeal. The instruction to the bank to set up a segregated client account was sufficient for the clients of the promoters to be able to depend on it being 'ring fenced' from the promoters' own funds and indebtedness.