AXA France Iard SA (The Successor to Financial Insurance Company Ltd) v Santander Cards UK Ltd

JurisdictionEngland & Wales
JudgeSir Richard Field
Judgment Date12 July 2022
Neutral Citation[2022] EWHC 1776 (Comm)
CourtQueen's Bench Division (Commercial Court)
Docket NumberCase No: CL-2021-000046
(1) AXA France Iard SA (The Successor to Financial Insurance Company Limited)
(2) AXA France Vie SA (The Successor to Financial Assurance Company Limited)
(1) Santander Cards UK Limited
(2) Santander Insurance Services UK Limited

[2022] EWHC 1776 (Comm)


Sir Richard Field

sitting as a Deputy High Court Judge

Case No: CL-2021-000046




Royal Courts of Justice

Strand, London, WC2A 2LL

Andrew Green QC, Fraser Campbell and Timothy Lau (instructed by Quinn Emanuel Urquart & Sullivan LLP) for the Claimants

Adam Zellick QC and David Murray (instructed by Reed Smith LLP) for the Defendants

Hearing dates: 22 nd & 23 rd February 2022

Approved Judgment

I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.


This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:30am on Tuesday 12 th July 2022 at 10:30am.

Sir Richard Field

There are before the Court two applications. The Defendants, respectively (“SCL”) and (“SISUK”), together (“Santander”) apply to strike out under CPR 24.2 (no real prospect of success) and CPR 3.4 (2) (a) (statement of case discloses no reasonable grounds for bringing the claim) certain parts of the Claimants' Particulars of Claim (“POC”). In relation to the Claimants' claim founded on a settlement agreement, the Defendants additionally contend that this claim amounts to an abuse of process under CPR 3.4 (2) (b).


The Claimants apply to amend their Particulars of Claim (“POC”) in certain respects.


I take the background to this litigation largely from the Claimants' Skeleton Argument which is not in all respects common ground between the parties. The Claimants are domiciled in France and carry on business as insurance underwriters as part of the AXA corporate group headed by AXA SA.


On 1 January 2019, the businesses, rights and obligations of two English insurance companies known as Financial Insurance Company Limited (“FICL”), which was engaged in general insurance and Financial Assurance Company Limited (“FACL”, which was engaged in life insurance), were transferred to the Claimants. The AXA group had acquired FICL and FACL from the Genworth corporate group (“Genworth”) on 1 December 2015 pursuant to a Sale and Purchase Agreement dated 17 September 2015 (“the SPA”). All of the policies to which this claim relates were sold by a company named GE Capital Bank Limited (“GECB”). At the time of the relevant sales, FICL, FACL and GECB were all part of the General Electric group of companies. GECB was acquired by the Santander group in 2009, and then changed its name to SCL. SISUK became involved later in 2010, as more fully described below.


Between around 1988 and 2011, FICL and FACL were engaged in the business of underwriting PPI for store credit cards. The Santander Defendants are part of the Santander corporate group. They are domiciled in England and are subsidiaries of Santander UK Plc (“SUK”). At all material times, SCL marketed and sold PPI underwritten by FICL and FACL. The PPI policies were attached to store credit cards, which were offered by SCL to customers of high street retailers, either via point-of-sale retail staff, or Santander call centre staff post-sale. PPI premiums were collected by SCL from customers' accounts and remitted to FICL/FACL. Santander earned substantial commission from the PPI premiums that customers paid (the mean average initial commission was 47.9%) in addition to profit share entitlements.


On 1 December 2000, FICL/FACL and SCL entered into an agreement formalising the historic agency arrangements under which SCL acted as agent in marketing and selling PPI products underwritten by FICL/FACL (“the Agency Agreement”). SISUK assumed the rights and obligations of SCL under the Agency Agreement in respect of the UK (but not Irish) business pursuant to a novation agreement dated 22 January 2010 (“the Novation Agreement”).


The marketing and sales by Santander of PPI underwritten by FICL/FACL gave rise to extensive PPI mis-selling complaints by customers against FICL/FACL. The scale of the mis-selling led the Financial Services Authority (“the FSA”) on 1 August 2010 to send a letter to relevant industry participants that identified common “point-of-sale” failings concerning PPI sales. Large numbers of mis-selling complaints in respect of PPI policies were also made in relation to policies underwritten by other insurers and sold by other intermediaries. Three years earlier, the FSA had issued a final notice to SCL on 30 January 2007 requiring it to pay a financial penalty of £610,000 in relation to a large number of PPI mis-selling practices (“the Final Notice”).


Broadly, the regulatory redress system for consumers involves: (i) a consumer making a regulatory complaint relating to PPI mis-selling directly against the regulated financial services company: and (ii) if that complaint is rejected by the company, or the consumer disputes the amount of redress offered, the complaint is referred to the Financial Ombudsman Services (“the FOS”) for determination.


The regulatory compensation regime draws a distinction between insurance policies written before and after 14 January 2005. In particular: (i) for the period prior to 14 January 2005, the regime treats insurers (e.g. AXA) as being responsible for PPI mis-selling complaints; and (ii) for the period from 14 January 2005 onwards, the regime treats the party conducting the insurance mediation (e.g. SCL) as also being responsible. As such, any regulatory complaint about PPI mis-selling prior to 14 January 2005 can only be made against FICL/ FACL and not Santander. Accordingly, FICL/FACL/AXA have been exposed to significant liabilities from complaints of historic mis-selling by Santander.


Initially, SCL took full responsibility for all complaints in relation to PPI sales, whether prior to or after 14 January 2005. This included SCL handling complaints and, if it accepted a complaint, paying compensation without contribution from FICL/FACL. Where FOS references led to FICL/FACL having to pay compensation in respect of policies sold prior to 14 January 2005 (because FOS have no jurisdiction over SCL in respect of such policies), SCL reimbursed FICL/FACL the compensation paid, plus FOS fees.


From 2012 there were exchanges between the parties concerning the allocation of responsibility for the handling of complaints in respect of PPI policies sold by SCL and the payment of compensation to customers. The Claimants contend that over a number of years, Santander gradually resiled from its practice of taking full responsibility for all PPI complaints.


In June 2015, given the dispute between them as to the proper allocation of liabilities, the parties attended a settlement meeting. It is AXA's case that this meeting resulted in a settlement agreement. Santander disputes this.


In July 2017 Santander notified AXA that they would no longer reimburse AXA in respect of any payments and costs in relation to PPI mis-selling prior to 14 January 2005. Santander then ceased handling complaints in respect of such mis-selling. Faced with this situation, on 7 December 2017, AXA and SUK entered into a Complaints Handling Agreement pursuant to which SUK provided complaints handling services on behalf of AXA in respect of PPI complaints in exchange for substantial charges to cover its costs (“the CHA”). SUK would determine the complaints, but all compensation and associated costs would be borne by AXA i.e. for SCL's mis-selling as determined by SCL's parent, SUK. On the same date as entering into the CHA, AXA and Santander also entered into a standstill agreement, pursuant to which the running of time for the claims now advanced by AXA in the POC was suspended for the purposes of limitation (“the Standstill Agreement”).


Clause 10.8 of the SPA under which the AXA group had acquired FICL and FACL provided that 90% of the responsibility for the “Relevant Distributor Mis-Selling Losses” would be allocated to Genworth. This liability was expected to be short lived as it was anticipated that Santander, shortly after the SPA had been executed would enter into a formal written agreement (referred to in the clause 10.8 as the “Relevant Distributor Agreement”) accepting liability for all mis-selling complaints in respect of PPI underwritten by FICL/FACL and distributed by Santander. As it transpired the “Relevant Distributor Agreement” was not entered into with Santander and AXA sought to enforce clause 10.8 which Genworth resisted, with the result that AXA brought a claim against Genworth in this Court (“the Genworth Proceedings”) which was decided in AXA's favour by Bryan J on liability and quantum. Thereafter, Genworth and the AXA group entered into a confidential settlement agreement in July 2020.

AXA's claim against the Santander Defendants


AXA claims approximately £644 million (before interest) as compensation for losses AXA have incurred in relation to the mis-selling of PPI by SCL prior to 14 January 2005, following complaint determinations by the FOS, AXA, or SUK (pursuant to the CHA).


AXA pleads that it is entitled to the £644 million under four sub-claims as follows:

(1) Breach of a settlement agreement between the Claimants and the Defendants alleged to have been concluded following a settlement meeting on 4 June 2015 (“the June 2015 meeting”) attended by several senior individuals from each side including Mr James Rember (General Counsel) and Paul Caprez (Chief Risk Officer) for the Claimants, and Steve Pateman...

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