Barclays Bank Plc v Svizera Holdings BV
| Jurisdiction | England & Wales |
| Judge | The Hon Mr Justice Flaux,The Honourable Mr Justice Flaux |
| Judgment Date | 08 April 2014 |
| Neutral Citation | [2014] EWHC 1020 (Comm) |
| Docket Number | Case No: 2012 FOLIO 277 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 08 April 2014 |
[2014] EWHC 1020 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Flaux
Case No: 2012 FOLIO 277
Mr Daniel Toledano QC (instructed by Reed Smith LLP) for the Claimant
Mr Oliver White and Ms Karishma Parekh (instructed on a direct access basis) for the Defendants
Hearing dates: 31 March, 1 and 2 April 2014
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
The claimant bank (to which I will refer as "Barclays") acted as the Agent and Offshore Security Trustee under a Facility Agreement dated 24 September 2007 with the defendants whereby a syndicate of lenders which included Barclays Capital, the investment bank division of Barclays, lent US$45 million to the second defendant ("Svizera"). Svizera is a Dutch company and is a wholly owned subsidiary of the first defendant ("Maneesh") an Indian pharmaceutical company. Maneesh acted as guarantor under the Facility Agreement.
Under the Facility Agreement there was a 30 month moratorium on repayment of principal so that during that period, only interest was payable. Svizera duly made payments of interest as they fell due during the period between 31 October 2007 and 31 December 2010. It also repaid the first two instalments of principal, each of US$2.25 million on the due dates of 31 March 2010 and 29 September 2010. However, thereafter, the instalment due on 28 March 2011 of US$10,125,000 was only part paid late, US$5,500,000 being paid on 7 June 2011 and the instalment of US$10,125,000 due to be paid on 28 September 2011 was not paid at all. On 3 February 2012, Barclays served an Acceleration Notice on Svizera pursuant to the terms of the Facility Agreement, but Svizera did not pay the outstanding balance. On 21 February 2012, Barclays served a demand on Maneesh as guarantor, but Maneesh did not honour that demand. It is evident that the failure of the defendants to honour their obligations was due to impecuniosity.
On 29 February 2012, Maneesh wrote to Barclays stating, inter alia: "As the money raised would have been in INR [Indian Rupees] so it was an understanding that 100% FC [foreign currency] loan would be covered by currency hedging…[an] email from Barclays Capital [of] 11 October 2007 confers the process of concluding interest hedging and currency hedging will be executed in a week's time. However Barclays did not allow our company Maneesh … to do currency hedging." This was the first time since the Facility Agreement was entered into that the defendants had raised the issue which is central to their Defence and Counterclaim in the current proceedings, that Barclays had been under an obligation to obtain for the defendants an INR/USD currency swap. It is notable that, in that letter, Maneesh did not suggest that the Facility Agreement was somehow rendered invalid by the failure to procure the INR/USD currency swap. Indeed, on the contrary, the letter sought a restructuring of the original debt.
The Claim Form in these proceedings had in fact been issued on 22 February 2012. Barclays claims on its own behalf and on behalf of the other lenders over US$35 million outstanding under the Facility Agreement and unpaid fees and legal fees and costs, together with contractual interest.
The Defence and Counterclaim was filed on 29 May 2012. It was evidently drafted by the head of litigation at the solicitors then acting for the defendants, Fladgate LLP and it is he who signed the statement of truth, although Mr Sapte accepted in cross-examination that he had been involved in providing the information it contained. As Mr Daniel Toledano QC, who appeared on behalf of Barclays, pointed out in his Skeleton Argument, although that pleading contains a number of different arguments, in essence the defendants advance one allegation, that in May 2007 and/or June 2007 and/or September 2007 Barclays represented that it could and would obtain an INR/USD currency swap for Svizera at ordinary commercial rates, to be entered into at the same time as the Facility Agreement. The defendants' complaint is that such a swap was not entered into.
This is relied upon as misrepresentation by the defendants. Although there is a pleaded case that this entitles the defendants to rescind the Facility Agreement, at the outset of the trial, Mr Oliver White on behalf of the defendants accepted that, since his clients were not in a position to repay to Barclays the sums advanced, there could not be restitutio in integrum, so rescission was not a remedy open to the defendants. In any event, even if that concession had not been made, rescission would not have been available since the defendants had clearly affirmed the Facility Agreement by making the payments of interest and principal due for over three years until they were unable to do so because of their financial state. The only remedy the defendants could pursue is for damages. In the alternative to the claim in misrepresentation, the defendants allege that there was a collateral contract of which Barclays was in breach, alternatively that Barclays was in breach of an advisory duty in tort, alternatively in breach of some contract collateral to the Facility Agreement.
Barclays' case is that all these defences are misconceived. It denies that any representation was ever made, contending that the only currency swap ever discussed between Barclays and the defendants was a USD/ Swiss franc [CHF] swap suggested by Barclays as a cost reduction strategy, but ultimately never executed. The only other swap under consideration was an interest rate swap which Svizera was obliged to enter into with Bank of India pursuant to the terms of the Facility Agreement. Accordingly, Barclays contends that the defence fails at first base on the facts. Even if it did not do so, Barclays relies upon a series of contractual terms and contractual estoppels to defeat the counterclaim.
In addition to the defences pleaded, in his Skeleton Argument served on the last working day before the trial, Mr White alleged for the first time that Barclays owed the defendants a fiduciary duty and was in breach of that duty by virtue of the negligent advice it gave. The allegation was repeated in a Supplementary Skeleton served at six in the morning of the first day of trial. This allegation is utterly hopeless. Quite apart from the fact that the relevant contractual documentation stated in terms that Barclays was not acting in a fiduciary or advisory capacity (see [15] below), this allegation completely misunderstands and misstates the nature of the relationship between a bank and its customer which save in special circumstances (not present here) is not a fiduciary one. That is confirmed by the very decision on which Mr White relies, Forsta Ap-Fonden v Bank of New York Mellon SA [2013] EWHC 3127 (Comm) at [173] per Blair J, following the judgment of Gloster J in JP Morgan Chase Bank v Springwell Navigation Corp [2008] EWHC 1186 (Comm) at [573] (affirmed by the Court of Appeal [2010] EWCA Civ 1221). Even if an application for permission to amend were to be made (which it has not been) I would refuse it on the basis that this allegation is bound to fail. In any event, in his oral closing submissions, Mr White effectively accepted that he could not run a case that there had been a breach of fiduciary duty.
For good measure, to the extent that, in his Skeleton Argument, Mr White sought to bolster that allegation that Barclays owed the defendants a fiduciary duty by asserting that Barclays acted as the defendants' agent, that assertion is equally hopeless. A commercial banking relationship is between two principals not a principal and an agent and under the Facility Agreement, Barclays was only agent for the "Finance Parties" i.e. the other banks.
Factual background
From about March 2007, Maneesh and Barclays held discussions as to the terms on which Barclays could arrange a syndicated loan for Maneesh to enable it to make two acquisitions, of a 51% shareholding in Tillomed Holdings Limited ("Tillomed") an English registered company and a 40% shareholding in Nostrum Laboratories Inc ("Nostrum") a US company. Maneesh was acting through Mr Vinay Sapte, its Chairman and Managing Director. Initially Mr Sapte dealt with Mr Navin Gupta, head of the Small and Medium Enterprises Team in the Commercial Banking Team at Barclays Mumbai branch, but from some time in May 2007, Mr Anuj Kapoor, a Director of Barclays Capital in Mumbai, took over negotiations and Mr Gupta's involvement reduced.
Mr Sapte and Mr Kapoor gave oral evidence before me. Mr Gupta no longer works for Barclays, so he was not called to give evidence, but Mr Kapoor has spoken to him and, in his first witness statement, Mr Kapoor was able to give hearsay evidence of what Mr Gupta had told him denying allegations by the defendants that he, Mr Gupta, had made any of the alleged representations. I found Mr Kapoor an honest and straightforward witness and, apart from a few irrelevant details on which his recollection may have been mistaken, I accept his evidence.
I should add that his evidence to me was essentially the same evidence as he gave at the trial last December before Hamblen J of the claim by Bank of India against Svizera under the interest rate swap, where Svizera was running a defence that the interest rate swap was subject to a condition precedent that Barclays would enter into the INR/USD currency swap. In his judgment rejecting that defence ( [2013]...
To continue reading
Request your trial
-
Mark Thomas Raymond Bailey and Another v Barclays Bank Plc
...its interests to those of Springwell." That paragraph of Gloster J's judgment was cited and followed by Flaux J in Barclays Bank Plc v Svizera Holdings BV [2014] EWHC 1020 (Comm) at 89 On the Company's own case, there is no question of it having in any relevant sense reposed trust and conf......
-
Thornbridge Ltd v Barclays Bank Plc
...of their relationship) in deciding whether any actionable representation has been made." 106 In the recent decision in Barclays Bank plc v Svizera Holdings BV [2014] EWHC 1020 (Comm) Flaux J had to consider similar representations to those in this case, that the client had made its own inde......
-
BNP Paribas SA v Trattamento Rifiuti Metropolitani S P A
...on the pleadings which required evidence. 190 It follows that I do not accept the submission that Flaux J was wrong when in Barclays Bank plc v Svizera Holdings BV [2014] EWHC 1020 (Comm); [2015] 1 All ER (Comm) 788 at [61]: “In view of the consistent judicial recognition of the effective......