Carol Ann Gatt v Barclays Bank Plc and Another
| Jurisdiction | England & Wales |
| Judge | HHJ Moloney |
| Judgment Date | 14 January 2013 |
| Neutral Citation | [2013] EWHC 2 (QB) |
| Docket Number | Case No: HQ10D02711 |
| Court | Queen's Bench Division |
| Date | 14 January 2013 |
[2013] EWHC 2 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
His Honour Judge Moloney QC
(sitting as a Judge of the High Court)
Case No: HQ10D02711
The Claimant in person (assisted by Mr Michael Gatt) Mr Rupert Allen (instructed by Matthew Arnold & Baldwin LLP) for the Defendants
Hearing dates: 12 th– 16 th November 2012
HHJ Moloney QC:
INTRODUCTION
This action arises out of events in April 2008, when the Bank of Scotland ("BoS") refused to provide re-mortgage finance to the Claimant Mrs Carol Gatt "CG" and her husband Michael "MG" (also formerly a Claimant) in respect of their multi-million pound home, Melksham Court in the Cotswolds. On enquiry by their brokers Savills Private Finance, the reason BoS gave for refusal was a problem with MG's credit rating. It emerged that the principal credit reference agencies, Experian, Equifax and Callcredit, were stating on MG's credit reports that his Barclays Bank current account was "delinquent", though not in "default", because he had a credit limit of only £1,500 but an overdraft of some £260,000.
It is accepted that the reports were an accurate reflection of computerised information provided by Barclays to the credit reference agencies under their long-standing and lawful data-sharing agreements. The account in question was in fact a joint account in both MG's and CG's names (though the reports did not say so). The Gatts in turn accept that the account was indeed overdrawn to that extent; but they say that the borrowing was well known to, and actually authorised by, their Barclays Relationship Manager Mr Williams, and that it was therefore untrue for Barclays to imply to the credit agencies and those to whom they passed the data on that MG and/or CG had substantial unauthorised borrowings.
It is the Gatts' case that this false statement by Barclays, brought about by Mr Williams, had the foreseeable consequence that they were unable to re-mortgage their home to raise finance, which was required to fund their longstanding property-development business, and that that in turn led to the collapse of their business, the loss of their home and other assets, and in MG's case to bankruptcy. (In the course of the bankruptcy proceedings, Barclays bought MG's claim in this action from his Trustee and then dropped it, so that to the Gatts' considerable indignation CG is now the sole Claimant.)
CG puts her claim in three overlapping ways:
a. breach of contract (she being a Barclays customer in her own right);
b. negligence/negligent mis-statement; and
c. defamation.
At its maximum, depending how much is properly claimable in respect of loss of future business profits, the claim runs to many million pounds.
The Defendants (to whom I shall jointly refer as "Barclays" or "the Bank" unless dealing with a point specific to one of them) maintain that they are not guilty of any misconduct, essentially because it was true that the joint account had a very large unauthorised overdraft. They further challenge the damages claim in all respects. And they counterclaim against CG for her personal liability on the overdraft and another joint loan of even greater amount; in each case (but particularly the overdraft) she denies liability, asserting that these are her husband's personal borrowings which Barclays has attributed to her without her consent.
BACKGROUND UP TO PURCHASE OF MELKSHAM COURT (MARCH 2004)
Mr and Mrs Gatt were both born in 1946, and married in 1968. In 1990, MG entered a joint property venture with a large Danish company, Larsen & Neilson; he was Managing Director, and later bought the Danes out, but his companies continued to be called the GLN group. From an early stage CG was actively involved in the business as a director and shareholder of some though not all the GLN companies. She had her own office in the group's headquarters in Tunbridge Wells, and carried out executive and administrative duties; MG appears to have been the front man so far as deal-making was concerned. In court they gave me the clear impression of having a strong and equal partnership, though the collapse of their business and lifestyle has plainly taken its toll on MG in particular.
It is not necessary in this judgment to review in detail the Gatts' business from 1990 to 2004. It is clear that they had a good track record, and played a major part in several successful projects such as leisure parks. Their general method of operation was to locate a development opportunity, purchase the land or an option on it (often with the help of a partner), obtain the necessary planning permissions and other prerequisites of development, and then take their profit by selling on to a larger developer which would carry out the actual building and selling. This middleman role had the advantage of not needing too much capital, and their habit was to fund it by borrowings secured on their home (their principal asset), and paid off when the profit came in, sometimes at fairly long intervals. (For example, in 2005/06 MG declared an income for tax purposes of £1.2 million, which was more than double the Gatts' combined taxable income for the whole of the preceding four years.) Plainly they were not afraid of borrowing, as some people are, but regarded being overdrawn for business and living purposes as a normal condition, confident of being able to repay when their ship came in. Barclays accepts that, up till the time with which this action is concerned, that confidence was well founded; the Gatts sometimes had to ask for an extension of time, but they kept their bankers informed of the progress of their deals, and eventually they always repaid both loan and interest in full.
As a result, the Gatts were able to live the lifestyle of prosperous, indeed wealthy, people. Before 2004 they lived in Lymden Place, Kent, a house then worth about £2 million, as well as owning their business premises, Copenhagen House in Tunbridge Wells. (For this purpose I shall not distinguish between assets owned by the Gatts directly or through their companies.) In 2004 they bought Melksham Court, Glos., a mediaeval manor house with grounds and outlying cottages, where they could house such things as CG's stable of quarter horses, MG's Ferrari and collection of Harley Davidsons, and a mobile home valued at £240,000. (The business remained based in Kent, though its projects could be anywhere, including the West Country.)
BARCLAYS' OVERDRAFT LIMIT APPROVAL SYSTEM
The best record of the dealings between Barclays and the Gatts in relation to borrowing is Barclays' computer diary "Notepad", which is centrally maintained and cannot be retrospectively altered. It contains a good deal of second-hand hearsay because, while some entries are made by the people who actually dealt with the Gatts, others are made by those to whom they reported. And of course, the Gatts never had access to it, and it also records internal Barclays meetings to which they were not party. Nevertheless I am satisfied that it is in general an accurate contemporary record both of what passed between the Gatts (specifically MG) and Barclays and of the internal Barclays responses.
Barclays' official process for the approval of increases in overdraft limits is described in the Witness Statements of Mr Williams, who was the Gatts' Premier (i.e. personal banking) Relationship Manager from September 2005 on, and Mr Gurney, who was their Corporate (i.e. business banking) Relationship Manager from 2002 until 2007, when the Gatts ceased actively banking with Barclays as described below. Neither of them could personally approve substantial overdraft increases of the order required by the Gatts. Such facilities had to be "sanctioned" (i.e. approved), initially by an automatic computer system called ERA ("enhanced risk assessment"). If ERA refused approval, the application could be appealed to a credit underwriter, who would consider the representations of the Relationship Manager and, if satisfied, approve the facility, perhaps on condition of the provision of security such as a solicitor's undertaking or a charge on land. He would set a maximum borrowing limit, and a maximum time period after which the sanctioned overdraft limit would lapse unless expressly renewed. These overdraft limits, as to both duration and amount, appear on the monthly bank statements sent to the customer.
The sanctioned overdraft limits on duration and amount were also logged on to the Bank's computer system ("marked up"). As described to me by Mr Hill of Barclays' credit reference agency department and explained further below, the marked up limits on each account form part of the shareable data which participating banks automatically provide to the credit reference agencies every month, thus giving rise to the statements complained of in this case.
I have described the above systems as "official", because it is a central part of the Gatts' case that whatever Barclays' internal procedures may have been, so far as they, the customers, were concerned the bank's practice was very different. They describe a much more traditional and informal approach, under which MG would keep in regular touch with his "bank manager", often over lunch; he would describe the state of business and his credit needs, and the bank manager would usually give oral approval there and then. MG told me that he regarded his bank managers as having the personal authority to do this without higher approval – that was their job. In those circumstances, he maintains, it would be thoroughly unfair and misleading for the Bank publicly to describe as "delinquent" or "unauthorised" a resulting overdraft of which the bank was fully aware, and...
To continue reading
Request your trial
-
FlyMeNow Ltd v Quick Air Jet Charter GmbH
...held to fall outside the law's protection: see Macintosh v Dun [1908] AC 390 (PC) (though there may be exceptions to this rule: see Gatt v Barclays Bank plc [2013] EWHC 2 (QB)). When it comes to the gratuitous provision of information about credit the authorities recognise a privilege for a......
-
Aniekan Mary Boyo v Lloyds Bank Plc
...default of her obligations in relation to an overdraft debt. This case is close on its facts to a decision in Gatt v Barclays Bank Plc [2013] EWHC2 (QB) an authority which both parties rely upon where it was held at Paragraph 37: “At Paragraph 9.1 (C) … There is no doubt that it is defamat......