Cgl Group Ltd v Royal Bank of Scotland

JurisdictionEngland & Wales
CourtQueen's Bench Division
JudgeJudge Bird
Judgment Date12 January 2016
Neutral Citation[2016] EWHC 281 (QB)
Date12 January 2016
Docket NumberCASE No: LM-2015000133

[2016] EWHC 281 (QB)




The Rolls Building

Fetter Lane

London EC4A 1NL


His Honour Judge Bird

(Sitting as a Judge of the High Court)

CASE No: LM-2015000133

Cgl Group Limited
Royal Bank of Scotland

Mr McGarry appeared on behalf of the Claimant

Ms Oppenheimer appeared on behalf of the Defendant

Judge Bird

In this judgment I will refer to CGL Group Ltd as the "claimant" and the two defendants RBS and NatWest as "the bank" or the "defendant" as the context requires.


The claimant purchased two financial products from the bank the first in July 2006 and the second in April 2007. It is not necessary to describe the transactions in any great detail, save to say that the first was a base rate collar trade, the second an amortising base rate swap. The collar was closed out on 12 July 2010 and half of the swap was closed out on 4 August 2010. The due termination date of the swap was 15 May 2017.


Complaints in general terms about the products and the circumstances in which they were sold to the claimants were first made in or about the middle of 2009.


On 29 June 2012 the FCA (as it now is) announced findings following a small scale review into the sale of interest rate hedging products and announced its agreement with a number of banks, including the defendant, that a redress scheme would be set up to compensate certain qualifying customers to whom such products had been miss-sold. I will refer towards the end of this judgment in greater detail to that scheme.


On 17 November 2013 the defendant confirmed to the claimant that it would fall within the parameters of the sales review and on 20 August 2014 the claimant was informed that it qualified for redress in respect of the collar trade, but not in respect of the swap.


On 5 January 2015 the claimant issued proceedings. Again I need not set out the basis of the claim at this stage in detail, but for the purposes of this application I proceed on the basis that the allegations are made out; this application being an application to strike out.


Ms Oppenheimer during the course of her submissions characterised the claim as a claim for miss-selling in the light of failure to provide advice and information. Mr McGarry who appears on behalf of the claimant did not raise any substantive objection to that broad description and I adopt it and agree with it. In its defence the bank asserts that all claims based on breaches of duty which arose more than six years before issue (that is before 5 January 2009) are statute barred.


I now turn to deal with the applications before me. By an application notice dated 19 October 2015 the defendant banks apply to strike out the claimant's claim or, alternatively, for summary judgment in respect of the same. In each case the defendant says the claims are statute barred. The claimant denies that the claims are statute barred and it pleads that it had the requisite knowledge to bring the claim only when the media first published reports about the miss-selling review to be conducted by the FCA in June 2012. The strike out application is supported by the witness statement of Felicity Ewing. The bank's position in short is that the issue of limitation is suitable for early determination without a trial because "the relevant dates are clear and the central questions are legal ones that can and should be determined at this preliminary stage". It is important to note that the claimant, rightly in my view, does not draw any distinction between the two products to which I have referred. It seems to me (and I understand the Claimant to accept this) that the claims in respect of the 2 products stand or fall together.


As to the evidence before me Ms Ewing deals with limitation at paragraph 15 and onwards of her statement. It is conceded by the claimants, again in my judgment rightly, that I should proceed on the basis that primary limitation has expired. The argument therefore has centred solely on the application and meaning of section 14A of the Limitation Act 1980.


The evidence shows the payments due in respect of the various products increased markedly from 16 February 2009 because the defendants' base interest rates had fallen to an unprecedented level by that date. From 19 July 2006 to January 2009 applicable rates in respect of the collar fell between the cap rate and the floor rate. As a result the claimant consistently made large payments to the defendant. In May 2009 the claimant asked for a settlement figure and in July 2009 the claimant contacted the bank to discuss restructuring. The contact was by email through the claimant's accountant. The email is in the application bundle in tab 8 at page 124 and stands as a note of a conversation had between the claimant's accountants and a member of the bank's staff; it reads as follows:

"Cos [or Cosmo; that is the director of the claimant] wants to talk with someone at RBS please about the hedging products — as I understand it there are two — a £1m cap and collar and a swap for £1.5m pegged to a long term loan arrangement amortised — it's the latter that cos wants to talk about because this was set out with the retention of chirk properties in mind which of course is now not happening — I've had difficulty tracking down the original chirk wip facility papers which might clear up quickly as they may have referred the hedge as a condition — can we include amongst other things for the next meet please?"

I am told and accept that reference to the "Chirk" properties is simply to a collection of properties known by that name. The word has no special meaning and is not a term of art.


On 17 July 2009 the claimant, through its director Mr Lloyd, complained by email directly. The complaint centred on "miss-selling". The email is at page 125 of the bundle. It was submitted via a general enquiries or complaint portal on the defendant's web site. It provides as follows:

"This complaint is of a serious nature: reference to hedging funds mis-sold to me. After numerous attempts to speak with someone in relation to this fund I now feel my only option is to log a complaint. This fund means a make or break to the company. Please contact me on…"

A mobile telephone number was supplied. The bank's position is that this clearly shows that the claimant was fully aware of the facts that lie behind the claim.


In accordance with the invitation extended in the email there was contact between the bank and the claimant on 19 November. Reference again was made to the products being miss-sold and there was discussion about breakage costs put at £280,000. I have seen a transcript of the conversation and listened to a recording of it. In the transcript Mr Lloyd, the claimant's director, says this, "I feel that I've been misled and miss-sold this policy." Nothing, it seems to me, turns on the description of the products as a policy. When he asked how he feels the miss-selling came about, he replies in this way:

"Mis-sold it because I didn't want it and they pestered me and pestered me and it was just put in front of me to sign, and you know it wasn't really explained."

He goes on to say:

"I never knew that it actually had 10 years to run, you know? We didn't notice it when we were selling off the property."


Thereafter, as I have referred to briefly, the collar was closed out on 12 July at a cost of some £53,500 and half of the swap was closed out in August at a cost then of £142,000.


In opposition to the strike out application Mr Lloyd of the claimant has submitted a short witness statement. It comprises only 14 paragraphs and as the bank put it during the course of submissions it was submitted "very late". The claimant accepts through Mr Lloyd that before 29 June 2012, the date when the FCA announced its review, that the claimant was aware that it had needed to make increased payments to the defendant and that it was aware of the extent of breakage costs. It accepts the extent of the contact which I have described between it and the bank in July 2009 and November 2009. The key provision within the claimant's evidence is set out at paragraph 10; there Mr Lloyd says this:

"Until June or July 2012, the Claimant was not aware of the nature and/or scope of the Defendant's regulatory and/or common law duties and did not have the requisite knowledge (constructively or otherwise) to attribute such loss/damage to the Bank's negligence, until after that time."


The claimant's position then is that in June or July 2012 its accountants told it that there may be a claim against the bank. It is said that the November communication, albeit referring to miss-selling should be seen against the background of earlier communications. It is said that the complaints made to the bank were complaints in truth about a lack of flexibility.


The application to strike out was met by an application to amend. The application sets out allegations that the defendant owed to the claimant a common law duty of care having agreed to review the sale of products to the claimant to, first, conduct the sales review in accordance with the undertakings given by the bank to the FCA and in accordance with the agreed methodology; secondly to provide the claimant with appropriate fair and reasonable redress and, finally, to conduct the review with reasonable care and skill.


The claimant pleads a breach of duty in respect of that proposed amendment in that the defendant concluded that at the end of the review the bank might have "done more" because the sales process was non-compliant with agreed sales standards. The...

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3 cases
  • CGL Group Ltd and Others v The Royal Bank of Scotland Plc & National Westminster Bank Plc and Others
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 24 July 2017
    ...certain regulatory duties are not actionable at all and breaches of others are only actionable by individuals and not by companies. 2 [2016] EWHC 281 (QB). 3 [2016] EWHC 1360 (QB). 4 [2016] EWHC 378 (QB). 5 Before the amendments made by the 2012 Act, the provision was in section 150 of FSMA......
  • Mr Clive Richard Davis v Lloyds Bank Plc
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 16 April 2021
    ...were made public by the Treasury Select Committee. 12 As was held in CGL Group Ltd v Royal Bank of Scotland both at first instance ( [2016] EWHC 281 (QB) at [39]) and in this court ( [2017] EWCA Civ 1073, [2018] 1 WLR 2137 at [86]), the review agreement was one made between the bank and ......
  • Cameron Developments (UK) Ltd v National Westminster Bank Plc and Another
    • United Kingdom
    • Queen's Bench Division
    • 26 July 2017
    ...claim"). 17 It has been agreed that since a judgment of the Court of Appeal is currently awaited in the case of CGL Group Limited v Royal Bank of Scotland plc [2016] EWHC 281 (QB) which is expected to resolve whether or not it is arguable that a bank owed its customer a duty of care at......
2 firm's commentaries
  • Judgments
    • United Kingdom
    • JD Supra United Kingdom
    • 11 July 2016 Bank does not owe a duty of care in relation to the review of sales of IRHPs CGL Group Limited v. The Royal Bank of Scotland plc [2016] EWHC 281 (QB) In this case, the claimant alleged (essentially) that RBS had missold it two IRHPs, in that it had failed to provide certain advice and i......
  • Judgments
    • United Kingdom
    • Mondaq UK
    • 18 July 2016
    ...Bank does not owe a duty of care in relation to the review of sales of IRHPs CGL Group Limited v. The Royal Bank of Scotland plc [2016] EWHC 281 (QB) In this case, the claimant alleged (essentially) that RBS had missold it two IRHPs, in that it had failed to provide certain advice and infor......

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