Charles Woodeson v Credit Suisse (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Leggatt,Lord Justice Longmore |
| Judgment Date | 17 May 2018 |
| Neutral Citation | [2018] EWCA Civ 1103 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2017/0105 |
| Date | 17 May 2018 |
[2018] EWCA Civ 1103
THE RIGHT HONOURABLE Lord Justice Longmore
and
THE RIGHT HONOURABLE Lord Justice Leggatt
Case No: A3/2017/0105
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
BRISTOL DISTRICT REGISTRY
MERCANTILE COURT
HIS HONOUR JUDGE HAVELOCK-ALLAN QC (Sitting as a Deputy High Court Judge)
[2016] EWHC 2775 (QB)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Guy Adams (instructed by Capital Law LLP) for the Appellants
Mr Christopher Boardman (instructed by Charles Russell Speechlys LLP) for the Respondent
Hearing dates: 9 th & 10 May 2018
Judgment Approved
See: Order at bottom of this judgment.
Introduction
This appeal from HHJ Havelock-Allan sitting in the Mercantile Court in Bristol challenges his decision to grant the defendant bank summary judgment in respect of certain of the claimants' claims. The result of the judgment is that the claimants can pursue a claim in deceit and contend that such claim is neither time-barred nor precluded by anti-set off provisions in their contract with the bank. No other claim is permissible. That is because it is arguable that the time for a deceit claim (as opposed to claims for negligent advice or breach of statutory duty) is extended pursuant to section 32 of the Limitation Act 1980 (“the 1980 Act”) and that the anti-set off provisions may be unreasonable clauses within the relevant statutory provisions, on which the bank may not rely.
The Facts
I can take these from the judge's full and careful judgment. The claimants, Mr and Mrs Woodeson, were the owners of a property called Cabbage Hall Farm, Sprigs Holly Lane in Oxfordshire which they purchased sometime in 1996. They re-mortgaged the property with the defendant (“the bank”) in January 2008. Their previous mortgage was a fixed rate interest-only deal with Cheltenham & Gloucester. That loan was for £400,000 and the fixed rate was due to expire around July 2007. The claimants began to explore re-mortgage possibilities early in 2007. The property was by then worth around £1.5 million, so there was scope to increase their borrowing but sterling mortgage rates were high. A friend suggested that they consider re-mortgaging in a foreign currency with a lower interest rate. He introduced them to an employee of the bank called Amrit Uppal.
Mr Uppal provided some information about foreign currency loans and a meeting followed on 5 th June 2007. This led to Mr Uppal sending the claimants some documentation which comprised an Acceptance Booklet, Security Agreement and Tax Documents. The claimants partially completed the blank sections and returned the documents to the bank on 15 th June 2007 with a request that Mr Uppal should fill in the remaining sections. Next, the claimants signed a Mortgage Application Form on 24 th July 2007 in which they sought, by way of re-mortgage, an interest-only Swiss franc loan in an unspecified amount for a term of 5 years.
In the event the sum which the claimants borrowed was far greater than was necessary to replace the amount outstanding under the mortgage with Cheltenham & Gloucester which, by the autumn of 2007, was just under £300,000. The claimants entered into a revolving credit facility with the bank on 17 th September 2007 in a sum of 2,089,319.21 Swiss francs. This was approximately equivalent to £880,000. The re-mortgage was completed on or about 7 th January 2008. The claimants drew down the greater part of the facility amount, redeemed the charge in favour of Cheltenham & Gloucester, and used the surplus money to invest in sterling deposits within an AIG Instant Access Bond. This was what is commonly called a “carry trade”. The interest rate on Swiss francs was much lower than that on sterling at the beginning of 2008. The claimants' aim was to capture the interest rate difference between sterling and Swiss francs, while at the same time benefitting from a mortgage which was cheap to service.
This deal proved to be disastrous when the Bank of England Base Rate fell sharply between October 2008 and March 2009 and the exchange rate of sterling to the Swiss franc declined in similar fashion. In January 2008, the exchange rate was 2.15 Swiss francs to £1. By the end of December the exchange rate was 1.55 Swiss francs. It declined further to 1.45 Swiss francs in 2010. When the borrowing became repayable at the end of the 5 year term, the claimants failed to repay it. The bank extended the maturity date to 31 st March 2013 and then to 31 st March 2014. It agreed not to enforce its rights until the end of September 2014. Eventually, on 7 th September 2015, the bank appointed receivers over Cabbage Hall Farm (“the property”).
The receivers issued proceedings for possession in the County Court at High Wycombe on 16 th November 2015. The claimants commenced the present action on 18 th February 2016 as a form of counter-attack. It was intended to dissuade the County Court from granting possession of the property. It was not successful. The District Judge made a possession order on 29 th March 2016. The claimants appealed. The appeal was heard by His Honour Judge Charles Harris QC in the County Court at Oxford on 13 th June and judgment was reserved. At the time of hearing of the bank's application in the instant proceedings, judgment on the appeal was still pending. It was handed down on 9 th September. The appeal was dismissed and a stay of the possession order was refused. Permission was sought to appeal to this court but was refused on the papers by Henderson LJ and, on oral renewal, by Asplin LJ. We were told that the Supreme Court is currently considering an application for permission to appeal.
The claimants' claim in this action is for:-
1) a declaration that they are entitled in equity to a set-off against the sums due from them to the defendant under a mortgage of the property the sums due upon their cross-claims for damages pursuant to section 138D Financial Services and Markets Act 2000 and/or for negligence and/or for deceit;
2) a declaration as to the sums of damages to which they are entitled on their cross-claims;
3) a declaration as to the sums which are due under the mortgage after giving credit for the sums due upon such cross-claims; and/or insofar as may be necessary
4) a declaration as to their entitlement to the proceeds of any sale of Cabbage Hall Farm; and
5) further or other relief.
The claimants blame the bank for mis-selling the Swiss franc facility. In the particulars of claim, they claimed damages from the bank for negligence, breach of statutory duty and deceit.
The claim in negligence was based on the assertion that Mr Uppal did more than simply provide information. It is alleged that he gave positive advice about the transaction which included recommending the Swiss franc as the preferable foreign currency and telling the claimants at the meeting on 5 th June 2007 that the 1% cost of hedging the transaction would be approximately equal to the expected fluctuation in the sterling/Swiss franc exchange rate over the 5 year term. The claimants also say they were not fairly warned of the downside risk if the Swiss franc/sterling exchange rate moved against them.
The deceit claim arises from documents which the bank disclosed in December 2014 pursuant to a Subject Access Request from the claimants under the Data Protection Act 1998. Amongst them was an internal document, dated 20 th July 2007, entitled “Scripted questions (Regulated mortgage contracts)”. Another was a copy of the Credit Application Form which Mr Uppal completed on or about 8 th August 2007. The bank had a procedure which its employees were obliged to follow in non-advised mortgage transactions. They were only permitted to ask the customer scripted (i.e. prescribed) questions so as to ensure that they did not cross the line between providing information and giving advice. Despite the fact that Mr Uppal crossed the box marked “Credit Facility only” rather than the box marked “Advisory Service” in the Acceptance Booklet which the claimants sent back to him, the claimants say that they were never asked any of the scripted questions and that the answers recorded by Mr Uppal in the scripted questions document are largely fictitious. The claimants also say that most of the information in the Credit Application Form about their personal circumstances is pure invention, or at the very least is completely mistaken. They point to the fact that in the Credit Application Form, Mr Uppal recorded the transaction as “Advised, Committed, Secured” and stated that he had fully explained the risk of the claimants having no currency hedging and thus the potential impact on their debt if the exchange rate moved adversely.
The claim in deceit is put this way in the particulars of claim:-
“36. Further given Mr Uppal's assessment of the risks in the Credit Application and the fact that he stated in that document that he had advised Mr and Mrs Woodeson as to such risks and that they fully appreciated them, when he had not in fact done so, it should be inferred that (a) the representation he made to Mr Woodeson at the meeting on 5 th June 2007 that the 1% cost of a hedge equated to approximately the expected fluctuation over the term was not his honestly held opinion; and/or (b) was deliberately misleading as to the extent of the exchange rate risks; and/or (c) if such opinion was honestly held at the time Mr Uppal dishonestly failed to correct his earlier advice or representations after he had appreciated the extent of the risk; and/or (d) Mr Uppal dishonestly failed to discharge the duty that had arisen in the circumstances to fairly and honestly advise Mr and Mrs Woodeson as to...
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