Elite Property Holdings Ltd v Barclays Bank Plc

JurisdictionEngland & Wales
JudgeLord Justice Flaux,Lord Justice Lindblom
Judgment Date17 July 2018
Neutral Citation[2018] EWCA Civ 1688
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: A4/2017/0142
Date17 July 2018

[2018] EWCA Civ 1688





HIS HONOUR JUDGE BIRD (Sitting as a Deputy High Court Judge)

[2016] EWHC 3294 (QB)

Royal Courts of Justice

Strand, London, WC2A 2LL


Lord Justice Lindblom


Lord Justice Flaux

Case No: A4/2017/0142

Elite Property Holdings Limited
Decolace Properties Limited
Barclays Bank Plc

Richard Slade QC and Malcolm Birdling (instructed by Mishcon de Reya LLP) for the Appellants

Patrick Goodall QC and Ian Bergson (instructed by Dentons UKMEA LLP) for the Respondent

Hearing date: 21 June 2018

Lord Justice Flaux



The appellants seek permission to appeal against the Order of HHJ Bird, sitting in the London Mercantile Court, dated 16 December 2016 whereby, on the respondent bank's application for strike out and/or summary judgment, he dismissed the appellants' advisory claims and review claims and refused the appellants permission to amend their Particulars of Claim by, amongst other things, adding the so-called Review Agreement Claim.


On 25 May 2017, Sir Terence Etherton MR directed that there be an oral hearing of the appellants' application for permission to appeal before two LJs, with the hearing of the appeal to follow immediately if permission were given. That oral hearing was held before us on 21 June 2018. At the outset of the hearing we indicated that we would hear full argument on both sides so that, in effect, we heard the appeal.

Factual background


The claims made by the appellants relate to various interest rate hedging products (IRHPs) entered by the appellants with the respondent bank between 2006 and 2010. The appellants were associated companies incorporated in the British Virgin Islands engaged in the business of property investment and development. The appellants entered into three structured collars with the bank between October 2006 and July 2008 (two by Elite and one by Decolace) in connection with loan facilities granted by the bank totalling about £7.5 million.


In 2008, the appellants' cash flow came under serious strain and from December 2008 they were complaining to the bank that the structured collars had been mis-sold. Discussions ensued about restructuring and funding breakage costs. In August and September 2010, the appellants terminated the structured collars and the bank provided loan facilities to fund the break costs, £695,000 to Elite and £93,000 to Decolace. This restructuring also involved the appellants entering into swaps with the bank as replacement hedging in respect of the original loan facilities. Prior to finalising the restructuring, the bank required the appellants to sign a settlement agreement in respect of the structured collars (“the 2010 Settlement Agreement”).


The 2010 Settlement Agreement provided, inter alia:

“3. The issues Decolace and Elite have raised, or may raise, in respect of the Existing Hedges [the three structured collars] have been fully and finally resolved;

4. All complaints, claims and causes of action which arise directly or indirectly, or may arise, out of or are in any way connected with the Existing Hedges have been fully and finally settled;

5. Decolace and Elite waive irrevocably any such claims or rights of action.”

It was accepted by the appellants before this Court that this Settlement Agreement barred all mis-selling claims in respect of the structured collars.


In June 2012, the bank agreed with the Financial Services Authority (now the Financial Conduct Authority, “the FCA”) to carry out a review of its sale of IRHPs. This was conducted pursuant to a confidential agreement with the FCA (“the FCA Agreement”) which expressly excluded third party rights under the Contracts (Rights of Third Parties) Act 1999 or otherwise. The agreement only came into the public domain when it was published by the Treasury Select Committee on 12 February 2015. The bank provided a written Undertaking annexed to the FCA Agreement to carry out the review in accordance with the terms set out in the Appendix.


Under the terms of the review set out in the Appendix, the bank agreed that it would provide appropriate redress to non-sophisticated customers, such as the appellants, who had been sold structured collars. Similarly, in the case of swaps, if the bank determined that they had been mis-sold, it was to provide fair and reasonable redress. The appropriate redress was what was fair and reasonable in the circumstances. Before any redress was provided an independent Skilled Person (in the case of this bank KPMG) had to agree the bank's assessment that the redress was fair and reasonable. The relevant terms provided, inter alia: “The Firm will not issue a provisional redress determination to a…Customer until the Skilled Person has agreed with the fair and reasonable nature of the Firm's redress proposal.” Paragraph 4.1 of the terms provided that the bank would agree with the FCA in advance the content of all customer communications and other key documents used in connection with the review.


In June 2014, the bank wrote letters to each of the appellants making redress offers, in the case of Elite in the sum of £947,178.66 and in the case of Decolace in the sum of £200,107.43. Those letters were in a standard form approved by the FCA. Under the heading “Consequential Losses” each of the letters stated:

“This redress offer includes interest at a rate of 8% simple per year on all refunded IRHP amounts. This is intended to compensate you for the fact that you lost the opportunity of using that money from the date of payment until the date of the refund (the “opportunity cost”). Specifically, it is intended to compensate you for: (i) any IRHP Borrowing Costs (as defined in Section 5.2.1 of the enclosed ‘Customer Guidance on Consequential Losses’): and / or (ii) lost profits or opportunities incurred because you were required to make payments under missold IRHPs (see Section 5.2.2 of the enclosed ‘Customer Guidance on Consequential Losses’.

On 4 September 2013, the FCA published guidance on the assessment of consequential losses in this review…

In addition to the FCA guidance on assessment of consequential losses, the Bank has produced the enclosed ‘Customer Guidance on Consequential Losses’ to provide further information to customers. We suggest you consider this carefully in order to decide which option to select.”


The letters then went on to explain that the appellant in question had three options. Option 1 was to accept the redress offer including interest at 8% simple per year. If Option 1 was selected in the “Response” at the end of the letter and in the Redress Offer Acceptance Form, then the redress payment would be made. The letter stated that acceptance of the offer would be in full and final settlement of all claims and causes of action. Option 2 was to accept the redress offer, including interest at 8% simple per year and to submit a claim for consequential loss other than the opportunity cost of being deprived of money. Again, this would be achieved by selecting Option 2 in the response and the Acceptance Form. However, it was made clear that if Option 2 were selected, no redress would be paid until the bank had completed its assessment of the consequential losses claimed.


Option 3 was not accepting the redress offer. The appellant could then choose to submit a claim for any category of consequential loss as outlined in the ‘Customer Guidance on Consequential Losses’. Once again the letter made clear that if Option 3 were selected, no redress would be paid until the bank had completed its assessment of the consequential losses claimed.


The letter stated:

“Please note that under Option 3 the Bank will make an assessment of your claim which may result in you being awarded less than, more than or the same as the 8% simple interest offered by the Bank now. Please also note that any consequential loss claim will be assessed against the tests explained in detail in the ‘Customer Guidance on Consequential Losses’… This assessment will mean that the confirmation or reissue of the offer of redress will necessarily take some time to complete.

If you wish to make a claim for any or all of the categories of consequential loss, please tick Option 3 under the heading ‘Response’ on the last page of this letter and complete the relevant sections of the enclosed ‘Consequential Loss Questionnaire’.”


In the enclosed ‘Customer Guidance on Consequential Losses’ under Option 3 it was stated:

“If you wish to reject the offer of 8% simple interest per year and instead want the Bank to conduct a detailed assessment of your consequential losses…please choose Option 3.

Please note that choosing Option 3 means that you accept the risk that the redress offered, following the detailed assessment of your claim, may be less than the offer of 8% simple interest per year on your Basic Redress.”


On 4 July 2014, solicitors then acting for the appellants emailed the bank saying that the appellants wished to proceed with Option 3 and enclosing signed acceptances to that effect. On that basis they had not completed the Redress Offer Acceptance Form or the Consequential Loss Questionnaire. They asked for an extension of time of 28 days to submit their consequential loss claim which the bank granted. On 8 August 2014, the solicitors then emailed the detailed Consequential Loss Claim in the form of a witness statement of Mr Stavrinides who describes himself as the “driving force behind the development” of the appellant companies, together with an expert report from a forensic accountant.


On 19 September 2014, the solicitors wrote to the bank explaining the financial difficulties in which the appellants found themselves and asking the bank to pay the Basic Redress amounts (which, of...

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3 cases
  • Mr Clive Richard Davis v Lloyds Bank Plc
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 16 April 2021
    ...A bank does not owe its customers a contractual duty to comply with the terms of the review: Elite Property Holdings Ltd v Barclays [2018] EWCA Civ 1688, [2019] Bus LR 129; ii) A bank does not owe its customers a common law duty of care to comply with its terms: CGL Group Ltd v RBS [2017......
  • Elite Property Holdings Ltd and Another v Barclays Bank Plc
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 21 February 2019
    ...whom Lindblom LJ agreed, the full citation of which is Elite Property Holdings Ltd and Decolace Properties Ltd v Barclays Bank plc [2018] EWCA Civ 1688, [2018] 2 BCLC 460. Proposed Amendments Before the Judge and the Judge's Decision 22 The Judge set out the proposed amendments before him ......
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    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 20 July 2020
    ...no duty to Elite or Decolace in relation to its carrying out of that review, whether in contract or in tort. The Court of Appeal ( [2018] EWCA Civ 1688) dismissed an application for permission to 50 HHJ Bird held that the conspiracy claims needed to be repleaded. The Claimant repleaded the......

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