A. F. Kopp Ltd v HSBC UK Bank Plc
Jurisdiction | England & Wales |
Judge | Hodge |
Judgment Date | 03 May 2024 |
Neutral Citation | [2024] EWHC 1004 (Ch) |
Court | Chancery Division |
Docket Number | Case No: BL-2023-MAN-000085 |
[2024] EWHC 1004 (Ch)
HIS HONOUR JUDGE Hodge KC
Sitting as a Judge of the High Court
Case No: BL-2023-MAN-000085
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
IN MANCHESTER
BUSINESS LIST (ChD)
Manchester Civil Justice Centre,
1 Bridge Street West,
Manchester M60 9DJ
Banking — Alleged breach of duty over delay in making funds available to Claimant — Claimant acting as import agent for two third party companies — Claimant suing bank for liability sustained to third parties for their loss of profits — Defendant bank's application for strike out or summary judgment — Contract term excluding liability for indirect or consequential loss — Whether extending to liability pursuant to settlement agreement with third parties for their loss of profits — Whether contract term satisfying the test of reasonableness — Whether claim should be struck out or summary judgment entered for Defendant bank — Unfair Contract Terms Act 1977, ss. 3, 11
Security for costs — Whether order for security would stifle the claim — Whether regard to be had to assets of third party companies when deciding whether to order security
The following cases are referred to in the judgment:
2 Entertain Video Ltd v Sony DADC Europe Ltd [2020] EWHC 972 (TCC), [2021] 1 All ER (Comm) 936, 190 Con LR 145, [2021] 1 All ER 527
Armstead v Royal & Sun Alliance Insurance Company Ltd [2024] UKSC 6, [2024] 2 WLR 632
Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch)
Fine Lady Bakeries Ltd v EDF Energy Customers Ltd [2020] EWHC 87 (QB)
Frank v Chlorelle Construction Ltd [2010] EWHC 3233 (TCC)
Hadley v Baxendale (1854) 9 Ex 341, 156 ER 145
Last Bus Ltd v Dawson Group Bus & Coach Ltd [2023] EWCA Civ 1297, [2023] 4 WLR 80
Niprose Investments Ltd v Vincents Solicitors Ltd [2024] EWHC 801 (Ch)
Okpabi v Royal Dutch Shell plc [2021] UKSC 3, [2021] 1 WLR 1294
Pinewood Technologies Asia Pacific Ltd v Pinewood Technologies plc [2023] EWHC 2506 (TCC)
Williams v Nu Design & Build Ltd [2021] EWHC 835 (TCC)
Mr Daniel Metcalfe (instructed by BBS Law Limited) for the Claimant/Respondent
Mr Nicholas Cobill (instructed by Eversheds Sutherland (International) LPP) for the Defendant/Applicant
Hearing date: Wednesday 17 April 2024
Date judgment circulated: Tuesday 30 April 2024
Hand down date: Friday 3 May 2024
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.
HIS HONOUR JUDGE Hodge KC
Remote hand-down: The court handed down this judgment remotely by circulation to the parties' legal representatives by email, by uploading it to CE-File, and by release to The National Archives. The time and date for hand-down is deemed to be 10:00 am on Friday 3 May 2024.
His Honour Judge Hodge KC:
I Introduction
In 2017–18, the claimant was acting as an import agent for two private limited companies registered in the United States of America, Mike Tronics LLC and A F Kopp LLC. In or around June 2017, the claimant opened a domestic business current account with the defendant, which provides banking and associated financial services. In February 2018 the claimant also opened a foreign currency business account with the defendant. It is common ground between the parties that those bank accounts, and the relationship between the parties, were governed by the defendant's standard ‘Business Banking Terms and Conditions’. It is also common ground that at the time when the defendant was conducting a ‘safeguard review’, which led to the claimant's accounts being suspended on 4 December 2018, the applicable terms and conditions were those current as of 1 July 2018. These class the claimant as a ‘Small Business Customer’. Clause 32 addresses the circumstances in which the defendant is not responsible to its customer “for things that go wrong”. Whether or not the defendant is liable to a small business customer (such as the claimant), pursuant to clause 32, depends upon the type of loss in question: the defendant is liable for “direct loss of profit” and for “other direct losses”, but not for “indirect or consequential loss (including lost business, data, profits or losses resulting from third party claims) even if it was foreseeable”. Similar terms and conditions applied when the claimant first opened its domestic account with the defendant in June 2017. By the time the foreign currency account was first opened in February 2018, the applicable terms and conditions corresponded exactly to those contained in clause 32.
By a Part 7 claim form, issued on 21 September 2023, the claimant seeks “damages for breach of contract and/or breach of duty of care in relation to the defendant's provision of financial services”. The claim form was accompanied by: (1) detailed particulars of claim, settled by counsel, and verified by a statement of truth signed by Mr Emmanuel Schleider, the claimant's (now) sole director and shareholder; and (2) the claimant's initial disclosure.
This is my considered judgment on an application by the defendant, issued on 19 December 2023, for summary judgment against the claimant under CPR 24, or to strike out the claim pursuant to CPR 3.4 (2) (a). In the alternative, the defendant seeks an order requiring the claimant to provide security for the defendant's costs of the claim (up to the first case management hearing) pursuant to CPR 25.12. On this application, the defendant (and applicant) is represented by Mr Nicholas Cobill (of counsel), instructed by Eversheds Sutherland (International) LLP. The claimant (and respondent) is represented by Mr Daniel Metcalfe (also of counsel), instructed by BBS Law Limited.
The application is brought in advance of the service of any defence to the claim. Apart from the acknowledgment of service, stating an intention to defend the entire claim, the only other formal steps in the proceedings have been the service of a CPR 18 request by the defendant, dated 9 November 2023, for further information about the particulars of claim and a (largely noncommittal) response from the claimant, dated 4 December 2023.
The evidence in support of the application is contained in the first witness statement of Mr Oliver David Grant, dated 19 December 2023, and exhibit ODG1. Mr Grant is the defendant's litigation solicitor. Evidence in answer is provided by a witness statement from Mr Schleider, dated 10 April 2024, and exhibit ES1. The defendant takes no point on the lateness of this evidence; and has served evidence in reply in the form of Mr Grant's second witness statement, dated 11 April 2024, and exhibit ODG2.
The defendant's application for summary judgment or strike out is advanced on the basis that, to the extent that the claimant has suffered any loss at all (which the defendant does not accept), then the defendant is not liable for such loss because it is specifically excluded by clause 32 of the applicable banking terms and conditions so the claim fails in its entirety. At paragraphs 35–56 of his first witness statement, Mr Grant also advanced an alternative, and secondary, case that the claim has no real prospect of success because there has been no breach of any of the applicable terms and conditions, or of any duty of care owed by the defendant, whether as alleged or at all. However, at paragraph 14 of his second witness statement, Mr Grant explains that as a result of Mr Schleider's witness evidence, the defendant no longer pursues its alternative case on breach at the hearing of this application. On that footing, the sole live issues that fall to be considered on this summary judgment and strike out application are whether the claimant has any real prospect of resisting the defendant's contentions that: (1) as a matter of contract, clause 32 prevents the claimant from recovering the losses it seeks to recover on this claim, even if it succeeds in establishing that those losses were suffered as a result of the defendant's alleged breaches of contract and duty; and, if so, (2) clause 32 satisfies the requirement of reasonableness imposed by s. 3 of the Unfair Contract Terms Act 1977 (‘ UCTA’).
The hearing bundle extends to some 620 pages. There is a combined bundle of authorities of some 1,057 pages, embracing some 44 extracts from statutes and regulatory provisions, case law authorities, and practitioners' texts. I have also received detailed written skeleton arguments from both counsel, in each case dated 15 April 2024. With the benefit of my pre-reading, the hearing was comfortably completed within its time estimate of one day, on Wednesday 17 April 2024.
In this judgment, I do not propose to rehearse the submissions of counsel in any detail since, although expanded upon in oral submissions, these are adequately set out, and rehearsed, in the written skeleton arguments. Nor do I propose to address every point raised by counsel; although this does not mean that any of them have been forgotten or ignored. Instead, I will confine myself to addressing those points which are strictly necessary to my decision.
For structural reasons only, this judgment is divided into the following sections (although these are not self-contained, and the contents of each section have informed others):
I: Introduction
II: Background
III: Summary Judgment
IV: Security for costs
V: Disposal
II: Background
In June 2017, the claimant applied online to open a business current account with the defendant. In its application, the claimant described its principal business activity as: “B2B [business to business] and B2C [business to consumer] consumer goods including electronics, office supplies and home goods as well as import and export goods”. The claimant estimated its turnover in the next year at...
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