Graiseley Properties Ltd and Others v Barclays Bank Plc

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeThe Honourable Mr Justice Flaux,The Hon Mr Justice Flaux
Judgment Date29 October 2012
Neutral Citation[2012] EWHC 3093 (Comm)
Docket NumberCase No: 2012 FOLIO 1259
Date29 October 2012

[2012] EWHC 3093 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Hon Mr Justice Flaux

Case No: 2012 FOLIO 1259

Between:
Graiseley Properties Limited and Others
Claimant
and
Barclays Bank Plc
Defendant

Mr Tim Lord QC and Mr Farhaz Khan (instructed by CYK Law) for the Claimants

Mr Adrian Beltrami QC and Mr Richard Hanke (instructed by Clifford Chance) for the Defendants

Hearing date: 29 th October 2012

APPROVED JUDGMENT

The Honourable Mr Justice Flaux The Hon Mr Justice Flaux
1

This is an application by the claimants in this case (which has been transferred from the Birmingham Mercantile Court to the Commercial Court as a potential test case concerning LIBOR) for permission to amend their particulars of claim to plead implied representations by the defendant and, in the alternative, implied terms. The implied representations are said to have induced the claimants to enter into the series of loan agreements and related hedging transactions. In the alternative, the claimants allege that similar terms are to be implied into those contracts.

2

So far as the implied representations are concerned, the claimants now allege that those implied representations were false and fraudulent and they seek to bring a claim against the defendant bank ("Barclays") in deceit, There was a claim for rescission for innocent misrepresentation in the original pleading, but the reason for the present proposed amendment is that, since the pleading was originally drafted and served, the various conclusions and findings of the regulatory authorities, both in this jurisdiction and in the United States of America against Barclays, have been published.

3

This matter concerns the setting of LIBOR and the effect of manipulation of LIBOR by Barclays. LIBOR is defined by the British Bankers' Association as:

"The rate at which an individual contributor panel bank could borrow funds were it to do so by asking for and then accepting interbank offers in reasonable market size just prior to 11.00 am London time."

4

The recent report of the Treasury Select Committee quotes the finding of the Financial Services Authority ("FSA") as to the significance of LIBOR and the related Euro rate of EURIBOR:

"Benchmark reference rates to indicate the interest rates that banks charge when lending to each other. They are fundamental to the operation of both UK and international financial markets, including markets in interest rate derivatives contracts."

5

This case concerns, in effect, two such derivatives contracts which the claimants were obliged to enter into as a condition of Barclays granting the relevant loan facilities. It is not necessary for present purposes to set out in any great detail the findings of the various regulatory authorities. What has essentially been found, both in the United States and in the United Kingdom, is misconduct and wrongdoing on the part of Barclays in relation to its manipulation of LIBOR at various times between 2005 and 2009.

6

In its Final Notice dated 27 June 2012, the FSA identified two distinct phases of wrongdoing. The first concerned submissions from Barclays to the BBA from 2005 to 2008, which took into account requests by interest rate derivatives traders to the submitters (who were responsible for submitting the LIBOR rates to the BBA) which the FSA found were motivated by profit. Secondly, the FSA found that during the financial crisis from about September 2007 until about May 2009, on instructions from senior management of Barclays, the submitters lowered their LIBOR submissions to the BBA, in response to negative media comments about the bank, what is described throughout the evidence before the Treasury Select Committee as "low-balling".

7

Similar findings were made in relation to these matters by both the Department of Justice in the United States and also by the US Commodities Futures Trading Commission, both of which issued reports on 27 June 2012 and both of which levied substantial fines against Barclays, as indeed, did the FSA. I should add that it is apparent from the material I have considered, including the recent preliminary findings of the House of Commons Treasury Select Committee, that what has been set out in the various regulators' findings and reports to date is by no means the complete picture and it appears likely that other matters will emerge in due course.

8

The specific implied representations relied upon by the claimants are set out in the draft amended pleading at paragraph 9 and they are as follows:

"(1) On any given date up to and including the date of the Swap and the date of the Collar, LIBOR represented the interest rate as defined by the BBA, being the average rate at which an individual contributor panel bank could borrow funds by asking for and accepting interbank offers in reasonable market size just prior to 11.00 am on that date.

(2) Barclays had no reason to believe that on any given date, LIBOR had represented, or might in the future represent, anything other than the interest rate defined by the BBA, being the average rate at which an individual contributor panel bank could borrow funds by asking for and accepting interbank offers in reasonable market size just prior to 11.00 am on that date.

(3) Barclays had not on any given date, up to and including the date of the Swap and the Collar, (a), made false or misleading LIBOR submissions to the BBA and/or (b), engaged in the practice of attempting to manipulate LIBOR, such that it represented a different rate from that defined by the BBA, viz a rate measured at least in part by reference to choices made by panel banks as to the rate that would best suit them in their dealings with third parties; and

(4) Barclays did not intend in the future to

(a),make false or misleading LIBOR submissions to the BBA and/or

(b), engage in the practice of attempting to manipulate LIBOR, such that it represented a different rate from that defined by the BBA".

9

The pleading goes on again to refer to a rate that was being measured in part by the bank's own personal interest, if I can summarise it in that way. The pleading then sets out how the representations were made by the agents of the bank, that is to say for present purposes, those managers and staff in the local branches in the Black Country with whom the claimants dealt, both in documents, including drafts of the various agreements which referred on a number of occasions to LIBOR and to the setting of the so-called screen rate, a series of emails passing between the bank and the claimants, and meetings.

10

Then the pleading sets out in detail at paragraph 12 the respects in which the representations are said to be false and those track in large measure the detailed findings made by the regulatory authorities. There is then a plea in paragraph 12A of why those representations are alleged to be fraudulent and what is pleaded is that the relevant knowledge and/or recklessness is that Barclays was proposing to...

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3 cases
  • Hockin and Others v Royal Bank of Scotland Plc and another
    • United Kingdom
    • Chancery Division
    • 25 April 2016
    ...14A1. Mr Reade says that the matters are all properly pleaded and referred me to Graiseley Properties Ltd & Ors v Barclays Bank plc [2012] EWHC 3093 (Comm) per Flaux J which was concerned with an application for permission to amend Particulars of Claim to plead implied representations or al......
  • Graiseley Properties Ltd and Others v Barclays Bank Plc
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 8 November 2013
    ...FROM HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION COMMERCIAL COURT THE HONOURABLE MR JUSTICE FLAUX &THE HONOURABLE MR JUSTICE COOKE [2012] EWHC 3093 (Comm) & [2013] EWHC 471 (Comm) Royal Courts of Justice Strand, London, WC2A 2LL The Right Honourable Lord Justice Longmore The Right Honourab......
  • Deutsche Bank AG and Others v Unitech Global Ltd and Another
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 28 February 2013
    ...to give rise to the implied statements. In my judgment, that is unsustainable and such a plea has no prospect of success. 30 In Graiseley v Barclays Bank [2012] EWHC 3093 Comm, Mr Justice Flaux allowed amendments to add claims for fraudulent misrepresentation against Barclays in relation t......
2 firm's commentaries
  • Banking On Bankers
    • United Kingdom
    • Mondaq UK
    • 21 October 2014
    ...AG & Ors v Unitech Global Ltd & Ors [2013] EWHC 471 (Comm) Graiseley Properties Ltd & Ors v Barclays Bank plc & ors [2012] EWHC 3093 (Comm); [2013] EWCA Civ 1372 IFE Fund SA v Goldman Sachs International [2007] EWCA Civ 811 ING Bank NV v Ros Roca SA [2011] EWCA Civ 353 Ward ......
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    • United Kingdom
    • Mondaq United Kingdom
    • 16 June 2014
    ...Or and Deutsche Bank AG v Unitech Limited [2013] EWCA Civ 1372 (Court of Appeal) Graiseley Properties Limited v Barclays Bank plc [2012] EWHC 3093 (Comm) (Mr Justice Deutsche Bank AG & Ors v Unitech Global Limited & Or and Deutsche Bank AG v Unitech Limited [2013] EWHC 471 (Comm) (M......

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