Hockin and Others v Royal Bank of Scotland Plc and another

JurisdictionEngland & Wales
CourtChancery Division
JudgeMrs Justice Asplin DBE
Judgment Date25 April 2016
Neutral Citation[2016] EWHC 925 (Ch)
Docket NumberCase No: FL-2016-000003
Date25 April 2016

[2016] EWHC 925 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

FINANCIAL LIST

Royal Courts of Justice, Rolls Building

Fetter Lane, London, EC4A 1NL

Before:

The Hon Mrs Justice Asplin DBE

Case No: FL-2016-000003

Between:
(1) Diane Hockin
(2) Michael Hockin
(3) Lonwest Limited
Claimants
and
(1) The Royal Bank of Scotland
(2) National Westminster Bank Plc
Defendants

David Reade QC and Farhaz Khan (instructed by Berg) for the Claimants

Mark Hapgood QC, Laura JohnandAdam Sher (instructed by Dentons UKMEA LLP) for the Defendants

Hearing dates: 6 & 7 April 2016

Mrs Justice Asplin DBE
1

There are two applications before the Court. The first in time is an application by the defendants, the Royal Bank of Scotland plc and National Westminster Bank plc (together referred to as "the Bank") dated 21 December 2015, to strike out parts of the Claim (the "Strike Out Application"). The second is an application by the Claimants, Diane Hockin, Michael Hockin and Lonwest Ltd seeking permission to amend the Particulars of Claim (the "Amendment Application"). It is dated 24 March 2016. The Claimants are assignees of various causes of action alleged to have been enjoyed by London & West Country Estates Ltd (in administration) ("LWE") against the Bank. The precise extent of that assignment is one of the issues central to both of the applications before the court.

2

LWE which is now in liquidation, owned and managed a number of commercial business parks in Somerset and Devon. It was a wholly owned subsidiary of a holding company owned by Mr and Mrs Hockin the first and second Claimants. In 2008 the Bank extended a £55m loan facility to LWE under which it was required to repay the loan over 3 years with interest referable to LIBOR (the "2008 Facility"). The parties also agreed a 10 year bank callable interest rate swap (the "Swap") a hedge of some description having been a pre-condition of the 2008 Facility. The 2008 Facility in large part refinanced an existing long term Bank Base Rate loan facility. In or about October 2009, LWE was placed into the Bank's Global Restructuring Group, ("GRG"). After a period, the 2008 Facility was assigned to a company referred to as Isobel, a joint venture between the Bank and Blackstone, at a significant discount, despite what are alleged to have been substantial offers made by LWE to refinance the 2008 Facility. Thereafter, Isobel placed LWE into administration.

3

Rights of action against the Bank having been assigned to the Claimants by a Deed of Assignment dated 20 March 2014 (the "Deed of Assignment"), the proceedings were issued on 22 June 2014 and Particulars of Claim followed on 22 July 2014. A Defence was served on 29 October 2014 and the Claimants served a Reply on 18 February 2015. The first Case Management Conference took place on 23 April 2015 and Warren J made directions down to trial. Disclosure took place in two tranches in October and December 2015 respectively. The claim was transferred into the Financial List on 19 February 2016, witness statements are currently due to be exchanged on 24 June 2016 and the trial is set down for five weeks in January 2017.

4

In the Agreed Case Summary, submitted in April 2015 prior to the CMC, the Claimants' case is described as falling under four heads. They are: the Advisory claim under which it is alleged that the Bank owed a duty of care properly to advise in relation to the Swap; the Swap Representation Claim pursuant to which the claimants say that the Swap was induced by misrepresentations made to LWE; the LIBOR Claims to the effect that impliedly, the Bank made representations to LWE as to LIBOR which were untrue and were made by the Bank knowing them to be untrue, without belief in their truth or recklessly as to their truth or alternatively that the Bank breached the LIBOR Implied Terms; and what is referred to as the GRG Claim pursuant to which the Claimants say that the Bank and in particular GRG acted in breach of an implied term to act in good faith in its performance of the terms of the 2008 Facility. It is stated that as a result of the alleged breaches of duty, LWE was forced into administration by Isobel, a company to which the Bank sold its debenture loan and suffered substantial loss and damage. The Bank denied that it was liable as alleged or at all. In particular, in relation to the LIBOR Claims it admitted that it was involved in LIBOR misconduct in relation to the Swiss Franc and the Japanese Yen but denied involvement in manipulation in relation to GBP LIBOR. It also denied that LWE had suffered any loss as a result of any alleged breach of what had been termed the LIBOR Implied Terms. Further in relation to the GRG Claim amongst other things, it was expressly stated that the Bank denies that the Claimants have standing to make the allegations in relation to the conduct of GRG.

The Applications

5

Although the Strike Out Application was made shortly before Christmas 2015, disclosure already having taken place, the first version of the proposed draft Amended Particulars of Claim was only received by the Bank on 18 March 2016, followed by a further version on 22 March 2016. By a letter of 30 March 2016, the Claimants were invited to produce a revised draft addressing the issues set out in that letter and a further revised draft was received by those instructed on behalf of the Bank after close of business on 1 April 2016.

6

In summary, the Strike Out Application is concerned with the GRG Claim in its original form and for the most part turns upon whether the Claimants can rely upon an alleged implied duty to act in good faith on the part of the Bank. Mr Reade QC on behalf of the Claimants submits that it has been overtaken by events in the form of the Amendment Application. In fact, the proposed draft Amended Particulars of Claim contains substantial proposed amendments, all of which are opposed by the Bank. They are described by Mr Reade for the most part as further particularisation of the allegations as a result of having analysed the considerable amount of disclosure made by the Bank. They include for example, substantial particularisation of the allegations of falsity of the LIBOR Representations at proposed paragraphs 14.4.2–14.4.11. In relation to what has been termed the GRG claim, Mr Reade seeks to add significant additional claims by way of amendment. They are a claim of unlawful means conspiracy and further allegations of deceit or negligent misrepresentation which for the most part are pleaded at paragraphs 16.1A – 16.1Z of the draft Amended Particulars of Claim. It is proposed to allege that Bank employees had deceived and misled LWE and conspired to procure the debenture and other security to enable the Bank better to control LWE's assets once in GRG (the "Further Claims"). In addition, it is proposed to amend the Particulars of Claim by the addition of paragraphs 16.2.7 – 16.2.10 particularising an alleged breach by the Bank of the implied duty of good faith with regard to the 2008 Facility by its assignment to a company referred to as Isobel leading to LWE's ultimate administration and liquidation (the "Assignment Claim").

7

In the light of the application for permission to amend and its very close relationship in some respects with the strike out application, both Mr Hapgood QC on behalf of the Bank and Mr Reade QC on behalf of the Claimants helpfully sought to make their submissions with regard to both applications together. However, for the sake of clarity I will consider the applications first through the prism of the Strike Out Application with reference where relevant to the proposed amendments and what is said about them.

8

CPR 3.4 (2) provides that the court may strike out a statement of case if it appears to the court –

"(a) that the statement of case discloses no reasonable grounds for bringing or defending the claim;

(b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings; or

(c) that there has been a failure to comply with a rule, practice direction or court order."

The Rule is supplemented by PD3A. It is not in dispute that the touchstone for the exercise of case management powers is the overriding objective and that the Court must deal with cases justly and at a proportionate cost. Furthermore, for the purposes of CPR 3.4(2)(a), strike out should not be granted in a developing area of the law unless the court is certain that the claim is bound to fail: Hughes v Colin Richards & Co [2004] EWCA Civ 266; [2004] PNLR 35. Cases which are suitable for strike out include those which raise an unwinnable case or do not raise a valid claim as a matter of law: CPR at paragraph 3.4.2 and Price Meats Ltd v Barclays Bank plc [2000] 2 All ER 346. It is also accepted that if the court considers that the defect in question might be cured by amendment, the claim should not be struck out without first giving the party concerned an opportunity to amend: Soo Kim v Youg [2011] EWHC 1781 (QB). For the purposes of CPR 3.4(2)(b) the term "abuse of the court's process" was explained by the then Lord Chief Justice, Lord Bingham, in Attorney General v Barker [2000] 1 FLR 759 in another context as "using that process for a purpose or in a way significantly different from its ordinary and proper use."

9

It is also not in dispute that in relation to the proposed amendments when determining whether to grant permission, the court should have regard to all of the circumstances summed up by the overriding objective and is also concerned with whether the proposed amendments are sufficiently arguable to go to trial in the sense that they have a real prospect of success: see Swain–Mason v Mills & Reeve LLP (Practice Note) [2011] EWCA Civ 14; [2011] 1 WLR 2735 and Civil Procedure para 17.3.6. In this regard, albeit in the context of summary...

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