Nicolas De Boinville v I G Index Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Andrew Hochhauser |
| Judgment Date | 10 December 2021 |
| Neutral Citation | [2021] EWHC 3326 (Comm) |
| Year | 2021 |
| Docket Number | Case No: LM-2018-000101 |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 3326 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
LONDON CIRCUIT COMMERCIAL COURT (QBD)
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
Mr Andrew Hochhauser QC
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Case No: LM-2018-000101
The Claimant in person
David Mayall (instructed by Martin Shepherd Solicitors LLP) for the Defendant 1
Hearing dates: 14 and 15 November 2020 [reading], 16, 17, 18, 19, 23, 24 November 2020 and 4 February 2021
APPROVED JUDGMENT
I direct that pursuant to CPR PD 29A para 6.1 no official shorthand note shall be taken of this Judgement and that copies of this version as handed down may be treated as authentic.
Table of Contents
| Background | 3 |
| The Claimant's Claims | 4 |
| The Counterclaim | 5 |
| Representation | 5 |
| Witnesses | 5 |
| Spread Betting | 8 |
| The Legal Framework | 9 |
| The Relevant Terms of the Customer Agreement | 11 |
| The Implied Terms contended for by the Claimant within the Customer Agreement | 14 |
| The Regulatory Obligations contained in the FSA's Principles of Business | 15 |
| The obligations contended for by the Claimant imposed upon the Defendant pursuant to the FSA Handbook's Client Asset Source (“CASS”). | 16 |
| The FSA Handbook | 16 |
| Fiduciary Duties contended for by the Claimant | 16 |
| The Duty of Care owed to the Claimant by the Defendant contended for by the Claimant | 17 |
| The Transfer Claim and the Counterclaim | 18 |
| The Settlement Agreement | 30 |
| The Claim to set aside the Settlement Agreement | 30 |
| The Law relating to a Misrepresentation Claim | 31 |
| Discussion and Conclusion on the Transfer Claim and the Counterclaim | 31 |
| The Best Execution Claim | 35 |
| The Claimant's Submissions on the Best Execution Claim | 35 |
| The Defendant's COM Policy at the Material Time | 37 |
| The Defendant's Submissions in Relation to the Best Execution Claim | 38 |
| Discussion and Conclusion in Relation to the Best Execution Claim | 45 |
| The FOS Claim | 47 |
| The Defence to the FOS Claim | 48 |
| Discussion and Conclusion on the FOS Claim | 49 |
| Conclusion | 51 |
Background
The Claimant, Mr Nicholas de Boinville, brings claims against the Defendant, a provider of Spread Betting Services on an ‘execution only’ basis, for damages for breach of contract, breach of fiduciary duty, misrepresentation and a statutory claim under section 150 (which was replaced on 1 April 2013) by section 138D of the Financial Services and Markets Act 2000 (“ FSMA”) for damages for alleged breaches of the applicable Conduct of Business Sourcebook (“COBS”) Rules, contained in the Handbook of Financial Services Authority (the “ FSA”) and from 1 April 2013, its successor the Financial Conduct Authority (the “FCA”).
The Claimant opened an account with the Defendant on 18 January 2012 (the “ Account”), and the relevant agreement against which his claims fall to be considered is the Defendant's September 2009 Customer Agreement (the “ Customer Agreement”). I shall turn to its relevant terms (the “ Terms”) shortly. The Claimant used the Account to open and close spread bets.
Section 150 of FSMA provided that:
“A contravention by an authorised person of a rule is actionable at the suit of a private person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.”
Section 138D(2) of FSMA provides in similar terms that:
“A contravention by an authorised person of a rule made by the Financial Conduct Authority is actionable at the suit of a private person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.”
It is common ground that:
(1) the Defendant was at all material times an “ authorised person” authorised by the FSA and then the FCA under FSMA to perform regulated activities.
(2) Spread bets, being contracts for differences, were at all material times a “ specified investment” under Article 85 of Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and a regulated activity within the meaning of section 22 of FSMA.
(3) The Claimant is a “ private person”, as defined in Regulation 3 of the Financial Services and Markets Act 2000 (Rights of Action) Regulations (57 2001/2256). In addition, the Claimant is classified as a “ Retail Client” under COBS 3.4.1R, which designation afforded him the highest levels of regulatory protection under rules made pursuant to the Financial Services and Markets Act 2000. I shall set out below the other relevant provisions of the COBS Rules.
(4) The Claimant is, and was at all material times, very experienced in financial services and, in particular, spread betting, as he acknowledges at paragraph 3 of his witness statement dated 8 September 2020 (the “ First Witness Statement”). He was therefore well aware of the substantial risks involved in placing spread bets, and historically he had lost money as a client of the Defendant in the 1980s. Indeed, at paragraph 5 thereof, he states that after losing that money, he stopped trading and his account lapsed, whereupon, at the invitation of the founder of the Defendant, Mr Stuart Wheeler, he was subsequently engaged by the Defendant as a consultant to its then nascent Sports Spread Betting business for which he was remunerated for three years from its profits. This occurred many years before the incidents of which he now complains.
The Claimant's Claims
The Claimant has three separate claims:
(1) A claim for losses arising from an allegation that the Defendant wrongfully withdrew £250,000 from the Account at 13:24 on 1 June 2012 (the “ Transfer Claim”). This claim was the subject of a settlement agreement evidenced by an email dated 6 June 2012 from the Claimant to a Ms Jody Dunn on behalf of the Defendant (the “ Settlement Agreement”). In order to succeed on this claim, the Claimant has to obtain rescission of the Settlement Agreement. He seeks to do so on the basis of negligent misrepresentation by the Defendant. The representations on which he relies are set out at paragraph 38 and 38A of the Amended Particulars of Claim.
(2) A claim for losses arising from those occasions when the Defendant is alleged to have failed to adhere to its regulatory duties of COBS 2.1 (Client's Best Interests) and COBS 11.2.1 (Best Execution) when in receipt of Claimant's customer margin liquidation orders/“flags” (the “ Best Execution Claim”).
(3) A claim for losses arising from alleged misrepresentations made by the Defendant's Compliance Department to the Financial Ombudsman Service (the “ FOS”) in 2013 and 2014. (the “ FOS Claim”).
The Counterclaim
The Defendant brings a counterclaim, arising from the Transfer Claim. If the Settlement Agreement is set aside, the Defendant claims £112,500, representing the sum paid under the terms of the Settlement Agreement and alleged extra losses on the Cable positions, less any further losses the Claimant is able to prove on the remaining DAX and AUD positions, to which I will later refer.
Representation
Although earlier in the proceedings he had been represented by solicitors and Counsel, who settled the pleadings on his behalf, the Claimant was a litigant in person throughout the hearing, and the subsequent application on 4 February 2021. I commend him for the measured and courteous way in which he conducted himself, both when giving evidence and when making submissions. He clearly feels a genuine sense of grievance in relation to what he regards as extremely bad treatment by the Defendant, but in general he kept his emotions in check. The Defendant was represented by David Mayall of Counsel. I am grateful to both the Claimant and Mr Mayall for their helpful written and oral submissions.
Witnesses
The Claimant was the only witness who gave evidence in support of his claims.
The Defendant called the following four witnesses who were the subject of cross-examination:
Mr Rob Pike, who is currently Head of the Defendant's UK Premium Client Management. In 2012 he was working for the Defendant as a Premium Client Manager, and he was the client manager dealing with the Claimant from 24 May 2012.
Mr Peter Tubb, who commenced employment with the Defendant in September 2002 and is currently its Head of Trading Services. In 2012 he was Head of Trading Operations. He never met nor spoke to the Claimant and spoke to him only through Mr Pike, the Claimant's Premium Client Manager.
Mr Gareth Richardson, who joined the Defendant as an employee immediately after university. By 2012 he had been promoted by the Defendant to a Senior Dealer. He was the dealer who dealt with the Claimant's account on 1 June 2012.
Mr Kypros Zoumidou, who is currently the Chief Executive Officer of Brightpool Limited which is part of the IG Group of Companies. He joined the Defendant as Head of Compliance on 24 May 2010 and in 2012 dealt with certain of the Claimant's complaints. He met the Claimant in January 2013 and corresponded with him thereafter.
In addition, there were two other witnesses in relation to whom the Defendant had served witness statements, but who were not cross-examined. They were as follows:
Mr Joe Ryan, who is currently the Defendant's Head of Futures and Foreign Exchange. He joined the Defendant on a graduate scheme in 2006. By 2012 he was Dealer, although he had no direct contact with the Claimant and was unable to give direct evidence...
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High Court Considers Exercise Of Contractual Discretion To Close Out A Customer's Position
...rules in relation to the close out of certain positions on his account when it fell into default: De Boinville v I G Index Ltd [2021] EWHC 3326 (Comm). Although set in the context of spread betting services, the decision will be of broader interest to financial institutions given its potent......
-
High Court Considers Exercise Of Contractual Discretion To Close Out A Customer's Position
...rules in relation to the close out of certain positions on his account when it fell into default: De Boinville v I G Index Ltd [2021] EWHC 3326 (Comm). Although set in the context of spread betting services, the decision will be of broader interest to financial institutions given its potent......