Playboy Club London Ltd and Others v Banca Nazionale Del Lavoro Spa
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Mackie,Judge Mackie |
| Judgment Date | 29 July 2014 |
| Neutral Citation | [2014] EWHC 2613 (QB) |
| Docket Number | Case No: 2013 Folio 198 |
| Court | Queen's Bench Division |
| Date | 29 July 2014 |
[2014] EWHC 2613 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LONDON MERCANTILE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
His Honour Judge Mackie QC
Case No: 2013 Folio 198
Fred Hobson (instructed by Michael Simkins LLP) for the Claimants
Andrew de Mestre (instructed by Bird & Bird LLP) for the Defendant
Hearing dates: 7 to 10 July 2014
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 Mackie QC
Judge Mackie QC:
This is a claim by a casino, Playboy Club London Limited, ("The Club"), that a bank, Banca Nazionale di Lavoro SPA ("the Bank"), was negligent in providing a reference for one of its customers Mr Hassan Barakat. Mr Barakat's cheques were then accepted by the casino which allowed him to play. Mr Barakat made losses, the cheques bounced and neither he nor his assets can be found. The casino claims to have lost £1.25 million. The bank denies negligence and says that the casino broke any chain of causation, or was in the alternative contributorily negligent, in taking cheques that it says were counterfeit. This is the conventional case where two innocent parties disagree about which of them should be responsible for the consequences of a disreputable third party except that it seems that Mr Barakat was assisted by an employee of the Bank.
Background and facts not much in dispute.
The First Claimant, the Club, is a casino in Mayfair. At the relevant time, it was known as the Rendezvous Club but changed its name in 2011. The Club is owned indirectly by the Second Claimant ("LCI") which forms part of a large casino group. The Third Claimant ("Burlington") is a company owned by LCI used, amongst other things, as a vehicle for obtaining references. The Second and Third Claimants have played no active part in what seems in reality to be a claim by the First Claimant alone. The Defendant is a well known bank incorporated in Italy and part of the BNP Paribas Group.
Mr Barakat became a member of the Club on 29 September 2008. Until October 2010 he had only played at the Club on one occasion for a modest amount. However, he was a well known player at a casino in Lebanon, the Casino du Liban, where he would typically gamble for stakes of around $100,000 per day funded in cash and was accorded "VIP status." The Casino du Liban had a contract for consultancy services provided by LCI.
In early October 2010 Mr Barakat opened an account with the Bank. He was not provided with a cheque book for that account which never contained any funds. Later in 2010 Mr Barakat indicated to a Mr Shephard (who was employed at CDL but had previously been a senior manager at the Club) that he intended to visit London and wished to gamble there. Mr Shephard recommended the Club to him and notified it (through Mr Adam Roberts and Mr Zaki El-Borhami) that a high-value customer was intending to visit them. Mr Shephard told them that Mr Barakat was expected to bring a substantial amount of cash, between $300–400,000, with him to gamble. He told the Club to expect Mr Barakat and to make the usual arrangements (such as hotel and airport transfers) for visiting VIP players.
Mr Barakat arrived at the Club on 11 October 2010. He applied for a cheque cashing facility ("CCF") in the amount of £800,000. A CCF allows a customer to present a cheque to the casino and, before that cheque is cashed, obtain plaques (i.e. high-value gaming chips) to an equivalent value. It therefore allows a customer to draw down on a cheque (up to a set limit) immediately upon presenting it to the casino.
Brenda Jamison, the cashdesk manager at the Club, took Mr Barakat through his application for a CCF and completed the forms with him. Mr Barakat also signed a document called a Status Enquiry Request on the headed paper of Burlington by which an opinion was sought from the Bank as to the means and standing of Mr Barakat and his trustworthiness to meet a financial commitment to the extent of £1,600,000. This document was addressed to the Manager at the Bank's branch in Reggio Emilia. In accordance with internal policies, Ms Jamison explained that it would be necessary to obtain a reference from his bank for double the amount of the CCF, i.e. £1.6 million. Mr Barakat gave details of his bank from which the reference was to be sought. He handed Ms Jamison a business card of his relevant contact at the Bank, Ms Paola Guidetti, described as "Svillupo Business" (Business Development) and an information sheet setting out his account details and Ms Guidetti's contact details. Mr Barakat correctly stated that he held an account bearing account number 301 at the Bank's Parma (Agency No.3) branch. The Bank accepts that Ms Guidetti was employed at the Reggio Emilia branch and was involved in opening Mr Barakat's account.
Ms Jamison arranged for a cashier (Ms David) to telephone three London casinos to see if Mr Barakat was a player known to them. He was not. No check was made of the "Vic", a club that Mr Shepherd had told the Club that Mr Barakat had used in the past. Ms Jamison also e-mailed Mr Shephard in Lebanon to find out further information about Mr Barakat. In response Mr Shephard forwarded what he had told Mr Roberts, and said that he was surprised that Mr Barakat was seeking a cheque cashing facility as he had been expecting to come to London with a large amount of cash to gamble.
The request for a reference was made by Burlington because that was the Club's standard practice designed to preserve confidentiality for customers preferring to keep their gaming activities private. Burlington has no employees or business of its own and is used only for administrative purposes.
As is standard practice, the reference was requested through the Club's bank, Natwest. On 11 October, Ms Jamison provided Natwest with the contact information for Ms Guidetti, to whom the reference was to be sent. On 12 October, Natwest then faxed the request for a reference to the Bank marked for the attention of Ms Guidetti. The fax was three pages (including the coversheet). It was faxed successfully to the Bank's fax number (0522 432141) as set out on Ms Guidetti's business card. That was one of three correct fax numbers for the branch. The request was addressed to the manager of the Bank's Reggio Emilia branch. The reference sought the Bank's opinion as to the means and standing of Mr Barakat and his trustworthiness to meet a financial commitment to the extent of £1.6 million at any one time.
On 13 October, Natwest received a faxed response from Ms Guidetti at the Bank and faxed it on to the Club. The reference, which is addressed to Burlington, reads as follows:
"WE CONFIRM AND CERTIFY, THAT MR HASSAN BARAKAT, OF VIA TANARA 35, PARMA 43100, MAINTAINS AN ACCOUNT NUMBER 301 WITH US TO OUR SATISFACTION, AND HE IS FINANCIALLY HEALTHY AND CAPABLE TO MEET HIS BUSINESS COMMITMENTS AND ALL HIS OBLIGATIONS.
MR BARAKAT IS TRUSTWORTHY UP TO THE EXTENT OF 1,600,000.00 ONE MILLION SIX HUNDRED THOUSAND STERLING POUNDS IN ANY ONE WEEK.
THIS INFORMATION IS GIVEN IN STRICT CONFIDENTIAL"
The Bank points to some features of the reference. The fax header bears the fax number 0522432141 which is a fax number at the Reggio Emilia branch of the Bank. However the fax header also refers to the source of the fax as "BNL UFFICIO ESTERO". This was a department of the Bank which had closed down by early 2008. It includes the reference "YOUR REF: RVC" in the top left corner. It purports to be signed by Ms Guidetti but the Bank points out that she told them in March 2011 that the signature was not hers. The final line of the typed text reads "PIN: BNL SPA 42537". This is a reference to an internal number for employee identification. By the date of the Reference, this numbering system was obsolete. The standard form information at the bottom of the Reference includes the share capital of the Bank which is stated to be €2,229,025,911. This is not however, the correct amount as at 13 October 2010 (and had not been since at least mid 2009).
The Club points out that this was a response from the Bank signed by Ms Guidetti and faxed on its letterhead from the same fax number (0522 432141) to which the request had been sent. The reference bore the same reference (RVC) used in Natwest's covering letter.
The Bank does not admit that the response came from the branch but in the light of the documents disclosed recently it is clear that it did.
The reference was passed by Natwest to the Club and recorded on the Club's internal computer system. On 13 October, M Michael Rothwell, Group Finance Director at LCI, was asked to authorise the CCF for Mr Barakat. Mr Rothwell reviewed the reference and approved the CCF in the amount of £800,000 acting, he says, on the strength of the reference.
Mr Barakat played roulette at the Club each day between 15 and 18 October. On 15 October, he presented a cheque for €346,980 (equivalent to £300,000) and drew down on his CCF for that amount. (There is debate about whether what Mr Barakat signed were in truth "cheques". That is an issue I do not have to decide and for convenience I shall call the documents "cheques" throughout this judgment.) He won £101,000 and redeemed his cheque. On 16 October Mr Barakat again presented a cheque for €346,980 (equivalent to £300,000) and drew down on his CCF for that amount. This time he won £100,000 and redeemed the cheque. He took his winnings for that day and the day before in cash and casino win cheques. On 17 October, Mr Rothwell...
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