Shah and another v HSBC Private Bank (UK) Ltd

JurisdictionEngland & Wales
JudgeMr JUSTICE HAMBLEN,Mr Justice Hamblen
Judgment Date16 May 2012
Neutral Citation[2009] EWHC 79 (QB)
Docket NumberCase No: IHQ/08/0530 & IHQ/08/0786
CourtQueen's Bench Division
Date16 May 2012

[2009] EWHC 79 (QB)




The Hon. Mr Justice Hamblen

Case No: IHQ/08/0530 & IHQ/08/0786

Shah & Anr
HSBC Private Bank (UK) Ltd

Paul Downes and Simon Goldstone (instructed by Edwards Angell Palmer & Dodge UK LLP) for the Claimants

Richard Lissack QC and Nicholas Medcroft (instructed by DLA Piper UK LLP) for the Defendant

Hearing dates: 15/12/2008 – 17/12/2008

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.

Mr JUSTICE HAMBLEN Mr Justice Hamblen

Mr Justice Hamblen:



The Claimants (respectively “Mr Shah” and “Mrs Shah”) were account holders with the Defendant bank (“HSBC”).


In these proceedings the Claimants claim substantial damages arising out of delays by HSBC in executing four transfers from the Claimants' account in 2006/7 and their failure to explain the reasons for such delays.


At the time the reason given by HSBC for failing to execute the transfers was that they were complying with their UK statutory obligations. However, the underlying reason why each transfer was delayed was because HSBC suspected that the funds in the Claimants' account were criminal property. Before HSBC could proceed with each transaction, it accordingly had to make an authorised disclosure to the relevant authorities and wait for appropriate consent (under Part 7 of the Proceeds of Crime Act “ POCA”). In each case where the transfer instructions were maintained consent was provided and the transfers made shortly thereafter. The following table summarises the position:

Date of payment instruction

Amount to be Transferred

Date of Authorised Disclosure

Date of Consent

Date Transfer Effected

20 September 06


21 September 06

2 October 06

3 October 06

26 September 06


28 September 06

Not applicable

(payment instructions were cancelled on 29 September 06)

Not applicable

6 February 07


7 February 07

14 February 07

15 February 07

28 February 07


28 February 07

2 March 07

5 March 07


The Claimants contend that HSBC's failure to carry out their payment instructions and to explain the reasons for not doing so have caused them substantial losses. Their case is that when in September 2006 Mr Shah told a creditor (an ex-employee) that HSBC's compliance with its UK statutory obligations was the reason he was unable to make a payment due to him, rumours spread in Harare that Mr Shah was suspected of money laundering in the UK. The effect of this was, the Claimants say, to stigmatise Mr Shah's reputation in Zimbabwe. As a result of this, and other actions of HSBC that Mr Shah complains about, Mr Shah says that the Zimbabwean authorities themselves became suspicious and firstly froze and then seized his investments (held through certain private companies) causing him losses of over US$300m.


I have to deal with two applications made by HSBC dated 29 February 2008 and 24 June 2008 to strike out and/or seek summary judgment in relation to substantial parts of the pleaded claim, together with an application made by the Claimants to amend their Particulars of Claim dated 5 September 2008.

The applications


HSBC applies to strike out parts of the claim under CPR 3.4 (or the court's inherent jurisdiction) and for summary judgment under CPR 24. The relevant parts of the claim to which the applications relate are:

6.1 The claim that HSBC failed to comply with the Claimants' instructions in respect of the four transactions on 20 September 2006, 26 September 2006, 6 February 2007, 28 February 2007 (the “ POCA Claim”);

6.2 HSBC's alleged failure to provide information and to forward bank statements with dispatch (the “Instructions Claims”);

6.3 The losses pleaded at paragraphs 26 of the Original Claim and in Further information provided and in particular:

6.3.1 the claim for damages allegedly suffered when the Zimbabwean authorities indicated that companies in which the First Claimant had an interest should invest in certain government securities (the “US$44m Interest Differential Claim” referred to in the Claimants' second response to the Defendant's request for information, dated 31 October 2007, at paragraphs 1.2 and 1.9);

6.3.2 the claim for damages arising from the alleged seizure by the Zimbabwean authorities of the government securities (paragraphs 26(c) and (d) of the Original Claim and paragraphs 1.1 and 1.9 of the second response to the Defendant's request for information) (the “US$331m Seized Investments Claim”);

6.3.3 the claim for damages arising from the alleged unilateral termination of a loan agreement between the BVI Company and the Reserve Bank of Zimbabwe (the “BVI Company Claim” referred to in the Claimants' second response to the Defendant's request for information at paragraphs 1.2 and 1.9).


The Claimants seek permission to amend their claim as set out in Amended Particulars of Claim (the “Amended Particulars”) first provided under cover of a letter dated 13 May 2008, as reformulated in one respect during the hearing. HSBC object to the following amendments sought to be made:

7.1 The Claimants' amended case on causation as set out in paragraphs 26a and 26b whereby it is alleged that it was Mr Shah's inability to transmit moneys under the second requested transfer that led to an ex-employee, Mr Kabra, going to the Zimbabwean authorities and the substantial losses subsequently suffered at the hands of those authorities.

7.2 The Claimants' amended claim founded upon an implied contractual term giving rise to a duty upon the Defendant to take reasonable care in maintaining the Claimant's accounts and in complying with instructions including the making of disclosures by way of Suspicious Activity Reports (“SARs”) (“Implied Contractual Duty”) as set out in the Amended Particulars paragraph 6b. It is pleaded that this implied duty was breached in three ways: first, by a failure to make the disclosure as soon as it was practicable to do so; secondly, because there were no rational grounds to suspect the Claimants of money laundering; thirdly, by a failure to refer to criminal property (Amended Particulars para.13A, 14A, 15A and 16A in relation to the four transactions).

7.3 The Claimants' amended claim of breach of confidence (Amended Particulars para. 6b, 13A, 13B. 14A, 14B, 15A, 15B, 16A, 16B, 23 and 28).

7.4 The Claimants' amended claim (as reformulated during the hearing) for failure to provide information (Amended Particulars para. 16C to 16E).

7.5 The Claimants' amended claim that insofar as a breach of the banking contract by the Defendant had a “damaging” effect on the reputation of the Claimants, the Defendant would take such steps as were reasonable to correct such “false” impression (Amended Particulars para. 6h).

7.6 The Claimants' amended case on loss (Amended Particulars para. 26d and 26e).

7.7 The Claimants' amended claim for a declaration that they are entitled to details of the authorised disclosures made by the Defendant (prayer for relief).

The relevant principles


Where an application is made to amend it is necessary for the applicant to demonstrate that it is appropriate for the court to exercise its discretion to permit the amendment.


In considering the exercise of its discretion the court should have regard to the overriding objective in CPR 1 and in particular the prejudice that will be caused to the parties (a) if the amendment is allowed and (b) if it is refused.


As stated by Peter Gibson LJ in Cobbold v Greenwich LBC in a passage cited in the notes to Civil Procedure Volume 1 2008 Edition at 17.3.5:

“The overriding objective [of the CPR] is that the court should deal with cases justly. That includes, so far as practicable, ensuring that each case is dealt with not only expeditiously but also fairly. Amendments in general ought to be allowed so that the real dispute between the parties can be adjudicated upon provided that any prejudice to the other party or parties caused by the amendment can be compensated for in costs, and the public interest in the efficient administration of justice is not significantly harmed.”


Where the merits of a proposed amendment are in issue it is necessary to show that it has some prospects of success. This is likely to turn on whether it has a real prospect of success, the same standard as under Part 24 – see the Notes to CPR 17.3 at 17.3.6 and the cases there referred to. If the court concludes that an amended claim or defence has no real prospects of success then no purpose would be served in allowing the amendment to be made.


In considering the applications under CPR 3.4(2)(a) and CPR 24 the burden is on the Defendants to prove either that the statement of case discloses no reasonable grounds for bringing the claim ( CPR 3.4(2)(a)) or that there is no real prospect of succeeding on the claim or issue ( CPR 24).


CPR 3.4 (2)(a) gives rise to an examination of the pleadings on the assumption that the pleaded facts will be established. CPR 24 allows for a wider enquiry but does not always do so in practice.


In considering such applications the Court should not be drawn into a mini-trial of complex cases. As stated by Lord Justice Brooke in Equitable Life Assurance Society v Ernst & Young [2003] EWCA Civ 1114 at paragraphs 38–41:

“38. In Three Rivers District Council v Bank of England (No 3) [2001] UKHL 16; [2001] 2 All ER 513 the House of Lords gave useful guidance to courts in their task of deciding whether to grant summary judgment in favour of a defendant in a claim as complex as this. It endorsed the authority of the...

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