Suremime Ltd v Barclays Bank Plc
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Havelock-Allan |
| Judgment Date | 30 July 2015 |
| Neutral Citation | [2015] EWHC 2277 (QB) |
| Docket Number | Claim No. A40BS458 |
| Court | Queen's Bench Division |
| Date | 30 July 2015 |
[2015] EWHC 2277 (QB)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
MERCANTILE COURT
BRISTOL DISTRICT REGISTRY
His Honour Judge Havelock-Allan Q.C.
Claim No. A40BS458
John Virgo (instructed by Tozers LLP) appeared for the claimant
Rupert Allen (instructed by Matthew Arnold & Baldwin) appeared for the defendant
Approved Judgment
I direct that 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 Havelock-Allan Q.C.
This judgment determines an application by the claimant to amend the Particulars of Claim.
The claim in the action is for alleged mis-selling of an interest rate hedging product or "swap". The swap was a Structured Collar. It was entered into by the claimant with the defendant bank ("the Bank") on 11 June 2008. The transaction has been investigated by the Bank as part of the review of swaps agreed between the major banks and the FSA ("the FCA Review" 1). The Bank has made the claimant an Offer of Redress. The claimant considers that the amount of the Offer of Redress is not adequate because it is based on what the claimant maintains is an unjustified assumption as to what kind of swap it would have entered into if the original transaction had conformed to the standards and principles agreed between the Bank and the FSA as the basis for the Review.
As an alternative to its claim for damages for negligent misrepresentation, breach of contract and/or negligent advice or the negligent provision of information, the claimant has pleaded that, by virtue of section 1 of the Contracts (Rights of Third Parties) Act 1999, it is entitled to enforce the agreements between the Bank and the FSA under which the FCA Review was instituted because it was a member of a class on whom the agreements purported to confer a benefit. The claimant alleges that the Bank is in breach of the agreements because it has failed to carry out the FCA Review in accordance with the standards and principles agreed with the FSA, and that the Bank is liable to the claimant for the consequences of that breach. I shall call this claim "the third party rights claim".
The third party rights claim is now dead in the water. When the particulars of claim were drafted, the exact terms of the agreements between the Bank and the FSA were not in the public domain. There were two agreements. The first was dated 29 June 2012 ("the June 2012 Agreement"). The second was dated 31 January 2013 ("the January 2013 Agreement"). Under the June 2012 Agreement, the Bank (together with HSBC, Lloyds and RBS) agreed to give a written Undertaking to the FSA to carry out a review of its sales of swaps since 1 December 2001 to private customers and retail clients who did not meet Sophisticated Customer Criteria, and to provide appropriate redress in cases where mis-selling was found to have occurred. The January 2013 Agreement followed a pilot exercise in which a sample of transactions had been reviewed. The pilot exercise suggested that certain amendments should be made to the Undertaking so as better to define the "Sophisticated Customer Criteria". These amendments were embodied in the January 2013 Agreement.
After initially declining to disclose copies of either Agreement as part of early disclosure, the Bank eventually furnished the claimant with a redacted copy of the
June 2012 Agreement 2, which revealed that it contained the following express provision:" Rights of persons other than the Parties
9. A person who is not a Party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 or otherwise to enforce any term of this Agreement."
In the light of clause 9, the claimant has abandoned its claim under the 1999 Act, and seeks permission to delete that head of claim from the particulars of claim. The Bank consents to that part of the application to amend. The part which is opposed consists of 3 new claims, or bases of claim, by which the claimant says that it is entitled to enforce its rights under the FCA Review and to claim the same measure of damage as if the 1999 Act had applied. These proposed new bases of claim have been raised in at least one other swaps case in the Bristol Mercantile List and are likely to be raised in other swaps cases where there is dissatisfaction with the Offer of Redress. So the decision on whether permission to amend should be granted in this case may have wider repercussions.
The new claims are, in summary, as follows:
(1) that in consequence of the Bank's offer to the claimant to review the sale of the swap and the claimant's agreement to participate in the review process and incurring expense in so doing, a contract came into being between the claimant and the Bank under which the Bank owed the claimant a duty to conduct the review in accordance with the specification it had agreed with the FSA for the conduct of the FCA Review;
(2) that in agreeing to provide redress in accordance with the specification for the conduct of the FCA Review, the Bank owed the claimant an equivalent duty of care in tort; and
(3) that in entering into the June 2012 and January 2013 Agreements with the FSA, the Bank agreed to confer on customers whose swap transactions were reviewed the benefits of such a review and of redress if appropriate, and, in accordance with the principles explained in White v Jones [1995] 2 AC 207, owed the claimant a duty to implement the review process properly because any failure to do so would place the Bank in breach of its Agreements with the FSA in circumstances where the FSA and FCA would suffer no loss but the claimant, as intended beneficiary of the FCA Review, would suffer a loss.
The Bank's objection to these new claims is that they stand no real prospect of success. No issue of limitation arises, nor is it contended that, as a matter of discretion, the amendments should not be permitted if the new claims are capable of serious argument. The Bank's contention is that they are not capable of serious argument but are fanciful and contrived.
The Bank is right that the relevant test is that which applies on an application to strike out or an application for summary judgment. The Court should not give permission to introduce by way of amendment new heads of claim which do not cross the arguability threshold of a "real prospect of success". To do so would be wasteful of the parties' and the Court's time and resources, and contrary to the overriding objective.
Whilst accepting that this is the correct approach, Mr Virgo, counsel for the claimant, draws attention to what was said by Mummery LJ in Doncaster Pharmaceuticals Group Ltd v The Bolton Pharmaceutical Company 100 Ltd [2006] EWCA Civ 661 at para. 5:
"Although the test can be stated simply, its application in practice can be difficult. In my experience there can be more difficulties in applying the "no real prospect of success" test on an application for summary judgment (or on an application for permission to appeal, where a similar test is applicable) than in trying the case in its entirety (or, in the case of an appeal, hearing the substantive appeal). The decision-maker at trial will usually have a better grasp of the case as a whole, because of the added benefits of hearing the evidence tested, of receiving more developed submissions and of having more time in which to digest and reflect on the materials."
Mr Virgo also relies on the cautionary note struck by Lord Browne-Wilkinson in Barrett v London Borough of Enfield [2001] 2 AC 550 where (at 557E-G) he said:
"In my speech in the Bedfordshire case [ X (Minors) v Bedfordshire County Council] [1995] 2 AC 633 at pp. 740–741 with which the other members of the House agreed, I pointed out that unless it was possible to give a certain answer to the question whether the plaintiff's claim would succeed, the case was inappropriate for striking out. I further said that in an area of the law which was uncertain and developing (such as the circumstances in which a person can be held liable in negligence for the exercise of a statutory duty or power) it is not normally appropriate to strike out. In my judgment it is of great importance that such development should be on the basis of actual facts found at trial not on hypothetical facts assumed (possibly wrongly) to be true for the purpose of the strike out."
Mr Virgo points out that there is a second limb to the test for striking out, as it is reflected in CPR 24.2. The Court should not strike out a claim or give summary judgment in respect of it, and therefore should also not preclude its being introduced by way of an amendment, if there is a "… compelling reason why the case or issue should be disposed of at a trial". This, in Mr Virgo's submission, is a case where there is a compelling reason. He submits that the FCA Review was plainly intended to generate some legal entitlement for those customers whose swaps transactions fell within its remit. It has created an expectation that the principles of the FCA Review would be faithfully implemented by the banks who signed up to it. There are a number of cases, aside from the present case, where the customer is not satisfied with the basis of calculation of an Offer of Redress. The question whether the customer has a private law right to enforce compliance with the FCA Review specification as opposed only to a public law right to challenge decisions taken during the FCA Review is an issue of some public importance and ought to be decided at a trial.
I shall start by rehearsing the arguments on each side in a little more detail under each new head of claim. There is a considerable degree of overlap.
The contract claim
Mr Virgo accepts that the viability of the...
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