Three Rivers District Council v Bank of England (No. 1)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STAUGHTON,LORD JUSTICE WAITE,LORD JUSTICE PETER GIBSON |
| Judgment Date | 23 November 1994 |
| Judgment citation (vLex) | [1994] EWCA Civ J1123-7 |
| Docket Number | QBCMI 94/0603/B |
| Court | Court of Appeal (Civil Division) |
| Date | 23 November 1994 |
[1994] EWCA Civ J1123-7
(Mr Justice Gatehouse)
Before: Lord Justice Staughton Lord Justice Waite Lord Justice Peter Gibson
QBCMI 94/0603/B
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
SIR PATRICK NEIL QC, MR VV VEEDER QC and MR D DOWLEY (Instructed by Messrs Lovell White Durrant, London EC1A 2DY) appeared on behalf of the Appellants
MR G LANGLEY QC, MR N STADEN QC and MR M PHILLIPS (Instructed by Messrs Freshfields, London EC4Y 1HS) appeared on behalf of the Respondent
( )
Wednesday, 23 November 1994
There were 6019 Plaintiffs in this action at the last count. They all placed money on deposit with the Bank of Credit and Commerce, through the United Kingdom branches of that bank. For the most part they have lost their money. I shall call them "the Depositors".
The Defendants are the Bank of England. They have the responsibility of supervising banking operations in this country, of issuing licences to take deposits, and if necessary of revoking those licences. The Depositors claim that the Bank of England did not discharge their duty properly. They should not have granted a licence to the Bank of Credit and Commerce, or should have revoked it. So the Depositors have sued the Bank of England, in an action commenced on 24th May 1993, for misfeasance in public office. It is said that the damages may be £550 million, plus interest.
Now comes the unusual feature of this case. The Depositors have assigned their claims to the Bank of Credit and Commerce, the very company which made off with the money. Of course they are now in liquidation. At first the Depositors were the only Plaintiffs, but the action was in fact directed and financed by the liquidators from the start. If it succeeds the moneys recovered will go, not to the Depositors alone, but to all the creditors of Bank of Credit and Commerce in proportion to what they are owed. So the claims are pursued without cost to the Depositors; but in return their share of any recovery has to take account of all the other creditors.
The Bank of Credit and Commerce were not made a party to the action. The Bank of England objected to that omission, or at any rate their solicitors did. So they issued a summons on 18th October 1993 asking that the action be dismissed or stayed. That came before Gatehouse J. on 6th December.
The main point argued on behalf of the Bank of England was that they should be protected from the risk of having to pay twice. There was also some discussion as to whether discovery could be obtained from Bank of Credit and Commerce, who were on any view financing the action; and about security for costs. The judge made an order in these terms:
1.The action be stayed unless and until the Plaintiffs join the Bank of Credit and Commerce International SA as a party to the action.
2.The costs of and occasioned by this application be paid by the Plaintiffs to the Defendant in any event.
3.The Defendant be granted a certificate for three Counsel.
4.The Plaintiffs be granted leave to appeal.
It should be noted that the judge did not give leave to amend the writ or Points of Claim. He merely ordered that the action be stayed until Bank of credit and Commerce were joined as a party. Although leave to appeal was granted, there was in the event no appeal.
There is one thing which I should have mentioned earlier. The assignment, as all agree, was equitable and not legal. It was an agreement to assign, and not an outright assignment. It contained an undertaking by the Depositor to execute a legal assignment if called on to do so. It authorised Bank of Credit and Commerce to sue in the name of the Depositors, and the Depositors undertook not to start any proceedings on their own.
The judge's reasons for his decision on 6th December were as follows:
This is the most bizarre situation where the 6,019 depositors as the legal owners of a debt have made equitable assignment in each case of that debt to the BCCI SA which is not a party to the action. I think it is the most bizarre situation, and I think it is right for the reasons given by Mr Langley and one authority which seems to come pretty close to the present facts to grant the stay until BCCI SA is joined. I do not know if I can go further than that, because until you know whether they object to being joined as plaintiffs I do not think there is any further order that can be made.
There was then a pause until 21st March, when the Depositors served a purported amended writ and purported amended Points of Claim. I say purported, because the Depositors did not have leave to amend, as has already been mentioned. The critical amendments were these. Bank of Credit and Commerce were added as a party. But the prayer in the writ was to read:
With the exception of Bank of Credit and Commerce International S.A. which is joined as a Plaintiff in this action in order to comply with the judgment and Order of the Honourable Mr Justice Gatehouse dated 6th December 1993 and which makes no claim against the Defendant, the Plaintiffs' claim is for :
etc.
In paragraph 12A of the Points of Claim it was proposed to insert a sentence in the same words.
The Bank of England then issued a summons in these terms:
(1)a declaration that neither BCCI SA nor the Plaintiffs have been granted leave by the Honourable Mr Justice Gatehouse to amend the Writ and/or Points of Claim to join BCCI SA as a plaintiff in the form of the purported amended Writ and Statement of Claim sent to the Bank's solicitors by the Plaintiffs' solicitors on 21 March 1994 or at all; or
(2)an order that the amendments to the Writ and Points of Claim be struck out on the ground that they disclose no reasonable cause of action;
(3)an order that the Writ and Points of Claim be struck out; alternatively,
(4)an order that the action remains stayed.
The summons came before Gatehouse J. at Preston Crown Court. That must have been though a convenient course as he had made the previous order; but I dare say that the library at Preston Crown Court is less than well furnished with the rarer books on Chancery practice. In the event the Judge refused the Depositors leave to amend, and continued his stay of the action. But he granted leave to appeal.
The judge's reasons for refusing leave to amend were essentially that the amended Points of Claim disclosed no cause of action. The pleading revealed that there had been an equitable assignment of the Depositors' claim, but also that the assignees, Bank of Credit and Commerce, made no claim against the Bank of England. The Depositors, in the judge's view, had no claim left because they had assigned it.
I was and remain puzzled as to why the Depositors' pleading is in the form that it is. At one time I thought that I knew the answer; but my guess has been controverted by counsel for the Depositors. I on the other hand have difficulty in accepting the reasons that he puts forward. They are that if the Bank of Credit and Commerce were active plaintiffs, then (i) the Bank of England might have more of a defence of limitation, (ii) the Bank of Credit and Commerce would have to prove 6019 assignments, and (iii) it might be argued that some or all of the assignments were invalid. I do not find those reasons at all plausible as forming the motive for an extraordinarily convoluted pleading. Nor did the judge. So I remain sceptical or ignorant as to what the motive is.
The Depositors now appeal. The question is purely one of law, as to whether the proposed amended Points of Claim would disclose a cause of action. We have been referred to a number of decided cases, but none is directly in point. That is not surprising, as it is unlikely that anybody in the past has adopted the form of pleading used in this case; or if they have, it is unlikely that anybody has objected, as the Bank of England do.
Before I look at the cases, I should mention an important development in the course of the argument. Sir Patrick Neill QC, for the Depositors and the Bank of Credit and Commerce, offered to add further wording to the proposed amendment to the writ and Points of Claim, so that it read
… other than or in addition to the claims which it is already presenting using the names of the individually named plaintiffs who are the legal owners of the claims equitably assigned to it.
If that additional wording cures the vice which the judge found in the proposed pleading which was before him, there is on one view no need to discuss this appeal any further. In my judgment the proposed pleading with that additional wording does indeed disclose a cause of action. As I understood it, Mr Langley for the Bank of England did not in express terms dispute that, although it may be difficult to reconcile with his other submissions. I believe that Waite LJ and Gibson LJ take the same view. So the appeal should be allowed. But if I stop there, we shall no doubt face a great dispute about the costs, both of this appeal and in the court below; and the amount is likely to be huge. It will be said, correctly, that the additional wording was only proposed for the first time after lunch on 31st October 1944, towards the end of Sir Patrick's opening submissions in this appeal. For that reason I think it appropriate to consider how the appeal would stand without the additional wording.
The issue is, whether the assignor of a chose in action retains a cause of action, when the assignment is equitable. All are agreed that, as a procedural requirement, he may if the...
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