WW Property Investments Ltd v National Westminster Bank Plc
| Jurisdiction | England & Wales |
| Judge | Lord Justice Christopher Clarke,Lord Justice Briggs |
| Judgment Date | 29 November 2016 |
| Neutral Citation | [2016] EWCA Civ 1142 |
| Date | 29 November 2016 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2016/1438 |
[2016] EWCA Civ 1142
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM LEEDS DISTRICT REGISTRY
HIS HONOUR JUDGE ROGER KAYE QC
B40LS775
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Briggs
and
Lord Justice Christopher Clarke
Case No: A3/2016/1438
Julian Roberts (instructed by DFG Solicitors) for the Appellant
Hearing date: 1 st November 2016
This is an application by WW Property Investments Limited ("WW") to appeal from a decision of HH Judge Roger Kaye QC dated 1 March 2016 whereby he struck out the entirety of WW's claim against the National Westminster Bank plc and refused it permission to add a new claim.
The basic facts are as follows. Between 2004 and 2010 WW borrowed money from National Westminster Bank Ltd ("NatWest"). Over the same period it entered into four interest rate hedging contracts. The first 3 of them were what are called Collars. These were entered into on the following dates with the following reference amounts.
The fourth was a Swap agreement which was entered into after the close-out of each of the three Collar agreements.
11.1.10 £ 4,000,000
| 9.12.04 | £ 2,070,000 |
| 15.7.05 | £ 1,000,000 |
| 12.10.07 | £ 861,000 |
The Collars were intended to hedge WW's exposure to interest obligations arising under the loans made by NatWest, which provided for interest to be paid at a percentage above NatWest's Base Rate. It was a term of the loans that they should be hedged. The effect of the Collars was that if NatWest's weighted average sterling base rate for each calculation period exceeded a certain amount NatWest would pay WW under the instrument but if the rate dropped below a certain level WW would pay NatWest. If rates increased WW thus had protection against the increase above the specified level. If rates fell WW would find itself making payments which increased the interest that it would otherwise be paying. Under the Swap WW was the fixed and NatWest the floating rate payer. The fixed rate was 5.45%, the floating rate was 1 month Sterling Libor, and the payment dates were monthly from 1.2.10 to 1.12.14. In the events which happened interest rates dropped in 2008 and remained low thereafter so that these agreements were disadvantageous to WW.
Each of the hedges had a mark to market value at day 1 in favour of NatWest.
The IRHPR
In 2013 NatWest entered into a Review Agreement, as did other banks, with the Financial Services Authority whereby NatWest agreed to carry out an Interest Rate Hedging Product Review (IRHPR), which would involve an independent firm of reviewing accountants. In accordance with the terms of the IRHPR the Collars were categorised as Category A business. This resulted in the automatic provision of some redress to WW subject to the assessment process.
On 15 October 2014 NatWest made offers in respect of the Collars. In the end WW accepted the offers and received redress of over £ 424,152.06 from NatWest. On 9 January 2015 WW executed acceptance forms. In each form WW ticked the box against the following words:
"I/We accept the Offer as set or in the offer letter of 15 August 2014 relating to the review of the sale listed above and do want to make / have already made a claim for additional losses."
Beneath that were the words:
"If you decide to accept this Offer, and subject only to the qualifications in the tax and consequential loss sections of the offer letter of 15 August 2014 permitting you to claim respectively for (1) additional losses incurred as a result of a difference in your tax position caused by receipt of the provisional basic redress payments and (2) Consequential Losses you have incurred as a result of the IRHP you were sold, this will represent full and final settlement of any claims, actions, liabilities, costs or demands that you may have against the bank arising under or in any way connected with the sale of this IRHP, as identified above. For this avoidance of doubt this applies to any past, present or future claims, actions liabilities, costs or demands, regardless of whether or not you are aware of them at the date of this letter. However, there are some causes of action (e.g. a claim for fraud), which as a matter of law you will always have available to you."
The offer letters included the following paragraph
" Additional losses not included in the Offer
The Offer shown above includes interest but no redress in relation to any additional losses you may have incurred as a result of the IRHPs you were sold. Where you have already provided information in relation to any additional losses you may have incurred as a result of the IRHPs you were sold, we will consider it and we will contact you shortly to discuss this further. Where you would like to provide further information in relation to additional losses you may have incurred as a result of the IRHPs you were sold, we set out at Appendix 2 generic guidance for all customers on additional losses (referred to as 'Consequential Losses' in that guidance) for you to read, after which you will need to let us know if you wish to make a claim.
Please submit details in writing and within 28 days of the date of this letter. Any information that you provide will also be assessed by the Independent Reviewer. The final redress payment will take into account our assessment of any claims for additional losses you may have."
Appendix 2 set out guidance in respect of claims for consequential losses. This included the following paras:
"The Financial Conduct Authority has confirmed the basis on which we must consider claims for Consequential Loss. More details can be found on the FCA's website:
http://www.fca.org.uk/consumers/financial-services-products/banking/interest-rate-hedging-products/questions
Where it is determined, based on principles agreed with the FCA (as explained in further detail below) that you have incurred Consequential Losses as a result of us not fully meeting the sales standards agreed with the FCA, we will provide redress to you for those additional losses.
When will redress for Consequential Losses be provided?
We will pay Consequential Losses which you have suffered where you are able to show that it is more likely than not that the particular loss claimed:
Was materially caused by us not fully meeting the sales standards agreed with the FCA in respect of the IRHP
andWas a kind of loss that a reasonable person standing in the shoes of the bank at the time the IRHP was sold to you should have foreseen.
You will need to tell us the amount of Consequential Loss that you have suffered and provide suitable evidence to support your claim. We provide more information on the evidence required later on in this Appendix. Please provide us with written evidence which quantifies or enables us to quantify your claims for Consequential Loss. Where appropriate we will also take into account how you sought to reduce your losses.
The outcome of your claim will depend on the specific facts of your case."
The Appendix went on to explain how a customer could submit a claim for Consequential Loss, what needed to be shown and the need to provide the claim for Consequential Loss within 28 days. It then said:
"If we determine that you are entitled to additional redress for a Consequential Loss you have suffered we will pay this separately to you".
WW made a claim for consequential losses which was ultimately rejected by NatWest with the sanction of the independent Reviewer in November 2015.
The Swap was categorised as Category B business. This meant that redress was not automatic and would only be afforded if the sale failed to meet the appropriate standards. NatWest invited WW to include the Swap in the IRHPR process and that offer was accepted. The eventual outcome was a decision that NatWest had met the standards applicable and hence no redress was appropriate.
The present proceedings were commenced on 6 March 2015. The strike out application before the judge was conducted by reference to a proposed amendment to the POC the revised draft of which is dated 21 October 2015. The pleading contains four principal claims (a) the Wager Claim; (b) the LIBOR Claim; (c) the PPA and Guarantee Claim; and (d) the Tort Claim.
The compromise issue
The judge accepted the submission that WW's claims in respect of the Collars (but not the Swap) had all been compromised by reason of the binding settlement agreements entered into pursuant to which WW was provided with redress in excess of £ 420,000. He accepted the submission that additional or consequential losses could, following the acceptance letters, only be claimed within the IRHPR process. Those claims had been made and rejected. Accordingly, the Wager, LIBOR and Tort Claims could only be maintained in relation to the Swap Agreement.
Whilst I see the force of that contention, it does not seem that matters are as clear-cut as that. The exception from the compromise is that it is subject to " the qualifications in the tax and consequential loss sections of the offer letter of 15 August 2014 permitting" WW " to claim for Consequential Losses you have incurred as result of the IRHP". The letter indicates that it is open to WW to make such a claim and that, if NatWest determined that WW was entitled to additional redress for Consequential Loss it will pay this amount separately. But it does not say that any such determination will be conclusive; or that, if NatWest does not make such a determination, there can be no further claim. I regard it as arguable with a realistic prospect of success that the words of the compromise do not have the effect relied on and that if NatWest wanted to exclude any such claim following an adverse determination by itself it...
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