Malik Ghulam Qadir (2) Malik Hussain v Barclays Bank PLC (2016)
In this recent case, the court struck out a claim for negligence on limitation grounds. In spring 2008, the defendant bank had given advice to the claimants on interest rate hedging products and the claimants later entered into three loans with swaps in June and July 2008. Following the global financial crisis, the claimants’ costs under the swaps substantially increased and they returned to the bank in 2009, 2010 and 2011 seeking to restructure the loans and breakage costs. Ultimately, the claimants terminated the agreements in 2014 and proceeded to bring a claim against the bank in 2015, arguing that they did not have the requisite knowledge before January 2012 so their claim could proceed. Applying Haward v Fawcetts (2006) the court held, for the purposes of determining ‘knowledge’, that the claimants did not need to know they had a legal complaint in negligence against the bank – they had known for a long time that the swaps were producing significant losses and should have taken that as a reason to investigate whether they had a claim against the bank.
Jonathan Edward Marsden v Barclays Bank PLC (2016)
The claimant was allegedly mis-sold two interest rate swaps in 2006 and 2007. As rates fell in 2008, he was required to make payments under the swaps. In 2009 his business started to suffer, allegedly due to his obligation to fund the swaps. In 2010 he made and then withdrew a complaint to the FOS and entered into negotiations with the bank to restructure his debt. A new loan was made which was stated as given in full and final settlement of all complaints, claims and causes of action which arise directly or indirectly, or may arise, out of or are in any way connected with the swaps. The claimant signed the settlement agreement and the swaps were terminated.
The claimant later brought a claim for breach of statutory duty, negligence, breach of contract, misrepresentation, restitution (on the grounds they are voidable as contrary to public policy), deceit and breach of contract in conducting the redress review. He claimed that the settlement agreement failed for lack of consideration and that he had succumbed to duress to sign the agreement.
The central argument of the bank was that all claims had been compromised by the settlement agreement so, as is the test for summary judgment, the claim had no prospect of success.
The court agreed. It held that the Bank’s agreement to provide a new facility was valid consideration for Mr Marsden’s agreement to release his claims and that there had been no illegitimate duress by the bank.
The settlement agreement also covered any deceit claim; in fact such a claim had been expressly brought to the bank’s attention before the settlement agreement was signed so was drafted with that in mind. Further, the claimant did not have a valid claim in relation to the review which the bank had conducted according to its obligations with the FCA.
Diane Hockin (2) Michael Hockin (3) Lonwest Ltd v (1) Royal Bank Of Scotland (2) National Westminster Bank Plc (2016)
In this case the defendants applied to strike out part of the claim. The company, a wholly owned subsidiary of a holding company owned by Mr and Mrs Hockin (the first and second Claimants), was granted a loan that was conditional on entry into a hedging product with the bank; an interest rate swap was agreed. Later, the subsidiary was placed into the bank’s global restructuring group (GRG) and subsequently, after the loan had been called in due to breach of covenant, was placed into administration. The company assigned to the claimants all claims that related to, were in respect of, resulted from or were connected with those breaches. In addition to bringing a claim for mis-selling, the claimants also claimed that the bank and its GRG had breached an implied term to act in good faith in its performance under the loan agreement. The bank argued that the claimants had no standing to bring such a claim.
The court held that the ordinary and natural meaning of “connected with” was a wide one and was not synonymous with “reliant on”. It was not unreasonable for the phrase “in connection with” to mean that the GRG claim flowed from the mis-selling of the swap claim.
When considering whether a duty of good faith should be implied into the loan agreement, the court had regard to Lord Neuberger’s recent judgment in Marks & Spencer plc v BNP Paribas (2015) and the fact that this is a standard commercial contract “it seems to me therefore, that the threshold for the implication of a term into a commercial contract of this kind is high”. On the evidence it was not possible to conclude that the claimants’ claim was unarguable for the purposes of a strike-out application.
The bank’s application was thus refused.