A company had gone into administration in 2014. In 2008 the company sought a loan from the bank and was granted a fixed rate loan of £11.6m over 10 years, containing a clause requiring the company to pay break costs in the event of early repayment. The claimants (the assignees of a cause of action formerly vested in the company in administration) allege that they were told by the bank after the loan agreement had been signed that they would therefore be liable for break costs of over £1.5m. The claimants allege that this led to the eventual collapse of the company as the company was unable to refinance on favourable terms (including borrowing sums to cover the break costs).
The central claim was that the bank had a duty to advise of the onerous term and, in breach of that duty, had failed to do so. The claim failed. In order for their breach of contract claim to succeed, the claimants needed to prove that they had a contract with the bank that required the bank to provide advice and they were not able to show this. For their negligence claim to succeed, they needed to show that the bank voluntarily undertook to provide the claimants with this service, contrary to the general position that a bank is not usually under an obligation to advise its customers; the circumstances in this case were not such that would lead to a departure from this general principle. If the claimants required advice as to the effect of the clause, it was more appropriate that their solicitors and accountants so advised.
Separately, the claimants made a claim of negligent misrepresentation on the basis that the loan was not fit for the company’s needs but this was not made out on the facts; it was apparent that the bank had tailored the loan to the company’s needs on the basis of the information provided.