Gary Ronald Marshall v Barclays Bank plc [2015] EWHC 2000 (QB) concerns an application by Barclays Bank plc ("Barclays") to strike out or obtain summary judgment in respect of a claim brought against the bank for alleged mis-selling of an interest rate hedging product.

The basis of the application by Barclays, was that such claim was barred by a general release in a pre-existing settlement agreement between Barclays and the claimant. The court also heard a second application by the claimant, to amend his particulars of claim.

The court was satisfied that the claimant, prior to entering into the settlement agreement, already knew that he had a right to make a claim against the bank in relation to mis-selling of the hedge product to him.  In those circumstances, any argument that the bank could or should have informed the claimant about the potential of the review of mis-selling swap products before entering into the settlement agreement was, in the Judge's view, "hopeless".  Further, it could not be argued that the consequence of non-disclosure by the bank of the review could be such as to discharge the settlement agreement.  Permission to amend the particulars of claim was separately considered and refused.

  1. Background
  2. Issues
  3. Practical implications

1. Background

In August 2007, the claimant borrowed the sum of £1 million from Barclays and, following various dealings, entered into a swap agreement on 28 March 2008.  The claimant ran into financial difficulties, as a result of which the parties entered into a settlement agreement on 26 April 2012.  Prior to entering into the settlement, there was documentary evidence that the claimant was fully aware that he had a potential claim against Barclays for mis-selling.

The settlement agreement contained a very widely drafted release provision, as follows:

" You [the claimant] agree to release and waive irrevocably any claims, complaints or rights of action against the Bank in relation to this matter and your banking relationship and arrangements with the Bank, and you covenant not to bring any such claim, complaint or action against the Bank. You agree that acceptance of these terms will constitute full and final settlement of your claims against Barclays, whether direct or indirect, foreseen or unforeseen, contingent or actual, present or future, and which arise, or may arise, out of or are in any way connected with this matter."

Following this, on 29 June 2012, the FSA announced the outcome of its investigation into the sale of interest rate hedging products to small and medium sized businesses.  It also announced it had reached agreement with four banks, including Barclays, to provide redress by way of a review exercise.  The claimant was informed by Barclays on 18 February 2013 that he was within the scope of the review as a result of which he confirmed that he would like Barclays to undertake a review of the sale of his product.  The outcome of the review was that the claimant was not entitled to any redress.  Although he did not challenge that decision at the time, the proposed amended particulars of claim alleged that the review process suffered from wholesale flaws making the process wholly unsatisfactory.

2. Issues

The key question for the court to determine was whether the general release (above) in the settlement agreement precluded the claimant from pursuing his claim.  In considering this question, the court proceeded on the basis that the claimant had at least an arguable prospect of showing that the bank was aware of the FSA investigation at the time it entered into the settlement agreement.

The bank argued that the general release in the settlement agreement was extremely wide as it expressly included foreseen and unforeseen claims, present and future claims, and claims in any way connected with the "matter".  In circumstances where the claimant was clearly aware that he had a potential claim for mis-selling prior to entering into the settlement agreement, his claim against Barclays should be struck out.  It was held that:

  1. The wide language of the release in the settlement agreement was sufficient to cover all of the claims the claimant was seeking to advance ( Bank of Credit and Commerce International SA v. Ali and Others [2002] 1 AC 251 distinguished as to the interpretation of the settlement agreement);
  2. The court rejected the claimant's attempt to rely upon the "sharp practice" argument identified by Lord Nicholls in BCCI.  It was argued that the bank had an obligation to disclose its knowledge of the FSA investigation and proposed review procedure to the claimant, on the assumed basis of the bank's awareness of these matters during the negotiation of the settlement agreement.  However, the review (which carried an obligation on Barclays to make proposals for compensation where mis-selling of swap products was found) was not materially different to the right which the claimant already knew that he had prior to entering into the settlement, which was a right to make a claim against the bank in relation to mis-selling of the hedge product;
  3. The bank did not seek to prevent the claimant from participating in the review (and the claimant in fact did so) such that it could not be argued that the consequence of any non-disclosure of the review by the bank could be such as to discharge the settlement agreement; and
  4. Even as a matter of public policy, the fundamental point was that the claimant knew at the relevant time that he had a right to make a claim such that he could not avoid the general release in the settlement agreement.

3. Practical Implications

This decision confirms that where a release in a settlement agreement is clear and drafted in wide terms, the court will be prepared to strike out claims falling within that release on an interim application.  The case also provides helpful clarification of Lord Nicholls's "sharp practice" argument.

There is an interesting question as to whether any parallels can be drawn between this decision and attempts to revisit settlements relating to mis-selling of interest-rate swaps following subsequent allegations of LIBOR fixing.  Clearly much will depend upon the particular factual circumstances of each matter, but the instant case may be of assistance to defendant banks with widely drafted releases which are facing such claims.