Where a bank has provided an estimate of its fees calculated on one basis, it cannot later calculate its fees on a different basis.

This was the finding in ING Bank NV v Ros Roca SA in which ING contracted with the defendant to act as its financial advisor in relation to the purchase of another company. ING provided bridging finance. The contract provided that ING's fees would be based on a certain calculation. The transaction proceeded and the defendant requested an estimate of the transaction costs from ING. ING subsequently advised they were €4 million. Had they been calculated on the contractual method of calculation those costs would have been €7.3 million. The €4 million figure was used in finalising the details of the transaction when it completed. Subsequently, ING sought to recover €7.3 million on the basis of how the fees were to be calculated as provided for under the contract.

The Court of Appeal held that ING's calculation was correct as the contract explicitly provided for how the calculation was to be made. However, ING was estopped from relying on the contractual provision. When ING had provided the estimate of €4 million for the costs, there was a shared assumption between the parties that despite the reference to how the fees were to be calculated in the contract, ING's fees were being calculated on a different basis. ING knew the estimate was inconsistent with the contractual provision (ING's relationship manager had undertaken the calculations and raised the issue) and it would be unconscionable to allow ING to go back on that assumption.

Things to consider

Lenders need to be aware that when providing information such as estimates of costs and fees, they need to check the contractual provisions too. If the estimate is relied on to the borrower's detriment, estoppel arguments may well succeed and the contractual provision will be unenforceable.