Introduction

Courts have been faced with a substantial number of claims alleging the mis-selling of payment protection insurance. Those claims are often misconceived and, ultimately, the Court is usually not persuaded by the borrower’s evidence. Those cases also often include a number of causes of action which are abandoned by the borrowers at trial. Readers of our earlier note entitled “The Race for the Triple Crown: Horses, High Stakes and PPI” will be aware that three senior judges recently either struck-out claims, or refused the borrowers permission to amend their claims, to include numerous allegations including breach of fiduciary duty, breach of a duty of care and breach of contract. Miller Gardner Solicitors LLP, solicitors for all of the borrowers in the three decisions discussed in that note, sought permission from the Court of Appeal to appeal two of the many issues determined by His Honour Judge Waksman QC (sitting as a judge of the High Court) in Barnes & Barnes v Black Horse Limited [2011] EWHC 1416. Lenders and brokers will be pleased to hear that Lord Justice Tomlinson robustly refused Mr & Mrs Barnes permission to appeal and their solicitors have decided not to pursue those grounds at an oral hearing.  

Background: Barnes & Barnes v Black Horse Limited

In summary, HHJ Waksman QC refused a substantial part of Mr & Mrs Barnes’ application for permission to add claims:

  • for breach of fiduciary duty;
  • for breach of the General Insurance Standards Council Private Customer Code (which either supported the claim for breach of fiduciary duty or underpinned a duty of care in negligence or a contractual duty); and
  • for breach of contract because the insurer “adheres to” to the Code meaning Black Horse Limited was liable under Section 75 of the Consumer Credit Act 1974 (the “CCA 1974”).

Shortly before the hearing, Mr & Mrs Barnes also abandoned their claim for repayment of sums made under allegedly unenforceable agreements.  

The Appeal

During the course of the hearing before HHJ Waksman QC, we understand that Mr & Mrs Barnes’ solicitors (who were represented by Brian Doctor QC at an earlier hearing in Chester County Court but, at this hearing, by Nathan Banks) proposed to appeal every point which did not go in their favour. However, after instructing Hodge Malek QC (who acted for the Financial Ombudsman Service in the recent judicial review hearing) and John Campbell SC, the only two points raised in the appeal to the Court of Appeal were the refusal to allow claims that:

  • allegedly “excessively” expensive policies of payment protection insurance were relevant to the allegation that the relationship was unfair within the meaning of Section 140A of the CCA 1974 (the “First Issue”); and
  • Mr & Mrs Barnes were owed a duty of care (either in negligence or a fiduciary duty) which Black Horse breached (the “Second Issue”).

Mr & Mrs Barnes sought permission to appeal for the Court of Appeal on 26 July 2011. Around a week or so before the appeal was filed, Mr & Mrs Barnes’ solicitors had filed an application for permission to further amend their claim to argue the First Issue. A further Re-Amended Particulars of Claim was provided in support of their application. On 7 July 2011 HHJ Waksman QC gave permission for Mr & Mrs Barnes to argue the First Issue.

Black Horse filed written objections with the Court of Appeal. It argued that the First Issue was wholly misconceived. HHJ Waksman QC had not refused to give permission to argue the First Issue in any event but, instead, had refused to give permission based on the draft Re-Amended Particulars of Claim that we before him. Given that a further Re-Amended Particulars of Claim had been provided after the hearing but before the appeal was filed, and HHJ Waksman QC had given permission for that amendment, the First Issue was therefore “pointless and an abuse of process”.

On the Second Issue, Black Horse argued that it was possible for a duty of care to arise but such a claim must set out (a) the detailed factual background, (b) the precise scope of the alleged duty, (c) particulars of how that duty is alleged to have been breached and (d) particulars of the loss and damaged caused by the alleged breach. The draft further Re-Amended Particulars of Claim did not set out such a claim and HHJ Waksman QC therefore correctly refused to give Mr & Mrs Barnes permission to argue that point. If (or when) a further statement of case set out all of those issues, Black Horse could consider the proposed amendments.  

The Decision

After considering Mr & Mrs Barnes’ appellant’s notice, grounds of appeal and skeleton argument and Black Horse’s objections, Lord Justice Tomlinson refused to give permission to appeal. His reasons were:

  • the Court of Appeal should be “slow to interfere with case management directions given in relation to the adequacy of statements of case”;
  • HHJ Waksman QC’s “conclusions as to the inadequacy of the further draft Re-Amended Particulars of Claim seems to me to be unarguably correct”;
  • the application for permission to appeal was unnecessary because:
    • HHJ Waksman QC had (as pointed out by Black Horse) given permission to argue the First Issue on 7 July 2011;
    • permission to amend to argue a duty of care was refused because HHJ Waksman QC decided that the further draft Re-Amended Particulars of Claim did not set out any proper factual or legal basis for the alleged duty of care;
    • HHJ Waksman QC did not (as pointed out by Black Horse) refuse to give permission to argue a duty of care in any event but simply said that it must clearly set out “the proper constituent parts of a cause of action”.  

Permission to appeal was therefore refused on both the First Issue and the Second Issue. After considering Lord Justice Tomlinson’s Order, Mr & Mrs Barnes’ solicitors decided not to pursue the appeal to an oral hearing.  

Comment

Lord Justice Tomlinson is not, of course, any stranger to payment protection disputes as he recently gave the borrowers permission to appeal in Harrison & Harrison v Black Horse Limited and was a member of the panel hearing the appeal. It is therefore perhaps unsurprising that he robustly dealt with an ambitious application for permission to appeal. In his undoubtedly correct decision, Lord Justice Tomlinson rightly points out that the Court of Appeal (or, indeed, any appeal court) should be slow to interfere in case management decisions. HHJ Waksman QC had the benefit of two days’ argument and time to hand down a detailed reserved written judgment. He formed a judgment (rightly in our view) that the further draft Re-Amended Particulars of Claim failed to disclose a real prospect of success meaning a number of the proposed amendments should not be allowed leaving the only viable claim of unfair relationship to be determined at trial but he cautioned that this should not “give any particular encouragement to the Barnes in terms of its prospects of success”.

Given Mr & Mrs Barnes solicitors’ position that they would seek permission to appeal any points that they were unsuccessful on, and the more moderated grounds of appeal, it must surely follow that they accepted HHJ Waksman QC’s decision that the other allegations were misconceived. This is encouraging news for lenders and brokers facing a considerable amount of spurious and misconceived claims. We have consistently endorsed HHJ Waksman QC’s view that borrowers should, instead of raising every conceivable argument, concentrate on the main issues and the Court should be alive to the prospect of striking-out unmeritorious claims. This not only leads to a reduction in the cost of such disputes but also ensures that valuable Court time is not spent considering misconceived arguments. The Court of Appeal’s message that it will be slow to interfere with case management directions is plainly right. Borrowers (or their solicitors) engaging in such activity have been warned that such an attempt, which simply increases already unnecessary costs, will rarely be entertained.