In a recent decision arising out of long-running litigation relating to alleged mis-selling of interest rate hedging products ("IRHPs"), the Court of Appeal has upheld the High Court's refusal to allow the claimants to pursue claims in unlawful means conspiracy: Elite Property Holdings Ltd & Anor v Barclays Bank plc [2019] EWCA Civ 204. We considered the High Court decision in an earlier banking litigation e-bulletin.

While this decision did not involve new law, it serves as a reminder of the difficulties of bringing a claim based on conspiracy and, in particular, that it is not sufficient simply to plead a claim and hope something turns up in disclosure. The claimant must be able to plead full particulars of all elements of the claim at the outset. Further, as the case makes clear, release clauses in settlements may be construed widely and it is important to be clear as to precisely what claims (if any) are intended to survive the settlement. Both elements of the decision are likely to be welcomed by financial institutions.

The effect of the present judgment is finally to dispose of these proceedings (subject to any attempted appeal to the Supreme Court). The majority of the claimants' claims relating to the sale of their IRHPs were previously struck out by the High Court (see our e-bulletin), in relation to which the Court of Appeal refused permission to appeal last year (see our e-bulletin). In its strike out judgment, the High Court had ordered the claimants to particularise properly their claims for conspiracy, giving the claim a potential lifeline, but the Court of Appeal has now refused permission to amend to include such claims, bringing this long-running dispute to an end.

Background

The detailed background is set out in our earlier e-bulletin, but in summary, following earlier decisions to strike-out parts of their claim, the claimants sought permission to amend their claim to add claims relating to unlawful interference and conspiracy with a predominant intention to injure, and conspiracy to use unlawful means. In particular, they sought to allege that the defendant bank (the "Bank") combined with BDO to enable the Bank to foreclose the claimants' loan facility (in connection with which the IRHPs were entered into) in breach of an undertaking given by the Bank.

The application to amend was dismissed by the High Court, whose judgment also dealt with other issues. The appeal in this case was concerned with the High Court's decision to refuse permission to amend in relation to the claim for conspiracy to use unlawful means.

Decision

The Court of Appeal upheld the High Court's decision. It agreed that, for the amendments to be allowed, the claimants needed to show that they had a real as opposed to fanciful prospect of success which was more than merely arguable and carried some degree of conviction: ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472.

The 2014 Release

The Bank argued it had made a redress offer concerned with the sale of the IRHPs (excluding consequential loss) which the claimants had accepted on 29 November 2014 (the "2014 Release") and which settled any claims, including tortious claims for unlawful means conspiracy.

The claimants sought to argue that the 2014 Release did not, on its proper construction, include claims in unlawful means conspiracy. However, the Court of Appeal considered that, based on the drafting of the relevant agreement, the definition of "Claims" in the 2014 Release was extremely wide and was sufficient to include all claims of unlawful means conspiracy. As a result, it dismissed the appeal because the only claim in the amended pleading which was now pursued could have no real prospect of success.

Elements of unlawful means conspiracy

Although the appeal had been disposed of based on the 2014 Release, the Court of Appeal went on to consider the appeal against the High Court's decision to refuse permission to amend on the grounds that the essential elements of the tort of conspiracy had not been pleaded.

The Court of Appeal confirmed the basic elements of the tort of conspiracy summarised by Morgan J in Digicel (St Lucia) Ltd v Cable & Wireless plc [2010] EWHC 774 (Ch):

"The necessary ingredients of the conspiracy alleged are: (1) there must be a combination; (2) the combination must be to use unlawful means; (3) there must be an intention to injure a claimant by the use of those unlawful means; and (4) the use of the unlawful means must cause a claimant to suffer loss or damage as a result."

The claimants accepted that they needed to show that BDO and the Bank had combined to do something unlawful, and that they had simply pleaded an inference that there must have been a combination, rather than setting out a detailed pleading. However, the claimants submitted that pending disclosure it was not possible for them to plead more and that it was legitimate for an inference to be drawn.

The Court of Appeal held that this was not sufficient; it was necessary for each element of the conspiracy to be properly pleaded in full. Therefore the proposed amendments were defective and permission should be refused.