Factual and Procedural Background
This appeal concerns the dismissal by HHJ Waksman QC of the Appellants' application to amend their Particulars of Claim and the striking out of original claims for conspiracy to injure by unlawful means and/or unlawful interference in trade or business. The Appellants, two companies registered in the British Virgin Islands ("Elite" and "Decolace"), had entered into interest rate hedging products ("IRHPs") with the Respondent, Company A (the "Bank"). The initial claims included mis-selling of IRHPs and breach of duty by the Bank, both of which were struck out by HHJ Bird. The conspiracy claims were permitted to be re-pleaded fully and properly particularised, but the subsequent application to amend was refused by HHJ Waksman QC.
The Appellants' claims relate to the Bank's conduct in relation to loan facilities secured over properties including care homes operated by an associated company, Company B. The Bank had undertaken a review under an agreement with the Financial Conduct Authority ("FCA") to identify customers eligible for redress regarding IRHP sales. Despite the Bank's undertaking not to foreclose or adversely vary lending facilities without consent except in exceptional circumstances, the Bank took enforcement action involving the appointment of receivers and administrators following certain defaults, including the striking off of the Appellants from the Companies Register in the British Virgin Islands and a winding up petition against Company B.
The Appellants contended that the Bank conspired with BDO, the appointed administrators and receivers, to unlawfully foreclose or vary facilities, breaching the undertaking to the FCA and causing loss. The Judge refused permission to amend on the basis that there was no real prospect of establishing unlawful means or intention to injure, and the claims were barred by prior release agreements entered into in 2014.
Legal Issues Presented
- Whether the Judge erred in law by holding there was no real prospect of proving a breach of the Bank’s undertaking to the FCA amounting to unlawful means.
- Whether the proposed claim for conspiracy to use unlawful means was barred by the 2014 Releases.
- Whether the draft amended pleading sufficiently alleged the essential elements of the tort of unlawful means conspiracy, including combination, unlawful means, intention to injure, and causation of loss.
- Whether the circumstances leading to enforcement action constituted "exceptional circumstances" justifying the Bank’s actions under the FCA undertaking.
- Whether fresh evidence should be admitted on appeal to support the Appellants' case.
Arguments of the Parties
Appellants' Arguments
- The claim for unlawful means conspiracy does not fall within the scope of the 2014 Releases because it arises from the Bank’s enforcement conduct, not the sale of IRHPs.
- The Bank breached its undertaking to the FCA by enforcing without exceptional circumstances, which amounted to unlawful means.
- The absence of Appellants from the Companies Register was used by the Bank as a pretext to unlawfully deprive them of cash flow.
- The tortious claim should be allowed as there was a real prospect of success and the draft amended pleading sufficiently pleaded the conspiracy and intention to injure.
- The 2014 Releases should be construed narrowly, with any ambiguity resolved against the Bank.
- Fresh evidence, including documents relating to mortgages and licence agreements, should be admitted to support the claim.
Respondent's Arguments
- The claim for unlawful means conspiracy is barred by the 2014 Releases, which broadly settle all claims connected to the sale of IRHPs.
- The Bank had contractual rights to take enforcement action following events of default, and no unlawful means occurred.
- The alleged breach of the contractual agreement between the Bank and the FCA cannot constitute unlawful means for tortious purposes.
- The draft amended pleading lacked essential elements of the tort, including a clear combination to use unlawful means and intention to injure.
- The circumstances leading to enforcement clearly constituted exceptional circumstances justifying the Bank’s conduct.
- The fresh evidence was not obtained with reasonable diligence and would not have an important influence on the outcome; thus, it should not be admitted.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Elite Property Holdings Ltd and Decolace Properties Ltd v Barclays Bank plc [2018] EWCA Civ 1688 |
Refusal of permission to appeal other aspects of claim dismissal; principles of claim compromise by release agreements. |
Confirmed that certain claims were barred by prior settlements and releases, restricting the scope of claims pursued. |
| Ladd v Marshall [1954] 1 WLR 1489 |
Test for admitting fresh evidence on appeal. |
Applied to determine that fresh evidence was not admissible as it could have been obtained earlier and would not affect the outcome. |
| Tajik Aluminium Plant v Ermatov & Ors [2008] EWCA Civ 54 |
More generous approach to admitting fresh evidence in interlocutory appeals. |
Considered but not applied as circumstances did not justify departure from usual principles. |
| ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472 |
Test for real prospect of success required for permission to amend pleadings. |
Used to assess whether the proposed amended pleading had a real prospect of success, which it did not. |
| Three Rivers District Council v Bank of England (No 3) [2003] 2 AC 1 |
Requirements for pleading a claim and drawing necessary inferences. |
Applied to conclude that the conspiracy claim was insufficiently pleaded. |
| Arnold v Britton [2015] AC 1619 |
Principles of contractual interpretation. |
Applied in construing the 2014 Releases to determine the scope of claims released. |
| Wood v Capita Insurance Services Ltd [2017] AC 1173 |
Endorsement of contractual interpretation principles from Arnold v Britton. |
Confirmed approach to interpreting release agreements in context. |
| JSC BTA Bank v Ablyazov (No. 14) [2018] 2 WLR 1125 |
Essential elements of unlawful means conspiracy tort. |
Referred to confirm that combination, unlawful means, intention to injure, and causation must be pleaded and proved. |
| Digicel (St Lucia) Ltd v Cable & Wireless plc [2010] EWHC 774 (Ch) |
Summary of ingredients of conspiracy to injure by unlawful means. |
Used to clarify the necessary components of the tort and to evaluate sufficiency of pleadings. |
Court's Reasoning and Analysis
The court carefully analysed the proposed amendments and the underlying facts. It accepted the legal test for permission to amend requiring a real prospect of success but found that the proposed pleading failed this test. The only unlawfulness alleged was breach of the Bank’s undertaking to the FCA not to enforce without exceptional circumstances. The court held that there was no real prospect of proving such a breach, as the circumstances surrounding enforcement were clearly exceptional, including insolvency issues, winding up petitions, and transfer of assets.
The court also found that the conspiracy allegations were sparse and lacked the necessary elements, particularly a clear combination to use unlawful means and an intention to injure. The alleged conspiracy was said to have occurred on or about 4 September 2013, coinciding with the Bank’s discovery of the striking off of the companies, but no prior agreement or unlawful act was established. The involvement of BDO was insufficiently pleaded and there was no realistic prospect of proving a conspiracy involving both the Bank and BDO.
Regarding the 2014 Releases, the court interpreted them broadly to include all claims connected to the sale of IRHPs, including the unlawful means conspiracy claim. The exception for consequential loss was narrowly construed and did not cover the tortious claim, but the claim was still barred by the release. The court rejected the Appellants’ argument that the claim fell outside the Releases because it arose from enforcement rather than sale.
The court declined to admit fresh evidence on appeal, noting that the documents could have been obtained earlier and would not significantly affect the outcome. The overriding objective and finality of litigation weighed against admission.
Finally, the court concluded that the Bank’s designation of exceptional circumstances was supported by the Skilled Person’s approval and the factual matrix, negating any real prospect of showing breach of the undertaking or unlawful conduct.
Holding and Implications
The court DISMISSED the appeal, affirming the refusal to grant permission to amend the Particulars of Claim to include a conspiracy to use unlawful means.
The direct effect is that the Appellants cannot pursue their claim for conspiracy to injure by unlawful means against the Bank based on the facts and pleadings before the court. The decision confirms that claims barred by comprehensive release agreements and lacking essential elements of tortious conspiracy will not be permitted to proceed. No new precedent was set beyond applying established principles of pleading, contractual interpretation, and the tort of unlawful means conspiracy.