Ventra Investments Ltd v Bank Of Scotland Plc

Factual and Procedural Background

The Plaintiff is a property development company now in creditors' voluntary liquidation, whose business involved purchasing, renovating, and letting residential properties. The Defendant was the Plaintiff's main banker and provided various loan facilities between 2004 and 2008, which allegedly required the Plaintiff to purchase interest rate hedging products from the Defendant. The parties entered into a Master Agreement and multiple interest rate derivative contracts, initially the Original Trades and subsequently the Replacement Trades, where the Plaintiff was the fixed-rate payer and the Defendant the floating-rate payer.

The Defendant became part of a larger banking group in 2009, and responsibility for the Plaintiff's accounts was transferred within the group. In 2011, the Defendant appointed administrative receivers over the Plaintiff. The Defendant had also entered into an Umbrella Management Agreement (UMA) with a third party asset manager, who subsequently entered into a Portfolio Management Agreement (PMA) with the Receivers to manage and sell the Plaintiff's charged property portfolio, which comprised approximately 89 properties sold for just under £57 million.

The Plaintiff was placed into creditors' voluntary liquidation in 2015, and the present action was commenced by the joint liquidators shortly thereafter. The Plaintiff's claims fall into three categories: (1) Misrepresentation Claims alleging inducement to enter into Replacement Trades by fraudulent misrepresentations by the Defendant; (2) Breach of Duty Claims alleging failure by the Defendant to provide sufficient information about risks; and (3) Undervalue Claims alleging that the property portfolio was sold at an undervalue by the Receivers and that the Defendant is vicariously liable for their conduct.

The Defendant denies all claims. Procedurally, the claim form was issued in 2015, followed by a stay to allow pre-action correspondence. Particulars of Claim and Defence were exchanged, with some strike-out applications by the Defendant succeeding. The trial was initially listed for June 2019 but was vacated by consent, and subsequently re-listed for January 2020. Disclosure and witness evidence exchanges have been ongoing but incomplete, with expert evidence yet to be fully served.

The current applications before the court, issued in March 2019, include a Disclosure and Amendment Application seeking further disclosure and permission to amend the Plaintiff's pleadings, and an Adjournment Application seeking to vacate the trial date to accommodate these requests. The Defendant consents to some re-amendments and additional disclosure but opposes the adjournment of the trial.

Legal Issues Presented

1. Whether the trial date should be vacated to allow further disclosure and amendments to the Plaintiff's claims.
2. Whether the Defendant is obliged to disclose documents held by third parties, specifically the asset manager and conveyancing solicitors, under the concept of "control" in disclosure rules.
3. Whether the Plaintiff should be permitted to amend its pleadings to extend LIBOR-related claims to the Original Trades and to add claims for rescission.
4. Whether the Plaintiff's requests for additional disclosure and further information are reasonable, proportionate, and necessary for the just disposal of the proceedings.

Arguments of the Parties

Appellant's Arguments

• The Plaintiff submits that without additional disclosure, particularly of documents held by the asset manager and conveyancing solicitors, a fair trial is impossible.
• The Plaintiff contends that the asset manager acted as the Defendant's agent under the UMA, placing those documents within the Defendant's control for disclosure purposes.
• The Plaintiff argues that the proposed amendments to extend LIBOR claims to the Original Trades and to claim rescission are consistent with the existing case and should be allowed to ensure the full case can be heard.
• The Plaintiff seeks various categories of additional disclosure relating to internal documents of the Defendant and associated individuals, which it claims are relevant and necessary to resolve key issues in dispute.
• The Plaintiff contends that any delay in making these applications is attributable to the Defendant’s failure to comply with disclosure obligations and obstructive conduct.

Appellee's Arguments

• The Defendant denies that the documents of the asset manager and conveyancing solicitors are within its control, noting that the UMA expressly excludes agency and the Defendant has no enforceable right to those files.
• The Defendant submits that disclosure must be limited to pleaded issues that are key in dispute, and many of the Plaintiff's allegations and requests go beyond the pleaded case and amount to a new, unpleaded case.
• The Defendant argues the proposed amendments extending LIBOR claims to the Original Trades are new, could have been made earlier, would require extensive further disclosure and evidence, and would necessitate adjournment of the trial.
• The Defendant contests the relevance and proportionality of many of the additional disclosure requests, characterizing them as fishing expeditions or unnecessary duplication of already disclosed materials.
• The Defendant emphasizes the importance of maintaining the trial date and minimizing disruption to the court’s resources and other litigants.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Al-Medenni v Mars UK Limited [2005] EWCA Civ 1041	Function of statements of case to define issues and ensure parties know the case to meet.	Reinforced the importance of clear identification of issues in pleadings.
Loveridge and Loveridge v Healey [2004] EWCA Civ 173	Permission to amend pleadings where departure causes prejudice.	Guided the court on when to allow unpleaded issues to be advanced.
Grove Park Properties Ltd v The Royal Bank of Scotland Plc [2018] EWHC 3521	Distinction between facts and evidence; brevity in pleadings.	Supported the principle that pleadings should be concise and not contain evidence.
McPhilemy v Times Newspapers Ltd [1999] 3 All ER 775	Importance of clarity and brevity in pleadings.	Emphasized that excessive particulars can obscure issues.
Tchenguiz v Grant Thornton UK LLP [2015] EWHC 405	Complex commercial transactions require adherence to basic pleading rules.	Supported need for clear and proportionate pleadings in complex cases.
Savings & Investment Bank Ltd v Fincken [2003] EWCA Civ 1630	Discretion in permitting amendments under overriding objective.	Informed balancing of injustice to parties in amendment decisions.
Gale v Superdrug Stores Plc [1996] 1 WLR 1089	Timing of amendment applications and prejudice caused.	Highlighted impact of late amendments on delay and costs.
Royal Bank of Scotland plc v Highland Financial Partners LP [2013] EWCA Civ 328	Risk of injustice from limiting disclosure.	Warned against rules creating framework for injustice in disclosure.
Charter UK Ltd v Nationwide Building Society [2009] EWHC 1002	Disclosure should be limited to material supporting remedies sought.	Asserted that immaterial matters should not be pleaded to obtain wider disclosure.
Three Rivers District Council v Bank of England [2001] UKHL 16	Requirement for pleading fraud with particularity and credible evidence.	Supported principle that fraud allegations must be precise and supported.
North Shore Ventures Ltd v Anstead Holdings Inc [2012] EWCA Civ 11	Control of documents by litigant includes practical control beyond legal possession.	Considered in assessing whether third party documents are under party control.
Fairstar Heavy Transport NV v Adkins [2013] EWCA Civ 886	Principal's entitlement to require production of documents from agent.	Applied to argue agency relationship and document control.
Yasuda Fire & Marine Insurance Co v Orion Marine Insurance Underwriting Agency Ltd [1995] QB 174	Entitlement to documents survives termination of agency.	Considered in relation to agency rights post-termination.
Edenwest v CMS Cameron McKenna [2012] EWHC 1258	Determination of control over documents held by solicitors acting for receivers.	Referenced regarding control of conveyancing files.
Schlumberger Holdings Ltd v Electromagnetic Geoservices AS [2008] EWHC 56 (Pat)	Cooperation and consent of third party relevant to document control.	Considered in context of cooperative relationship for document disclosure.
Gaskell v Gosling [1896] 1 QB 669	Agency of receivers appointed by mortgagee.	Explained legal device of receivership agency for mortgagor.
Davey v Money [2018] EWHC 766	Extent of secured creditor's involvement to establish agency or liability.	Applied to assess whether Defendant’s interference created agency or liability.
Morgan v Lloyds Bank Plc [1998] Lloyd's Rep Bank 73	Liability of mortgagee for negligent interference with receivership sales.	Referenced as standard for establishing liability for interference.
UBS AG (London Branch) v Kommunale Wasserwerke Leipzig GmbH [2017] EWCA Civ 1567	Characteristics of agency relationships.	Used to evaluate agency relationship under UMA.
Boyd & Hutchinson v Foenander [2003] EWCA Civ 1516	Factors for considering adjournment applications.	Guided balancing of interests in trial adjournment decisions.
Elliott Group Ltd v GECC UK [2010] EWHC 409	Overriding objective in adjournment decisions.	Supported consideration of proportionality and expense.
Fitzroy Robinson Ltd v Mentmore Towers Ltd (No 2) [2009] EWHC 3070	Specific factors relevant to late adjournment applications.	Provided guidance on evaluating late adjournment requests.
Nesbit Law Group LLP v Acasta European Insurance Company Limited [2018] EWCA Civ 268	Balancing injustice in late amendment applications.	Summarized principles for late amendments balancing finality and justice.
Quah Su-Ling v Goldman Sachs International [2015] EWHC 759	Impact of trial date risk on late amendment applications.	Emphasized that risk to trial date weighs against late amendments.
Swain-Mason v Mills Reeve LLP [2011] EWCA Civ 14	Requirement for clarity and completeness in very late amendments.	Stressed obligation to plead fully in late amendments.
Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1995] 2 All ER 769	Prima facie evidence of market value from sale price unless improper marketing shown.	Applied to assess relevance of marketing and sale process in undervalue claims.
Michael v Miller [2004] EWCA Civ 282	Requirement to show improper marketing to rebut sale price as market value.	Referenced in relation to undervalue claims.
Bishop v Blake [2006] EWHC 831 (Ch)	Similar principle on sale price as evidence of market value.	Supported approach to undervalue claims.
William Sindall Plc v Cambridgeshire County Council [1994] 1 WLR 1016	Discretionary relief under Misrepresentation Act 1967 s 2(2).	Referenced in relation to rescission amendments.
Property Alliance Group Ltd v Royal Bank of Scotland Plc [2018] EWCA Civ 355	Implied representations about LIBOR integrity.	Referenced as recent authority on LIBOR misrepresentation claims.
Marme Inversiones 2007 SL v Natwest Markets Plc [2019] EWHC 366 (Comm)	Consideration of LIBOR-related representations.	Considered relevant to LIBOR Representation claims.

Court's Reasoning and Analysis

The court carefully examined the Plaintiff’s applications for further disclosure and amendments in light of the overriding objective to deal with cases justly and at proportionate cost. It acknowledged the complexity of the case and the significant asymmetry of information between the parties, particularly given the allegations of fraud and misconduct.

Regarding disclosure of documents held by the asset manager and conveyancing solicitors, the court concluded that these documents were likely relevant to key pleaded issues, including the alleged undervalue sales and the Defendant’s alleged interference. However, the court was not persuaded that the UMA created an agency relationship sufficient to bring those documents within the Defendant’s control for disclosure purposes. The contractual terms and the practical realities indicated that the Defendant lacked a present enforceable right to obtain those files. Consequently, the court refused to order disclosure of those documents by the Defendant.

On the proposed amendments to extend LIBOR misrepresentation claims to the Original Trades, the court found that these amounted to a new case which could and should have been pleaded earlier. The amendments would necessitate extensive further disclosure and expert evidence, causing significant prejudice and likely adjournment of the trial. The Plaintiff failed to justify the lateness of this application, and the court refused permission to amend.

Conversely, the court allowed the Plaintiff to amend to plead claims for rescission limited to the Replacement Trades, finding that the additional evidence required was manageable within the existing timetable and the prejudice to the Defendant was minimal.

In relation to numerous categories of additional disclosure sought by the Plaintiff, the court applied the principles of reasonableness, proportionality, and necessity under the disclosure pilot scheme (PD51U). It ordered limited additional disclosure where the documents were likely relevant to key issues and proportionate to require, including documents relating to certain decision-makers and governance groups within the Defendant’s organisation. However, many broad or fishing requests were refused as disproportionate or irrelevant to pleaded issues.

The court emphasized the importance of finality and the need to maintain the trial date, dismissing the Plaintiff’s application to adjourn the trial. It noted that the rejected applications would have required adjournment, but since they were refused, no grounds existed to vacate the trial date. The court also declined to pre-emptively adjourn the trial pending possible future applications for disclosure of third-party documents.

Finally, the court criticized the parties for lacking cooperation and realism, resulting in wasted resources. It directed the parties to cooperate fully, comply promptly with disclosure orders, and focus on the core issues to prepare for trial within the existing timetable. The court indicated a revised trial length of approximately eight weeks, including judicial pre-reading and closing submissions, and invited the parties to agree a timetable or submit further proposals.

Holding and Implications

The court granted permission for the Plaintiff to amend its pleadings to include rescission claims limited to the Replacement Trades.

The court refused permission for the Plaintiff to amend its pleadings to extend LIBOR claims to the Original Trades and dismissed other amendment applications.

The court dismissed the Plaintiff’s application for disclosure of documents held by the asset manager and conveyancing solicitors, finding no control by the Defendant.

The court granted limited additional disclosure orders relating to specific internal documents and custodians within the Defendant’s organisation, and granted one application for further information.

The court dismissed all other applications for additional disclosure and further information, and refused to vacate the trial date.

The direct effect of this decision is that the trial scheduled for 15 January 2020 will proceed as planned, subject to the limited amendments and additional disclosure permitted. The ruling underscores the court’s strict approach to late amendments and disclosure requests, emphasizing the need for clarity in pleadings and proportionality in disclosure. No new legal precedent was established; rather, the court applied established principles to the facts before it.