James & Anor v HSBC UK Bank PLC (Rev1)

Factual and Procedural Background

The Plaintiffs brought a claim in the Bristol District Registry of the High Court against the Defendant (Company A), a retail bank, arising from an account opened in the name of the female Plaintiff in about 2004 (the "Loan account") that the Plaintiffs allege was never authorised. The Plaintiffs allege transfers from their joint accounts to that Loan account between 2005 and 2008, a subsequent default registration, and later collection activity. The Plaintiffs pursued complaints to the Defendant, made two data-subject access requests (SARs), complained to the Ombudsman (unsuccessful), obtained expert review, and issued proceedings in October 2022 seeking declarations, injunctions, restitution, damages and interest.

The Defendant applied for summary judgment or to strike out the claim on grounds of no reasonable cause of action and limitation. The application was first heard by Judge [Blohm] on 23 October 2023 (oral judgment). Judge [Blohm] largely accepted the Defendant's submissions, but invited further submissions on a possible constructive trust argument. After further written submissions and a second hearing on 17 July 2024, Judge [Blohm] declined to re-open the first judgment, refused the Plaintiffs' application to amend the Particulars of Claim, struck out the entire claim by order dated 23 July 2024 and ordered the Plaintiffs to pay costs. Permission to appeal to the Court of Appeal was granted by Judge [Warby]; the appeal was heard and dismissed.

Legal Issues Presented

1. Whether Judge [Blohm] was wrong not to re-open his first judgment under the AIC jurisdiction (the "AIC/Barrell" jurisdiction).
2. If so, whether Judge [Blohm] made a mistake in interpreting the Defendant's letter of 31 July 2013.
3. Whether any alleged mistake would have affected the Judge's conclusion on limitation (that time started to run in 2013).
4. Whether the Judge's conclusion that time started to run in 2013 was open to him on the evidence before him.
5. Whether that conclusion was incorrect for alternative or additional reasons.
6. Whether the Judge was therefore wrong not to amend the first judgment.

Arguments of the Parties

Plaintiffs' Arguments

• The Judge should re-open his first judgment under the AIC (Barrell) jurisdiction because he had misunderstood the 31 July 2013 letter.
• The proposed amended Particulars of Claim identified causes of action not previously pleaded: (a) breaches of contract (acting only on instructions; reasonable skill and care), (b) a constructive trust over monies removed (or their traceable proceeds), and (c) an alternative proprietary restitutionary claim (victim remained owner of stolen money).
• Those proposed causes of action would be subject to limitation only if time had started to run earlier; the Plaintiffs argued they did not have sufficient knowledge to begin time running until later (relying on the SARs and expert report) and invoked s.32 Limitation Act 1980.

Defendant's Arguments

• The pleaded claims in deceit/fraud disclosed no reasonable cause of action: deceit requires a representation relied on to the claimant's detriment and the Plaintiffs plainly did not rely on any representation.
• Claims in malicious falsehood (traducing/credit damage) are subject to a one-year limitation and are therefore time-barred on the Plaintiffs' own case.
• The constructive trust and restitutionary claims (as pleaded or as proposed) are, in any event, subject to limitation; the Plaintiffs had enough knowledge by 2013 for time to run under s.32 LA 1980 such that any fraud-based postponement had ended.
• The Judge was not shown to have made any mistake in interpreting the 31 July 2013 letter and, even if he had, he would have reached the same conclusion on limitation and would not re-open the judgment.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court analysed the pleaded causes of action and limitation as follows:

1. Deceit/fraud: The Judge and the Court accepted that "fraud" is descriptive of behaviour but that the actionable tort is deceit, which requires a false representation on which the claimant relied to their detriment. The pleaded false representations did not show that the Plaintiffs were deceived or relied to their detriment; therefore the deceit claim disclosed no reasonable cause of action and was correctly struck out.
2. Malicious falsehood/credit damage: Such a claim would attract a one-year limitation and on the Plaintiffs' own case was statute-barred.
3. Constructive trust/restitutionary proprietary claims: Judge [Blohm] considered there was an arguable case that documents (eg the CARM report) were false and that a constructive trust or proprietary restitutionary claim might be available in principle. The Judge initially left that issue open and invited further submissions because the application of proprietary remedies to transfers involving bank account balances raised difficult questions.
4. Limitation under s.32 Limitation Act 1980: Judge [Blohm] concluded that, on the facts known to the female Plaintiff by 2013 (knowledge that a loan had been recorded in her name, that she had not received the money, that transfers of £25,000+ had been made from the joint account, and that there were records of a purported repayment arrangement that the Plaintiffs said did not exist), a person exercising reasonable diligence could have discovered the fraud by 2013. Those primary facts, read together, were such that an inference of fraud was more likely than innocence and therefore time started to run in 2013 such that the proposed claims were, in substance, statute-barred.
5. Re-opening under the AIC/Barrell jurisdiction: The Plaintiffs sought to re-open the first judgment on the basis that Judge [Blohm] had misread the 31 July 2013 letter. The Court examined the letter's pages and the plausibility of the asserted misreading but concluded that, even if the Judge had been misled on that point, he would have reached the same conclusion on limitation when the matter was considered afresh. Accordingly, re-opening was not warranted and the earlier decision stood.

Holding and Implications

APPEAL DISMISSED

Direct effects:

• The Court of Appeal upheld Judge [Blohm]'s decisions: the claim was struck out in its entirety; the application to amend the Particulars of Claim was dismissed; the Plaintiffs were ordered to pay costs and permission to appeal was refused by the lower court and the appeal was dismissed on its merits.
• The Court affirmed that the deceit claim failed for want of the necessary reliance element and that, on the pleaded facts, time began to run in 2013 so that the proposed proprietary claims could not be saved by s.32 on the material before the Judge.

No broader legal precedent was established by the decision: the Court applied existing authorities on pleading dishonesty, limitation and the AIC/Barrell jurisdiction and reached conclusions on the facts and law as applied to this case.