England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM SOUTHAMPTON COUNTY COURT
(His Honour Judge Rudd)

		Royal Courts of Justice Strand, London, WC2A 2LL Tuesday 23rd January 2001

LORD JUSTICE HENRY:

1. Mr Turner's dispute with his bank, the Royal Bank of Scotland plc ("the Bank") has a long history. A summary of that history is to be found in the judgment of Chadwick LJ in Turner -v- Royal Bank of Scotland [2000] BPIR 683 at 684B to 692D.
2. We are here concerned with what Chadwick LJ referred to as the Southampton action where by proceedings commenced on 18th September 1995:

"... Mr Turner asserted that the Bank had (in 1986, 1987 and 1988) disclosed information about his affairs to National Westminster Bank plc which was misleading, malicious and false, with the intention that such information would injure him. He claimed, first, damages for breach of the Bank's contractual duty of confidence; and second, damages in tort for a breach of a duty of care 'not to knowingly or recklessly injure the plaintiff's commercial interests'. Subsequently, Mr Turner added a claim in conspiracy, based on the assertion that the Bank had agreed with other bankers to ignore obligations of confidentiality and to pass confidential information about their customers to credit information agencies. He put the amount of the damages which he had suffered at £567,000. Subsequently, he has increased the amount of that claim to a figure which is a little over £16 million." (ibid at 685E)

3. The three heads of claim there referred to were separately tried. The first had concerned the Bank's practice of giving credit references about the claimant to another bank without Mr Turner's knowledge or consent. This was held, by His Honour Judge Rudd and the Court of Appeal (see Turner -v Royal Bank of Scotland plc [1999] Lloyds Rep Banking 231) to be a breach of the contractual duty owed by the Bank to its customer. The second claim investigated the tortious liability of the Bank to Mr Turner in respect of the same series of banker's references (HHJ Rudd's judgment of 14th April 1999 which is now appealed to us by Mr Turner, and which we consider next). The third claim, by amendment, alleges conspiracy amongst certain clearing banks who pass information to certain credit reference agencies ("the conspiracy claim"). His Honour Judge Rudd dealt with this by his judgment of 1st September 1999, and the application for leave to appeal the order arising out of this judgment is also before us, and will be dealt with by us after the second claim.
4. The issue in the second claim is not made clear by the wording of paragraphs 11 and 12 of the Re-Amended Particulars of Claim in the Southampton action. There the paragraphs read:

"11. Also the Defendants had a Common Law duty of care in Tort not to knowingly or recklessly injure the Plaintiff's Commercial or personal interests.

12. In breach of the said Terms of said Contract and duty the Defendants made communications dated 19th March 1986, 11 March 1987, 18 March 1987, 6 September 1988 with the National Westminster Bank PLC. The Defendants concealed the communications from the Plaintiff and the Court further the communications contained misleading and or malicious and or false words and or phrases knowing that and intending that the said words and or phrases alternatively that the concealment of the said words and or phrases would injure the Plaintiff."

5. These two paragraphs did not clearly identify torts, or even Mr Turner's real complaints. But the judge, assisting a litigant in person, albeit it a very experienced and articulate one, assisted Mr Turner to develop his claim in the way that seemed most promising. The judge defined the emergence of the point in this way:

"During the course of argument, Mr Turner has abandoned any suggestion of tortious liability based on deceit or malicious falsehood, and the claim proceeded on the basis of negligent misrepresentation. This basis was further refined and restricted solely to the reference given in March 1986. There were other references given in respect of Mr Turner after this date, but Mr Turner accepts that those references are accurate and could not in those circumstances amount to a negligent mis-statement.

The issue, therefore, arising from paragraphs 11 and 12 of the Particulars of Claim is this: was the reference given by the Royal Bank of Scotland to the National Westminster Bank a negligent mis-statement, and therefore a breach of some duty of care owed by the Royal Bank of Scotland to Mr Turner and which breach occasioned Mr Turner financial loss."

6. The March 1986 reference arose in this way. Mr Turner was a customer of the Bank, and one of the directors of a private company called Foxonwheel Limited. This was a company which repaired heavy plant. The company's banker was the National Westminster. For the details of the request for a reference and the reason for it, Mr Turner did not provide the judge with any contemporaneous documentation, but simply gave him an account (including hearsay evidence of what the bank manager involved at the National Westminster would say were he called to give evidence, which he was not). So the judge noted that he was dependent on Mr Turner's account, but made no complaint of that.
7. Mr Turner told him that Foxonwheel wished to purchase new and larger premises. The building they had in mind cost £145,000. At that time the company had been trading for a few years, but had never made a profit or paid directors' fees. Its share capital was £2 and it did not appear to have any assets of a substantial nature. This unpromising financial background meant that the company required a loan of 100% of the purchase price. In considering the loan transaction, the National Westminster indicated that it would require a director's guarantee from Mr Turner. It was against that background that they wrote to the Bank and asked for that bank to give a reference in respect of whether or not Mr Turner was good for a guarantee of £145,000. The Bank replied that Mr Turner was

"... respectable and trustworthy, but from the figures available to us his resources appear to be fully committed at present."

8. Mr Watson gave evidence for the Bank. The judge accepted him as a truthful witness. Mr Watson explained to the judge that the words of the reference could not be wholly taken at face value. The Bank had a "... glossary of frequently used phrases", for the assistance of their staff dealing with status enquiries. The 1993 version of that publication (the nearest to the reference date available) suggests that "respectable" is to be read as "satisfactory" and "fully committed" implies "accounts at limit or overdrawn or most or all assets pledged in security - may also suggest a lack of liquid funds". He said that "resources" meant immediate funds, that is liquid or realisable assets which could be pledged as a security. He distinguished assets from resources in that assets were not something which the owner had an immediate call upon. It is clear that the judge accepted that evidence, and read the reference accordingly.
9. In the event, for whatever reason, National Westminster did not lend Foxonwheel £145,000 or any sum, Foxonwheel never purchased the property, and according to the judge (but I believe challenged by Mr Turner), went into liquidation.
10. Mr Turner put his case this way. Only a few months before the reference in question the Bank had, in an internal document, described him as being "... a gentleman of some considerable substance ...". They should have so referred to him in the March 1986 reference. If they had, then the loan would have been forthcoming, the new premises would have been purchased and the profitability of Foxonwheel would have been such that that company would have been able to pay Mr Turner not less than £9,000 per year in director's fees.
11. The judge first considered whether the Bank should have described the claimant in March 1986 as "... a gentleman of ... substance ...". The judge found that by that date the picture had changed:

"By March 1986 Mr Turner was at or beyond the limits of his overdraft and had not paid monies into his Royal Bank of Scotland accounts for some considerable time. There was a history of returned cheques on his account and a history of promises which had not been kept in respect of payments. Mr Turner was part-owner of some land and was hoping to obtain compensation in respect of a compulsory purchase order. The Bank had a letter of comfort from his solicitors dealing with the compulsory purchase matter. Mr Turner regarded these 'assets' as giving the Bank considerable security in respect of his affairs. The Bank clearly thought otherwise."

12. Against that background it clearly would have been irresponsible to say the least for Mr Watson so to describe Mr Turner. Indeed, the judge went on to consider the accuracy of the reference that was actually given. He concluded that the enquirer at the National Westminster would have understood the reference in the same way as Mr Watson had explained it to the judge, and he concluded:

"Bearing in mind the banking status of Mr Turner with the Royal Bank of Scotland and on the assumption that the enquiry was for a guarantee in respect of £145,000, the reference was a perfectly accurate statement of the Bank's belief and was clearly based on information then available to the Bank, namely the current banking status of Mr Turner. I am quite satisfied that the reference given by the Bank and the subject matter of this cause of action was neither negligent nor a mis-statement."

That was a conclusion of fact that the trial judge was entitled, indeed driven, to reach.

13. That finding was fatal to Mr Turner's claim for negligent mis-statement. But it does not end there. For the claim to succeed, the claimant would have to show that he had suffered loss as a result of the negligent reference given. That would in practice mean that he lost director's fees that otherwise he would have earned. The judge properly examined the evidence before him as to the financial prospects of Foxonwheel. The evidence he had was not based on any contemporary documentation. Though Mr Turner satisfied the judge of his personal belief that the prospects of Foxonwheel were good, the judge found that his evidence as to the prospects of the company was speculative and unsupported by any objective material. He analysed the business plan that Mr Turner had put before him which showed that

"Hardly surprisingly, ... given certain assumptions, the company would be able to repay both the capital and interest element of the loan of £145,000 over a commercial period and that it would generate profits."

14. He examined the two further assumptions that the success of the enterprise required and concluded:

"Put at its best, the material in respect of Foxonwheel making a profit is highly speculative and whether having made such a profit it would have been in a position to pay Mr Turner director's fees or prepared to pay Mr Turner director's fees is even more speculative. There is nothing by way of substantive evidence to support the claimed financial prospects of this company and in consequence no substantial evidence to support Mr Turner's claim on the balance of probabilities that he would receive any or substantial director's emoluments."

15. Accordingly the judge concluded that Mr Turner had failed to establish on balance of probabilities that he had sustained any financial loss as a result of the giving of the reference. Again, that is a finding of fact which the judge was entitled to make. There is nothing to show that the judge misdirected himself in arriving at it, and it is fatal to this head of damage.
16. Additionally, Mr Turner seeks to rely on a tort of "concealment". That arose in this way. He discovered about the references that were sought and given without his knowledge and consent more than six years after the date of those references. In his Particulars of Claim in the Southampton action he relied on Section 32 of the Limitation Act, 1980 which, so far as is relevant provides:

"... where in the case of any action for which a period of limitation is prescribed by this Act, either-

a) the action is based upon the fraud of the defendant; or

b) any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant ...

the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it."

17. The defendants accepted that Section 32 applied, and took no limitation point. This confirmed in Mr Turner's mind that there was such a tort. The judge was clearly satisfied that there was no such tort, and no such route to the damage claim that the judge properly investigated. We agree with him. We do not see how Mr Turner could recover under this head damages additional to any recoverable under Head 1 for damages for breach of the Bank's contractual duty of confidence.
18. We are satisfied that the judge teased out of Mr Turner the best way of putting his case. We are prepared to assume (while not deciding) that the Bank owed Mr Turner a duty of care in negligent mis-statement. But we are satisfied that there was no breach of that duty, and that Mr Turner has failed to establish any financial loss under any head of damage additional to any damage recoverable under Head 1, contractual breach of confidence by the Bank. Accordingly, I would dismiss this appeal. Since writing this judgment, I have read the judgment of my Lord, Lord Justice Kay which follows: I agree with it.


 


LORD JUSTICE KAY:

19. I agree with the judgment of my Lord, Lord Justice Henry in respect of this appeal, and deal with the separate application for permission to appeal referred to in paragraph 3 of his judgment.
20. This application relates to the third claim which alleged conspiracy amongst certain clearing banks who pass information to certain credit reference agencies. The matter was dealt with by His Honour Judge Rudd who rejected this claim.
21. The conspiracy alleged is pleaded in the particulars to paragraph 15 of the Amended Particulars of Claim which reads:

"(a) Defendant and other bankers agreed to en masse to ignore and break Bankers confidentiality code contrary to that part of Common Law usually referred to as the Tournier Rules.

(b) They agreed to pass confidential information to Credit Information Agencies concerning such of their customers as their diverse employees thought fit.

(c) Each Banker agreed not to do business with any person registered with the Credit information by another Banker."

22. The Bank made admissions that there was an agreement related to particulars (a) and (b). By its Amended Defence, it admitted

"The defendants, together with certain other Banks, took a decision in or about May 1988 that in future they would supply to certain Credit Reference Agencies information about debts which were in default, where no security had been given and no satisfactory reports received from the customer within twenty-eight days of a formal demand for repayment."

23. No similar admission was made as to particular (c).
24. The factual basis of this claim is that in 1991 Lloyds Bank PLC which was a party to the agreement supplied details of an account which Mr Turner had with Lloyds Bank, which it was alleged was in default, to a Credit Reference Agency.
25. Mr Turner then applied to the Midland Bank PLC, also a party to the agreement, to open an account. Once Midland Bank learnt of the matter reported to the Credit Reference Agency it refused him banking facilities and according to Mr Turner, made it clear that no other Bank would grant him banking facilities in the circumstances.
26. Despite repeated efforts, Mr Turner has been unable to obtain banking facilities since that date and claims that this has caused him pecuniary loss.
27. The judge on the evidence found (at page 10 of his judgment) that the Bank and eight other banks:

"...entered into an agreement, the terms of which were that they would mutually supply to certain Credit Reference Agencies "information about debts" which were:-

(1) Normally up to £5,000

(2) In default

(3) Where the Bank had no security; and

(4) Where no satisfactory response had been received from the customer within 28 days of formal demand for repayment"

28. The judge made no finding of any wider agreement and it seems inherent in what he said as to the evidence of Mr Watson, a Business Manager employed by the Bank, that he rejected the contention that the Bank was a party to any agreement whereby banking facilities would be refused by any bank which was a party to the agreement simply because an adverse report from another party was recorded by a credit reference agency. The judge found (page 11 of his judgment):

"I accept the evidence of Mr Watson as to the operation of credit scoring systems. I accept his evidence that the registration of a default by one Bank pursuant to the 1988 agreement would not produce a "decline" result on The Royal Bank of Scotland's credit scoring system. I accept his evidence that a warning would be thrown up by the system and that the Bank would require further information before accepting or declining the account."

29. Having concluded that there was an agreement, the judge went on to consider whether there was an actionable conspiracy. He concluded that, subject to the issues of whether there was a duty of confidentiality and whether there was any breach of such a duty, the mutual agreement to induce breaches of contract would have amounted to an actionable conspiracy. If there was an actionable conspiracy, then the conspirators including the Bank would be jointly and severally liable for acts done pursuant to the conspiracy.
30. The Bank accepted that Lloyds Bank owed Mr Turner an implied duty of confidentiality of his accounts but argued that the duty was not an absolute one. It contended in respect of that duty, inter alia, that the duty did not apply so as to prevent Lloyds Bank from supplying information when there was a duty to the public to disclose or when the interests of the bank required disclosure.
31. The judge considered these arguments. He rejected disclosure where the interests of the bank required as a proper exception to the requirement of confidentiality but in respect of public interest, he reached the following conclusion:

"It follows, therefore, that as a matter of fact, I find that the information supplied in this case to the Credit Reference Agencies by the Banks was supplied pursuant to a general duty to the public and in those circumstances the duty of confidentiality did not arise. Consequently, the supply of information about Mr Turner's account by Lloyds Bank to a credit reference agency, pursuant to the 1988 agreement, was not a breach of that Bank's duty of confidentiality to Mr Turner."

32. Mr Turner's proposed appeal is directed at this finding which clearly does raise important issues that would merit the grant of permission provided that there was some prospect of Mr Turner benefiting if he was successful on this aspect of the case.
33. However, matters are raised by the Bank to suggest that even if the court concluded that the judge was wrong in this part of his judgment, Mr Turner could not benefit from such a conclusion. The first matter to be considered is whether even if liability could be established against Lloyds Bank, the Bank as a conspirator would also be liable. If not, then the point on public interest becomes wholly academic.
34. The argument advanced by the Bank in this regard is that on Mr Turner's own case, the passing of the information to the credit reference agency by Lloyds Bank fell outside the conspiracy. In his reply in an action against Lloyds Bank, Mr Turner contended that Lloyds Bank did have security for the money which he owed them in the form of a solicitor's undertaking and that he had offered alternative security which was refused. These contentions were repeated before us.
35. Thus it is argued that Mr Turner himself recognises and asserts facts which mean that the disclosure by Lloyds Bank did not fall within the terms of the agreement as found by the judge. Clearly, if Lloyds Bank acted outside the terms of the agreement, it was not an act in furtherance of the conspiracy and whilst liability may attach to Lloyds Bank, it cannot attach to any of the other banks which were parties to the agreement even if there was an unlawful conspiracy.
36. This argument would appear to be unanswerable and hence, whatever the position might be in Mr Turner's claim against Lloyds Bank (which has not been heard), he must fail in this part of his action against the Bank. Any appeal, therefore, would be academic.
37. A further matter arises in respect of the damage claimed to flow from the alleged conspiracy. Mr Turner seeks damages on the basis that once the information had been sent by Lloyds to the Credit Reference Agency there was no prospect of his gaining banking facilities. This he attributes to the third limb of the conspiracy that he alleged, namely an agreement not to offer banking facilities to anyone branded as in default by notification being given to the Credit Reference Agency.
38. However, the judge did not find that aspect of the alleged conspiracy made out. The agreement, which he found to exist, certainly in so far as it affected the Bank, did not mean automatic refusal but rather it would act as a warning requiring further consideration.
39. If that is so the Midland Bank, which Mr Turner asserts explained to him that he would automatically be refused because of an agreement to that effect, cannot have been acting in furtherance of a conspiracy with the Bank since the Bank was not a party to such an arrangement. The same would apply to any other Bank subsequently adopting the same stance as Mr Turner asserts happened.
40. This argument too would seem to be one presenting insurmountable difficulties for Mr Turner.
41. For these reasons, I would conclude that whilst the point taken by Mr Turner is one otherwise meriting the grant of permission, such a grant could only lead to the further expenditure of costs in this very protracted piece of litigation with no prospect that ultimately Mr Turner could benefit from it and accordingly permission should be refused.

LORD JUSTICE MANTELL:

42. I agree with the judgments of my Lords, Lord Justice Henry and Lord Justice Kay.
Order: Dismissed with costs summary. (This order does not form part of approved judgment)