England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Rolls Building 7 Rolls Buildings Fetter Lane EC4A 1NL
		21st May 2014

1. THE MASTER: The claimant, Mr Parvizi, commenced his claim quite a long time ago, in June 2013, and in the bundle are the statements of the case of the parties. In fact the particulars of claim succinctly sets out the claim that Mr Parvizi makes. A defence was filed in due course and, perhaps not without some materiality, standard disclosure has been given by both the claimants and defendants; that was back in November of last year. In fact the defendants' list came last, on 29 November, and then on 17 February there is the application notice with which I am concerned, which seeks an order that Mr Parvizi's claim should be struck out as disclosing no reasonable grounds of bringing the claim and, alternatively, for summary judgment.
2. The matter then comes on for hearing today. Evidence has been filed by Samantha Walley, to which I will refer in more detail, by Mr Hughman, who is the partner in the claimant's solicitors, who has the conduct of the claim, and indeed by Mr Parvizi himself, as well as by Mr Garton.
3. So, as I say, the application comes before the court today. Disclosure has taken place. It is a very serious case as far as Mr Parvizi is concerned, because he was denied access to his funds at a critical time, and if he had had access to his moneys his case is that there would have been considerable gains available to him by his betting activities, and so he suffered, very considerably, by reason of the activities of Barclays Bank.
4. Both counsel have taken me to the relevant law and I do not discern any considerable difference between them. I was taken, helpfully, to the underlying statute of the Proceeds of Crime Act 2002 and, perhaps in particular, I was taken to the case in the Court of Appeal sitting in its Criminal Division, R v Da Silva [2006] EWCA Crim 1654. The importance of that case is that it sets out a number of matters relating to the question of suspicion, and in particular I was referred to paragraphs 8, 15 and 16 of that judgment:

"16. What then does the word 'suspecting' mean in its particular context in the 1988 Act? It seems to us that the essential element in the word "suspect" and its affiliates, in this context, is that the defendant must think that there is a possibility, which is more than fanciful, that the relevant facts exist. A vague feeling of unease would not suffice. But the statute does not require the suspicion to be 'clear' or 'firmly grounded and targeted on specific facts', or based upon 'reasonable grounds'. To require the prosecution to satisfy such criteria as to the strength of the suspicion would, in our view, be putting a gloss on the section. We consider therefore that, for the purpose of a conviction under section 93A(1)(a) of the 1988 Act, the prosecution must prove that the defendant's acts of facilitating another person's retention or control of the proceeds of criminal conduct were done by a defendant who thought that there was a possibility, which was more than fanciful, that the other person was or had been engaged in or had benefited from criminal conduct. We consider that, if a judge feels it appropriate to assist the jury with the word 'suspecting', a direction along these lines will be adequate and accurate."

5. It is apparent from that paragraph, as is stated by the Lord Justice, that the suspicion must be more than fanciful; that a vague feeling of unease will not suffice. But, as he says, the statute does not require the suspicion to be clear or firmly grounded and targeted on specific facts or based upon reasonable grounds. That of course is in the context of what the prosecution would need to satisfy the court and the jury about in relation to an indictment dealing with charges under the Act.
6. I was referred to the case of Shah v HSBC Private Bank (UK) Limited [2012] EWHC 1283, which also had, in the Court of Appeal, as part of its composition Longmore LJ. That case has been referred to by both counsel as the first Shah case. It is important in both establishing the question of principle, namely that there was a possibility which was more than fanciful, but it is also important in establishing that it is for the bank, who is after all asserting suspicion, to establish the primary fact of the suspicion in order to justify not following the customer's instructions.
7. The position there was that unidentified people in the bank had entertained a suspicion and the Court of Appeal was of the view that the bank was required to prove the important fact of the suspicion in the ordinary way at a trial by first making relevant disclosure and then calling either primary or secondary evidence from witnesses. The court was examining this in the context of a summary application.
8. At paragraph 21 Longmore LJ under discussion deals with relevant principles, following the reasoning in the Da Silva case, to which I have made some reference. The Lord Justice avers that the court founded its conclusion that the relevant suspicion need not be based on reasonable grounds. Importantly, the court goes on to consider the summary judgment aspect of the claim and it does so in paragraph 24 onwards of its judgment. Clearly the court was very concerned that the submissions that were being made to it by counsel might be thought to be giving, if accepted, carte blanche to banks to decline to execute their customers' instructions without there being a real court investigation of the process, and thus it was important that there should be judicial oversight, not least at the summary judgment stage. But the court accepted the judge's conclusions that rationality, antecedent negligent mistake and mechanically generated suspicion could form no part of any trial between the parties, and it does so at paragraph 33 of that judgment.
9. I accept that a claim by a customer that its bank has failed to carry out instructions will be usually a strong claim in contract. The burden of proof that the implied term, which effectively is what is in issue here, operates because a suspicion is on the bank, because, as I observed in the course of argument, only the bank can explain its position. I have briefly referred to the witness statement evidence that has been presented. Foremost among that material is the witness statement of Samantha Walley. This is a fairly recent witness statement, 12 February 2014. It is to be observed that this type of material was not available in the Shah v HSBC private bank case summary judgment application. She explains her position in the bank, namely that she is a frontline monitoring analyst in the anti money laundering team, and she sets out a number of matters, including that she is nominated to oversee authorised disclosures relating to money laundering offences, and she also says that she was the analyst responsible for, as she puts it, evaluating the activity on the claimant's account, following the submission of an internal report – that is a report made I think by the Holborn branch of the bank – and so she explains that she made a report seeking the consent to carry out the payment instructions in question here. She explains the timeline that she was dealing with, namely that on 11 June she received a telephone call from the branch, and then no doubt further consideration was done the next day, as she suggests. In fact we know that she made her report very shortly before midday on 12^th. She explains what she did, and I shall not set this out in any detail as it is sufficiently set out by her, but she reviewed Mr Parvizi's customer profile and so she got certain personal details there. One of the matters that apparently struck her was that his annual gross income is recorded as £150,000, but the credit turnover in his account in the three years as set out, and in the year to June 2013, was set out by her in paragraph 12. She then explains that she considered the activity on the count by looking at his bank statements. She evidently considered that there was significant gambling activity, and says so. She said there were several large transfers of moneys to gaming companies together with payment references that denoted gambling.
10. Paragraph 14 of Ms Walley's witness statement is something that both counsel have referred me to, where she refers to gambling activities and where she says that gambling can give rise to a suspicion if the source of the underlying flow found in a customer's account cannot be established. Ms Walley says that she tried to establish the source of funds coming into the account, and she refers to four transactions, from Mr Garton, Mr DeWolf and Mr Kari and another one from Mr Garton.
11. Ms Walley says that she also carried out a Google search and she read a number of articles from various sources about Mr Parvizi, and she says she found out that he had been investigated by the Financial Services Authority. She says that before submitting a Consent SAR to SOCA, she became aware of the bank's systems that the bank was holding monies under restraint in a savings account. She says that did not have any bearing on her decision to make an authorised disclosure report to SOCA.
12. She then summarises her grounds, one of which, in paragraph 22, is that could not establish any connection between the payers identified and Mr Parvizi and that he had been subject – something which I referred to earlier in her witness statement – to an investigation by the FSA. She says, and I mention this so as to get it out of the way because it is not material, that she had no knowledge of apparently some altercation that Mr Parvizi had when he visited the Hatton Garden branch of the bank.
13. So, as I say, there is a witness statement going into some detail by a responsible officer at the bank. I tend to agree, with respect, with Mr Bodnar, that, if one analyses closely the grounds of this lady's suspicions, there may be said to be a lack of complete coherence in her reasoning, although I am not sure that it is in any way determinative. It may well not be for this court to make this observation but I am surprised, for example, that she did not take the obvious step of making an inquiry to Mr Parvizi's relationship manager.
14. Mr Bodnar, both in his submissions and in his skeleton argument, refers to a number of problems or inconsistencies or lack of sufficiency in the explanation that Miss Walley gives. For example, he points out that she appears to rely, at least in part, on transfers executed by other customers of the defendant bank, one of whom is described in her manuscript as very wealthy. Mr Bodnar says that in effect, therefore, she is asserting that she suspected that funds from these individuals were in some way the proceeds of crime and that those customers were in some way involved.
15. Perhaps of more strength, with respect, Mr Bodnar observes that while Miss Walley deals with Mr Parvizi's gambling activities, the gambling activity is not in itself evidence of money laundering, as she says. But he submits she appears to give no indication of how she formed the suspicion that his gambling activity constituted, or might have constituted, suspicion of money laundering. After all, this was the account of Mr Parvizi, a well-established gambler. The transactions were, as a brief analysis of the pages in the bundle of his current account shows, with reputable bookmakers, and, as I say, with customers, two of whom are customers of the bank. Ms Walley, he submits, gives no indication of how she formed the suspicion that those activities in this particular way could have supported her suspicions. She did of course refer to the article of proceedings taken by the FCA against Mr Parvizi.
16. What is strange perhaps is that, notwithstanding what Ms Walley says in her witness statement, and notwithstanding what is said in the rather sketchy handwritten notes of hers, is, at least arguably, not entirely the same as the content of her report to the authorities. She does say that the account sees large gambling activities with multiple transfers to and from PP online and refers to large transfers from third parties, of which she sets out the names. Then she says that her reason for suspicion is due to articles relating to Mr Parvizi in which he is involved in insider trading, and an investigation by the FSA is taking place. But of course it is true, as I am reminded correctly by Mr Medcroft, that this documentation, in particular her handwritten notes, were not envisaged as documents that would be pored over, so to speak, by the lawyers.
17. The position, however, is that there is, at least arguably, a lack of reasoning in some of what she says, one is the fact that the majority of credits were from established bookmakers, and that four receipts from the individuals, and three of the four receipts, or possibly two of the four receipts, came from customers of the bank.
18. So Mr Bodnar can, with some legitimacy, attack the comprehensiveness of the reasoning that is set out by Miss Walley in support of her suspicion. However, as it appears to me, the evidence that she has produced establishes a clear belief by her of a relevant suspicion, and I am not able, I think, on balance to conclude that that is simply fanciful. The decision of the Court of Appeal in Shah, the Court of Appeal in the criminal case, clearly establishes the nature of the suspicion and its limits.
19. I have concluded, not without some hesitation, that in this case there is no real prospect of Mr Parvizi establishing at trial that Miss Walley did not have a relevant suspicion and a suspicion which was more than fanciful, even though, as I say, it is open to attack upon a nice examination of some of what she says.
20. For example, she does give some detail of what she did, including that she could not establish any connection at the time between the payers identified by her and Mr Parvizi. Now, as I say, that could have been the subject of further examination, no doubt time permitting. But she could not establish at the relevant time any connection between those individuals and Mr Parvizi, so I therefore use that as an example, but only an example, why I am driven to conclude that there really is no prospect of saying that this was simply a fanciful foray of Miss Walley which led her to report to SOCA.
21. I do think perhaps, with respect if I may say so, that one might have expected more coherence and detail in the report that had been in fact provided to the authorities, but there we are. So although I do accept that this is a most important case for Mr Parvizi and he probably has suffered financially as a consequence, it does seem to me that this is a case where, really and truly, there is no reason why this case should proceed to trial. There are no real prospects of success and, alternatively, the claim should be struck out.
22. It is difficult to see at trial what further could be really usefully investigated. There has been disclosure; there was not in fact disclosure in the Shah v HSBC case. I suppose there could be an investigation about reasonableness, but then one falls back on the problems because the authorities give definition of suspicion and its scope; it is set out by the Court of Appeal in the two cases to which I have made reference.