In its judgment handed down on Monday (22 July 2024), the Court of Appeal (Bean LJ, Phillips LJ and Snowden LJ) has upheld Freedman J’s decision to dismiss summarily deceit claims for nearly £100 million brought against National Westminster Bank (“Natwest”) by its ex-customers, Mr and Mrs Riley (the “Rileys”). The case primarily concerned the enforceability of a settlement agreement in the face of fraud allegations and the Court of Appeal emphasised the strong policy reasons why settlement agreements should be upheld.
Natwest was represented by Paul Sinclair KC and Laurie Brock.
The Rileys alleged that between 2009 and 2012 Natwest had made various representations to them and to a company called Riley Holdings Limited (“RHL”), including that Natwest intended to support and/or rehabilitate RHL and return it from its Global Restructuring Division (“GRG”) to ‘mainstream’ banking. The Rileys alleged that these representations were false and fraudulent because, in fact, Natwest had classified RHL as a ‘Non-Core’ customer and had already determined an intention to ‘run down’ (and seek to profit from) RHL and then exit the relationship.
Natwest, which denied the claims at every level, sought summary dismissal on two grounds: (1) that the claims had been compromised by reason of a prior Settlement Deed between the parties (the “Settlement Issue”); and (2) that the claims were time-barred (the “Limitation Issue”).
Freedman J found in favour of Natwest on the Settlement Issue (and therefore dismissed the claims) but found that the Rileys had an arguable case on the Limitation Issue. The Rileys appealed on the Settlement Issue and Natwest cross-appealed on the Limitation Issue.
On the Settlement Issue, each of the Rileys’ five grounds of appeal were dismissed, with the Court of Appeal concluding that:
- the case was strikingly similar to Maranello Rosso Ltd v Lohomij BV and Ors [2022] EWCA Civ 1667, which made it clear that the decision in Satyam Computer Services v Upaid Systems [2008] EWCA Civ 487 “should not be read as support (even obiter) for the proposition that express words are always, or even generally, required to release a claim in fraud” (see [74]);
- there were strong policy reasons why settlements should be upheld; and it was no part of the court’s function to frustrate the intentions of contracting parties once those had been objectively ascertained (see [76]);
- the doctrine of ‘sharp practice’ did not assist the Rileys on the facts (see [77]-[79]); and
- the fact that Mr Riley was claiming in part as assignee from RHL (which had not been party to the Settlement Deed) made no difference, with the case being distinguishable from Kazeminy v Siddiqui & Ors [2012] EWCA Civ 416 (see [80]-[83]).
On the Limitation Issue, the Court of Appeal unanimously disagreed with Freedman J’s conclusion that it was arguable that the Rileys could not have pleaded their claim in deceit prior to 7 October 2016 (the agreed limitation ‘cut-off’);
- The Court of Appeal accepted “the kernel” of Natwest’s submission on its cross-appeal that (inferred) knowledge of RHL’s classification as a ‘Non-Core’ customer was not essential to the deceit claim, which could have been pleaded by reference to matters of which the Rileys were aware (and had indeed alleged and/or adopted) by 2014 (see [73], [87]-[88]).
- Thus, the Court of Appeal indicated that, had Natwest not already succeeded on the Settlement Issue, it would have succeeded on the Limitation Issue.
The judgment is available here.