Warner Retail Ltd v National Westminster Bank
2014
CHANCERY DIVISION
United Kingdom
CORAM
- MRS JUSTICE ROSE DBE
Areas of Law
- Civil Procedure
- Banking and Finance Law
- Contract Law
2014
CHANCERY DIVISION
United Kingdom
CORAM
AI Generated Summary
Warner Retail claimed negligent advice from a bank regarding interest rate swaps and sought over £800,000 in damages. They requested expert testimony, but the court rejected the late application, maintaining the original trial schedule.
Judgment
MRS JUSTICE ROSE:
This case concerns an allegation of mis-selling of interest rate swaps to a small family business, Warner Retail. It is a claim based on an allegation that the banks, which are the Defendants, gave negligent advice to the Claimant in June 2006 and November 2007. It is alleged that the bank assumed an advisory role, and gave advice negligently, or gave advice in breach of contract. The Claimant relies on an alleged breach of regulatory rules that applied to the banks at the time. These rules are relied on as informing the standard of care that the bank was required to achieve.
Those rules, I am told, were drafted in very broad terms, so that on the facts of a particular case, the Claimant says, the evidence of an independent expert as to how those very broad principles of guidance are applied in the market by banks, is essential to enable to court to understand properly what the yardstick is that the court is going to be asked to apply as regards the standards expected of the Defendants at the time. If there is, and the Claimants says there is, a recognised body of expertise out there in the market, and if their proposed witness is one of that body, that may well assist the court in establishing whether there has been a breach of the duty of care.
As regards the value of the claim, as pleaded it is in excess of £800,000 as at the date of the Particulars of Claim. That is the amount that had been paid under the swap agreement over and above what the bank had been paid under the loan itself. These were bank cancellable swaps, which are different from so-called ‘vanilla’ swaps, because the bank can, before the end of the term of the agreement (which was 15 years in both cases here) terminate the agreement at the end of any quarter after the 5th anniversary. Under a vanilla swap that ability to cancel is not present and it is simply a fixed term arrangement. The option to terminate given to the bank under a cancellable swap has consequences for the amount of money paid under the swap, because a client pays slightly less under the cancellable swap than it would pay under the vanilla swap. If the Claimant is not successful in this litigation, these agreements will remain in force for the next seven or eight years unless the bank decides to cancel them sooner.
The Claimant alleges that it would not have entered into the bank cancellable swap, or even into a vanilla swap, if it has been properly advised, but would instead have entere