A High Court judge has dismissed a claim brought by a property development group alleging that Barclays and consultants BDO conspired together to engineer the foreclosure of a loan.
High Court judge Nicholas Vineall QC gave summary judgment this week dismissing the claim, brought by Elite Property Holdings, Decolave Properties Limited and Travelforce Limited, as an abuse of process.
The first two companies are BVI-registered property investment businesses, while the third is a hotel operator. All three are run by a UK-based company called Norm Consultants.
The group banked with Barclays, and in September 2010 the bank replaced one of their debt products, a “structured collar” with interested rate swaps that were later found to have been mis-sold by the financial regulator.
According to the ruling, under the FSA’s redress scheme, Barclays agreed that, unless there were exceptional circumstances, it wouldn’t foreclose on any customers affected by the mis-selling until they had fished paying out out compensation. KPMG was appointed to check the agreement was complied with.
However, the companies allege that in 2013 Barclays broke the agreement.
“The Claimants’ case is that on about 4 September 2013, the Bank combined with BDO with the purpose of engineering a position whereby the Bank could foreclose on or adversely vary the Claimants’ existing facilities, thereby inflicting intentional harm on the Claimants and the Group,” the judgment said.
They say there were no “exceptional circumstances” and allege that Barclays “purported to appoint BDO as LPA Receivers” so the could work together to get foreclosure.
The allegations, but not this lawsuit, have already been considered by the Court of Appeal. The companies have already sued Barclays, not BDO, claiming a conspiracy, but last year the Court of Appeal dismissed the case saying they had no real prospect of proving a conspiracy.
At a hearing earlier this month, lawyers for BDO argued this lawsuit should also be dismissed, arguing that it was an attempt to re-try allegations that had already been settled.
In his ruling the judge said that this “is not the usual type of abuse of process case in which A has sued B and failed, and tries to sue B again.”
“Here the claimants have failed against Barclays and how seek to sue BDO instead.”
“On other hand, the claim against Barclays and the claim against BDO are, for all practical purposes, exactly the same claim: a claim that they conspired with each other to mislead KPMG and that as a result Barclays got away with a foreclosure which they could not otherwise have achieved.”
He found that suing BDO was not in itself and abuse of process.
“Clearly BDO could have been sued at the same time as Barclays but that is not in itself sufficient to constitute abuse,” he said.
Even so, he found that the new claim was “a collateral attack” on the Court of Appeal judgment.
“It seems to me that the new claim, insofar as it relies on the same conspiracy as was alleged in the Barclays claim, is quite clearly a collateral attack on that finding,” he said.
“I therefore conclude that the new claim alleges in substance the same conspiracy as the Barclays claim, that that claim has been found to have no reasonable prospect of success because of the absence of any such conspiracy, that the new claim is a collateral attack on the [Court of Appeal] findings to that effect, and that it is as a result an abuse of process.”I therefore strike it out,” he said.
(1) Elite Property Holdings Limited (2) Decolave Properties Limited (3) Travelforce Limited v BDO LLP
QBD (Nicholas Vineall QC sitting as a Deputy High Court Judge) 20 July 2020
George Spalton (instructed by RPC) for the Defendant
Ian Mayes QC and Jonathan Miller (instructed by Kyriakides & Braier Solicitors) for the Claimants
