Plaintiff having client and office accounts with defendant bank – Plaintiff rearranging accounts – Defendant introducing new style account – Plaintiff claiming lost interest – Whether defendant under duty to inform plaintiff of new style account – Whether defendant in breach of duty – Plaintiff’s claim dismissed
In 1982 the plaintiff, a firm of solicitors with a substantial conveyancing practice, had three accounts with the defendant bank at its Ilford branch. The first two were an office account and a client account (the operating accounts) on which interest was not payable. The third was a Client’s Premium Deposit Account (CPDA) which was an interest earning client-fund account having a number of preferential features such as free banking and premium interest rate. The CPDA account required a minimum opening balance of £25,000 and had one particluar disadvantage in that it could not function as an operating account because no cheques could be issued on it. In 1984 the plaintiff realised that it might be possible to derive some benefit from the short-term client account, namely the operating account, by coming to an arrangement with the defendant to “set-off” interest charged on a mortgage against the benefits derived by the defendant from the credit balance on the plaintiff’s operating account. A request was made to transfer £50,000 of the mortgage to the defendant on the basis that no interest would be charged on that sum. The defendant agreed provided that the amount in the operating account exceeded the mortgage by a ratio of 2:1. It was agreed that the CPDA would be closed and the balance transferred to a new operating account in which the minimum balance of £100,000, in accordance with the ratio, would be maintained. In June 1984 the defendants introduced a number of new features to its CPDA including the availability of a cheque book facility which meant that it could be used as a full operating account. In 1988 the plaintiff learned about the new style CPDA and opened such an account, closing its operating account. The plaintiff issued proceedings claiming damages for the interest lost in keeping funds in the operating account rather that the new style CPDA. It was contended that the defendant had been under an implied term to inform the plaintiff of the availability of any new type of banking facility or arrangement which was reasonably capable of applying to or being utilised by the plaintiff, and that the defendant was in breach of that term by failing to inform the plaintiff of the new-style CPDA.
Held The plaintiff’s claim was dismissed.
1. It was not reasonable and equitable to imply the term contended for into the agreement when the nature of the agreement, which was for specified banking services, and the absence of any form of payment for advisory services were taken into account. Further, it was not necessary to imply the term for business efficacy and the term was not so obvious that it went without saying. Therefore the term was not be implied into the agreement.
2. In any event, even if such a term could have been implied, the new style CDPA was a continuation of an old style account with a number of improvements. Therefore it did not amount to “a new type of banking facility or arrangement” of which the defendant would have been under a duty to inform the plaintiff.
Jeremy Storey QC (instructed by Suriya & Douglas) appeared for the plaintiff; Geraldine Andrews (instructed by Stallards) appeared for the defendant.
