Bank Notes

F - Fraud and deceit

27/3/24

HAYES v R [2024] EWCA Crim 304

Appeals against convictions for dishonest manipulation of LIBOR and EURIBOR were upheld. The relevant codes for fixing LIBOR and EURIBOR did not allow an individual bank to make a range of submissions and to have regard to its own commercial advantage, but required submission of a single figure representing what the bank honestly and genuinely understood was the cheapest rate at which it could borrow on the inter-bank market at the relevant time.

19/3/24

FAROL HOLDINGS LTD v CLYDESDALE BANK PLC [2024] EWHC 593 (Ch)

The court dismissed claims relating to so-called tailored business loans. Under the loans the lender hedged its interest rate risk in the market and the customers’ interest liabilities were capped at fixed rates but increased if market rates fell. The customers were liable for break costs incurred by the lender when the loans and hedges terminated. Claims that the lender had no liability to pay break costs were rejected and the lender’s terms were held to have entitled it to recover loss arising from break costs. The court summarised principles of deceit and misrepresentation [206] but found that none of the representations about break costs were false and allegations of deceit were not made out. Claims that the lender misrepresented that its profit was limited to the interest rate margin also failed because a reasonable person in the position of the customers would not have understood any such representation was being made. Although the primary limitation periods for the claims had expired, the limitation periods for a number of the claims would have been extended under s.14A and/or s.32 Limitation Act 1980 by reason of the customers’ lack of knowledge. The court also reviewed principles for finding an unfair relationship [751] but rejected the claim made on this basis.

27/5/20

BOYSE (INTERNATIONAL) LTD v NATWEST MARKETS PLC [2020] EWHC 1264 (Ch)

Considers the law relating to pleading deceit and fraud in a claim relating to LIBOR manipulation [35] and when the claimant could with reasonable diligence have discovered the fraud for the purpose of s 32(1) Limitation Act 1980 [38]. For that purpose there must have been something to put the claimant on notice [47]. Considers whether proceedings can be struck out where this is in issue, or whether summary judgment is appropriate [48]. It will normally be appropriate for summary judgment to be pursued on a limitation point and preferably after the claimant has had an opportunity to plead its case [53]. On the facts the claim was time barred and an application for permission to amend was dismissed.

25/2/19

MARME INVERSIONES 2007 SL v NATWEST MARKETS PLC [2019] EWHC 366 (Comm)

A claim to rescind interest rate hedging contracts on grounds of manipulation of the EURIBOR reference rate failed. The court reviewed the principles for implying representations [115]. None of the pleaded representations could be implied. A representation that RBS was not manipulating or attempting to manipulate EURIBOR had not been pleaded and even if implied, there was no evidence to show it would have been false. The court reviewed the requirements for fraudulent misrepresentation [253] (including where knowledge of falsity is not known to the person making the representation) and the circumstances in which an adverse inference can be drawn from destruction of documents [268] or from a witness not being called [271]. The court also reviewed principles of reliance [278] (including the need for the claimant to have given some thought to any implied representation) and causation [289]. On the facts no reliance was established, the contracts had been affirmed and could not be partially rescinded. An alternative claim for damages would also have failed.

26/7/18

CMOC SALES & MARKETING LTD v PERSONS UNKNOWN [2018] EWHC 2230 (Comm)

Considers the proof required in fraud claims where the defendants do not engage in the litigation process or appear at trial and service has been effected by alternative means including by Facebook Messenger and WhatsApp. A thief of stolen funds is to be treated as a fiduciary holding the funds on constructive trust [76]. Summarises requirements for claims of dishonest assistance [89] and unlawful means conspiracy [92]. Knowledge required to establish dishonest assistance and conspiracy does not require it to be shown that the defendant intended to injure an identified victim. It is sufficient if the defendant knows that there is a victim [117]. Also summarises requirements for claims of knowing receipt [128] and unjust enrichment [140]. Where there are direct and indirect recipients, there is only one true recipient for the purpose of an unjust enrichment claim and the claimant can elect which to pursue. Compound interest is available for proprietary claims and knowing receipt but not for dishonest assistance. Costs incurred in pursuing orders from courts abroad can be claimed as damages [172].

25/10/17

IVEY v GENTING CASINOS (UK) LTD [2017] UKSC 67

Summarises the correct approach to issues of dishonesty [74]. The fact-finding tribunal must first ascertain (subjectively) the actual state of the individual's knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.

29/10/15

JSC BANK OF MOSCOW v KEKHMAN [2015] EWHC 3073 (Comm)

The court dismissed the defendant’s application to strike out the bank’s claim. The bank’s claims of fraudulent conspiracy and fraudulent misrepresentation had a real prospect of success. The primary facts pleaded did not necessarily have to lead to an inference of fraud. It was sufficient that on the basis of the primary facts pleaded, an inference of dishonesty was more likely than one of innocence or negligence [20].

22/10/15

AMERICAN EXPRESS SERVICES EUROPE LTD v AL-SHABRAKAH [2015] EWHC 3004 (QB)

The court rejected as inherently implausible an assertion that borrowing was a result of credit card fraud.

22/7/15

NGM SUSTAINABLE DEVELOPMENTS LTD v WALLIS [2015] EWHC 2089 (Ch)

Claims of fraudulent misrepresentation dismissed.

31/3/15

HAYWARD v ZURICH INSURANCE COMPANY PLC [2015] EWCA Civ 327

A claim by insurers to set aside a settlement agreement for fraudulent misrepresentation failed. Although the underlying claim which had been settled had been falsely exaggerated, the insurer had already known or perceived that to be the case at the time of the settlement. The fact that better evidence of the fraud only came to light after the settlement made no difference.

6/2/15

JACKSON v THOMPSONS SOLICITORS [2015] EWHC 218 (QB)

Contains a useful summary of the law as to bias [14] and the torts of abuse of process [27], causing loss by unlawful means and unlawful means conspiracy [30], procuring a breach of contract [33] and deceit [36]. Claims that the defendant induced an ATE insurer to avoid cover and procured the failure of an application for a group litigation order failed on the facts.

4/11/14

UBS AG v KOMMUNALE WASSERWERKE LEIPZIG GMBH [2014] EWHC 3615 (Comm)

Considers the legal principles for setting aside contracts on grounds of bribery of agents [587], conflict of interest on the part of an agent [621], attribution of an agent’s knowledge to a company [628], fraudulent misrepresentation [642], contractual estoppel [773] and rescission [783].