Turner v Royal Bank of Scotland Plc

A claim for negligent misstatement requires proof both of breach and financial loss caused by the breach. A bank does not incur liability where a status reference accurately represents its belief, based on information then available. Speculative evidence of a company’s prospective profitability and directors’ remuneration does not establish recoverable loss on the balance of probabilities.

Section 32 of the Limitation Act 1980 postpones limitation in cases involving fraud or deliberate concealment. It does not create a separate tort of concealment or an additional head of damages. Permission to appeal may be refused where success on an arguable issue could not benefit the applicant because the alleged act fell outside the relevant agreement or could not establish causation.

The appellant was a customer of the respondent bank and a director of Foxonwheel Limited. In 1986 the respondent supplied National Westminster Bank with a status reference concerning whether the appellant could guarantee a loan of £145,000 for Foxonwheel.

The Southampton County Court rejected the appellant’s claim that the reference was a negligent misstatement and found that he had not proved financial loss. The appellant also relied on an alleged tort of concealment. A separate conspiracy claim concerned an agreement between banks to provide specified default information to credit reference agencies. The present appeals concerned the negligent-misstatement claim and an application for permission to appeal in relation to the conspiracy claim.

1. The appeal concerning the reference was dismissed. Lord Justice Henry delivered the principal judgment. Lord Justice Kay agreed with that judgment on the appeal, and Lord Justice Mantell agreed with both judgments.
2. The court was prepared to assume, without deciding, that the bank owed the appellant a duty of care in negligent misstatement. The trial judge was entitled to find that the March 1986 reference was accurate, having regard to the appellant’s banking position and the information available to the bank. There was therefore no breach of duty.
3. In any event, the appellant had to establish financial loss caused by the reference. The evidence concerning Foxonwheel’s ability to purchase the premises, generate profits and pay directors’ fees was speculative and unsupported by substantive objective material. The loss claim consequently failed on causation and proof of damage.
4. The court agreed that there was no separate tort of concealment. The appellant could not use the alleged concealment to recover damages additional to any damages available for breach of the bank’s contractual duty of confidence. The operation of section 32 of the Limitation Act 1980 did not alter that conclusion; the bank’s acceptance that the provision applied was a limitation concession, not recognition of a new cause of action.
5. Permission to appeal on the conspiracy claim was refused. Even if the trial judge’s conclusion concerning the public-interest exception to banking confidentiality were wrong, the appellant had no realistic prospect of benefiting. On his own case, the disclosure by Lloyds Bank fell outside the agreement found by the trial judge because security had allegedly been provided or offered. Further, the agreement did not involve automatic refusal of banking facilities, so the alleged loss could not be attributed to acts in furtherance of the conspiracy.
6. The order was dismissed with costs.

• Court of Appeal (Civil Division): The appeal from the Southampton County Court was dismissed with costs. Permission to appeal in relation to the separate conspiracy claim was refused.
• Southampton County Court: His Honour Judge Rudd rejected the negligent-misstatement claim in a judgment dated 14 April 1999 and rejected the conspiracy claim in a judgment dated 1 September 1999.