Hall & Ors v Royal Bank of Scotland Plc

An overdraft expressly repayable on demand remains repayable on demand unless the facility agreement clearly provides otherwise. A reference to repayment in accordance with normal banking practice does not, without more, require the bank to extend the facility or restrict its right to demand repayment. Contractual and tortious duties alleged against a bank must be assessed principally by reference to the parties’ agreement. A bank is not subject to an implied duty requiring decisions to be made by agricultural specialists, locally, or face to face where that duty would create a conflict with the bank’s interests and is not fairly and reasonably conveyed by the agreement or advertising.

The claimants, a farming partnership, alleged that the defendant bank had breached express or implied contractual terms and a tortious duty of care by transferring management of their account, failing to provide face-to-face dealings with an agricultural manager, and refusing to continue or extend overdraft facilities. They relied on the facility wording, the bank’s advertisements, and the British Bankers Association Statement of Principles.

The bank applied to strike out the claim on the basis that the alleged duties did not exist. The central issues were whether the words requiring repayment in accordance with normal banking practice restricted the bank’s demand rights, and whether the pleaded contractual or tortious duties could be implied.

1. Claim struck out. The pleaded duties were not legally sustainable.
2. The facility documents governed the principal issues. The overdraft was expressly repayable on demand. The words requiring repayment in accordance with normal banking practice did not restrict the bank’s right to demand repayment, refuse an increased facility, or decline to extend the facility beyond the review date. The warning in the facility letter and condition 2(b) reinforced that construction.
3. The court accepted the approach in William’s and Glyn’s Bank Ltd v Barnes [1981] Com LR 205 and Lloyd’s Bank plc v Lampert [1991] 1 All ER (Comm) 161 (CA) concerning the normal characteristics of overdrafts repayable on demand.
4. Alleged duties requiring the bank to use experienced agricultural decision-makers, consider the claimants’ particular position, act sympathetically and positively, or comply with the Statement of Principles before demanding repayment were inconsistent with the contractual allocation of rights. The authorities, particularly Shamji v Johnson Matthew Bankers Ltd [1986] BCLC 278 and Chapman v Barclays Bank Plc (26.3.97), showed that a duty would not be imposed where its exercise created a potential conflict between the bank’s interests and those of its customer.
5. The advertisements promised access to financial help, but did not guarantee that every account decision would be made by a locally based agricultural expert or require face-to-face meetings before important decisions. It was neither a fair nor reasonable interpretation of the advertisements to imply such a term.

The pleaded allegations of breach and causation would have raised triable issues if the duties existed, but the absence of any such duties meant that the claim was bound to fail.

First-instance decision. No prior appellate decision is stated in the judgment.