Clydesdale Bank Plc v Stoke Place Hotel Ltd & Ors

A person may be liable in deceit as a joint tortfeasor where another makes the representations pursuant to a common design to defraud. The claimant must still establish damage, since damage is the gist of the action. In an unlawful means conspiracy, intention to injure is established where the defendant appreciates that the unlawful conduct deprives the claimant of the opportunity to decide whether to advance its money. Damages for unauthorised lending comprise the fresh money actually advanced after the defendant joined the conspiracy, but exclude interest merely debited to the account.

The Bank brought claims against Mr Dhillon concerning personal guarantees, the release of security over Stoke Place Hotel, and substantial unauthorised lending by the Bank’s relationship manager. The guarantees were said to have been released by agreement or estoppel. The Stoke Place claim alleged that Mr Dhillon participated in a fabricated share sale used to induce the Bank to release its security, although the transaction was in fact a refinancing with HSBC. The unauthorised facilities claim alleged conspiracy by unlawful means based on advances made without authority.

1. Guarantees. The Bank had not agreed to release either guarantee. The evidence did not establish any binding assurance or estoppel, and the documents showed that the £850,000 guarantee was retained even when the related charge was released. Judgment was therefore given for £250,000 and £850,000, with contractual interest from 19 September 2012.
2. Stoke Place. Mr Dhillon knowingly participated with Mr Bains in a common design to deceive the Bank. The Bank was induced to release its security by false representations that an 80% share sale had occurred. Under Dadourian Group International Inc v Simms, [2009] EWCA Civ 169, a person may be a joint tortfeasor in deceit without making the representation personally, where it was made pursuant to a common design. A declaration was granted, but questions of loss, including whether the deceit caused recoverable damage, were reserved.
3. Unauthorised facilities. The essential elements of unlawful means conspiracy were a combination, unlawful acts, an intention to injure, and resulting damage. Mr Dhillon joined the plan by requesting further facilities, knowing that Mr Seavers lacked authority and was breaching his duties. Intention to injure did not require a predominant intention to benefit the defendant. It was enough that Mr Dhillon appreciated that the Bank was being deprived of the opportunity to decide whether to make the advances.
4. The damages were the fresh advances made after 30 June 2010, when Mr Dhillon knew of the lack of authority. Interest debited to the account and fees were excluded because they were not money actually paid out by the Bank. The provisional damages figure was £12,773,471.80, subject to submissions concerning credits and interest.