Ventra Investments Ltd v Bank of Scotland Plc

Strike-out applications concerning pleadings should not be divided into rigid categories of irrelevance and abuse of process. The court must assess the complaint against the pleading and the circumstances of the case, asking whether the material is sufficiently irrelevant, incomplete, or contrary to the procedural rules to justify removal.

A claimant cannot plead an incomplete or contingent case in order to obtain disclosure for a possible future cause of action. Background allegations are permissible only where they materially support a pleaded issue, such as representation, falsity, duty, or causation. Allegations that merely enlarge the factual dispute or disclosure burden may be struck out.

Ventra Investments Ltd, in liquidation, brought claims against Bank of Scotland Plc arising from replacement interest-rate swaps entered into between October 2008 and February 2009. The claims alleged negligent and fraudulent misrepresentations and negligent failure to explain the nature and effect of the swaps.

The bank applied under CPR r 3.4(2) to strike out pleaded allegations concerning the financial crisis, the bank’s acquisition by Lloyds Banking Group, an alleged strategy for disposing of risky loans, a liquidation policy, and internal risk-monitoring systems. The central issues were whether those allegations were relevant to the pleaded causes of action and whether some amounted to an impermissible reservation of an unpleaded claim.

1. Applicable approach. The court rejected the suggested distinction between separate strike-out categories. The relevant question was whether, having regard to the pleaded case and the circumstances, the impugned material was sufficiently irrelevant, incomplete, or in breach of the pleading rules to justify its removal. The court had power under CPR r 3.4(2) to strike out material which confused or obstructed the fair conduct of the proceedings.
2. Section D and paragraph 37.6. Paragraph 18 contained an inadequately pleaded inference that Ventra had been designated for exit and disposal. Paragraph 37.6 merely reserved the right to plead, after disclosure, that the bank had not intended to continue the relationship. The allegations were unclear, incomplete and internally inconsistent. They did not properly support the pleaded case on the representations or their falsity. They also amounted to pleading part of a possible new misrepresentation claim in the hope of obtaining disclosure. Paragraphs 18 and 37.6, together with the remaining contextual allegations in Section D, were struck out.
3. Section K. Allegations concerning a post-July 2009 liquidation policy were not relevant to representations made between September 2008 and February 2009. They did not establish falsity and did not materially affect causation, which depended on whether the replacement trades caused the cash-flow problem and resulting loss. Section K was therefore struck out.
4. Paragraphs 13 and 14. Allegations concerning internal potential-future-exposure systems were not relevant to the pleaded misrepresentation or explanatory-duty issues. The dispute concerned Ventra’s knowledge, rather than the bank’s access to internal risk information. Those paragraphs were struck out for irrelevance.

The application for summary judgment on limitation grounds had been withdrawn on agreed terms before the hearing.