Standish & Ors v Royal Bank Of Scotland & Ors

Permission to appeal in a conspiracy claim should be granted only where the pleaded case has a realistic prospect of overcoming the legal defects identified below. Before contractual terms can be implied, the alleged contract must be sufficiently identified and its express terms understood. Equitable duties owed by a mortgagee arise when mortgage remedies are exercised, not merely because security is held or remedies are threatened. A possible causal link between a shadow director’s conduct and loss may justify permission where the pleaded chronology makes the issue arguable, although the pleading may require clarification. The prospect of developing the law is not, by itself, a freestanding ground of appeal.

The claimants sought permission to appeal against Chief Master Marsh’s decision of 30 July 2018 striking out their proposed claim under CPR Part 3.4(2). The claim alleged conspiracy to injure by unlawful means arising from the defendants’ restructuring activities. The alleged unlawful means included breaches of contract, equitable duties owed by a mortgagee and fiduciary duties said to arise from the conduct of a shadow director.

The Chief Master held that no sufficiently identifiable overarching customer agreement had been pleaded, that the alleged equitable duties were legally unarguable, and that there was no causative link between the alleged shadow directorship and the claimants’ losses. Falk J had refused permission on paper. The renewed application concerned whether any of five grounds had a realistic prospect of success.

1. Disposition. Permission to appeal was refused on grounds two and three. Permission was granted on grounds one and four, subject to security for costs of £20,000 payable into court within 28 days. Ground five was included only as an argument relevant to the permitted grounds and was not a freestanding ground.
2. As explained in Marks & Spencer v BNP Paribas, contractual terms cannot properly be implied until the contract and its express terms, if any, have been identified and interpreted. The pleaded overarching customer agreement was insufficiently particularised. Nevertheless, the possibility that terms might be implied by law into an underlying banking relationship meant that ground one was not bound to fail.
3. The allegation concerning implied terms in facility agreements had not been specifically pleaded. A general allegation referring to the customer agreement and sub-agreements could not cure that defect. The prospect of success on ground two was therefore unrealistic.
4. The equitable duties of a mortgagee relate to the exercise of mortgage remedies, such as sale, possession or appointment of a receiver. A mortgagee owes no fiduciary or equivalent duty concerning the prior decision whether to exercise those remedies. The court treated Medforth v Blake as consistent with that distinction. A proposed duty not to threaten remedies unless justified and reasonable was not an arguable incremental development of the law. Ground three therefore had no realistic prospect of success.
5. On the assumed facts, the pleaded sequence of instructions by the alleged shadow director, the appointment of the consultant and the subsequent restructuring arguably established a sufficient causal link with the claimants’ loss. The pleading required greater particularity, including the alleged instructions to the consultant, but ground four was not bound to fail.
6. The need to consider possible developments in the law did not independently justify permission. Given the limited and uncertain prospects of the permitted appeal, security for costs was appropriate.

• High Court (Queen’s Bench Division): On 12 February 2019, the renewed application was granted in part. Permission to appeal was granted on grounds one and four, conditional on security for costs, and ground five was included only as a supporting argument.
• Chief Master Marsh: On 30 July 2018, the claim was struck out under CPR Part 3.4(2), with the proposed amendment considered on the assumption that permission to amend would be given.
• Falk J: On 29 November 2018, permission to appeal was refused on paper.