Kevin Ralph William Riley & Anor v National Westminster Bank Plc

A release in a settlement may cover unknown claims in fraud or dishonesty without express words, if the deed, read with its factual and commercial context, objectively shows that intention. The caution against readily inferring surrender of unknown rights does not make express reference to fraud always or generally necessary. Where the release covers the relevant fraud claims, there is little scope for alleging equitable sharp practice based on non-disclosure of those claims. A clause releasing claims which a party may later have against a bank, expressly connected with a named company and coupled with a broad covenant not to sue, may cover a claim later assigned to that party by the company. The Court of Appeal also considered, obiter, that contemporaneous material was sufficient to plead fraud for limitation purposes.

The appellants claimed that National Westminster Bank Plc had fraudulently misrepresented its intention to support and rehabilitate their business and had concealed an intention to exit the relationship and profit from its assets. They also pursued a claim originally belonging to Riley (Holdings) Limited, which had later been assigned to Mr Riley.

Freedman J granted the Bank summary judgment and struck out the claim, holding that the claims had been compromised by a Settlement Deed which released known and unknown claims connected with the appellants, NDA, Riley (Holdings) Limited and its properties. He held that the limitation issue would require a trial. The appeal concerned construction of the release, equitable sharp practice, alleged fraud in procuring the settlement, the assigned claims, and limitation.

Bean LJ delivered the judgment of the court. Phillips LJ and Snowden LJ agreed.

1. Disposition. The appeal was dismissed. The claims were barred by the Settlement Deed, so the summary judgment and strike-out order stood.
2. Construction of the release. The deed had to be construed as a whole against its factual and commercial context. The Nabarro correspondence and the Tomlinson Report alleged deliberate misconduct, asset-stripping and dishonest conduct by the Bank. The later non-core business allegations added little to that central case. Following the binding decision in Maranello Rosso Ltd v Lohomij BV and Ors [2022] EWCA Civ 1667, the absence of express words referring to fraud was not determinative. Satyam Computer Services v Upaid Systems [2008] EWCA Civ 487 should not be read as establishing that express words are always or generally required. The unitary approach to contractual construction was applied, as explained in Wood v Capita Insurance Services Ltd [2017] UKSC 24. Clause 13(2), which excluded only non-fraudulent misrepresentation from the entire-agreement provision, did not control the separate release.
3. Sharp practice. The release was construed as covering unknown fraud, dishonesty and conspiracy claims relating to the defined subject matter. That construction entailed a mutual intention to settle such claims and left little scope for a finding that the Bank had engaged in sharp practice by failing to disclose them. The appellants knew and alleged deliberate wrongdoing, chose not to investigate further, and settled for valuable consideration.
4. Assigned claims. Clause 7.1 covered claims which the appellants might later have against the Bank and expressly referred to Riley (Holdings) Limited. Clause 7.2 reinforced the release by prohibiting proceedings connected with the Released Claims. The fact that RHL was not a party, or that a third party might theoretically have sued, did not prevent the release applying to proceedings brought by Mr Riley. Kazeminy v Siddiqui & Ors [2012] EWCA Civ 416 was distinguishable.
5. Limitation. The court’s conclusion on limitation was strictly unnecessary to disposal of the appeal. It nevertheless held that the relevant question was whether the appellants possessed reasonably credible material which, as it stood, established a prima facie case of fraud. The three Nabarro letters and the Tomlinson Report would have been sufficient to plead deceit in 2013–14. Knowledge of the Bank’s non-core categorisation was not essential.

• Court of Appeal (Civil Division): The appeal was dismissed. The court upheld the summary judgment and strike-out order. [2024] EWCA Civ 833
• High Court of Justice, Business and Property Courts: Freedman J granted the Bank summary judgment and struck out the claim, holding that the Settlement Deed released the claims. He considered that the limitation issue would require a trial. [2023] EWHC 2401 (Ch)