Nationwide Building Society v The Bank of New York Mellon, London Branch & Anor

Summary judgment is appropriate where a claim has no realistic prospect of success and no other compelling reason requires a trial. The court should not conduct a mini-trial or decide fact-sensitive questions of contractual intention merely from documents where a fuller factual investigation may affect the result.

A document described as an agenda may still have contractual effect. The question is whether, objectively and in context, the parties intended to create legal relations. A contractual promise may also amount to an assumption of responsibility in tort. Excluding a concurrent tortious duty requires clear words. A contractual mechanism regulating amendments does not become a no informal modification clause unless it says so.

Nationwide issued notes under a US Medium Term Note Programme. Four series were not listed on the London Stock Exchange or admitted to the FCA’s Official List, resulting in a substantial withholding-tax liability.

Nationwide claimed against its solicitor, Allen Overy Shearman Sterling LLP. The solicitor brought a Part 20 contribution claim against The Bank of New York Mellon, London Branch, alleging that signing and closing agendas imposed, or evidenced, a contractual or tortious duty on the bank to confirm that the notes had been listed.

The bank applied for summary judgment. The central questions were whether the agendas could give rise to contractual obligations, whether the Indenture precluded such obligations or required formal modification, and whether an assumption-of-responsibility duty in tort was arguable.

1. Summary judgment test. Under CPR 24.3, the court may determine an issue summarily where the respondent has no realistic prospect of success and there is no other compelling reason for trial. The court must avoid a mini-trial, but may decide a short point of law or construction where the evidence is complete. It should hesitate where the issue is fact-sensitive or a fuller investigation may affect the outcome.
2. Contractual intention. The solicitor’s case that the signing and closing agendas had contractual effect was properly arguable. The language that the issuer and paying agent were to confirm listing was capable of imposing an obligation. The absence of signature blocks, governing-law provisions and conventional contractual language was not decisive. The careful circulation, negotiation and finalisation of the agendas, together with the possibility that they defined aspects of the transaction not found elsewhere, gave the claim a real prospect of success.
3. The question whether the parties objectively intended to create legal relations was highly fact-sensitive. The court’s scepticism about the commercial context was insufficient to justify summary judgment. Evidence at trial could illuminate the parties’ shared assumptions and the function of the agendas.
4. Indenture provisions. Article 8 of the Indenture was concerned with the circumstances in which amendments could bind noteholders. It did not prescribe a particular form for every agreement between Nationwide and the bank, nor operate as a no informal modification clause. Section 6.1(a)(i), which confined the trustee’s duties to those specifically set out in the Indenture, did not clearly exclude freestanding contractual obligations.
5. Tortious duty. If the contractual case was arguable, it was also arguable that the bank had assumed responsibility for the same task and owed a concurrent duty of care. The absence of a contract does not itself prevent an assumption of responsibility, but a finding that the parties did not intend any legal obligation would ordinarily undermine that alternative case. Any exclusion of a tortious duty required clear words, which the Indenture did not contain.
6. The Part 20 contribution claim was therefore not hopeless and the application for summary judgment was refused. Nationwide was permitted to amend its pleading concerning the contingent effect of the trustee’s negligence on the indemnity, but had to pay the bank’s costs of that amendment application.