IRHP Mis-selling: Important decision on settlement of unknown claims and contractual duty

On 26 July 2017, HHJ Moulder, sitting in the Manchester Mercantile Court, handed down judgment in Cameron Developments (UK) Ltd v (1) National Westminster Bank plc (2) Royal Bank of Scotland plc [2017] EWHC 1884 (QB). Richard Edwards QC (instructed by Slater and Gordon) represented Cameron, and John Odgers QC and Christopher Bond (instructed by DLA Piper) represented the Bank.

The Bank had sold Cameron an interest-rate hedging product, and the Bank agreed to review the sale as part of the Financial Conduct Authority’s Review into the mis-selling of IRHPs. The Bank made Cameron an offer of “basic redress” in the Review, which Cameron accepted. The Bank then considered Cameron’s claim for consequential losses in the Review, which the Bank rejected. Cameron sued the Bank to recover those consequential losses, claiming (inter alia) that the Bank had been negligent in its conduct of the Review.

The Bank applied to strike out Cameron’s claim in respect of the Review, on the grounds that (1) the terms on which Cameron had accepted the Bank’s offer of compensation precluded any subsequent claim for negligence in investigating consequential loss and (2) the Bank owed no contractual duty to Cameron when assessing its consequential loss.

The judge allowed the Bank’s application on both grounds and struck out the Review claims. The Court found that no contract arose between Cameron and the Bank in respect of the conduct of the Review, a finding consistent with several other first-instance decisions.

This judgment is also of particular interest for its application of the approach of the House of Lords in BCCI SA v Ali to giving up future and unknown claims. The Court held that the wording used in the Bank’s compromise agreement was sufficiently wide and clear to encompass claims of which Cameron neither was nor could have been aware at the date of settlement.