LONDON, 14 January 2019 – In late December 2018, Mr Justice Males (as he then was) dismissed RBS’s application to strike out parts of GPP’s Particulars of Claim (PoC) which set out in detail RBS’s conduct in allegedly putting forward a false and misleading case in separate (now resolved) proceedings between RBS and GPP’s sole director.
The dispute arises out of the now notorious lending practice of RBS in the run up to the global financial crisis of 2008. The key issue is whether a £10.5 million loan agreement entered into between the parties in 2007 is void and if so, what are the consequences to that agreement and to further finance agreements entered into at or around the same time. The claim exceeds £20 million.
GPP’s case is that the loan agreement was for an agreed term of 10 years, with a co-terminous 10-year hedging product. However, after the agreement concluded but before drawdown, RBS altered the loan agreement halving the term of the loan (to five years), without GPP’s knowledge or consent. RBS then engaged in a cover-up of this illegal act, not showing the director a copy of the altered document until 2012 and, in a claim brought personally by the director, accusing him of forging the loan agreement to fraudulently induce investors to take a stake in GPP. RBS’s further witness evidence contradicted its own case and it was forced to retract its claims.
RBS claimed that its conduct in the earlier proceedings is irrelevant, but even so, it denied that it knowingly put forward a false or misleading case. RBS asserted that if an (unknown) bank employee did alter the loan agreement, it would
have done so “honestly and in good faith” and it would
have notified GPP’s sole director (Mr Wyatt) of the alteration.
The Learned Judge determined that “In the absence of any explanation of why a false allegation against Mr Wyatt was made, it is a reasonable…inference that this was done knowingly….and that the reason why this was done was in order to conceal reprehensible conduct. Whether it is right to draw that inference will be a matter for the trial judge in the light of all the evidence in the case…But in my judgment the point can be pleaded.”
GPP was permitted to plead to RBS’s conduct in its PoC on this basis.
GPP is represented by a team from specialist dispute resolution law firm Cooke, Young & Keidan LLP (CYK) and by counsel from Serle Court and 20 Essex Street Chambers. RBS is represented by Dentons and a counsel team from Fountain Court.
CYK partner Lydia Danon comments:
“This is a great result for GPP. Notwithstanding Ross McEwan’s claims that there has been a positive culture shift at RBS, here is another example of the bank getting up to its old tricks, bearing down on its customer. Instead of brushing the issue under the carpet, RBS has brought its conduct to the fore and it will now have to explain what it knew about what GPP says is the forgery of the loan agreement.”
The team at CYK for this case is led by partner Lydia Danon (with assistance from Philip Young), together with senior associate Rosie Wild and associate Irina Buydova. The counsel team is made up of Lance Ashworth QC and Philip Riches. The trial of this matter is listed to take place in May 2020.
A copy of the judgment can be found here:
CYK has built a strong reputation for handling complex and high-value international litigation since it was founded, and it has achieved many high-profile landmark victories for clients including:
- CMOC v. Persons Unknown. This was the first reported case in which the English Court granted a Worldwide Freezing Order against Persons Unknown, in support of which the English Court granted extensive Disclosure Orders against numerous banks worldwide. The English Court also evolved new procedural steps to deal cost effectively with complex international litigation including service by data room.
- RBS v. Highland: This was a long-running and aggressively-fought multi-jurisdictional litigation involving substantial sums. CYK acted for Highland which by the conclusion of the action was entirely successful in uncovering the substantial fraud perpetrated (and then concealed) by RBS, in defeating RBS’s claims and in establishing its own claims against RBS. In the process of this litigation English legal history was made as the Court of Appeal judgment handed down in April 2013 is the first time that the English Court has ever struck down a judgment obtained by a British bank on the basis that it had been obtained by that bank’s fraud.
- Graiseley v. Barclays. This was the leading and “test case” before the English Courts in respect of dishonest LIBOR manipulation as it was the first case in which that charge has been alleged against a major bank.
In addition to litigation of this kind, the firm also has substantial expertise in international arbitration, partnership and LLP disputes, corporate and shareholder disputes, financial regulation, and fraud and asset recovery. Clients include major corporates, multinationals, fintech companies, financial brokers, hedge funds and asset managers, aerospace and shipping businesses, and wealthy entrepreneurs.