Key Facts
- •Four SMEs brought claims against Clydesdale Bank PLC (CB) and National Australia Bank Limited (NAB) regarding fixed interest rate loans (FRTBLs).
- •The claims related to break costs charged on early repayment and the inclusion of undisclosed 'Added Value' (AV) in the fixed interest rate.
- •CB used 'Corresponding NAB Hedges' (CNHs) to transfer interest rate risk to NAB, with break costs mirroring CNH termination payments.
- •The claimants argued that CB lacked contractual entitlement to charge break costs as calculated, and that the Fixed Rate misrepresented the bank's profit.
- •Claims included misrepresentation (fraudulent and negligent), unjust enrichment, breach of contract, and unfair relationship under the Consumer Credit Act 1974.
Legal Principles
Contractual interpretation considers the parties' intentions based on a reasonable person's understanding, considering the language, context, and commercial common sense.
Arnold v Britton [2015] UKSC 36
Elements of deceit include a false representation made knowingly, without belief in its truth, or recklessly, intending the representee to rely on it, causing them to act to their detriment.
Derry v Peek (1889) 14 App Case 337
Unjust enrichment requires enrichment of the defendant at the claimant's expense, with an unjust factor (e.g., mistake). Change of position can be a defense.
Banca Intesa Sanpaolo SpA v Comune di Venezia [2023] Bus LR 384
An unfair relationship under s.140A of the Consumer Credit Act 1974 can arise from terms, enforcement of rights, or other creditor actions; the court considers all relevant factors.
Plevin v Paragon Personal Finance Ltd [2014] UKSC 61
Limitation periods for fraud claims start when the claimant discovers or could reasonably have discovered the fraud. For negligence, a three-year period starts when the claimant has the necessary knowledge.
Limitation Act 1980, sections 32(1)(a) and 14A
Outcomes
All claimants' claims were dismissed.
The court found that CB was contractually entitled to charge break costs as calculated, and that the Fixed Rate did not constitute misrepresentation.