High Court Decision in Shokrollah-Babaee v EFG Private Bank Addresses Time Bar, Duty of Care, and Scope of Claims

Introduction

The High Court of Justice Chancery Division’s decision in Shokrollah-Babaee v EFG Private Bank Limited provides insight into several fundamental legal principles within English law. The decision addresses the issues of time bar in tort and statutory claims, common law duties of care, the scope of Claim Forms, and the requirements under the Mortgage Conduct of Business (MCOB) rules. This article examines the court’s rationale and legal findings in the case, providing a structured analysis for the legal community.

Key Facts

The case centered around the claims brought by Shokrollah-Babaee (“the claimant”) against EFG Private Bank Limited (“the defendant”) alleging breaches of the MCOB rules and a common law duty of care regarding mortgage offers and related property valuations for the years 2012 and 2015. The defendant contended that the claims were statute-barred, outside the scope of the Claim Form, and even if within scope, were not viable based on merit.

The factual matrix reveals that the claimant engaged in property development financed by loans from the defendant, underpinned by valuations from Savills Plc. He later faced financial setbacks and a statutory demand from the defendant for the unpaid loans, which catalyzed the initiation of the claim.

Legal Principles

Limitation Periods

The judgment confirms that statutory claims under s.138D of the Financial Services and Markets Act (FSMA) and common law negligence claims both generally have a limitation period of six years pursuant to sections 2 and 9 of the Limitation Act 1980. The court rejected the applicability of s.14A, which provides a discovery rule extension for negligence claims, to statutory claims under s.138D of FSMA.

Duty of Care

The court addressed whether the defendant owed the claimant a common law duty of care with respect to the valuations. A duty of care requires a level of advisement or service to the claimant. It was established that the provision of a valuation report by a lender to a borrower, for the lender’s own purposes, does not typically create a duty of care.

Scope of Claim Form

The judgment provides guidance on interpreting the scope of a Claim Form. It reiterates the position that a claim form should be complete in itself and particulars of claim should only be relied upon for clarity where there is ambiguity. Claim forms cannot be retrospectively broadened to include claims not originally specified.

MCOB Breaches

The court discussed breaches of the MCOB focusing on whether the defendant unreasonably represented valuation figures in its loan illustrations. The MCOB rules required that estimated valuations provide a reasonable assessment based on all the facts available. The court found that there was no breach by the bank since it relied on professional valuations by Savills.

Vicarious Liability

The principle of vicarious liability was explored where the claimant argued that the defendant was liable for the actions of Savills under subcontracting principles. The court concluded that no such subcontracting occurred and the bank’s reliance on the Savills Reports was a manifestation of due diligence rather than delegation of duty.

Outcomes

The court struck out all claims, concluding that claims relating to statutory breaches under s.138D were time-barred, and the claimant did not fulfill the criteria under s.14A regarding the discovery rule. The court found no common law duty of care owed by the defendant, it was determined the APR claim was an entirely new claim not covered by the Claim Form, and rejected the claimant’s breach of MCOB allegations.

Conclusion

In Shokrollah-Babaee v EFG Private Bank Limited, the court applied longstanding legal principles to the facts with rigor and clarity. This case reinforces the critical importance of understanding limitation periods in tort and statutory claims, delineates the boundaries of duty of care in the lending context, and iterates the crucial importance of accurately drafting Claim Forms. For practitioners, this decision is a reminder to be prompt and exact in both bringing and framing claims within the procedural rules and substantive law.