Claimant can plead RBS put forward “false and misleading case”

RBS: Fraud allegation withdrawn

A property company can plead that RBS “knowingly put forward a false and misleading case” in other proceedings against its director, the High Court has ruled.

Mr Justice Males said that, if proved, this was a fact from which an inference could be drawn that the bank had altered a £10.5m loan agreement with Grove Park Properties (GPP) and “that it did so fraudulently”.

However Males J rejected GPP’s application to amend its reply and defence to the bank’s counterclaims to plead the conduct of RBS in the other proceedings as part of its defence.

Males J said the bank’s “initial position” in proceedings against GPP’s director, Gary Wyatt, was that Mr Wyatt “had committed fraud and forgery” by changing the repayment date in the loan agreement from 2012 to 2017.

The bank later amended its defence, withdrawing the allegations of fraud and forgery, and agreed to settle Mr Wyatt’s claim. RBS accepted before the court that it had made a false allegation against him.

Males J said that, in the absence of any explanation of why this was made, “it is a reasonable (although not necessarily an inevitable) inference that this was done knowingly” and that “the reason why this was done was in order to conceal reprehensible conduct”.

The judge said whether it was 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”.

Delivering judgment in Grove Park Properties v the Royal Bank of Scotland [2018] EWHC 3521 (Comm), Males J said the bank had applied to strike out paragraphs from the claimant’s particulars of claim pleading that in other proceedings, between the bank and Mr Wyatt, the bank “knowingly put forward a false and misleading case”.

Males J said the company’s claim arose out of loan and interest rate swap agreements concluded in late October or early November 2007, between GPP and the bank.

There was a dispute as to what was agreed about repayment of the primary loan, for £10.5m. The claimant argued that the parties agreed orally on a 10-year loan, repayable on 1 November 2017. The bank argued that a five-year loan was agreed.

The parties agreed that the primary loan document drawn up by the bank provided for repayment of the loan on 1 November 2012 and this was altered by Mr Wyatt to read 1 November 2017.

GPP argued that Mr Wyatt drew the date to the attention to the bank’s employee, Derek Bradstock, who was present when the loan was agreed, and “who said that ‘2012’ was a typographical error and that Mr Wyatt should amend it to read ‘2017’”.

Mr Wyatt wrote the number ‘7’ over the number ‘2’ in 2012, then initialled the change, signed the document and retained a photocopy.

“The bank does not accept that Mr Bradstock or anyone else on its behalf agreed to the change. Its case is that the loan document as drawn up and providing for repayment in 2012 correctly reflected the parties’ oral agreement and that there was no agreement for Mr Wyatt to change it to 2017.”

Males J said it was common ground that the date was altered again, and the date of 2017 changed back to 2012, and initialled by another employee of the bank.

The claimant argued that this further change was made without Mr Wyatt’s knowledge or authority and was concealed from him.

The bank, on the other hand, “says it does not know whether the alteration was made by Mr Wyatt or by a bank employee”.

However, if it was made by a bank employee, there would first have been a conversation between Mr Wyatt and the bank to confirm that the term of the primary loan was five years

Males J said GPP’s case was that in these circumstances not only the primary loan, but a secondary loan, overdraft and interest rate swap were all void and it was under no liability to repay a total of £12.5m to the bank.

He dismissed RBS’s application to strike out paragraphs from the particulars of claim relating to its argument that the bank put forward a false and misleading case in the proceedings against Mr Wyatt.

Males J also dismissed the claimant’s application to amend its reply and defence to counterclaim to plead the bank’s conduct of the Wyatt proceedings as a defence.

He said the parties would need to review their pleadings in the light of this ruling.

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