BAILII [Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]

England and Wales Court of Appeal (Civil Division) Decisions

You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Nicholson v HSBC Bank Plc & Anor [2001] EWCA Civ 748 (11 May, 2001)
Cite as: [2001] EWCA Civ 748

[New search] [Context] [View without highlighting] [Printable RTF version] [Help]

Neutral Citation Number: [2001] EWCA Civ 748

(His Honour Judge McGonigal)

Royal Courts of Justice
London WC2
Friday 11th May, 2001

B e f o r e :



- v -


(Computer Aided Transcript of the Palantype Notes of
Smith Bernal Reporting Limited, 190 Fleet Street,
London EC4A 2AG
Tel: 020 7421 4040
Official Shorthand Writers to the Court)


THE APPLICANT appeared on his own behalf
MR E McQUATER (Instructed by Messrs Addleshaw Booth & Co, Leeds LS1 1HQ)
appeared on behalf of the Respondents



Crown Copyright ©

  1. LORD JUSTICE ALDOUS: I will ask Lord Justice Rix to give the first judgment.
  2. LORD JUSTICE RIX: This an application for permission to appeal on notice by Mr Nicholson, a litigant in person. He, back in 1988, had extensive pig farming and other farming interests. It was a bad time in the pig market; prices were low and his business was under great pressure. He owed some 700,000 to the second defendant, BOCM, and some 600,000 to the first defendant, HSBC, his bank. The bank was a secured creditor, BOCM was unsecured. As unsecured creditor BOCM was particularly anxious about what it saw as a declining situation. The bank had, until the events of February 1988, much less information about his affairs than did BOCM. Mr Nicholson was operating either within or, with the bank's consent, only just outside his overdraft limit. He was, however, operating on an overdraft, which under his contract with the bank was repayable on demand.
  3. In February 1988 there came a crisis. The outcome was that the bank called in its overdraft and appointed a receiver. Mr Nicholson complains that the bank was fully secured, and in appointing a receiver operated so contrary to what he saw as being the best interests of his operation being turned around and kept going until pig prices could recover, that it was to be inferred that in appointing a receiver the bank had acted in bad faith and was not acting in its own interests, but in the interests of the unsecured creditor, BOCM, who, Mr Nicholson says, was an important customer of the bank and therefore one to whom the bank was prepared to listen.
  4. His arguments at trial and in his notice of appeal, and his submissions both on paper and before the court today, have ranged over a number of issues and grounds. Nevertheless, Mr Nicholson says quite candidly, and I would quite agree with him, that he stands or falls on his argument of bad faith.
  5. The judge considered that case in detail. He heard six witnesses from the bank, and I think two further witnesses from BOCM. He also, of course, heard Mr Nicholson and he heard from a valuer, Mr Garside. The judge found that all witnesses were telling the truth and he believed them all. In particular he heard from three critical witnesses from the bank, as well as the two critical witnesses from BOCM. The three from the bank were Mr Stewart, who made the recommendation for putting in the receiver; Mr Marshall, a senior executive; and Mr Thompson, another senior executive who made the actual decision in consultation with Mr Marshall.
  6. Apart from the fact that he heard the witnesses and believed them, and believed the bank's case that it was ultimately acting in its own interests, and not, as Mr Nicholson had it, as a cover for the interests of BOCM, the judge gave detailed reasons for rejecting the argument of bad faith. The judge pointed out that whatever the value of Mr Nicholson's enterprises, his borrowings were very large and he had run out of cash. On his own figures he needed to have a further 200,000 to cover cash flow projections, and I think his request was that his credit should be extended by a further quarter of a million pounds. The bank was unwilling to extend that further credit. BOCM was also unwilling to extend further credit. It was not prepared to provide further pig meal.
  7. Mr Nicholson told his creditors at the critical meetings in February 1988 that the Yorkshire Electricity Board were threatening to cut off his electricity. That may in fact have been an overstatement of the position because subsequently, at trial, Mr Nicholson was able to produce evidence that it was not the policy of the Yorkshire Electricity Board to cut off electricity from livestock farmers such as himself. But it is entirely credible to think that Mr Nicholson at the time made the point, which the judge found that he did, in order to put pressure upon his creditors.
  8. Moreover, not only were Mr Nicholson's finances in this critical position (he also owed other monies to other creditors), but he had lost the confidence of his bank. Two years previously in 1986 the bank had made it clear that it would be quite comfortable with Mr Nicholson going to a different bank, and when in 1988 it learned that Mr Nicholson's situation was far worse than it had previously been allowed to know, it lost confidence in his ability to pull through, or in his ability to cut down on his costs or cash withdrawals - or even in the security of his herds if he were given notice of its intention to put in a receiver. It was in these circumstances that, acting in its own interests, in an impossible situation where no one was prepared to put up further monies, it decided to put in a receiver.
  9. Mr Nicholson complains that the valuation of the bank's security discussed in the critical report of Mr Stewart, in which he recommended receivership, did not do justice to the value of his enterprise objectively considered. Even on that level of detail, I cannot agree with his submissions. The report recorded Mr Nicholson's own valuation of his major farm at 1.5 million, even though the evidence was that at this time in February 1988 Mr Nicholson was valuing it at the lower figure of 1.15 million. The bank's valuation was 1.2 million, that was the figure in its books. But it was perfectly sound banking practice, for the purposes of these considerations, to take the value at a discounted level of only two-thirds. That is what the bank did. It then had to deduct the first charge given to another creditor, 550,000.
  10. Mr Stewart's report also refers to Mr Nicholson's other assets, albeit without seeking to put definitive figures upon those other assets. But then the bank was not at that time in the position that Mr Nicholson sought to rely upon at trial, of having to hand the sort of expert evidence which he had prepared about the possible values of his assets.
  11. Mr Nicholson complains in this connection that at a case management conference in the year before the trial he was not given permission to call evidence from an expert, Mr Butler, as to the value of his enterprise. He did not, however, appeal against that decision which the judge had made in the exercise of his discretionary case management powers. He however did have the expert, Mr Garside, at trial to give evidence about valuation. But the judge properly considered that, on a case of bad faith, what he had to consider was material that the parties had to go on at the relevant time, rather than expert material assembled at a trial over a decade later. Ultimately, I do not think the judge can be faulted in that view.
  12. The outcome of the matter is therefore that both because the judge accepted the truthfulness of the critical witnesses, accepted their evidence that the bank was acting in its own interests, and also for the further reasons which the judge was able to give on the undisputed facts of the case, it seems to me to be impossible for this court to say that there is a realistic prospect of success on the question of bad faith. Therefore, unfortunately for Mr Nicholson, he must fall rather than stand on that issue.
  13. In those circumstances, I think that I can deal relatively lightly with the other points that Mr Nicholson has covered, either on paper or in his oral submissions.
  14. So far as his complaint of breach of confidence in the information given by BOCM to the bank in a phone call on 10th February 1988, all such questions were completely overtaken by events when, within a few days, Mr Nicholson gave both his major creditors carte blanche to talk to each other and to share information fully, in order to see if a solution could be found to his critical problems. Therefore I see no realistic prospect of success on the question of breach of confidence, a matter which Mr Nicholson in fact, to be fair to him, has not mentioned in his oral submissions today.
  15. The third major issue raised in Mr Nicholson's submissions, that of breach of contract, is that he should have been given longer than the four hours he was given between demand and the appointment of a receiver to find the money to pay off the bank. However, his contract was that his overdraft was repayable on demand, and there is clear authority that "on demand" means "on demand". Although some time will be given for the sheer mechanics of rendering the payment demanded, time is not given to raise the money which is demanded. Therefore no complaint can be made of the fact of the receiver being put in later on the same day as the demand was made.
  16. Mr Nicholson also raises a number of human rights points under the European Convention on Human Rights and the Human Rights Act 1988. Essentially his submission is that he has not had a fair trial. But in my judgment he did have a fair trial. He cannot complain about the judge's decision in his discretion as to what evidence was fit to go before the court and what was not. In any event, for reasons which I have already given, the question of valuation did not impinge materially on the critical question of good faith which the judge had to decide. Having considered all Mr Nicholson's material and submissions carefully, in the light of the very careful and full judgment which was given by the judge below, I can see no realistic prospect of success on these human rights grounds either.
  17. Therefore, for these reasons which I have sought to explain as comprehensively but also as briefly as possible, over the broad area of Mr Nicholson's complaints, my judgment is that there is no realistic prospect of success on appeal and I would dismiss this application.
  19. ORDER: Application for permission to appeal refused with costs.
    (Order not part of approved judgment)

BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII