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England and Wales High Court (Chancery Division) Decisions
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Cite as:  EWHC 1005 (Ch)
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BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
BUSINESS LIST (ChD)
London EC4A 1NL
B e f o r e :
| JONATHAN MARK BROOMHEAD
|- and -
|(1) NATIONAL WESTMINSTER BANK PLC
(2) THE ROYAL BANK OF SCOTLAND PLC
Charlotte Eborall (instructed by Addleshaw Goddard LLP) for the Defendants
Hearing date: 28 February 2020
Crown Copyright ©
Chief Master Marsh:
The new claim
(1) The defendants' application to strike out the claim, and/or for summary judgment, issued on 14 October 2019.
(2) The claimant's application for permission to amend his particulars of claim issued on 24 January 2020.
(3) The claimant's application for permission to rely on further evidence served on 25 February 2020.
Pleading fraud or dishonesty
"The claimant does not have to plead primary facts which are only consistent with dishonesty. The correct test is whether or not, on the basis of the primary facts pleaded, an inference of dishonesty is more likely than one of innocence or negligence. As Lord Millett put it, there must be some fact "which tilts the balance and justifies an inference of dishonesty". At the interlocutory stage, when the court is considering whether a plea of fraud is a proper one and whether to strike it out, the court is not concerned with whether the evidence at trial will or will not establish fraud but only with whether the facts are pleaded which would justify the plea of fraud. If the plea is justified, then the court must go forward to trial and assessment of whether the evidence justifies the inference is a matter for the trial judge. This is made absolutely clear in the passage from Lord Hope's speech at - which I quoted above."
Fraud " is a thing apart;" and " fraud unravels all ".
"The principles are, briefly: first, there has to be a 'conscious and deliberate dishonesty' in relation to the relevant evidence given, or action taken, statement made or matter concealed, which is relevant to the judgment now sought to be impugned. Secondly, the relevant evidence, action, statement or concealment (performed with conscious dishonesty) must be material. 'Material' means that the fresh evidence that is adduced after the first judgment has been given is such that it demonstrates that the previous relevant evidence, action, statement or concealment was an operative cause of the court's decision to give judgment in the way it did. Put another way, it must be shown that the fresh evidence would have entirely changed the way in which the first court approached and came to its decision. Thus, the relevant conscious and deliberate dishonesty must be causative of the impugned judgment being obtained in the terms it was. Thirdly, the question of materiality of the fresh evidence is to be assessed by reference to its impact on the evidence supporting the original decision, not by reference to its impact on what decision might have been made if the claim were to be retried on honest evidence." [emphasis added]
"A new trial should be ordered when the interests of justice so demand. Where a party has behaved fraudulently, been guilty of procedural impropriety or some other irregularity has affected the fairness of the trial the vital question to be asked is whether there is a real danger that this has influenced the outcome. If there is, a retrial should normally be ordered. If there is not, the interests of justice require that the decision should stand."
"I am inclined to agree with Mr Davies that the test was over-stated in Royal Bank of Scotland and that the proper approach is that laid down by the Court of Appeal in Hamilton."
The first claim
(1) At a meeting between the claimant and Mr Mosley of the first defendant on 22 March 2004 it is alleged two promises were made: that the bank would grant the claimant a loan for a term of 20 years (the first promise") and that provided interest and capital repayments were met and the overdraft facility was not exceeded the overdraft facility would be "renewed automatically" and repayment would not be demanded during the term of the loan ("the second promise").
(2) At the second 21 May 2004 meeting, Mr Mosley gave the claimant a loan agreement for signature. It offered him a £400,000 secured interest-only loan to be repaid in full on 30 June 2006. The claimant says that at the meeting, despite the express terms of the agreement, Mr Mosley said the loan agreement would be "automatically renewed" provided the interest payments were made and the overdraft facility was not exceeded ("the third promise").
(1) He was unable to accept the claimant's evidence. He found it to be to a large degree a reconstruction of events and that he was unable to be a dispassionate witness " instead seeking to present his case in what he thought was its best light; " and that was largely due to an unshakeable conviction that the failure of his business was due to the first defendant's conduct. 
"I approach Mr Broomhead's evidence with caution and have concluded that, before attaching significant weight to it, I should carefully test it against the contemporaneous documents and the inherent probabilities.": .
(2) The evidence of the claimants' witnesses was of limited assistance to him. There were no witnesses with first-hand knowledge of the meetings at which the three promises relied on by the claimant were said to have been made:  to .
(3) The evidence given by the three principal witnesses for the first defendant, Mr Derbyshire, Mr Pearson, and Mr Mosley, was given fairly and they freely acknowledged that their recollection of events was "at best" limited. Mr Brown was a "fair witness". The judge was less impressed by the evidence given by Mr Harvey:  to .
(4) The first defendant's case that the Promises were not made was much stronger than the claimant's contrary case: . In the course of reaching that conclusion, the judge discussed in paragraph  the first defendant's internal records that showed for a significant period the term of the loan was 16 years. The judge accepted Mr Mosley's explanation for how this came about. In fact, the claimant's case, as it was pleaded, was based on an agreement by the first defendant for a 20 year loan. After disclosure the claim was adapted to fit the first defendant's internal documents. The claimant's evidence on this key point, with the benefit of disclosure is far from being unequivocal. He said in this statement:
"When I signed my Particulars of Claim I thought that I had been promised a 20 year term But the documents appear to me to show that Mr Mosley promised me 16 years (or, possibly, 15 years), and that I must have indicated that was sufficient."
(5) If the Promises were made, they were not intended to have contractual effect: .
(6) The applicable limitation period was 6 years under section 5 of the Limitation Act 1980 and the period expired long before the claim was issued: .
(7) By early 2009, the claimant's businesses were not generating sufficient income to meet the hire purchase payments and it was for that reason it was advertised for sale. Thus, the claimant's case on causation failed: .
(8) The claimant's loss of a chance claim failed: .
(9) There was no merit in the claim under the Consumer Credit Act 1974 and the relationship was not unfair: .
Evidence on the applications
(1) Mr Lowans' second statement contains evidence that is largely outside his own knowledge. However, where he is required to provide the source of his evidence, he says he is "informed by the Bank". He states in paragraph 1 that he uses the term "the Bank" to mean both defendants. He therefore appears to be saying that he is informed by both corporate entities of each relevant fact. This seems inherently unlikely. But more fundamentally, stating that the source of evidence is a named corporate party does not comply with the requirements of Practice Direction 32 paragraph 18.2(2): see Punjab National Bank (International) Ltd v Techtrek India Ltd  EWHC 539 (Ch) at  . In a case such as this in which the claimant makes serious allegations of dishonesty it is understandable that the solicitors acting for the defendants wish to shield those who provide information from making statements on an application for summary judgment. However, the corollary is that the court may be unable to give more than limited weight to information that is not credited to a source. In large organisations such as the defendants, external lawyers are often instructed by in-house counsel, who in turn obtain information from others. In more routine cases, or in routine applications, the court may be unconcerned about such matters; but in a case such as this, it is really important to know who it is who is attempting to meet the serious allegations the claimant makes. The evidence provided by Mr Lowans has significantly reduced weight as a consequence of a failure to give the sources of his knowledge, particularly when set against some of Mr Wright's evidence that is based upon his own knowledge of the defendants' systems.
(2) The defendants have chosen to permit the court to take account of Mr Wright's evidence. Some of what he says is little more than comment and of no real assistance. However, where he gives evidence from his own knowledge of the way data was captured and treated by the defendants in the material period, or where he expresses an opinion he appears to be qualified to provide, the court is bound to accept it unless it is obviously wrong. To reject his evidence, other than in such an instance, would involve conducting a mini-trial.
Disclosure in the first claim
(1) The fact that the defendants took some time to give disclosure (that is the period allowed for disclosure under the order for directions was longer than is standard) is neutral; taking time over disclosure is equally consistent with the task being undertaken carefully and conscientiously as it is with a fraudulent approach.
(2) The first disclosure statement is full and comprehensive and, it is to be inferred from the lack of challenge, it accorded with the approach to disclosure agreed between the parties.
(3) The provision of subsequent disclosure, which on each occasion was accompanied by an explanation and a further disclosure statement, would tend to demonstrate that the defendants were, as is to be expected, fully aware of their obligation under CPR 31.11. Disclosure is, even when carried out carefully, a complex business and all the more so when the search for documents involves multiple sources dating back over many years. The provision of additional disclosure is not suggestive of fraud.
The new claim
(1) Paragraph 7.1 makes two points. First, based on what the claimant has been told by the whistleblower, the defendants could have provided disclosure in the first claim from the RMP "at the click of a button" and there was no excuse for late disclosure. This overlooks the fact that disclosure involves reviewing the pool of available documents for what can broadly be termed relevance, and also for privilege and business confidentiality. Secondly, it is said that "this alone" (the lack of a reason for late disclosure) suggests that the defendants adopted "a selective approach to disclosure". Neither of these assertions point unequivocally toward dishonesty. Disclosure was provided, albeit on the claimant's case it was late, and disclosure is required to be selective in the sense that a careful review of the available documents is required. It is quite another matter if documents that are known to be adverse are withheld, but that is not alleged.
(2) Paragraph 7.2 refers to the defendants' record keeping system called 'E-Flex' and the failure by the defendants to reveal its existence. However, there is no allegation of dishonesty. There is nothing per se that is dishonest about selecting sources of documents for disclosure unless it could be said, which it is not, that the existence of E-Flex was suppressed because the defendants knew it would reveal documents that were adverse to its case. Mr Roe QC placed considerable reliance on this issue as seen in light of Mr Wright's evidence and its significance requires further analysis.
(3) Paragraph 7.3 says the whistle-blower will provide evidence from his experience of the defendants "deliberately taking advantage of claimants' solicitors' lack of knowledge about the bank's systems for document retention". This allegation, in the way it is put, does not help the claimant as it is unfocussed and furthermore it is not a point Mr Wright deals with in his witness statement.
(1) The claimant alleges that the defendants have manipulated documents from its RMP that were disclosed in the first claim. The claimant says documents show signs of "some form of scrape by a find and replace facility the effect of which was to remove 'unwanted' text and automatically replace it with immediately opposing square brackets ()". He says this is called a 'wildcard'. He provides an example showing its effect. However, in the example, the wildcard appears only to affect punctuation and there is nothing to suggest that any material text is missing and nothing is said about causation.
(2) The claimant says he does not know whether what he terms "the manipulation" of the defendants' documents was caused by the Section 166 review by the FCA, his claim or both. This adds nothing to his claim.
(3) The allegation here is an example of the diffuse nature of the pleading. It alleges that there are two different versions of handwritten notes made by Mr Brown (a witness for the defendants at the trial) and that the notes are redacted. He suggests that one version "appears to have a post-it note placed over some text. No case on causation is suggested.
(4) Similarly, the claimant relies on two versions of a review document being disclosed, one with and one without a manuscript note visible, and one with some text redacted. The claimant has seen both versions and seen the redacted text. The note itself is not material.
(5) (6) and (7) These sub-paragraphs merely provide narrative about the whistleblower. In (7) the claimant says he "believes that the fingerprints might mark a period in which some manipulation of RMP was achieved." The fingerprint he refers to is the "electronic footprint" left behind every time a document was accessed and altered. However, the point is made at a high level of generality.
(8) The claimant refers to conversations with two former area bank managers. What he reports does not relate to or assist his case.
(9) (10) and (11) make generalised assertions that do not assist the claimant's case and do not assert dishonesty in the defendants' dealings with him.
(12) The claimant says he hold four different versions of some documents but, of itself, that is unsurprising.
(13) and (14) The claimant points out inconsistencies in the layout of unspecified documents without alleging or evidencing dishonesty or causation.
(15) The claimant alleges there are signs of use of a white-out tool and says it is a classic sign of document tampering. But he does not say what information may have been obscured. It appears the document he has in mind dates from 2010 whereas the Promises date from 2004.
(16) This particular repeats particular (3) and adds irrelevant material about RBS' subsidiary West Register.
(17) Various points are made. First, that only some of the documents disclosed included their metadata. This would have been evident prior to the trial of the first claim. Secondly, the claimant refers to a spread sheet created by the GRG. This was a document considered by His Honour Judge Klein.
(18) In this very lengthy particular, the claimant asserts that the loan was renewed internally after the GRG became involved. This issue was dealt with at the trial. He also complains about late disclosure some 5/6 weeks before the trial started of additional documents.
(19) The claimant says that in light of the disclosure of documents by the defendants to Promontory (which was appointed by the FCA to investigate the GRG), the defendants' motivation in delaying disclosure in the first claim "may have been that [they] wished to alter some of the documents or data."
(20) The claimant describes the defendants' failure to locate the back-up tape for May 2004 as "suspicious". He goes on to say that Iron Mountain have a highly effective professional document storage system and that it was likely the defendants would have more than one copy of all back-up tapes "mainly for security purposes, which makes it even more implausible that the bank could not locate this most important back-up tape". Plainly May 2004 was a crucial period for the claimant's case in the first claim given that the Promises he relied on were said to have been made on 22 March and 21 May 2004. It is notable however that the defendants did produce the April and June 2004 back-up tapes.
(21) This is a complaint that the defendants charged too much to restore back-up tapes. The complaint does not forward the claimant's case.
(22) The claimant says the date range for the defendants' disclosure did not include March 2004 and requests were made at the time for disclosure to extend earlier than April 2004.
(23) This is a complaint about the defendants' response the Data Subject Access Requests in April 2019. Clearly it cannot assist the claimant.
(24) It is said that "certain documents" produced under the Data Subject Access Review are different versions of documents disclosed in the first claim.
(25) The claimant refers to an internal advice document created on 2 October 2007. However, the document was dealt with in HHJ Klein's judgment.
(26) The claimant says he has revisited the defendants' disclosure and refers to a sanction sheet signed by Mr Mosley on 25 August 2008. He suggests the date has been overwritten with the date changed to 25/5/04. The case the claimant now makes is not clear and it does not particularise dishonesty.
(1) Whether as it is currently pleaded the draft amended particulars of claim make out a case that is bound to fail. This involves reviewing whether the elements of the cause of action (per Lord Sumption at - in Takhar) are there. The judgment must have been procured by fraud. There must have been conscious and deliberate dishonesty and it must have been material in the way that is explained in RBS v Highland Financial Partnership. The claimant does not have to show that fraud could not have been uncovered with reasonable diligence on his part.
(2) Whether it can be said, if the answer to the first question is in the negative, the court should exercise its discretion to strike out the claim. This involves considering whether the claim is in a growing or uncertain area of law and should be permitted to go to trial.
(3) If the case, as it is currently pleaded, is vulnerable to being struck out, should the claimant have a further opportunity to salvage it to take account of matters raised in Mr Wright's evidence or as a result of a further review of the facts.
(1) note, for example, that the defendants have disclosed differing versions of documents, where they have disclosed an apparently complete version. There could be many innocent, or negligent, reasons why there is more than one version of a document;
(2) say that some elements of the documents were redacted, when redaction is a common feature of disclosure in claims against banks because of the need to protect customer confidentiality;
(3) rely on documents that were considered by the trial judge and dealt with in his lengthy and thorough judgment.
(1) At paragraphs 75 to 88 he explains that document tampering was endemic at the defendants and gives examples of techniques that were used. He concludes this section of his statement by saying: " he has serious concerns as to the authenticity of documents disclosed by the Defendants and relied on by the Court in the original trial."
(2) He is sceptical about the claimed loss of the May 2004 back-up tape and says that (a) that off-site storage run by Iron Mountain was "incredibly stringent" and (b) in the 25 years he worked for the defendants he never knew anything to go missing. Critically he says the Defendants would have retained copies of any back-up tapes. The claimant made the same point in his witness statement and it is notable that Mr Lowans, in his second statement, does not deal with the point. For present purposes it must be assumed to be accurate.
(3) He explains in some detail how the RMP and E-Flex worked and their respective purposes. He deals with E-Flex at paragraphs 41 to 49. He says it operated in tandem with the RMP and they were the two primary electronic systems for Customer's Facilities and Accounts. He says every loan, overdraft, supplemental agreement or security document requested by a relationship manager would be processed by the E-Flex system. He expresses the view that E-Flex would contain highly relevant information pertaining to the first claim. Importantly, it would reveal a record and an audit trail of who had accessed the claimant's account facilities and when and where changes were made.
(4) He explains at paragraphs 30 to 36 that every customer was given a unique number, a CIN. He provides an example of documents from the RMP system relating to the claimant that shows contradictory CIN numbers and says this cannot occur within genuine RMP documents as the CIN number is automatically 'electronically pulled through' the system and remains constant on genuine RMP documents.
(5) At paragraph 95 he expresses the opinion that a document dated 16 September 2009 is not genuine. At paragraphs 114 and 115 he points out that the document appears to have been signed electronically as being sanctioned on 3 August 2009, that is some time before the document is dated.
(6) His evidence lends some weight to the concerns expressed at paragraph 11(24) of the draft amended particulars of claim about the differences between documents disclosed in the first claim and those disclosed in response to the Data Subject Access Request.
(1) Mr Wright's evidence raises issues of fact that may make it inappropriate, if a properly pleaded case that meets the fraud threshold is produced, to grant summary judgment.
(2) The defendants' position is not aided by evidence from Mr Lowans that fails to provide a source or source of his evidence.
"7. Documents disclosed by the Defendants a few weeks before trial from its internal customer relationship platform showed expiry dates on the Claimant's facilities of March 2020 (i.e. 16 years from the alleged promise made by Mr Mosley).
7.1.1 The whistle-blower has explained that there is no apparent excuse for such late disclosure because the full contents of the relationship manager platform are always downloadable and printable at the click of a button. The bank's conduct in this instance alone suggests a selective approach to disclosure.
7.1.2 A further electronic system within the bank's record-keeping, alongside the RMP system, is called 'E-Flex'. Nowhere in the disclosure exercise did the bank even reveal the existence of E-Flex still less disclose any documents from it. The function of E-Flex is to provide an electronic rubber stamp of who did what within the bank's computer system and on what day/time.
7.1.3 The whistle-blower will seek to provide evidence from direct experience of the bank deliberately taking advantage of claimants' solicitors' lack of knowledge about the bank's systems for document retention."
"11. The Claimant contends that by reason of post-trial discoveries and revelations he can show in this action that the Defendants were guilty of conscious dishonesty in the presentation and pursuit of the Defence,
(a) although not necessary, the Claimant contends that the dishonesty would have been determinative in the disposal of the Claim;
(b) although not necessary, the Claimant contends that he could not with reasonable diligence have discovered the matters of which he complains herein;
(c) although not necessary, the Claimant contends that the dishonesty was probably partly aimed at taking advantage of the inequality of arms in the litigation;
(d) the apparently credible material raising a prima facie case is:
(1) The Defendant manipulated disclosed documents. Print-outs from its electronic customer relationship platform show signs of some form of scrape by a find and replace facility the effect of which is to remove 'unwanted' text and automatically replace it with immediately opposing square brackets (). Merely by way of examples, an entry on the system made by Mr Mosley in February 2008 and marked by manuscript note "4/2/08 Decrease" reads,
"JMB Hire Limited. This is the new hire part of the operation. It doesnt actually own any machinery be re-hires from JMB 100 Ltd " (the missing, replaced text would seem to be 'cause');
A later entry from Mr Mosley marked by manuscript note "18/7/08 Renewal" reads,
"Declined to assist any further funding for this connection on either loan or overdraft. He has RBSIF waiting in the wings to assist where on the present debtor book could arguably uplift well over £100k if he so wish we are still pushing for the ID line";
An entry from Mr Mosley from September 2009 reads,
"£311k loan 14E years remaining. C&I repayments commenced September 2003";
Mr Coates, risk manager, has added to the same entry,
"Exit risk via open market  PV needs to provide adequate positive commentary".
The insertion of the back-to-back square bracket symbol under a 'find and replace' facility is called a 'wildcard' and the effect of the facility is to make a once and for all automatic replacement across the entirety of a database such as the Defendants' relationship manager platform, wherever the unwanted text appears.
(2) The Claimant's complaint had been one of the 207 sample cases included within the FCA's Section 166 review regarding GRG's treatment of small and medium sized businesses and one of the 4 cases selected for Special Interview save that, because he was already in litigation, the Claimant did not proceed. The Claimant does not know whether the manipulation was caused by the Review, the litigation or both.
(3) The Claimant has discovered two different versions of handwritten notes made by Mr Brown of GRG made at a meeting shortly following the transfer of the Claimant's account to that division. The second copy appears to have a post-it note placed over some text so that the page photocopies without the text being visible. The document was also disclosed with heavy redaction by a four-inch solid black box covering the bottom part of the page of notes.
(4) The Claimant has discovered 2 identical versions of a review document dated 24 October 2009. One has a manuscript note not present on the other version and one shows a small line of redaction covering over the line which stated 'Security review undertaken (credit docs) no issues'. This is the 'SLS (renamed GRG) Internal Strategy and Credit Review Sheet'. The same unredacted document is contained separately within the electronic bundle of Bank disclosed documents AG 330-00001. A separate internal bank email dated 05.11.09 under the headings:
'Security Notes: ***** Special Notes *****'
'ORIGINAL CHARGE LOST. COPY FROM HMLR IN FILE'. A copy of a 'charge' document was later presented by the bank to the local County Court some time later in a 'Claim for Possession of Property' dated 7th September 2011 as an exhibit to a Statement of Truth signed by Chris Keane of Squire Sanders & Dempsey (UK) LLP, dated 20.07.11, the bank's then solicitors. It was marked as 'we certify that this is a true copy of the original Dated 7/2/11 Squire Sanders & Dempsey (UK) LLP'. At best it is likely not to be 'a true copy of the original', but is probably a 'copy of a previous copy' from the Land Registry. The Claimant believes that the redaction of specific text "Security Review undertaken (credit docs) no issues" was a deliberate attempt to conceal or distract from the fact that the bank at that time had lost the Security Charge Document.
(5) Following the learned Judge's dismissal of the Claim, the Claimant was able to make contact in July 2018 with a whistle-blower from the bank whose name had featured in several press and BBC articles examining GRG's dishonest practices and who had been a reporter to the FCA. He, a former senior RBS employee, informed the Claimant that large numbers of the Defendants' staff had routinely received specific training in how to falsify documents and including how to forge signatures. One of the techniques he specifically identified was the use of notes to cover text before photocopying with the shadow line created by the photocopier then being able to be concealed over a recopying exercise of up to 20 times. The whistle-blower explained that a phrase in common currency at the Defendants was "the best business is done at the photocopier". The Claimant was subsequently able to see from various mainstream media reports that the whistle-blower's revelations corresponded with other public accusations against the bank.
(6) The whistle-blower explained that it was common for the Defendants to copy and paste data from its RMP (relationship manager platform) system so as to produce selective disclosure when a customer was pursuing a formal complaint.
(7) The whistle-blower explained to the Claimant how he could see an electronic fingerprint on the RBS RMP system whenever an RBS employee accessed it. With the benefit of this information the Claimant was able to see that 16 of the Defendants' staff entered his RMP files on both 14 and 16 September 2009 which is the time the Defendants first imposed £3,000 monthly charges and new punitive interest rates on the Claimant and which Mr Brown of GRG described in his notes as 'penalty interest'. Other than these fingerprints however, there is no contemporaneous documentation (emails or otherwise) anywhere else to demonstrate that those individuals entered the system in that short period. Further, apart from this 3 day period, the same electronic fingerprints are largely missing from the rest of the RMP File Documents, whereas it would be expected that they would exist in the ordinary course of business with Mr Mosley and the other managers before the GRG transfer. The Claimant believes that the fingerprints might mark the period in which some manipulation of RMP was achieved.
(8) The whistle-blower suggested it would be in the Claimant's interests to speak to two former area bank managers operating a claims management company in Hull. The Claimant sought them out and learned that they had specific experience of the Defendants disclosing documents in litigation which were different to the same documents provided under a subject access request. They further explained that the Defendants operated a dishonest practice in respect of swaps/IRHP litigation of providing a covert credit line unknown to the customer which represented a contingent liability for the swap product and could be used by the bank to hedge against the chance of the agreement going awry for the customer and even on occasion to default the customer on loan to value breaches.
(9) The Claimant has become aware of a secret recording of the former RBS Director, John Hourican, from 2009 in which he admits the Defendant's routine use of 'data cleaners'.
(10) The Claimant contends that the Defendants have both admitted publicly in the recent past to allowing staff to recreate documents and having the software for such practices.
(11) The Claimant believes that widespread document manipulation is a complaint being pursued in an ongoing class action brought against RBS GRG by RGL Management, a claims management company.
(12) In some instances the Claimant now holds 4 different versions of the same bank document,
(a) A copy of the supposed original document
(b) A changed version with square brackets and a space
(c) A version identical to (b) but with the square brackets and space removed
(d) A version received under a post-trial subject access request with the square brackets and space removed and where the text has been copied into a new text box.
(13) The Claimant now sees there are numerous blank spaces within the RMP File that are out of sequence within the ordinary course of the documents. In size, the blank spaces are from circa one paragraph up to nearly an entire page.
(14) There are some documents which do not follow on as would be naturally expected in page order e.g. whilst the numbering might be page 1, 2, 3, 4, 5 the text at the head and foot of the documents does not flow or make sense i.e. a discrepancy between the numbering and document text.
(15) There are some 'text box' thick black perimeter lines broken in places with what appears to be the use of a 'white out' tool (e.g. a tipp-ex ribbon) that has strayed from deleting other text into the side of the text box. The Claimant has been alerted to this feature as a classic sign of document tampering.
(16) A document from the Supplemental Disclosure Bundle, File 1 of 2 no.71 contains handwritten notes from GRG Manager John Brown and shows several lines of text concealed by one or two pieces of paper (likely 'post it' notes) when utilising a photocopier. The notes are referring to the Claimant's then available assets within his business structure. This was at the time that GRG was promoting a debt for equity swap as an alternative to large capital repayments. The Claimant is aware that RBS operated a secret but now notorious property arm in conjunction with GRG called West Register which was used to acquire customers' property. Leaked RBS GRG & West Register Policies & Procedure Manuals were published in October 2016 by Buzzfeed in an article named "Dash for Cash". The West Register Manual reveals that RBS staff were instructed to send internal 'Victory Emails' when acquiring a borrower's property for the Bank's property arm West Register.
(17) Following the trial, the Claimant has checked the original meta data of just a small number of bank documents that retain their original meta data. The bank's electronic disclosure is split into two categories named "Images" and "Natives". Within the bank's disclosure of electronic documents, only a small number of electronic documents and a small number of Microsoft Excel spreadsheets created by GRG have retained original meta data. All the electronic documents under the 'Natives' heading should as 'Natives' retain their original meta data. GRG created a specific Microsoft Excel Spreadsheet that seemed to be renewed on an ongoing monthly basis. Of concern is the fact that GRG were supposed to have taken over the Claimant's accounts on the 30th June 2009 or 1st July 2009, according to the faxed GRG introductory document from Paul Mosley, and also as referred to by other bank documents. Within the bank's disclosure and taken from the witness statement of CRM Credit Manager Julie Gatfield, the handover to GRG was on the 14th May 2009, or alternatively within just days shortly afterwards, not later on the 30th June 1st July 2009. The Claimant has checked the original meta data of a particular monthly GRG spreadsheet from the bank's electronic disclosure document no. AG0000177 00001. The original meta data reveals that the date last 'saved' and also 'last printed' was '03.06.2009'. The document contains within it a section entitled 'Pricing/Upsides', where it states that:
"PPA potential uplift in site value should 'care village' idea materialise / fall back of existing PP to develop two properties and swimming pool."
This demonstrates, the Claimant avers, that GRG had identified a way of profiting from the secured property by way of exchanging debt for equity as early as 3rd June 2009, which is almost a full month before the official transfer to GRG had taken place, and a month before the first meeting with the Claimant on the 1st July 2009 (the 1st July 2009 is identified as the transfer date to GRG in the RBS GRG letter dated 23.12.09). The first meeting of the 1st July 2009 was where GRG was supposed to learn about the Claimant's business to enable to begin a process of turnaround/transfer back to the NatWest bank manager, as per the text of the introductory faxed letter from Paul Mosley and not for GRG to at their earliest opportunity seek a way of profiting from the secured property for the bank's benefit.
(18) There is an internal Transactional & Nontransactional Comments note purportedly written by GRG Senior Manager Mike Potts on the 09-Nov-09 that states that "All events of default to be preserved please." What is now clear from the second Supplemental Disclosure Bundle is that GRG renewed the Loan and Overdraft several times during 2009 until 4th December 2009, and in so doing extended the expiry date/term date of the loan and overdraft in writing within bank documentation. There is further documentation showing that RBS renewed the borrowing for some considerable time afterwards without the Claimant's knowledge. GRG and RBS repeatedly stated that the loan and overdraft were due for repayment on the 28th February 2009 were not repaid or renewed on that date; and therefore the Claimant was in default. This became an issue within the Judgment where aspects of the Claim were deemed by the learned Judge to be time barred as the Claim Issue date was 17th April 2015. The Julie Gatfield Witness Statement 'JAG1' with exhibits states that "I can see from the credit report that I renewed the facilities for a month, until 11 June 2009 . This would also have ensured that nothing showed up as overdue on the RMP system in the meantime". Within the Exhibits of JAG1, there is a 'Bank Sanction Summary Sheet' dated 5th May 2009. The A1 Loan and A3 Overdraft are 'Decision/ Approved' with a Review date of 11 June 2009. The document is signed by Paul Mosley on the 18th May 09, whereby immediately above his signature it states that:
* Post drawdown conditions are accepted by customer and will be monitored on an ongoing basis.
* Covenants are acceptable.
The Claimant says he was at no time informed that the loan and overdraft had been subject to a credit application at this time, nor did he have any knowledge that 'Post drawdown conditions are accepted by customer'. The fact that Paul Mosley signed this 'Bank Sanction Summary Sheet' on the 18th May 2009 was entirely missing from the Witness Statement of Paul Mosley. However, this matter is included within the Witness Statement of Julie Gatfield only.
The Claimant has a second version of the same summary sheet, otherwise the same, signed instead by 'Steve Mason' and undated.
There are several other references to the debt being due for repayment in June 2009 within GRG internal communications:
e.g. the GRG John Brown email dated 03.12.09 quote "Debt was due for repayment in June this year case transferred to GRG soon after".
Then 20 or so days later, GRG's John Brown wrote a letter to the Claimant dated 23.12.09, that stated "Your loan was due for repayment on 28th February 2009 and as such is in default. Your loan agreement clearly states that in such an event the interest rate shall be increased from 2.0% to 3.5% above base rate. This increase was not imposed until 10 August 2009 despite the loan being in default from 1 March 2009 . The overdraft also expired on 28 February 2009 .."
This letter was written just 20 or so days after writing within his internal email dated 03.12.09 that stated that "Debt was due for repayment in June this year".
The court was not referred to the fact that GRG covertly renewed the borrowing several times until 4th December 2009, which is demonstrated by the single late disclosed document File that arrived circa 5 weeks prior to trial (disclosure statement of truth signed 24th April 2018). During the course of the litigation, the bank's solicitors Addleshaw Goddard sent two substantive letters that the bank relied heavily upon asserting that 'there were no contemporaneous documents to support the Claimant's Claim'. The first letter dated 19 May 2017 states on page 2 at 2.5 & 2.6 that:
2.5 "It should be noted that the statements alleged are contrary to general banking practice. Why would a Bank agree a specific repayment date in writing, but then orally agree that it would not demand the monies for a far longer period?"
2.6 "In light of the above, and the evidence provided by your client to date, your client's collateral contract argument is entirely unsubstantiated. Put simply, there is no independent or contemporaneous evidence that suggests that the alleged statements might have been made. Your client's claim will therefore fail.
The second letter dated 15 September 2017 which is post standard disclosure states on page 1 at 1.1 that:
'Now that the parties have completed standard disclosure and we have had the opportunity to inspect those documents which have been disclosed by your client, we have reconsidered the contents of your 28 June 2017 letter in light of those documents. The short point arising out of our review is that there are no contemporaneous documents to substantiate the claims made by your client in respect of liability, causation or quantum. Accordingly, our view is strengthened that your client's claim is fundamentally flawed and bound to fail. The statements that there were no contemporaneous documents to support the Claimant's Claim were false.' Five or so weeks before the trial was due to begin on the 24th April 2018, a second tranche of supplemental disclosure (Disclosure Statement signed on the 13th March 2018) was served. The file contained numerous NatWest bank statements that had not been disclosed previously. The file also contained what became known at the trial as 'Credit File Front Sheets'. The Front Sheets contained numerous references to 'March 2020' being the expiry date of the Loan. This matched the alleged promise made by Paul Mosley in 2004. At trial the 'March 2020 Loan Expiry Dates' were deemed 'a mistake' that had carried through the documents by being accidentally 'auto populated' from one loan 'front sheet' to the next loan 'front sheet'. Within that late disclosure there were also however numerous 'Loan Application Forms' that also had entered upon them 'March 2020' as the expiry date of the Loan. It was, the Claimant avers, highly unlikely that the 'March 2020' date was also a mistake on the Loan Application Sheets, as Paul Mosley would have had to manually re-populate almost every text box within the Loan Application form, and to not alter/or correct the expiry date of 'March 2020'. That is improbable.
(19) At the first CMC hearing the Defendants specifically asked for extended time to give disclosure. The Claimant has recently discovered that RBS provided documents to the FCA's contractor Promontory on an electronic platform called 'RingTail'. He discovered this after a recent conversation with Duncan Burrell, Promontory's internal General Counsel in connection with a Data Subject Access Request to Promontory on the 12th April 2019. Mr. Burrell dealt with the DSAR. According to the bank's own disclosure documents, the bank also utilised the 'RingTail' platform as an electronic platform to transfer and store data relevant to the Claim. Most if not all of the documentation had always therefore been readily available and indeed utilised by the bank in the earlier Section 166 review. The Claimant fears that the District Judge was misled and the motivation may have been that the Defendants wished to alter some of the documents or data.
(20) According to the bank's first Disclosure Statement it could not locate 'the May 2004 monthly back up tape' from Iron Mountain. This would have no doubt contained the email traffic pertaining to the May 2004 Paul Mosley promises. The bank stated in correspondence that most of its documents would have been attached to bank emails at some time or other. The bank's location of the back up tapes for April and June 2004 but not May 2004 is suspicious. Iron Mountain have a highly effective professional document storage system that offers document/data tracing via advanced barcoding amongst other methods. Further, it is likely that a PLC such as a bank would have more than one copy of all back up tapes, mainly for security purposes, which makes it even more implausible that the bank could not locate this most important back up tape.
(21) The bank requested £1,000 per month per 4 custodians (there were 4 custodians Paul Mosley, Matthew Harvey, John Brown & Sharon Lewis) to restore back up tapes. The Claimant believes that the prohibitively expensive price was used to deter the Claimant from pressing for disclosure and deter the court from ordering it.
(22) After multiple requests to do so the bank did not supply Electronic Disclosure under its date range scope for Paul Mosley or Sharon Lewis prior to 1st April 2004 and in so doing deliberately missed the communications from March 2004 when the first substantial promises were made by Paul Mosley. Thus both the March and May 2004 disclosure was missed out. The basis for the bank's refrain that there were no supporting contemporaneous documents for the Claimant's case is obvious.
(23) The bank's response to the DSAR in April 2019 was manifestly defective because it did not produce documents which the Claimant already knew without doubt the bank held because they had been disclosed to him in the course of the litigation. The Claimant is now seeking formal enforcement through the Information Commissioner. The outcome of that regulatory enforcement will have a direct bearing on this action because it is expected to produce a definitive set of the documents held by the bank and that definitive set will allow the Claimant's allegations herein to be tested.
(24) Contrariwise, certain documents produced under the DSAR are different versions of documents disclosed in the litigation. Certain key sanction summary sheets obtained under the DSAR contain an additional column entitled 'expiry date/term'. The date entered for the expiry of the loan facility documents is 31 May 2020, i.e. consistent with the Claimant's original claim. Without cogent explanation for the discrepancy the Claimant can only infer that the corresponding sheets disclosed in the litigation were deliberately edited.
(25) The Claimant has now discovered that a written internal advice document created on 2 October 2007 had the expiry date/term entry altered from 31 May 2020 to 31 May 2008.
(26) In the light of his post-trial discoveries the Claimant has revisited the bank's disclosure generally. Close scrutiny has shown that a sanction summary sheet signed by Mr Mosley on 25/8/08 has been manually altered, with a 4 written over the 8 of the year and a 5 over the 8 for the month, thus to read 25/5/04. The Judge placed weight on the sheet because the typed terms were contrary to the Claimant's case, stipulating a requirement for full repayment of the facilities within 2 years (save for a possible review of modest residual borrowing against income streams available). The Claimant's belief now is that the sheet dates from 25/8/08, the date Mr Mosley signed against, and thus was after the point in time where the CRM (Customer Risk Manager) department had already removed his self-sanctioning powers as a result of his dealings with the Claimant, recording that 'the increases that have been auto approved have not helped (possible credit stewardship issues here'). It appears to be part of a crude attempt by Mr Mosley to cleanse the file and shelter from internal criticism or disciplinary action."
Note 1 Lord Briggs and Lady Arden gave dissenting judgments on the issue before the Supreme Court but also appear to have accepted the test in RBS v Highland Financial Partners as the correct one. [Back]
Note 1 Lord Briggs and Lady Arden gave dissenting judgments on the issue before the Supreme Court but also appear to have accepted the test in RBS v Highland Financial Partners as the correct one. [Back]