Adibe v National Westminster Bank Plc

This is an application for permission to appeal listed with the appeal to follow should I grant permission. It is an application to appeal from the decision of Deputy Master Henderson given on 16 November 2016. By his decision the Master dismissed the claims brought by the claimant, Mr Adibe, against the defendant, National Westminster Bank (“the Bank”) upon the Bank’s application for those claims to be struck out as disclosing no reasonable cause of action or as abuses of the process of the court and also for summary judgment on the basis that the claims have no real prospect of success.

By his claims Mr Adibe sought damages for alleged breaches of contract, negligence and breach of fiduciary duty on the part of the Bank in its conduct of the handling of his accounts with the Bank. He also sought damages for the alleged breach on the part of the Bank of an agreement made between him and the bank whereby litigation which had been commenced by the Bank against him was compromised. Mr Adibe says that as part of the compromise arrangements the Bank was obliged to mark his credit records as settled and that the Bank failed to do so.

In a careful and fully reasoned judgment, the Master analysed the evidence in relation to each of the claims maintained by Mr Adibe and for various reasons, including that many of the causes of action were statute barred, he dismissed all of the claims. Originally, Mr Adibe sought to challenge the entirety of the Master’s order, but Mr Blackwood, who did not appear below, expressly limited the basis upon which Mr Adibe seeks to appeal to one point and in relation to one cause of action, relating to the alleged failure on the part of the Bank to mark Mr Adibe’s credit records as settled, as I have explained above.

The ground thus still pursued is that the Master erred in determining that there was no financial agreement between Mr Adibe and the Bank to mark his credit records in that fashion. It is convenient to begin consideration of the material in this case with the manner in which the claim was pleaded in Mr Adibe’s particulars of claim. There it was pleaded at paragraph 9, that in or around December 2007, after ignoring Mr Adibe’s requests to restructure his second loan as a result of financial difficulties experienced by him, following the loss of his job on 30 September 2005 due to redundancy, the Bank instituted debt recovery proceedings against him in the Northampton County Court. It sought thereby to recover the outstanding balance of the loan and unpaid account charges in the sum of £5,190.78. It continued:

During the course of its aforesaid claim against the claimant the defendant disclosed a default notice dated 14 September 2007 alleged to have been served on him served pursuant to section 87(1) Consumer Credit Act 1974. However, this document patently and incorrectly indicated that his repayments were in arrears to the tune of £21,450.20.

The claimant denies ever receiving the default notice in question and contends that the defendant was thereby or in any event in breach of the aforesaid provisions of the Consumer Credit Act 1974 as well as section 88 thereof, as the default notice disclosed was not in prescribed form, the amount stated therein was grossly overstated and incorrect, nor was any OFT fact sheet as required enclosed therewith or referred to therein.

Subsequently, in or around October 2008 the defendant agreed in settlement of their said claim against the claimant to accept £3,000 in full and final settlement payable in full by the end of November 2008. As part of the settlement agreement it was also agreed that the default entries registered by the defendant in the claimant’s credit files relating to the outstanding balance of the loan and the £180 in respect of the account charges would be marked as settled.

However, and in breach of the aforesaid agreement, the defendant failed to amend the claimant’s credit files following completion of payment of the aforesaid settlement sum in the respects agreed. Instead and in breach thereof the defendant had or caused the claimant’s said records to be marked partially settled.”

Upon the Bank’s application for striking out, or summary judgment, it relied upon two witness statements from Carrie Talbot, a solicitor with Messrs Matthew Arnold and Baldwin, who were then the bank’s solicitors; material documents for the purposes of this litigation were exhibited to those witness statements. In response, Mr Adibe also served a witness statement.

This evidence was considered and analysed in detail by the Master and in relation to the sole ground of appeal now under consideration he dealt with the matters that I now have to consider, in particular in paragraphs 73 to 86 of his judgment. He began by referring to correspondence between the Bank and Mr Adibe which led to Mr Adibe’s signing a Tomlin order which was drafted by the Bank’s solicitors. It was sent as an attachment to an email dated 28 October 2008 which followed other exchanges between the Bank and Mr Adibe to which I will refer in considerable detail a little later in this judgment.

The email concerned was in the following terms:

That was then signed. The attached Tomlin order in draft was then signed by Mr Adibe; it was dated 29 October and it was signed also on behalf of the Bank by a representative of Irwin Mitchell who by that time were the Bank’s solicitors.

The consent order was made by the court on 31 October 2008 in these terms:

all further proceedings in this action shall be stayed upon the terms set out in the attached schedule except for the purpose of carrying such terms into effect;

each party shall have liberty to apply to the court if the other party does not give effect to the terms set out in the schedule.”

The schedule, signed by or on behalf of both parties, was in these terms:

the sum of £1475.00 will be transferred from the defendant’s business account numbered […] the remainder of £1525.00 will be paid by two instalments of £762.50, the first payment due on or before 30 October 2008 and the second instalment due on or before 30 November 2008.

If payment is not made on the due date the claimant shall give notice in writing of such default to the defendant and if payment is not made within 14 days from the date of such notice the claimant shall be at liberty to apply to lift the stay and to enter judgment against the defendant for the full amount of their claim, less any payments are made.”

The Master then continued at paragraph 77 of his judgment with a review of the evidence and the other materials in the case. He said:

In my judgment, the Master thereby indicated that he recognised that he was investigating the factual background that would be relevant to the issues both as to whether there was a contractual arrangement between the parties that had given rise to an agreement, partly in writing, partly oral, and also whether there was a contract which was a contract only in writing, and, still further, whether there was indeed a collateral contract.

I gratefully adopt the survey of the evidence set out by the Master and I can do no better for this purpose than read certain passages of the Master’s review of the evidence in full. I begin at 77.1:

I pause there to observe that it is plain from that evidence that a matter of real concern to Mr Adibe had been, from an early stage of negotiations, the amending of the credit file record. Returning to the Master’s judgment at paragraph 77.2:

I move on to paragraph 77.3. It is not necessary for me to read the whole of that passage, but I do read the last three lines of it, where the Master said:

He continued at paragraph 77.4:

The Master continued:

Mr Adibe’s offer in his letter dated 14 October 2008 was rejected by a letter from Irwin Mitchell dated 27 October 2008 so at that stage there is no contract of compromise

By the 27 October 2008 letter Irwin Mitchell put a counter offer or at least an invitation to treat in the following terms: ‘To see a swift end to this matter, our client would be prepared to accept a minimum of £4,000 in full and final settlement of your liability in respect of the loan account [number and account details given] and the advantage Gold account [details given]. The payment would have to be a lump sum payment within a reasonable period. Please consider the offer. It would be good if you were able to let us know if this offer is acceptable to you prior to the hearing on 31 October 2008.

The uncertainty as to the payment arrangements means that the counter offer in the 27 October 2008 letter was probably only an invitation treat, but nothing turns on that because it was not accepted.”

The Master then referred to a number of telephone conversations between Mr Adibe and Messrs Irwin Mitchell, the Bank’s solicitors. Irwin Mitchell’s notes are in the hearing bundle. They are extremely difficult to read, as the Master found them to be, but in my judgment they are critical in the resolution of the matters that I have to determine. The telephone attendance note of 27th October, doing the best I can with the aid of a magnifying glass, reads as follows:

Then there is an entry for 28 October, again very difficult to read, but it seems to say:

So it was obvious that Irwin Mitchell had it in mind by this stage to deal with any settlement by way of Tomlin order. Then finally the last entry for 28 October says, as far as I can read it, this: “Call back from defendant. Advised acceptable offer and that I will send Tomlin order to him. Confirmed that if I send by email he will send it back to me by fax. Email sent.”

Those emails were exhibited to the Bank’s evidence. The Master then cross-referenced this evidence with that in Mr Adibe’s witness statement, where Mr Adibe said at paragraph 9(f):

Paragraph 9(g) stated:

The Master then consider all of the evidence relied upon by both sides and stated his conclusion about the factual dispute as to what was said in the course of the telephone discussions between Mr Adibe and Irwin Mitchell and he did this at paragraph 77.15, which is an extremely important paragraph in the judgment:

I considered in the course of the hearing this morning and raised it with counsel whether upon the hearing of this appeal it would be appropriate for me to reconsider the conclusion reached by the Master as to the prospect of Mr Adibe having a real prospect of success on the issue identified, particularly in light of what followed next and what was described in paragraph 77.16 and 77.17 of the Master’s judgment. In those paragraphs first of all the Master dealt with the content of the email which forwarded the Tomlin order; given its importance I mention again that the email referred to the Tomlin order as recording the terms of the settlement between the parties and invited Mr Adibe, if he happy with its terms, to sign it and return it.

Then at 77.17 of his judgment the Master said this:

The conclusion that I have reached is that in light of the material before the Master and his very careful consideration and analysis of the evidence, it would inappropriate for me, whether upon a review or upon a rehearing, to disturb his factual conclusion. I do not consider that this appeal should be dealt with on the basis of a rehearing. Given the material that there is available, I do not consider that proceeding to hear this appeal by way of a rehearing would actually affect the conclusion.

In my judgment, the conclusions reached by the Master and expressed by him at paragraph 77.15 are supported by two additional considerations which in this particular context he did not expressly state but which I think he may well have had in mind, given what is set out elsewhere in the judgment.

First, as I have mentioned already, it is beyond doubt that the amendment of the credit records was a matter of real concern to Mr Adibe. That is evidenced in the documents relating to earlier communications between the parties. Secondly, if the Bank was prepared to settle its claims for £3,000, it is difficult to see the commercial justification, or any justification, for the Bank’s refraining from making appropriate amendments to the credit records and recording that the account liabilities were indeed settled.

The Master then proceeded to consider the interpretation of the exchanges between the parties and state his conclusions on the collateral contract issue. He began by reminding himself at paragraph 78 that the Tomlin order did not include terms as to amending credit records. Then he continued at paragraph 79:

the terms contained in the draft Tomlin order do not include the term which Mr Adibe says it should have done as to the requirement to mark the credit file or files as settled;

there is the small difference in the addition referred to in paragraph 32(f) of Ms Talbot’s statement;

the immediately following sentence in the email said that if you are happy with the terms please sign the Tomlin order. Mr Adibe then signed the draft Tomlin order, thereby indicating that he was happy with the terms, those terms being the terms of the settlement agreement between the parties. In my view, this is conclusive on the point.

By signing the draft Tomlin order Mr Adibe agreed that it contained the terms between him and the bank. In my opinion, that is a conclusion which I can properly make on an application for summary judgment, because it is a conclusion on a point of construction in respect of which I have all the relevant background facts and, insofar as they are disputed or unclear, I have assumed in favour of Mr Adibe. That conclusion disposes of Mr Deacon’s argument that the agreement was part oral and part in writing. It also disposes of his argument that there was a collateral contract to the effect that in consideration of Mr Adibe agreeing the terms of the draft Tomlin order the bank would mark the credit files as settled. In respect of both arguments the email on 28 October 2008 and Mr Adibe’s acceptance of its terms by signing and returning the draft Tomlin order meant that the entire agreement between Mr Adibe and the bank comprised what was contained in the draft Tomlin order and no more.

A basis for the collateral contract argument might have been found if Ms Downie’s statement of 14 October 2008 was treated as a standing offer by the bank to mark the credit file as settled if Mr Adibe agreed a compromise of the 2007 proceedings with the bank. However, that approach does not fit with the facts as alleged by Mr Adibe. Specifically, Mr Adibe only alleges a single settlement agreement, not two, thus (1) in paragraph 12 of the particulars of claim Mr Adibe states that it was as part of the settlement agreement also agreed that the default entries would be marked as settled; and (2) in paragraph 9(g) of his statement Mr Adibe says the following: that following receipt of Irwin Mitchell’s letter of 27 October he called Irwin Mitchell and offered £3,000 in full and final settlement on the condition that my credit file was at least marked settled, as had been indicated upon payment of the sum agreed. My offer was accepted by the defendant and a consent order was prepared their said solicitors which was endorsed by us. In this quoted passage Mr Adibe is saying that the term condition as to the marking of his credit file was a term agreed on 27 October.

Given that the terms of the draft Tomlin order represented the entire agreement between Mr Adibe and the bank, then, as already mentioned, as a matter of construction it is not possible to include a term as to the credit files in that agreement. Any background facts relied upon to construe that agreement as including a term relating to a credit file would have to have been a fact which derived from the previous negotiations between the parties and which would be inadmissible for the purpose. Further, to include such a term would involve adding a term rather than construing an existing term.

It is conceivable that there is a case for rectification of the Tomlin order or at least its schedule, but rectification is not sought in a case where it is not pleaded.

Accordingly in my judgment, insofar as Mr Adibe claims damages for breach of the agreement to mark the credit file as settled, it fails and should be summarily dismissed.”

I should add that in paragraph 86.1 the Master said, in relation to the term as to marking of default entries of the credit files as a term of part of the collateral contract made part orally and part in writing, that no such contract had been pleaded, and he explained that was the Bank’s submission. But he went on to say this:

I turn now to the party’s submissions which were made to me today. Mr Blackwood, counsel for Mr Adibe, made a short but powerful point with regard to paragraph 77.15 of the Master’s decision and his finding as to a real prospect of success on the part of Mr Adibe on the question of whether the £3,000 offer was on the condition that the credit file was at least now marked settled. Mr Blackwood said that that finding could not be reconciled with the conclusion that there was no collateral contract because it amounted to a finding that there had been an agreement antecedent to the Tomlin order.

Mr Blackwood submitted that the factual finding that Irwin Mitchell accepted the offer made by Mr Adibe on 28 October establishes that as of that date there was an agreement that the credit file should be marked settled in exchange for £3,000. This conclusion is reinforced by the factors that I have mentioned previously; in particular the lack of commercial justification for refusing to acknowledge that there had been a settlement if agreed sums had been paid. Mr Blackwood submitted that the Master effectively imported an entire agreement clause into the Tomlin order where the order itself contained no such provision.

Ms Butler in her able submissions for the Bank emphasised that the Tomlin order did not contain any provision as to the amendment of credit records. She submitted that there is a strong presumption that where parties arrive at a definite written contract they intend that contract to contain all the terms of their agreement, and for that proposition she relied upon the decision of Lord Russell, the Lord Chief Justice Gillespie Bros v Cheney, Eggar & Co [1896] 2 QB 59, where his Lordship said this:

Ms Butler went on to draw attention to other passages in Chitty at, in particular, paragraph 13.101. It cannot, in light of these authorities, be successfully asserted that the mere production of a written agreement, however complete it may look, will, as a matter of law, render inadmissible evidence of other terms not included expressly or by reference in the document. Returning to Chitty, a passage is then cited from the judgment of Roskill LJ, as then was, in the case of Evans and Son (Portsmouth) Ltd v Andrea Merzario Ltd [1976] 1 WLR 1078 at page 1083 : “The court is entitled to look at, and should look at, all the evidence from start to finish in order to see what the bargain was that was struck between the parties”. I turn then to the text in Chitty:

Ms Butler submitted that, contrary to Mr Blackwood’s submission, the Master was entitled to consider the terms of the Irwin Mitchell emails, in particular the email of 28 October forwarding the Tomlin order, when determining whether the Tomlin order contained the whole agreement between the parties, and, having considered that it did, the Master was right, in his conclusion that this disposed of the case based upon a part oral and part written contract, or upon a collateral contract.

I now turn to my conclusions and remind myself of what was said by Roskill LJ in Evans v Merzario, that “The court is entitled to look at, and should look at, all the evidence from start to finish in order to see what the bargain was that was struck between the parties.” In my judgment, it is essential to go back to the Master’s finding that the offer that was made by Mr Adibe was made on the condition that the credit file was marked settled or, rather, I have to have regard to his finding that there was a realistic prospect of Mr Adibe establishing that that was the case.

The telephone record discloses, at least arguably, that such an offer was an acceptable offer made to the Bank. If the offer was made on the basis of the condition thus stipulated, it must follow that the parties cannot have intended that the term which was the subject of an antecedent express stipulation should be excluded, in the words of Lord Russell in Gillespie. Any other conclusion would lead to the result that the Bank could take the benefit of a deal struck with Mr Adibe without the burden of the condition upon which the Master held that Mr Adibe had been prepared to make that offer.

It is the combination of the Master’s findings as to the prospects of success in establishing the conditional nature of the offer, and the Irwin Mitchell attendance note that the core of the offer was acceptable, that in my judgment is critical. In my judgment, there is therefore a case that raises real prospects of success in relation to the establishing of a collateral contract, and in the circumstances I conclude that permission to appeal should be granted and that the appeal on the limited point advanced by Mr Blackwood should succeed.

I observe, as I think Mr Blackwood accepted in the course of argument this morning, that it will clearly be necessary for consequential amendments to be undertaken in respect of the particulars of claim so as to put the case into good order. I note that had the Master reached a conclusion similar to the conclusion which I have reached on this issue, it appears from what he said in his judgment that he similarly would not have wished to deprive Mr Adibe of the chance of advancing a properly pleaded case to reflect what his case, in my judgment, appears to be.

I therefore grant permission and allow the appeal accordingly.