Cooper v National Westminster Bank Plc

The basic facts relevant to this action are not in dispute.

The defendant, National Westminster Bank plc (“NatWest”), carries on business as bankers.

The claimant, Mr. David Cooper, was and is a retail customer of NatWest. At all times material to this action Mr. Cooper maintained a current account (“the Account”) numbered xxxxxxx at the 74, Kilburn High Road, London, branch (“the Branch”) of NatWest. The Account did not bear interest. At the times material to this action the Account was a joint account of Mr. Cooper and Miss Rita Mason. Miss Mason has not been joined as a party to this action.

Mr. Cooper has addresses in both London and Dublin. He carries on business as a trader, in particular in tobacco products, such as cigarettes. To the knowledge of NatWest Mr. Cooper carried on that business in 2002.

On 28 October 2002 Mr. Cooper gave instructions to NatWest to draw on the Account a draft expressed to be payable to John Player & Sons Ltd. (“Player”). The instructions were given in writing by Mr. Cooper completing a standard printed form used by NatWest entitled “Ordering a Foreign Draft”. Mr. Cooper wanted NatWest to issue a draft in favour of Player in the Euro equivalent of £135,000 and to send the draft to him at an address in Dublin. The requested draft (“the Original Draft”) was issued and the Account was debited on 29 October 2002 with the sum of £135,000, together with a fee of £40. The equivalent in euros of the sum of £135,000 at the date of the issue of the Original Draft was €213,327.00. The rate of exchange adopted for that transaction was thus £1 = €1.5802.

The Original Draft was despatched to Mr. Cooper in Ireland and was received by him. However, he decided that he did not wish to use the Original Draft to make a payment to Player. Instead he requested NatWest to replace the Original Draft with a draft (“the Replacement Draft”) in the same euro sum, €213,327.00, expressed to be payable to himself. Mr. Cooper was requested to return the Original Draft to facilitate compliance with his instructions. It appears that he posted the Original Draft to NatWest, but that it did not arrive.

On 29 November 2002 Mr. Cooper visited the Branch and there saw Mrs. Joginder Singh, at that time the Assistant Manager of the Branch. Mrs. Singh was, and is, known as Sue Singh. In the absence of the Original Draft, and in order to facilitate the issue of the Replacement Draft, Mrs. Singh invited Mr. Cooper to complete a form of indemnity to cover NatWest against the risk that the missing Original Draft might turn up and be presented for payment. Mr. Cooper did complete the form requested. Mrs. Singh signed the form as witness to the signature of Mr. Cooper. Mr. Cooper contended, and Mrs. Singh did not dispute, that he instructed that the Replacement Draft be sent to him by post to an address in Dublin.

Instructions were then given within NatWest for the issue of the Replacement Draft. It appears that the Replacement Draft was issued on or about 9 December 2002. However, instead of being posted to Mr. Cooper in Dublin, the Replacement Draft was sent to the Branch and there placed in safe-keeping. The receipt of the Replacement Draft was over-looked in the Branch until about 1 April 2003. The case for NatWest was that on or about 1 April 2003 someone from the Branch telephoned Mr. Cooper to tell him that the Replacement Draft was at the Branch awaiting his collection. His reaction was said to be that he was instructing solicitors and that NatWest could expect to hear further. Mr. Cooper did not accept that there had been such a conversation. However, what next happened of which there was documentary evidence was that Mr. Cooper’s solicitors, Messrs. Moss Beachley Mullem & Coleman (“MBMC”) wrote a letter (“the July Letter”) dated 18 July 2003 addressed to the Manager of the Branch, but marked for the attention of Sue Singh. Mr. Cooper’s account was that that letter was prompted by Mr. Cooper visiting the branch on 8 July 2003 and being told, he said, that there was no information as to what had happened to the Replacement Draft.

The July Letter was in these terms:-

“Re: Mr. David Cooper

23 Islington Park Street, London N1 1QB

Current Account No xxxxxxx

We are instructed by the above-named who informs us that a sum in excess of €213,000 should have been credited to his account by the Bank in October 2002.

Various enquiries by our client as to why this sum has not been recorded in his account have led to no satisfactory explanation and to the date hereof he has not been assured that the account includes this sum. He is particularly disappointed because he was informed that everything was in order some 4 months’ ago on the telephone.

It is plain that Mr. Cooper has lost the benefit of the interest which could have been added to the money from October.

Could you please respond by return to inform us that the full amount is now in his account, together with interest at the rate payable by the Bank from October 2002 to date.

We have informed our client that he must bring the matter to the attention of Head Office and, if necessary, the Ombudsman if the poor service he has been shown is not remedied and compensation received, within the next 7 days. Your response should be to our client with a copy to ourselves.”

It is plain, I think, that that letter was ambiguous as to what it was that NatWest was being asked to do. On its face the request was to credit an account in fact maintained in sterling with a Euro amount. That could only happen if the Euro amount were first converted into sterling. Again, what NatWest was being requested to do was to “inform us that the full amount is now in his account”, which perhaps contemplated the conversion of the Euro amount into sterling at the then current rate of exchange, but also to pay on the amount credited to the (non-interest bearing) Account “interest at the rate payable by the Bank from October 2002 to date”. Either, therefore, there was a request for interest, which would seem to postulate that the conversion from Euros into sterling had been made as at October 2002, or there was a request for conversion at the rate of exchange current at the date of the letter, in which case the reference to interest would be otiose.

The Manager of the Branch in 2003 was Mr. John Dempsey. He responded to the July Letter in a letter dated 24 July 2003. All he said substantively in that letter was:-

“I am currently looking into the issues raised and will revert to you with my findings within the next 7 days.”

What in fact NatWest did in reaction to the July Letter was recorded in a letter (“the August Letter”) dated 4 August 2003 written by Mrs. Singh to Mr. Cooper at his London address, as set out at the head of the July Letter:-

“RE FOREIGN DRAFT: EUR 213327

I am pleased to advise you that as instructed by your solicitor’s [sic] Moss Beachley Mullen & Coleman the above mentioned draft has been cancelled and following entries have been passed to your sterling account no xxxxxxx as follows.

Account credited £135040.00 being the original amount debited to your account on 29/10/2002.

Interest due from 29^th Oct 2002 to date £2000.

As a gesture of goodwill a payment of £500 as exgratia [sic] has also been credited to your account.

Once again please accept my apologies for any inconvenience caused to you.”

The sums mentioned were credited, according to the relevant statement of the Account, a copy of which was put in evidence, on 1 August 2003. At close of business on 31 July 2003 the sterling equivalent of €213,327.00 was £148,992.18. The prevailing rate of exchange was thus £1 = €1.4318. After allowing for repayment of £135,040, interest of £2,000 and an ex gratia payment of £500, NatWest was £11,452.18 better off after the measures taken in response to the July Letter than it would have been if Mr. Cooper had simply collected the Replacement Draft.

In the prayer of the Amended Particulars of Claim in this action the relief claimed, in addition to statutory interest, was:-

“(1)

An order that the Defendant do forthwith deliver up to the Claimant a banker’s draft of €213,327 pursuant to paragraph 18 above subject to the Claimant repaying the sum of £135,040 to the Defendant.

(2)

Further and/or alternatively damages pursuant to paragraph 20 above.”

The first element in the prayer was in substance a claim for the foreign exchange profit which Mr. Cooper would have made if he had collected the Replacement Draft and kept it uncashed until today. The claim for specific performance by delivery up of a draft in the sum of €213,327 was not in fact pursued at the trial. In the Particulars of Loss and Damage pleaded at paragraph 20 of the Amended Particulars of Claim Mr. Cooper sought to cover the possibility that the court would find that he was entitled to compensation for loss of a foreign exchange profit, but at a date earlier than the date of the trial. However, he also sought to recover alleged loss of trading profits and loss of interest on the sum of €213,327. Clearly there was a tension between claims based on the hypothesis that Mr. Cooper would have used, either in trade or to earn interest, the sum of €213,327, if he had received the Replacement Draft in 2002, and his claims for loss of a foreign exchange profit which depended upon the Replacement Draft being retained uncashed until whatever was the relevant date. What was pleaded in the Particulars of Loss and Damage, omitting deleted words and underlinings, was:-

“(1)

Further to the claim for the issue and delivery up of the replacement draft and/or in the further alternative to it and on the basis that the Claimant would have used the replacement draft in the course of his business as a trader in cigarettes, the Claimant has lost profits which would have been of the order of 8% per quarter amounting to €17,066.16 per quarter since 15 December 2002 (25 quarters) or alternatively from a reasonable period after 29 November 2002 as set out at paragraph 10A above and continuing. A copy of the letter from John Player & Sons to the Claimant of 10 May 2006 is at page 9 of the attachment DC 1. €426,654

(2)

Yet further to the claim for the issue and delivery up of the replacement draft and/or in the further alternative to it and the claim for lost profits and on the basis that the Claimant would have placed the replacement draft or its proceeds in a interest bearing account at an annual rate of 5½%, the Claimant has lost interest since 15 December 2002 or alternatively by [sic] a reasonable period after 29 November 2002 as set out at paragraph 10A above or after. €70,397.91

(3)

Alternatively the difference between the contract price for the replacement draft and the market price as at the date the Claimant requested performance of the Agreement on 18. 7. 2003 £15,099.54

(4)

Alternatively the difference between the contract price for the replacement [sic] and the market price as at the date the Defendant credited the Claimant’s account with £135,040 on 4. 8. 2003 £14,288.90

(5)

Alternatively the difference between the contract price for the replacement draft and the market price as at the date the Claimant requested performance of the Agreement on 8. 4. 2004 £6,075.81

(6)

Alternatively the difference between the contract price for the replacement draft and the market price as at the date the Claimant requested performance of the Agreement or alternatively compensation based on the current sterling value of the replacement draft on 2. 11. 2004 £13,115.60

(7)

Alternatively the difference between the contract price for the replacement draft and the market price as at the date of issue of these proceedings £15,916.72

(8)

Alternatively the difference between the contract price for the replacement draft and the market price as at the date of judgment herein.”

In his closing submissions Mr. Bernard Lo, who appeared on behalf of Mr. Cooper, abandoned the claims pleaded at particulars (1) and (2) on the grounds that those claims had not been supported by the evidence. It seems to me that that was a realistic concession.

As I have indicated, it was not in dispute that NatWest had been in breach of contract in not despatching the Replacement Draft to Mr. Cooper in Dublin, but in keeping it at the Branch. The primary case for NatWest in answer to the claims of Mr. Cooper was that any and all such claims had been compromised and so could not be pursued. It was contended that the compromise was to be found in the July Letter, which was said to be an offer of a compromise, and the actions taken by NatWest in response to that letter, specifically crediting the Account on 1 August 2003 with sums totalling £137,540 and responding to the July Letter itself in the terms of the August Letter. The alternatives to that primary case were explained by Miss Katherine Watt, who appeared on behalf of NatWest, in her written skeleton argument at paragraph 14 in this way:-

“In the alternative to its primary case, the Bank’s secondary case is as follows:

(1)

The Bank denies that Mr. Cooper would be entitled to issue and delivery up of the Second Draft in any event. The Bank ceased to be under an obligation to deliver the Second Draft in mid-2003, because the July Letter terminated or superseded any such obligation, and/or Mr. Cooper accepted the Bank’s breach of condition in failing to deliver the Second Draft. In any event, even were that not the case, specific performance would not be available because damages would plainly be an adequate remedy, or should not be granted by reason of Mr. Cooper’s gross delay in claiming the same and/or the fact that performance of any obligation to deliver the Second Draft is no longer possible.

(2)

The Bank denies that Mr. Cooper is entitled to damages for loss of profits and/or loss of interest by reason of not having the proceeds of the Second Draft. Mr. Cooper has not provided any evidence whatsoever of these mutually contradictory claims, and the former in particular is too remote. In any event, Mr. Cooper has actually had the sum of £137,540 since it was credited to his Account on 1 August 2003, yet has chosen not to withdraw those funds for use in his business or to transfer them into an interest bearing account. In the premises, he has not sustained any such losses and/or has failed to mitigate his alleged losses.

(3)

The Bank accepts that if Mr. Cooper’s claim had not already been compromised, he would be entitled to claim damages for non-delivery of the Second Draft. However, those damages would be measured as the difference between the actual cost of the Second Draft and the cost of a replacement draft as at the date for delivery – circa mid-December 2002. Mr. Cooper’s claim that damages should be assessed at a later date is misconceived. Alternatively, even if damages were to be assessed at a later date, the measure of loss must take account of the fact that Mr. Cooper has had the sum of £137,540 since 1 August 2003.

(4)

Any award of interest should be at a rate that reflects Mr. Cooper’s alleged actual loss in this regard and for a period that reflects Mr. Cooper’s delay. The fact that Mr. Cooper has chosen to retain the sum of £137,540 since 1 August 2003 in a non interest-bearing account is compelling evidence that his losses in this regard are nil. Alternatively, the appropriate rate of interest is the commercial rate, 1% over base rate.”

Miss Watt elaborated on the primary case of NatWest at paragraphs 25 and 26 of her written skeleton argument:-

“25.

The Bank’s case is that it reasonably understood the July Letterto be a compromise offer as set out above, and that its credits to the Account on 1 August 2003, and its August Letter to Mr. Cooper and MBMC confirming the same, constituted acceptance of that compromise offer.

26.

Alternatively, the Bank contends that if the August Letter and/or crediting of the Account did not constitute acceptance of the offer made in the July Letter, they amounted to a counter-offer to compromise the claim identified in the July Letter on terms of those credits to the Account, which Mr. Cooper accepted by his conduct and/or silence thereafter. As to this:

(1)

Whilst the general rule is that an offeree who does nothing in response to an offer is not bound by its terms, silence may constitute acceptance of an offer in exceptional circumstances, for example where the offer was solicited by the offeree, or where the offeree had an implied obligation to speak. Further and in any event, an offer can of course be accepted by conduct, and such conduct may take the form of forbearance, such as forbearance to sue on a debt, or failure to take such steps as would be expected if the offer were not accepted.

(2)

Here, as Mrs. Singh explains, had Mr. Cooper been dissatisfied or considered that the Branch had not followed his instructions, the Bank would have expected him to say so, and/or to pursue a complaint with Head Office or the FOS [Financial Ombudsman Service] as threatened in the July Letter. … In fact, Mr. Cooper did none of those things. It was not until Mr. Cooper visited the Branch on 8 April 2004, over eight months later, that the Bank heard anything further from Mr. Cooper; moreover, he then did nothing for a further 7-8 months thereafter. Mr. Cooper did, however, continue to use the Account. Meanwhile, on his own evidence Mr. Cooper knew that the exchange rate between sterling and the Euro was fluctuating, such that the cost to the Bank of providing a €213,327 draft for the amount originally debited from the Account would or could increase as time went on. In the premises, Mr. Cooper accepted the Bank’s counter-offer by his failure to make any demand for further monies or the Second Draft, forbearance to pursue the formal/legal action threatened in the July Letter, and/or silence, for 8 months (and then a further 7-8 months) following the August Letter, and/or by his use of the Account in the meantime.”

At paragraph 35 of her written skeleton argument Miss Watt made alternative submissions as to the effect of the July Letter:-

“Mr. Cooper’s claim is pleaded on the basis that the Bank is under a continuing obligation to deliver the Second Draft to him. However, that particular allegation is unsustainable, because the Bank’s obligation to deliver the Second Draft clearly came to an end in mid-2003.

(1)

Even if the July Letter was not a compromise offer capable of acceptance, the July Letter plainly was not an instruction to deliver the Second Draft, and plainly was an instruction to credit the Account. That instruction terminated or superseded any previous instruction to deliver the Second Draft (even if it was ambiguous in defining the amount to be credited to the Account). The July Letter is wholly inconsistent with any continuing obligation to deliver the Second Draft.

(2)

The Bank was entitled, and indeed bound, to act upon the instruction given in the July Letter; the Bank reasonably interpreted that instruction as one to cancel the Second Draft and credit the Account; the Bank duly acted on the instruction by cancelling the Second Draft, converting the Euro funds into sterling, and crediting the Account; and Mr. Cooper cannot now say that the Bank should not have so acted (in particular, in cancelling the Second Draft and converting the Euro funds into sterling) on the basis that what he really intended was that the instruction in the July Letter should have been to deliver the Second Draft to him. If that was what Mr. Cooper really intended, that is a matter between Mr. Cooper and MBMC; it is not the concern of the Bank.

(3)

Moreover, on his own evidence Mr. Cooper was aware that the Bank had acted on the instruction given in the July Letter by October 2003 at the very latest, yet waited another 6 months before visiting the Bank and a further 7-8 months before taking up the matter with the Bank in writing, in the knowledge that this delay was or could be increasingly costly for the Bank if it were required to provide a €213,327 draft for the amount originally debited. In the premises, Mr. Cooper cannot now resile from the instructions given in the July Letter and/or is estopped from doing so.

(4)

Further or alternatively, any agreement between the parties that the Bank would deliver the Second Draft to Mr. Cooper, was rescinded or extinguished by an agreement reached in mid-2003 (by way of the July Letter, crediting of the Account, August Letter, and/or Mr. Cooper’s conduct and/or silence thereafter), pursuant to which Mr. Cooper abandoned any right to delivery of the Second Draft (on terms that he maintain his claim for compensation for non-delivery between December 2002 and July 2003) in exchange for crediting of the Account.

(5)

Further or alternatively, the Bank’s failure to deliver the Second Draft to Mr. Cooper at his Dublin address within a reasonable time after 29 November 2002 or at all, was clearly such as to give Mr. Cooper the right to treat any contract to that effect as discharged. Mr. Cooper did so by the [July] Letter (as to which see above), and/or by his conduct and silence thereafter (which was clearly inconsistent with the action onewould expect him to take if he were treating any contract to deliver the Second Draft as still in force), thus bringing such contract to an end.”

In his written skeleton argument Mr. Lo sought to respond to the submissions of Miss Watt on behalf of NatWest.

He contended that the July Letter did not, on its face, amount to an offer to compromise the claims of Mr. Cooper against NatWest as a result of the non-delivery to Mr. Cooper of the Replacement Draft. He submitted that the terms of the letter were insufficiently certain to amount to an offer. He drew attention to the ambiguities in the letter which I have already remarked.

Mr. Lo submitted that the ambiguities in the July Letter also prevented it taking effect as a letter of instructions, at least a letter giving the instructions which NatWest contended it had found within it.

If and insofar as Miss Watt contended (which I think, in fairness to her she actually did not) that Mr. Cooper was bound to accept a repudiatory breach of contract on the part of NatWest in not proving the Replacement Draft, Mr. Lo contended, rightly, that an innocent party was not bound to accept a repudiatory breach as bringing a contract to an end.

The answer advanced by Mr. Lo to the suggestion that there was a compromise agreement founded on a counter-offer on the part of NatWest to be found in the August Letter was that nothing Mr. Cooper had done in response to that letter amounted to an acceptance by conduct, and that, as a matter of law, acceptance cannot be inferred from silence or inactivity.

The case for NatWest was that after the issue of the Replacement Draft, and its despatch to and receipt by the Branch, there was no contact between NatWest and Mr. Cooper in relation to the Replacement Draft until he was telephoned on about 1 April 2003. In cross-examination Mr. Cooper contended that he had made contact with NatWest during this period. His evidence on this point was, to put it mildly, vague and contradictory. At one point he contended that he had visited the Branch in January 2003 or February 2003. At another point he put the same visit as occurring in December 2002 or January 2003. Then he said that the visit had been within two months of meeting Mrs. Singh on 29 November 2002. Whenever precisely he contended that the visit had taken place, it seemed that he only asserted a single visit between 29 November 2002 and April 2003. He said that he had made a second visit to the Branch in April 2003 or May 2003. That visit, I think, was not in dispute. Mrs. Singh, who was called to give evidence on behalf of NatWest, told me in cross-examination that she had met Mr. Cooper twice, first on 29 November 2002 and then in April 2003, following the telephone contact with him (which she said may have been made by a member of staff, rather than by her) about the Replacement Draft being in the Branch. Mr. Cooper contended that he had made a third visit to the Branch in June 2003 and a fourth on 8 July 2003. He was confident about the date of the July visit because on that occasion he obtained a print-out of the Account at 9.59 a.m. and a copy of that print-out was put in evidence. Again, there was a stage during his cross-examination when Mr. Cooper seemed to be contending that he had had meetings at the Branch as many as six times in the period 29 November 2002 to 8 July 2003, but, when challenged by Miss Watt on that point, he revised that number, saying that the six included telephone calls, which he considered to be meetings. However many times Mr. Cooper in fact had contact with the Branch in the period 29 November 2002 to 8 July 2003, and whatever form the contact in fact took, he said that each time he was told that NatWest knew nothing about the Replacement Draft, but would look into it. The case for NatWest was that there was no contact between it and Mr. Cooper in relation to the replacement draft in the period 29 November 2002 to 18 July 2003 other than the telephone call made to Mr. Cooper on about 1 April 2003 and the meeting between him and Mrs. Singh in about April 2003 following that call. I think that it was accepted that Mr. Cooper may have gone to the Branch on 8 July 2003 and there obtained a print-out of the state of the Account, but it was not accepted that he actually spoke to anyone at the Branch on that occasion.

I do not accept the evidence of Mr. Cooper as to an alleged visit to the Branch between 29 November 2002 and April 2003, nor do I accept his evidence that he made a visit in about June 2003. I find that he was not in contact with NatWest in relation to the Replacement Draft between 29 November 2002 and 1 April 2003. I accept the evidence of Mrs. Singh that someone from the Branch, possibly her, telephoned Mr. Cooper on about 1 April 2003 to tell him that the Replacement Draft was in the Branch, and that thereafter she met Mr. Cooper again. I accept that Mr. Cooper visited the Branch on 8 July 2003 and obtained a print-out of the state of the Account, but I do not accept that he spoke to anyone on that occasion about the Replacement Draft.

From a document in standard form entitled “Payments Abroad – Foreign Draft Enquiry” completed by Mrs. Singh on 25 July 2003, of which a copy was put in evidence, it seems that on 25 July 2003 instructions were given by Mrs. Singh to cancel the Replacement Draft. The reason for cancellation given by Mrs. Singh on the form was:-

“Draft forwarded to branch – then to forward to customer in Ireland – draft overlooked & left not posted to customer – branch error.”

After the despatch of the August Letter nothing further was heard from Mr. Cooper, according to NatWest, until 8 April 2004. Mr. Cooper contended, however, that he had written to Mr. Dempsey a manuscript letter dated 24 October 2003. A copy of what was said to have been the letter was put in evidence. NatWest’s case was that it had never received that letter and that no reference had been made to it on behalf of Mr. Cooper until 6 January 2009. The plain suggestion was that the letter was a fabrication made at about the end of 2008 with a view to producing evidence thought to support the case of Mr. Cooper. The letter dated 24 October 2003 was in these terms:-

“Further to our call on the phone I am writing to inform your [sic] that I require my draft replaced for €213k. I do not wish to accept the monies put in my account last august. I need for you to take these fund [sic] from my account and replace my Euro draft for €213k.”

Mr. Cooper contended that it was only in about September or October 2003 – he gave different dates at different times in his cross-examination – that he discovered that NatWest had placed credits to the Account on 1 August 2003. He told me that he learned of this from Mr. Ian Beachley, a partner in MBMC. He had not himself, at this time, he said seen either a copy of the July Letter or received the August Letter. Mr. Beachley, according to Mr. Cooper, had said to him only that NatWest had stated that the Account had been credited, and had suggested that Mr. Cooper check the Account to see whether that was correct. Mr. Cooper did then check the Account and discovered the sums credited on 1 August 2003. That discovery prompted him to write the letter dated 24 October 2003, he told me.

In his witness statement prepared for the purposes of this action Mr. Cooper dealt with the letter dated 24 October 2003 in this way:-

“44.

I became aware in early to mid October 2003, having received a letter or phone call from my solicitor, that NatWest had re-credited my account with the payments mentioned above. I was not happy with this as I still wanted my Replacement Draft or a further replacement in the same sum in euros.

45.

Consequently on 24. 10. 2003, I wrote to Mr. Dempsey, the Manager at Kilburn. The relevant part of the letter reads

[it was then quoted]

I do not recall ever receiving a response to this letter from Nat West.”

In that account Mr. Cooper made no reference to the alleged telephone call mentioned in the text of the letter. He did not volunteer any details of such a telephone call in answer to questions in cross-examination, although he did assert, baldly, that there had been a telephone conversation.

Mr. Beachley was called to give evidence on behalf of Mr. Cooper. He said that he had been given instructions by Mr. Cooper on 8 July 2003 to write a letter to NatWest on his behalf. He composed and sent the July Letter based on his then understanding of his instructions. Those instructions had been given at a brief meeting in the street. He next heard from Mr. Cooper when Mr. Cooper telephoned him on 1 October 2003. Mr. Beachley made an attendance note of that call. During the telephone conversation on that occasion Mr. Beachley and Mr. Cooper, Mr. Beachley told me, discussed the August Letter. Mr. Beachley’s recollection was that he had read the August Letter to Mr. Cooper on the telephone, but he said that it was possible that his secretary had sent Mr. Cooper a copy of the August Letter a few days earlier. Mr. Beachley’s evidence was that Mr. Cooper had first produced to him a copy of the manuscript letter dated 24 October 2003 at a meeting on 28 October 2008. Mr. Cooper had not previously mentioned to Mr. Beachley the existence of that letter. I accept the evidence of Mr. Beachley without reservation.

Mr. Dempsey was not called to give evidence on behalf of NatWest. He is very ill. However, by a letter dated 26 April 2005 addressed to Sir Fred Goodwin, then Group Chief Executive of the Royal Bank of Scotland Group plc (“RBS”), of which NatWest was, and is, a subsidiary, MBMC made a complaint on behalf of Mr. Cooper that he should have been credited on about 1 August 2003 with the then sterling equivalent of the value of the Replacement Draft, and not simply been reimbursed the original cost of the draft, together with £2,000 interest and an ex gratia payment of £500. As part of the investigation within NatWest which was instigated following the receipt of that complaint Mr. Dempsey was asked to provide an account of what had happened. He did so in two documents. In a briefing note (“the Dempsey Note”), which was itself undated but which seems to have been despatched to Marcelle Farrow of NatWest under cover of a note dated 4 May 2005, Mr. Dempsey dealt with the events up to 4 August 2003. The story was continued in a memorandum (“the Dempsey Memorandum”) dated 5 May 2005 also sent by Mr. Dempsey to Marcelle Farrow. The Dempsey Note and the Dempsey Memorandum were put in evidence pursuant to the provisions of Civil Evidence Act 1995.

The material part of the Dempsey Note for present purposes was to this effect:-

“This draft [the Replacement Draft] was, I feel, inappropriately held in a secure locked tin at the branch until 1^st April 2003 when it was noticed that it had been there for several months. A member of staff then phoned Mr. Cooper to explain that the draft was at the branch awaiting his collection, presuming that this was his original despatch instructions. At this stage, according to the attached note, Mr. Cooper demanded that he be reimbursed with the loss of interest he had suffered as a result of the above. The member of staff he spoke to at this time advises me that he was unable to invest the Euro draft in an account in Southern Ireland which was his intention and this was as a result of our error in not posting the draft direct to him. At this stage, when asked what he wanted us to do, Mr. Cooper advised that he would be contacting his solicitor and that we would be hearing further in due course. [Mrs. Singh told me in cross-examination that this had been said to her at her meeting with Mr. Cooper in April 2003.] To the best of my knowledge Mr. Cooper had not chased the whereabouts of the draft since it’s [sic] issue in December 2002.

The next we heard was when a letter was received from his Solicitor dated 18 July 2003 – you have copy of this. We did feel that the 1^st & 2^nd paragraphs of this letter were somewhat ambiguous and despite the issues mentioned above around the reissue of the draft felt that the original draft had been issued in accordance with Mr. Cooper’s instructions. What we were unsure of was if Mr. cooper [sic] had in fact returned the original draft to us as he didn’t chase matters until December 2002. The letter also requested that Mr. Cooper’s account be re-credited with original amount debited for the issue of the 1^st draft and that he be reimbursed with interest lost as he was unable to invest the sum into a Euro account which we presume he had/has elsewhere.

It was at this stage that we noticed that there would be profit of some £13,952.18 due to the difference in exchange rates if we were to cancel the 2^nd draft issued and credit the full proceeds to Mr. Cooper’s account.

At this stage in the proceedings, the Manager of the branch was advised of the situation and decided to refer for guidance to his Area Manager Operations. The situation was explained in full, referred onward by the Area Manager Operations to the Senior Manager Operations and also to Group Legal Department. I am not aware how the interest loss was calculated as there is no record of this in the paperwork. I recall a figure of some £1,700 being mentioned to me, and remember suggesting that this be increased to £2,000 and a further ex-gratia payment of £500 made to Mr. Cooper. This was then confirmed to Mr. Cooper in a letter sent from the branch on 4 August 2003 which was copied to his solicitor (copy enclosed).”

The Dempsey Memorandum was concerned with events after 4 August 2003. Mr. Dempsey said this about what had occurred:-

“Following on from my earlier briefing note I am commenting below on a further discussion I had with Mr. Cooper when he called into the Branch in April 2004. I am also commenting on the various letters from the solicitor – copies of which were forwarded when my full brief was requested.

•

The letter received from the solicitor dated 18 July 2003 was dealt with in accordance with the instructions contained – we replied to this on 4 August 2003 direct to Mr. Cooper and copied the solicitor in to the response. It must be said that we did as requested by the solicitor thinking this would conclude matters.

•

The next thing to happen was Mr. Cooper called into the branch in April 2004, some 7/8 months later and requested to see the Manager. Mr. Cooper had a letter from his solicitor which was headed up draft & was undated. He requested that I dealt with this. My response at the time was that I felt the matter had been concluded to the satisfaction of all some 9 months previous [sic] and that we had followed his instructions which had been received via his solicitor. I did recommend to Mr. Cooper that he referred back to his solicitor and the instructions he had given them in July 2003. I told Mr. Cooper that if he wished to re-open matters he should either instruct me himself in writing or do this via his solicitor.

•

I can’t comment on the letter received from the solicitor dated 26 April 2004 as I have no recollection having received this.

•

I can’t comment on the letter received from the solicitor dated 2 November 2004 as I have no recollection having received this.

•

I did receive the letter from the solicitor dated 10 December 2004 – you have my reply stating that the copy of their letter dated 2 November 2004 was not enclosed and stating that it appeared that the original had never been received.

•

I did receive the letter from the solicitor dated 16 December 2004 and as I couldn’t locate the letter received at the Branch in July 2003 which I thought had concluded issues replied by requesting them to fax me a copy of said letter from their file – at this point I did think Mr. Cooper was simply trying his luck via his solicitor.

•

I have no recollection having received the fax dated 20 January 2005 from the solicitor and I certainly didn’t receive a copy of their original letter of 18 July 2003 as I would have refereed [sic] them back to the instructions contained within – my further comment on this is that I never took the draft copy of the solicitor’s letter from Mr. Cooper in April 2004 – he left the branch with this when I had said the matter had been concluded. Mr. Cooper is not an easy man to deal with and the couple of times I have met him he has ended up being very vociferous and seems to enjoy threatening the bank with legal action.

•

I have no recollection having received the letter from the solicitor dated 23 March 2005.

All told, I do feel there may be a moral issue here but also have to say that I feel Mr. Cooper is chancing his luck. He has a huge desire to get the value of the differential in the exchange rates. I suppose the question is – is he entitled to it & how do we stand from a legal view point, which I thought had been covered in July 2003. Someone needs to make a call on this as I feel huge periods of time lapse and them [sic] Mr. Cooper tries to resurrect matters. It really concerns me greatly that you have copied me into so many letters from the solicitor that I have no knowledge of ever seeing but feel that I can’t comment further on them.”

Mr. Dempsey’s position clearly was that he heard nothing from Mr. Cooper between July 2003 and April 2004.

The letter dated 24 October 2003 was, if genuine, possibly relevant to whether Mr. Cooper had accepted any counter-offer contained in the August Letter. However, the relevance of correspondence between the parties after that date was really only insofar as it shed any light on the claims of Mr. Cooper for damages for loss of the opportunity to invest the sum of €213,327 and make profits, and for damages for loss of the opportunity to invest the sum in an interest-bearing account. Miss Watt, however, pointed out, correctly, that in none of the subsequent correspondence until January 2009 was any reference made to the letter dated 24 October 2003.

The draft letter which Mr. Dempsey accepted had been produced to him by Mr. Cooper at a meeting which I think it was accepted took place on 8 April 2004, was in these terms:-

“We have seen a copy of your letter to our client of 4^th August concerning which our client has now been able to give us further instructions. Your records will show that our client does not have or operate a Euro Account at your Bank. The record will also show that in October 2002 Mr. Cooper requested a Draft from your Bank in the sum of €213,327.

The first paragraph of our letter of 18^th July 2003 (copy enclosed) slightly misinterpreted our client’s instructions. The sum of €213,327 was not to be credited to the account but a Draft in that sum provided to him. Mr. Cooper understands that the Draft was issued by the Bank at that time and then lost. If it was not drawn then it should have been.

Subsequently during the months and months of delay, the value of the Euro has declined by at least 8% - 10% and in addition our client has lost the interest he might have earned.

Although you have compensated our client to some extent concerning the lost interest there has been no compensation to him for the drop in the value of the Euro.

Our claim therefore is that immediate arrangements should be made by the Bank to place our client in the position he would have been had a Draft for €213,327 been prepared and issued in October 2002 at the rate of exchange which applied at that time – together with the payment of interest on the money which would have accrued since then (to be paid in Euros also) and in respect of which you have offered a total of £2500.

Could you please consult the record at the Bank to confirm the above and let us have your further response within the next 7 days.

Please let us know if the position is not clear.”

Mr. Beachley told me, and I accept, that he drafted that letter on 23 October 2003.

On 8 April 2004 Mr. Cooper also wrote a note on paper printed for use by NatWest. On that note Mr. Cooper wrote his address in London and one of his addresses in Dublin. The note was addressed “To whom it concerns”. The text was:-

“Please accept my solicitors Draft letter re – my enclosed problem. I did not ask for the monies to be credited to my account. I required a replacement draft in my name. I still require a replacement draft in Euro’s [sic] for the sum of €213,327 = £135,040 stg.”

There was a post scriptum to the note:-

“Should a draft not be issued in the next 14 days I will leave this in the hand of my solicitors.”

Mr. Dempsey’s account of the meeting on 8 April 2004 was set out in the Dempsey Memorandum in the passage which I have quoted. In the Dempsey Memorandum Mr. Dempsey also indicated his position in relation to each of the pieces of correspondence emanating from MBMC to which I am about to come.

In a letter dated 26 April 2004 MBMC wrote to Mr. Dempsey:-

“We confirm acting on behalf of the above-named who left with you a letter from ourselves on 8^th April. Mr. Cooper was informed that there would be a response by now.

Would you please let us know if a response will be received shortly and, if not, could you let us have details of the need for delay.

Our client is quite intent on taking the matter further and we hope we will have a response from you within the next 7 days.”

Despite the terms of the concluding paragraph of the letter dated 26 April 2004, and the absence of any response from Mr. Dempsey, nothing further was done by Mr. Cooper, or by MBMC on his behalf, until MBMC wrote a letter dated 2 November 2004 to Mr. Dempsey. The letter was in these terms:-

“We continue to act for Mr. Cooper.

Our client wrote to you on or about 8 April 2004 to send you a draft letter provided to Mr. Cooper by ourselves and which set out his claim against the bank. There has been no response.

Our client made it plain in his own letter of 8 April that (because the original draft had been lost by the bank) he required a replacement draft for the sum of €213,327. This was equal to £135,040 at that date.

We also wrote to you on 26 April.

Of course, our client is unable to accept the suggestion made by the bank in their letter of 4 August 2003.

The compensation due to our client based upon the exchange rate from time to time, easily accessible to the bank, but we expect will exceed £10,000.

The matter can be simply resolved by the bank providing the Euro draft in our client’s name as originally requested, together with a full payment of interest due for the intervening period. In other words, putting our client in precisely the position he would have been in had the original draft not been lost.

We have instructions to pursue this matter and to issue proceedings in respect of this within 14 days of today’s date unless our client’s requests are met in full.

Please acknowledge receipt.

We enclose copies of the following documents:

1.

Draft letter to the manager of NatWest Bank;

2.

Our client’s letter to the bank dated 8 April.

3.

Copy of our letter dated 26 April 2004.”

Mr. Cooper’s evidence was that he had left with Mr. Dempsey not only the draft letter from which I have quoted, but also the note he wrote on 8 April 2004 on the stationery of NatWest whilst at his meeting with Mr. Dempsey. It seems strange, if he did leave with Mr. Dempsey the note which he had written in Mr. Dempsey’s presence, that Mr. Cooper had a copy of it which he was able to supply to his solicitors. It seems much more likely, from the fact that Mr. Cooper could supply his solicitors with a copy, that, as Mr. Dempsey seemed implicitly to contend (he only dealt in terms with the draft letter), whatever Mr. Dempsey was offered he gave back to Mr. Cooper.

Mr. Dempsey did not respond to MBMC’s letter dated 2 November 2004. MBMC wrote again on 10 December 2004:-

“Further to our letter of the 2^nd November, copy enclosed, we await your urgent response if Court proceedings are to be avoided. Please let us know of any difficulties in replying.”

This time Mr. Dempsey did reply, in a letter dated 14 December 2004:-

“Thank you for your letter 10 December 2004. The copy of your letter dated 2 November was not enclosed and it appears that the original has not been received.

Please arrange to forward me a copy and I will then give it my immediate attention.”

MBMC in its turn responded in a letter dated 16 December 2004:-

“Thank you for your letter of the 14^th December, received on the 16^th December. We now enclose a further copy of our letter dated 2^nd November. In the circumstances, we hope you will be able to let us have your detailed response within 7 working days.”

That was another letter which reached Mr. Dempsey. He replied in a letter dated 21 December 2004:-

“I am currently looking into the issue raised for our above mutual client.

In order to reply in full, it would be most helpful if you could arrange to fax me a copy of your letter addressed to the bank dated 18 July 2003, as the original has been sent to the bank’s central records storage department.

I look forward to receiving this at your convenience and would like to thank you in anticipation for your help.”

MBMC did not seek to send a copy of the July Letter to Mr. Dempsey, it seems, until a facsimile transmission sheet dated 20 January 2005 was prepared. The text of the letter written on that sheet was:-

“Further to your letter of 21 December 2004 we enclose a copy of our letter of 18 July 2003 – please note the correction made to the letter of 18 July 2003 by our letter sent to you by Mr. Cooper on or about 8 April 2004.

The letter of April 2004 sets out the position according to Mr. Cooper’s instructions.

Thank you for your early response.”

There was no documentary evidence put before me to suggest that that facsimile transmission sheet was ever despatched. For example, no transmission slip was put in evidence.

However, notwithstanding that Mr. Dempsey did not react to the facsimile transmission sheet dated 20 January 2005, it was not until 23 March 2005, on Mr. Cooper’s own case, that MBMC wrote a further letter to Mr. Dempsey:-

“We are surprised not to have heard from you by now to resolve this matter. Please note that unless we hear from you with a satisfactory response before the end of the month our client will have no alternative but to issue proceedings. We trust that that can be avoided.”

There was no response from NatWest by the end of March 2005. However, instead of commencing proceedings on behalf of Mr. Cooper what MBMC did was to write, as I have already noted, to Sir Fred Goodwin. The letter was dated 26 April 2005:-

“Please note we act for Mr. Cooper and we have been in correspondence with the NatWest bank in Kilburn since 18 July 2003 concerning our client’s account.

A dispute concerning the conduct of this account has arisen. Staff at the branch say that the dispute should now revert to your attention for resolution.

The background is quite straightforward.

Our client conducts a sterling account at the branch and does not have a euro account.

Our client gave instructions for the NatWest bank at 74 Kilburn High Road to provide him with a draft for €213,327. Our client has been informed that the sterling equivalent was £135,040, the amount debited to his account on 29 October 2002 (in our opening letter of 18 July 2003 we had slightly mis-interpreted our client’s instruction – the sum of €213,327 was to be the amount of the draft required and not a sum to be credited to his account).

Eventually after more correspondence the Kilburn branch of NatWest credited our client’s account with the sum of £135,040 on 4 August 2003 together with £2000 interest and £500 ex gratia payment. A substantial time had gone by.

The payments by the branch did not compensate our client for his loss.

The rate of exchange between the pound and the euro in the intervening period had altered adversely to our client’s interests to a greater extent. The exact alteration in the exchange rate would be available to yourself but our client believes he has suffered a loss of more than £10,000 comparing the exchange rate on the 4 August 2003 with the rate at the time he requested the euro draft.

We hope you agree that the value to our client of a euro draft in [sic] at the date requested in the sum of €213,327 would have placed our client in a better financial position by August 2003 and continuously to present date).

We enclose copies of the correspondence between ourselves and the Kilburn branch. We have been prompted to write to you because of the lack of response to recent letters to Mr. Dempsey.

As a last attempt to try to resolve the matter without litigation we are writing to yourself. However, if the matter cannot be settled on reasonable terms within 14 days of today’s date, litigation will issue without further warning. Any suggestion for compensation should also include legal costs.

Kindly acknowledge receipt.”

The complaint was rejected. That decision was communicated to MBMC by a letter dated 23 August 2005 signed by Mr. Feilim Mackle, Managing Director, Retail Banking. MBMC wrote a letter dated 31 October 2006, which was in the nature of a letter before action, to the litigation department of RBS. Relatively shortly, in the context of the speed at which the dispute between Mr. Cooper and NatWest had progressed up to that point, thereafter by a letter dated 4 January 2007 MBMC changed tack and complained to Financial Ombudsman Service (“FOS”) about NatWest. A final decision of FOS rejecting the complaint was communicated by a letter dated 18 June 2007 signed by Mr. David Millington. This action was commenced by a claim form issued on 14 December 2007.

Miss Watt submitted that, on proper construction of the July Letter, Mr. Cooper, via MBMC, offered to accept in settlement of his claims against NatWest the sum of £135,040. She contended that the reference in the letter to the date “October 2002”in the context of the date for the crediting of the Account showed that what Mr. Cooper was offering to accept was simply reimbursement of the sum paid for the Original Draft. She asserted that the effect of the demand for “interest at the rate payable by the Bank from October 2002 to date” was that Mr. Cooper was offering to settle for £135,040 alone, as the Account was not interest-bearing.

It is plain, in my judgment, as a matter of construction of the July Letter, that it was not an offer of compromise capable of acceptance so as to preclude Mr. Cooper pursuing his claims in this action. I have already noted the ambiguities in the text of the letter. There was no clear offer to accept any sum or other recompense in settlement of Mr. Cooper’s claims arising out of the non-delivery of the Replacement Draft. The letter went no further, as it seems to me, than to indicate that Mr. Cooper would be prepared not to take matters further if, “the full amount is [placed] in his account together with interest at the rate payable by the Bank from October 2002 to date”. However, what “the full amount” was was unspecified, although it might have been interpreted as being that “sum in excess of €213,000 [which] should have been credited to his account by the Bank in October 2002”. Again “the rate of interest payable by the Bank from October 2002 to date” was not identified, although that might have been interpreted as the base rate of NatWest from time to time over the specified period. As Mr. Lo submitted, the terms of the July Letter were simply insufficiently certain to be capable of amounting to an offer capable of acceptance. In a contractual context the letter was at best an invitation to treat.

However, even if that were wrong, and the July Letter was technically capable of being an offer to compromise Mr. Cooper’s claims, it is manifest that NatWest did not accept that offer. Any offer contained in the July Letter was not an offer to accept the reimbursement of the cost of the Original Draft, together with an amount of £2,000 described as interest, but obviously (as it was a round figure amount supposed to cover interest on £135,040 for 290 days) assessed entirely arbitrarily, and an ex gratia payment of £500.

Miss Watt’s submission that the July Letter gave instructions to NatWest as to what Mr. Cooper wished to have done which were ambiguous, but which NatWest interpreted in good faith, and for acting upon which NatWest could not be held accountable was, at first blush, more attractive than the submission that the letter was an offer which NatWest accepted.

In support of her submission Miss Watt reminded me of the observations of Lord Chelmsford in Ireland v. Livingston (1872) LR 5 HL 395:-

“Now it appears to me that if a principal gives an order to an agent in such uncertain terms as to be susceptible of two different meanings, and the agent bona fide adopts one of them and acts upon it, it is not competent to the principal to repudiate the act as unauthorized because he meant the order to be read in the other sense of which it is equally capable. It is a fair answer to such an attempt to disown the agent’s authority to tell the principal that the departure from his intention was occasioned by his own fault, and that he should have given his order in clear and unequivocal terms.”

The approach adopted in that case, which concerned an order placed with an agent, was applied by Devlin J. in the banking case Midland Bank Ltd. v. Seymour [1955] 2 Lloyd’s Rep 147. In that case, the learned judge said, at page 153:-

“In my judgment, no principle is better established than that when a banker or anyone else is given instructions or a mandate of this sort, they must be given to him with reasonable clearness. The banker is obliged to act upon them precisely. He may act at his peril if he disobeys them or does not conform with them. In those circumstances there is a corresponding duty cast on the giver of instructions to see that he puts them in a clear form. Perhaps it is putting it too high for this purpose to say that it is a duty cast upon him. The true view of the matter, I think, is that when an agent acts upon ambiguous instructions he is not in default if he can show that he adopted what was a reasonable meaning. It is not enough to say afterwards that if he had construed the documents properly he would on the whole have arrived at the conclusion that in an ambiguous document the meaning which he did not give to it could be better supported than the meaning which he did give it.”

These two decisions relied upon by Miss Watt were considered by Toulson J. in Patel v. Standard Chartered Bank [2001] All ER (D) 66. At paragraphs 35 and 36 of his judgment the learned judge said:-

“35.

I was referred to certain authorities about an agent who acts on ambiguous instructions. Ireland v. Livingstone (1872) LR 5 HL 395 and Midland Bank Ltd. v. Seymour [1955] 2 Lloyds Rep 147 are authorities for the principle that when an agent acts upon ambiguous instructions, he is not in default if he can show that he adopted what is a reasonable meaning. But those authorities were considered by the Court of Appeal in European Asian Bank AG v. Punjab & Sind Bank (no 2) [1983] 1 WLR 642. Robert Goff LJ, giving the judgment of the court, described the principle, at p. 655, as “only available in very limited circumstances” and said, at p 656:

“Obviously it cannot be open to every contracting party to act upon a bona fide, but mistaken, interpretation of a contractual document prepared by the other, and to hold the other to that interpretation. If an offer is made by one person to another, the offeree has to make up his mind about the meaning of the offer before accepting it and entering into a binding contract; once he enters into a contract by accepting the offer, he is bound by its terms, which (in the event of dispute) will fall to be construed objectively. Furthermore, even in the context of agency and other analogous transactions, the principle in these two cases presupposes, in our judgment, that a party relying upon his own interpretation of the relevant document must have acted reasonably in all the circumstances in so doing. If instructions are given to an agent, it is understandable that he should expect to act on those instructions without more; but if, for example, the ambiguity is patent on the face of the document, it may well be right (especially with the facilities of modern communications available to him) to have his instructions clarified by his principal, if time permits, before acting upon them.”

36.

In other words, the critical question is not limited to whether the agent’s interpretation was reasonable; it is whether he behaved reasonably in acting upon that interpretation.”

I respectfully adopt the analysis of Toulson J. It seems to me that what I have to consider in the context of the suggestion that the July Letter contained instructions from Mr. Cooper, given via MBMC, which were ambiguous, is whether it was reasonable for NatWest to act upon its interpretation of the instructions.

In my judgment it is plain that NatWest did not act reasonably in taking the steps which it did after the receipt of the July Letter of cancelling the replacement draft, crediting the Account on 1 August 2003 with £135,040, the cost of the Original Draft, together with the sums of £2,000 and £500, and writing the August Letter. The instructions given in the July Letter, insofar as it was appropriate to interpret the letter as giving instructions, rather than as an invitation to treat in relation to settlement of Mr. Cooper’s claims against NatWest, were ambiguous. It was clear from the terms of the Dempsey Note that the instructions were recognised at the time as being ambiguous. It was also obvious from the terms of the Dempsey Note that NatWest was aware at the time that construing the instructions in the way NatWest contended that it did generated a profit for NatWest of £13,952.18. That realisation produced a degree of sensitivity which meant that whoever in the Branch first noticed these features felt that they should be brought to the personal attention of Mr. Dempsey, and he thought that he should bring them to the attention of the Area Manager Operations, Sarah Frankham. She plainly felt that the issues involved were sufficiently delicate to refer the matter upwards to the Senior Manager Operations, and that manager considered that it was necessary to take legal advice before reaching a conclusion. No doubt the non-legally qualified executives of NatWest involved in deciding what should be done relied on the legal advice given. However, it seems that that advice must have been woefully deficient. The obviously correct advice was to seek clarification from Mr. Cooper, via MBMC, of what he wanted to do, to have the then current value of the Replacement Draft credited to the Account, or only the cost of the Original Draft, plus some interest. That advice cannot have been given, because that is not what happened. The advice which must have been given was, in effect, to steal the Replacement Draft and pay as compensation a lesser sum than its value, for that is what happened. I doubt that anyone would seek to characterise that analysis as acting bona fide on a reasonable interpretation of ambiguous instructions.

I accept the submission of Miss Watt that by crediting the Account with the sums placed in it on 1 August 2003 and writing the August Letter NatWest, in effect, made an offer to Mr. Cooper to compromise his claims against NatWest communicated in the July Letter. However, in my judgment the evidence led before me did not justify the conclusion that Mr. Cooper had accepted that offer.

There was plainly no express acceptance. Miss Watt did not contend that there had been.

The case of NatWest that Mr. Cooper had accepted the offer depended upon inferring acceptance from conduct. However, as it seems to me, there was no conduct of Mr. Cooper which could be said to be evidence of acceptance of the offer.

I find that Mr. Cooper was in fact unaware, until his telephone conversation with Mr. Beachley on 1 October 2003, of the terms of the August Letter or of the fact that sums had been credited to the Account on 1 August 2003 by NatWest.

I accept that NatWest received no indication from Mr. Cooper after the despatch of the August Letter and before the meeting between Mr. Cooper and Mr. Dempsey on 8 April 2004 that Mr. Cooper was dissatisfied with how NatWest had proceeded in response to the receipt of the July Letter. As Miss Watt accepted in her closing submissions, what NatWest in fact sought to rely upon as indicating acceptance of the offer contained in the August Letter was silence on the part of Mr. Cooper for this period.

Acceptance notoriously cannot, in ordinary circumstances, be inferred from silence. However, Miss Watt drew to my attention some observations of Brandon L. J. in Rust v. Abbey Life Assurance Co. Ltd. [1979] 2 Lloyd’s Rep 334. In that case the issue was whether a binding contract had been concluded between an applicant for an investment in property bonds and the insurance company offering such bonds when, in response to an application form submitted by the applicant, accompanied by a cheque in the appropriate amount, the insurance company allocated units in the relevant fund to her and sent her a policy of insurance. It was held that a binding contract was made in such circumstances. However, an alternative analysis which commended itself to the deputy judge at trial was that a contract came into existence when the insurance company sent the executed policy of insurance in relation to the bonds to the applicant and she did nothing for seven months. At page 340 of the report Brandon L.J. said:-

“If I am wrong about that, however, it seems to me that the learned Deputy Judge’s decision should in the alternative be upheld on the second basis relied on by him. The plaintiff held the policy in her possession at the end of October 1973. She raised no objection to it of any kind until some seven months later. While it may well be that in many cases silence or inactivity is not evidence of acceptance, having regard to the facts of this case and the history of the transaction between the parties as previously set out, it seems to me to be an inevitable inference from the conduct of the plaintiff in doing and saying nothing for seven months that she accepted the policy as a valid contract between herself and the first defendant.”

Miss Watt also relied in support of her submission upon the comments of Lord Steyn in Vitol SA v. Norelf Ltd. [1996] AC 800. The case was in fact about repudiation. At pages 811E – 812D of the report Lord Steyn, with whose speech the other members of the House of Lords agreed, said:-

“It is now possible to turn directly to the first issue posed, namely whether non-performance of an obligation is ever as a matter of law capable of constituting an act of acceptance. On this aspect I found the judgment of Phillips J. entirely convincing. One cannot generalise on the point. It all depends on the particular contractual relationship and the particular circumstances of the case. But, like Phillips J., I am satisfied that a failure to perform may sometimes signify to a repudiating party an election by the aggrieved party to treat the contract as at an end. Postulate the case where an employer at the end of a day tells a contractor that he, the employer, is repudiating the contract and that the contractor need not return the next day. The contractor does not return the next day or at all. It seems to me that the contractor’s failure to return may, in the absence of any other explanation, convey a decision to treat the contract as at an end. Another example may be an overseas sale providing for shipment on a named ship in a given month. The seller is obliged to obtain an export licence. The buyer repudiates the contract before loading starts. To the knowledge of the buyer the seller does not apply for an export licence with the result that the transaction cannot proceed. In such circumstances it may well be that an ordinary businessman, circumstanced as the parties were, would conclude that the seller was treating the contract as at an end. Taking the present case as illustrative, it is important to bear in mind that the tender of a bill of lading is the pre-condition to payment of the price. Why should an arbitrator not be able to infer that when, in the days and weeks following loading and sailing of the vessel, the seller failed to tender a bill of lading to the buyer he clearly conveyed to a trader that he was treating the contract as at an end? In my view therefore the passage from the judgment of Kerr L.J. in the Golodetz case [1989] 2 Lloyd’s Rep 277, 286, if it was intended to enunciate a general absolute rule, goes too far. It will be recalled, however, that Kerr L.J. spoke of a continuing failure to perform. One can readily accept that a continuing failure to perform, i.e. a breach commencing before the repudiation and continuing thereafter, would necessarily be equivocal. In my view too much has been made of the observation of Kerr L.J. Turning to the observation of Nourse L.J. [1996] QB 108, 116-117, that a failure to perform a contractual obligation is necessarily and always equivocal I respectfully disagree. Sometimes in the practical world of businessmen an omission to act may be as pregnant with meaning as a positive declaration. While the analogy of offer and acceptance is imperfect it is not without significance that while the general principle is that there can be no acceptance of an offer by silence, our law does in exceptional cases recognize acceptance of an offer by silence. Thus in Rust v. Abbey Life Assurance Co. Ltd. [1979] 2 Lloyd’s Rep 334 the Court of Appeal held that a failure by a proposed insured to reject a proffered insurance policy for seven months justified on its own an inference of acceptance: see also Treitel, The Law of Contract, 9^th ed. (1995), pp 30-32. Similarly, in the different field of repudiation, a failure to perform may sometimes be given a colour by special circumstances and may only be explicable to a reasonable person in the position of the repudiating party as an election to accept the repudiation.”

In Rust v. Abbey Life Assurance Co. Ltd. it seems that the particular circumstances which were considered to justify concluding, as an alternative ground of the decision, that acceptance should be inferred from silence, were that the applicant had submitted an application for property bonds, that that had happened following a number of meetings, and that she had paid £91,600 for the bonds. The real question in relation to silence was thus whether she should have spoken out earlier than seven months after receipt of her policy if what she had received was not what she had solicited and paid for. Those circumstances were a long way from those of the present case.

In the present case, as I have indicated, it was contended that it should be inferred from silence on the part of Mr. Cooper that he was agreeable to receive from NatWest in settlement of a claim for delivery of a draft worth €213,327, or to be credited with the value of such a draft converted into sterling as at 18 July 2003 or shortly thereafter (which draft was found, when in fact converted on 31 July 2003, to be worth £148,992.18), a total of £137,540. In Rust v. Abbey Life Assurance Co. Ltd. the plaintiff had applied for something, after considering carefully with advisors what she should apply for, and she had paid for what she ostensibly wanted, which she had received. The real question was whether it should be inferred that what she had received was what she wanted. In the present case Mr. Cooper was presented with a fait accompli. NatWest had not only decided what offer to make, which was disadvantageous to Mr. Cooper, but had decided to press its offer on him by crediting the Account with the amount of the offer. NatWest had not sought agreement from Mr. Cooper to its proposal before crediting the account. It had realised that the offer was disadvantageous to Mr. Cooper and must have realised that he was unlikely to accept it, given a free choice.

In relation to the contentions of Mr. Cooper that he had sent his manuscript letter dated 24 October 2003 to Mr. Dempsey, and that that showed that he did not accept the offer contained in the August Letter Miss Watt submitted, first, that the passage of time between 4 August 2003 and about 24 October 2003 was such that the inference for which she contended should be drawn; second, that if Mr. Cooper despatched the letter dated 24 October 2003 on or about that date, and, contrary to her basic submission, it was not then too late to reject NatWest’s offer, the inference of acceptance of the offer should be drawn from Mr. Cooper not chasing for an acknowledgement of the letter; but, third, that it should be concluded from the fact that no subsequent reference was made to the letter dated 24 October 2003 in the correspondence which I have set out, or in the Particulars of Claim, that in fact the letter was not produced or sent on or about 24 October 2003.

In cross-examination of Mr. Cooper Miss Watt questioned him closely as to the circumstances in which he came to reveal to his solicitor, Mr. Beachley, the existence of the letter dated 24 October 2003. Mr. Cooper did suggest in cross-examination that what prompted him to look for the letter dated 24 October 2003, of which he had a photographic copy, or what reminded him of its existence, was the fact that a number of letters written by MBMC to Mr. Dempsey seemed not to have arrived. I have to say that I was not impressed by Mr. Cooper’s evidence concerning the letter of 24 October 2003. However, it was never put to him in terms that it was a fabrication. In those circumstances I am not prepared to find that the letter was not what it purported to be. However, that is not critical to my conclusions in relation to the alleged acceptance by Mr. Cooper of the offer contained in the August Letter.

The fact of the matter is that it was obvious to NatWest from the earlier dealings with Mr. Cooper in relation to the Original Draft and the Replacement Draft that he was not someone who reacted quickly or who pursued matters in an organised, efficient and expeditious manner. In particular, Mr. Cooper had failed to pursue the matter of the issue and the delivery of the Replacement Draft between about 29 November 2002 and 1 April 2003. Thereafter, although threatening, in his meeting with Mrs. Singh in April 2003 to instruct his solicitor, Mr. Cooper in fact did nothing until instructing MBMC to write the July Letter. While these delays may seem strange to others, especially when the delays were on the part of an apparently successful businessman and concerned a significant amount of money, they were nonetheless part of the established pattern of dealings between Mr. Cooper and NatWest in relation to the Replacement Draft a long time before 4 August 2003. A reasonable man, with the knowledge of the extended periods of apparent inactivity on the part of Mr. Cooper in dealing with NatWest in relation to the Replacement Draft, would, as it seems to me, have drawn no conclusion, from the silence from Mr. Cooper after 4 August 2003 until 8 April 2004, that he agreed to the offer contained in the August Letter.

It is difficult to resist the conclusion that NatWest sought to manoeuvre Mr. Cooper, by crediting the Account, into a position in which he felt that he had no choice but to accept, or at least that it would be difficult not to accept, what had happened. No evidence was adduced before me that NatWest in fact relied on the silence of Mr. Cooper at any time as evidence that he actually agreed with what NatWest had offered.

Consequently I reject the submission that it should be inferred from the silence of Mr. Cooper that he accepted the offer of NatWest contained in the August Letter.

Miss Watt’s submission in relation to acceptance by Mr. Cooper of a repudiation on the part of NatWest of its contractual obligation to deliver the Replacement Draft was, I think, directed at avoiding a conclusion by the Court that NatWest owed Mr. Cooper a continuing obligation to deliver that draft. I did not understand her to contend that that point was an answer to a claim for damages. Obviously acceptance of a repudiation does not deprive the innocent party of a right to damages for the breach. However, for the reasons which I have explained, I am no more satisfied that it should be inferred from the silence of Mr. Cooper between 4 August 2003 and 8 April 2004 that he accepted a repudiatory breach of contract on the part of NatWest than that it should be inferred from the same silence that Mr. Cooper accepted the offer contained in the August Letter.

The further alternative submission of Miss Watt based on the silence of Mr. Cooper between 4 August 2003 and 8 April 2004 was that he was estopped from contending that NatWest remained under a continuing obligation to deliver the Replacement Draft. Again, the need to consider that issue does not arise in the light of the abandonment of Mr. Lo of a claim for specific performance, but once more, if it did, the submission would fail for the same reasons as the submissions that it should be inferred from the silence that Mr. Cooper had accepted the offer contained in the August Letter or that it should be inferred from that silence that Mr. Cooper accepted a repudiatory breach of contract on the part of NatWest.

The result is that I find that NatWest was in breach of contract, as it accepted, in failing to deliver the Replacement Draft to Mr. Cooper within a reasonable time of receiving instructions to do so, and that it has no defence of compromise or bona fide compliance with instructions to the claims made in this action insofar as pursued.

It remains to consider the issues of damages and interest.

The only claim for damages for non-delivery of the Replacement Draft which was pursued was for the difference between the value of the draft and its sterling equivalent.

It was, I think, common ground, that such damages should be assessed by analogy with a claim for damages for non-delivery under a contract of sale of goods.

Miss Watt submitted that the date of assessment should be the date of breach, and that the date of breach should be considered as the date as at which the Replacement Draft should have been delivered. It was common ground that no date for delivery of the Replacement Draft had been agreed expressly, and thus that it was an implied term of the contract that the Replacement Draft would be delivered within a reasonable time after 29 November 2002. In her evidence, unchallenged on this point, Mrs. Singh told me that in the ordinary case it took between about ten and fifteen days to produce a replacement draft. Thus Miss Watt submitted that the date for assessment of damages should be the middle of December 2002. It appeared to be common ground that the sterling value of €213,327 at that time was £136,587, less than the total amount credited by NatWest to the Account on 1 August 2003.

Notwithstanding the various possible dates canvassed in the particulars under paragraph 20 of the Amended Particulars of Claim, in his closing submissions Mr. Lo contended that the correct analogy in respect of the time as at which damages should be assessed was with a sale of goods case in which there was no express time for delivery. To that extent his submissions coincided with those of Miss Watt. However, Mr. Lo reminded me that Sale of Goods Act 1979 s.51 is in these terms:-

“(1)

Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may maintain an action against the seller for damages for non-delivery.

(2)

The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the seller’s breach of contract.

(3)

Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered, or, if no time was fixed, then at the time of the refusal to deliver.”

Mr. Lo submitted that in the present case the relevant time was when NatWest refused to deliver the Replacement Draft, and that, on the evidence, that was when it cancelled it. He contended that the best evidence of the market value of the Replacement Draft at that date was the sum raised by NatWest by the cancellation, £148,992.18.

Miss Watt countered that the law was unclear whether, in a case in which delivery was to be made within a reasonable time, for the purposes of Sale of Goods Act 1979 s.51(3) there was a fixed time for delivery. Happily I do not have to reach any conclusion on that point, as it was common ground that the present was not actually a sale of goods case, but one in which the principles underlying a sale of goods case could be applied by analogy.

I accept the submissions of Mr. Lo that the appropriate date as at which to assess damages in the present case is as at the date of cancellation of the Replacement Draft. By analogy with a sale of goods case, as it seems to me, the cancellation of the Replacement Draft was tantamount to a refusal to deliver it. I am fortified in that conclusion by the fact that, although not pleaded in this way, it seems to me that actually what the present case was about was conversion of the Replacement Draft by NatWest by treating it as its own to cancel and thereby make a profit. If the case had been put in conversion, the date as at which damages would have fallen to be assessed would have been the date of conversion. The assessment of damages would have led to the same conclusion, that what Mr. Cooper was entitled to by way of damages was the value of the chose in action converted, £148,992.18, but he would have had to have given credit for the sums paid by NatWest, totalling £137,540.

In the end I was invited by Mr. Lo to assess damages in sterling. The sterling value of the proceeds of the Replacement Draft, £148,992.18, less the sums credited to the Account on 1 August 2003, £137,540, amounts to £11,452.18. I assess damages in that sum.

It was, by the conclusion of the trial, common ground that interest should be awarded on the amount of any damages which I assessed at the rate 1% above the Bank of England base rate from time to time.

Miss Watt contended that Mr. Cooper should not recover interest for the whole of the period between 1 August 2003 and the date of judgment by reason of his delays in pursuing his claims. There were a number of periods when there was inactivity on the part of Mr. Cooper when there might have been pursuit by him of his claims. One such period was between his learning, on 1 October 2003, of what NatWest had done, and 8 April 2004 when he went to see Mr. Dempsey. Another such period was between the latter date and 2 November 2004 when MBMC commenced a chain of correspondence which, after some rather desultory initial steps, led to the complaint to Sir Fred Goodwin in the letter dated 26 April 2005. A further period of inactivity followed the rejection of that complaint, by letter dated 23 August 2005, and continued until the writing of the letter before action dated 31 October 2006. That letter was the precursor to the complaint to FOS. There was a further period of delay between the communication of the decision of the Ombudsman, by letter dated 18 June 2007, and the commencement of this action, on 14 December 2007. It could, moreover, be said that even during periods of activity, such as between 2 November 2004 and 23 August 2005, steps were generally not taken as swiftly as they might have been.

Mr. Lo accepted that there had been delays, and, I think, realistically recognised that Mr. Cooper could not expect the Court to award interest for the whole of the period between 1 August 2003 and the date of judgment. However, he urged me to stand back from the detail of the periods of delay and to assess interest on the basis of what was fair.

In considering the question of the period for which interest should be awarded it is important, as it seems to me, to have firmly in mind that NatWest behaved in a most high-handed fashion in interpreting the July Letter in the way most favourable to itself. It compounded its initial actions by, essentially, trying to brazen things out. Mr. Dempsey sought to fend Mr. Cooper off on 8 April 2004 by maintaining that matters had been satisfactorily resolved the previous summer and that Mr. Cooper would have to write, or have his solicitors write, formally if he wanted the matter re-opened. When MBMC complained on behalf of Mr. Cooper to Sir Fred Goodwin, again the position adopted by NatWest was that it was right and there was no substance in the complaint of Mr. Cooper. It is difficult to understand how an objective review of the case in the period 26 April 2005 to 23 August 2005 could have led NatWest to that conclusion. Nonetheless, it maintained that position when Mr. Cooper complained to FOS. The underlying merits do not seem to encourage one to smile on the attempts of NatWest to chip away at the amount which should now be paid to Mr. Cooper.

As against that, the threats of complaints to Head Office and FOS were made in the July Letter itself. In its letter dated 2 November 2004 to Mr. Dempsey MBMC said that it had instructions to pursue the matter and to issue proceedings, if Mr. Cooper’s requests were not met in full within 14 days. In the ensuing correspondence leading up to the complaint to Sir Fred Goodwin there were further threats on behalf of Mr. Cooper of issuing proceedings. The complaint to Sir Fred itself contained a threat of proceedings, as did the letter before action dated 31 October 2006.

It seems to me that Mr. Cooper acted reasonably in pursuing complaints to Sir Fred Goodwin and FOS, and in postponing the commencement of proceedings whilst these steps were taken. I am not inclined to the view that Mr. Cooper acted unreasonably in not seeking to raise his complaints more actively with NatWest before his meeting with Mr. Dempsey on 8 April 2004. However, there was no real explanation for the delay between MBMC’s letter dated 26 April 2004 and its letter dated 2 November 2004. I do not consider that it would be just to award Mr. Cooper interest in respect of that period. Again, the delay in the period 23 August 2005 to 31 October 2006 was wholly unexplained, and I do not feel that it would be just to award Mr. Cooper interest in respect of that period either. However, apart from those two periods, it does seem to me that it would be appropriate for NatWest to pay interest at the rate 1% above the base rate of the Bank of England from time to time.

Thus there will be judgment for Mr. Cooper against NatWest for damages assessed at £11,452.18 together with interest at the rate 1% above the Bank of England base rate from time to time on that sum

(i)

from 1 August 2003 until 26 April 2004;

(ii)

from 2 November 2004 until 23 August 2005;

(iii)

from 31 October 2006 until the date of judgment.

The parties will no doubt be able to agree the relevant rates of interest and calculate the sum due as interest.