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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Bale v HSBC Bank Plc [2002] EWCA Civ 1866 (2 December 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/1866.html Cite as: [2002] EWCA Civ 1866

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(MR JUSTICE FIELD)

		Royal Courts of Justice Strand London, WC2 Monday, 2nd December 2002

1. LORD JUSTICE CARNWATH: This is an application for permission to appeal from an order of Field J who dismissed an appeal from Master Leslie. Master Leslie granted summary judgment to the defendants on 1st March 2002. It is therefore a second appeal.
2. The background is that Mr Bale has brought four claims following the liquidation of his company (which I will call "BHEL"). That company made timber frames for houses. Its bankers were the Midland Bank (now HSBC) in Worthing. In the early part of 1994 the bank expressed concern about the company and recommended the appointment of an accountant, Mr Montgomery, to prepare a report and to assist. His work was funded to a large extent by a body called the Prosper Group and there is another action in respect of them to which I do not need to refer.
3. Mr Montgomery introduced a Mr Colin Budd to BHEL and he subsequently became a director. It is due to the activities of Mr Budd that it is said that Mr Bale's company suffered loss, principally because a separate company was set up purportedly to assist the company but in fact, so it is alleged, to strip Mr Bale's company of its assets for the benefit of Mr Budd.
4. The two actions with which I am concerned against the bank were begun one in Truro District Registry and one in Bristol District Registry, but they have since been consolidated in the High Court.
5. Both Master Leslie and Field J had to deal with other matters as well as these. The two actions (which I shall call "Truro" and "Bristol") related respectively to a claim against the bank for negligence for failing to satisfy them properly of Mr Montgomery's competence and suitability to carry out this task; and (in the Bristol action) failures of the bank in relation to Mr Budd and failure to draw to attention to knowledge they had of his dubious past in another matter in which the bank had been concerned.
6. The only one I am directly concerned with today is the Truro matter, but it is important to consider both. What happened was that on 1st March Master Leslie had the bank's application for summary judgment. He dealt with the matter on the basis that the bank's appointment of Mr Montgomery had not caused the loss, because the bank could not have foreseen that Mr Budd was going to be introduced. He did not deal separately with the Bristol element of the claim, that is the claim specifically in relation to Mr Budd.
7. There was an appeal against that. In his witness statement supporting the appeal Mr Bale complained that the Bristol element of the matter had not been dealt with, but he also said that he had not had a fair hearing on either point. He said that he had the impression that the Master had made up his mind and that he was not called on to deal with this aspect of the case, which led him to think that he was going to be successful; also, that a banking expert's report which was before the Master was not considered in any way.
8. His application for permission to appeal was dealt with by Holland J on 1st May. He granted permission to appeal. He noted that the allegation was one of procedural irregularity, and said that this application had been dealt with at the end of a long day and that in the course of that the Bristol element of the claim had been overlooked. According to the note which I have of that hearing (which was prepared by Mr Bale's McKenzie Friend), the judge added this:

"There was no consideration of the Expert's Report or any reference to it. I would not allow permission on this point."

So it seems as if the failure to consider the expert's report by Master Leslie was one of the points ventilated before Holland J, but there is no explanation beyond that brief note of what he made of it.

9. Before Field J on 25th July a number of other matters were considered. In relation to the Bristol element of the claim, he accepted the Master seemed to have overlooked that element of the matter. Therefore he directed that the summary judgment in respect of that be restored to the Master for him to deal with that properly.
10. With regard to the Truro aspect, that is the negligence in relation to the appointment of Mr Montgomery, the judge adopted the same approach as Master Leslie. He said this:

"Even if the bank did owe a duty of care to vet Mr Montgomery, it is not alleged that they would have discovered that Mr Montgomery was a fraudster or had had a previous association with Mr Budd. It is simply alleged that they should not have recommended a one man band who had insufficient experience to do the job. This means that Mr Bale is quite unable to show that the bank's alleged breach of duty caused the loss complained of, namely, the losses consequent on the depredations of Mr Budd."

He went on:

"In my judgment, it is not enough to show that but for the introduction of Mr Montgomery the losses would have been avoided because it was Mr Montgomery who introduced Mr Budd. Instead, the court must apply a common sense attitude to causation, ..."

11. Mr Bale in his application to this court says that the judge only dealt with part of the case before him, because his skeleton argument before the judge had clearly raised the procedural error and in particular the failure to consider the expert's report.
12. In a further skeleton argument in this court Mr Bale says that the expert's report would have shown that the circumstance of appointment of Mr Montgomery made his role not of that of an investing accountant but rather of a company doctor. That is indeed something which is discussed by the expert. He says that to appoint a sole practitioner for that role was contrary to accepted banking practice and that failure, among others, led to the losses which were caused.
13. It seems to me that there is certainly a reasonably arguable point that neither Master Leslie nor the judge has had regard to the expert's report. In particular that might have been of significance in showing that Mr Montgomery's role was somewhat more substantial in relation to the company than seems to have been implied by the judge's judgment, and indeed was a "company doctor" as Mr Bale has said.
14. The other point is that since the hearing before Field J, the Bristol aspect of the matter has been reheard by Master Leslie on 24th October, and I have a copy of his approved judgment which deals with that matter in some detail. He has now decided that the application for summary judgment in respect of that part of the matter should be dismissed. He drew attention to the particular circumstances of this case where the bank was requiring steps to be taken by a customer and in effect closely monitors the way in which the business is being conducted in its own interest. He says that in those circumstances they had a greater duty in relation to the company, sufficient to make it at least arguable that there was a case in respect of failure to warn of what they knew about Mr Budd. So there will be a trial of that matter.
15. There is also, I should have mentioned, a claim against Mr Montgomery separately and that is also a matter which will be going to trial.
16. As this is a second appeal, I need to be satisfied that there is some point of general public interest or some other compelling reason to grant permission. It cannot be said that this raises matters of general public interest, certainly not of the kind that would normally justify grant of permission to appeal, although I appreciate there are matters in relation to banking practice which may be of general interest. However, I do believe there is a compelling reason to grant permission, because the real complaint here is that an important aspect of Mr Bale's case has never had a hearing at either level, either before the Master or before the judge; that is the case based on the particular character of Mr Montgomery's appointment and its discussion in the expert's report.
17. For those reasons, I grant permission to appeal. I cannot do more on the hearing before me. No doubt when the defendant bank have notice of this they will consider to what extent the future conduct of the case overall might be assisted by allowing these matters to go to a trial without contesting the appeal. However, that is a matter entirely for them.

ORDER: Application for permission to appeal granted; time estimate of half a day and to be listed before two judges.

(Order not part of approved judgment)

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