Shah & Anor v HSBC Private Bank (UK) Ltd [2011] EWCA Civ 1669

Case No A2/2011/2954[2011] EWCA Civ 1669
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(QUEEN’S BENCH DIVISION)
(MR JUSTICE POPPLEWELL)
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Wednesday 30 November 2011
Before
LORD JUSTICE LONGMORELORD JUSTICE MOSESLADY JUSTICE BLACK
Between
SHAH & ANRAppellantHSBC PRIVATE BANK (UK) LTDRespondent
(DAR Transcript ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400 Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr P Downs QC and Mr J Sullivan (instructed by Edwards Wildman Palmer LLP) appeared for Appellant.Mr R Lissack QC and Mr N Medcroft (instructed by Berwin Leighton Paisner LLP) appeared for Respondent.
Judgment
[1]This is an appeal from Popplewell J’s refusal to the claimant of permission to amend his pleadings. The decision of Popplewell J was given on 15 November 2011 when the date of trial was listed for 28 November. Here we are on 30 November; we are told that Supperstone J has been assigned to do this trial and is awaiting the outcome of the argument before us this morning. Those interested in the background to the claim by the customer of the defendant Bank for failure to comply with his instructions for a period of 13 days may read all about it in the judgments of first Hamblen J in [2009] 1 Lloyd’s Rep 328, secondly this Court in [2010] Business Law Reports at page 1514 (both of those being in relation to applications for summary judgment); thirdly, the judgment of Coulson J of 4 July 2011 [2011] EWHC 1713; fourthly, the judgment of this Court in [2011] EWCA Civ 1154 on 13 October 2011 (both of those being in relation to disclosure); fifthly, the judgment of Popplewell J in [2011] EWHC 2835 of 17 October at the end of the case management conference lasting three days; and lastly, the judgment of Popplewell J given, as I say, on 15 November, being the judgment on the claimant’s application for permission to re-re-amend their pleadings to allege bad faith on the part of individuals in the defendant Bank. That is the order which is being now appealed with the permission of Ward LJ.[2]The defence of the Bank is that they have a genuine suspicion that the claimant’s instruction related to criminal property (probably deriving from money laundering transactions) and that they were therefore prohibited by section 328 of the Proceeds of Crime Act 2002 from acceding to their customer’s instructions.[3]No positive allegation of bad faith on the part of the Bank was made by the claimant until September of 2011 when an allegation of bad faith was made against a Miss Shah of the bank (no relation to the claimant) on the basis that it was she who had made a suspicious transaction report (or STR as it is called in the jargon of the money industry) to the Bank’s Money Laundering Compliance Officer, Mr Wigley. That allegation of bad faith was, on or about 17 October of this year, abandoned. Instead, an allegation of bad faith is now sought to be made against a person whom I shall refer to as C in the Compliance Department of the Bank and against a person, R, in the Relationship Department of the Bank, both of whom the Bank, with the sanction of this Court, has declined to identify. The judge, in the course of his judgment, observed of this allegation:
“It appears therefore that the allegation is that both C and R decided in advance of the creation of the STR that an STR would be created when each of them had no basis for doing so. Paragraph 13F, which I shall come to, makes clear that this allegation is not only that each of C and R themselves had no relevant suspicion, but that each knew that the other had no relevant suspicion. This then is an allegation of a conspiracy between individuals in different departments to behave dishonestly and in bad faith. There is no motive for such dishonesty or activity alleged anywhere in the proposed amendments.”
[4]The judge refused permission to make the amendments sought for two main reasons. First, the evidence relied on did not support the allegation; secondly, that it was much too close to the trial date for such an allegation to be made. I have already said that the case was due to begin last Monday.[5]It is said by Mr Downs QC, for the appellant, that the reason why the amendment was sought so late was because the evidence relied on to support the amendment only emerged when the Associate General Counsel of Private Banking of the defendant on 11 October 2011 exhibited transcripts of telephone conversations between Miss Shah and both the Compliance and the Relationship Departments of the bank on 21 September 2006 as part of the evidence to be relied on in refuting the original allegation of bad faith made for the first time in September 2011 against Miss Shah. Now, apparently, Miss Shah is to be promoted as a witness of truth acting at all times in the interests of the claimant and the allegation of bad faith is instead transferred to the persons in the Relationship and Compliance Departments who were, as I say, referred to by the judge as C and R and who reported their supposedly non-genuine concerns – if Mr Downs’ argument is to be accepted – to Mr Wigley, the Bank’s Money Laundering Reporting Officer.[6]Those transcripts of conversations were analysed by the judge and Mr Downs has caused us to analyse them this morning. He submits that on their true analysis they show seven salient facts, namely that Miss Shah had herself no suspicion of any money laundering activity on the part of the claimant; secondly, that she had verified his explanation; thirdly, that her superior agreed with her about that but abrogated his responsibility in respect of it; fourthly, that the only reason the report was made was the size of the transaction; fifthly, that the Relationship department had no genuine suspicion at all of any money laundering activity, but deliberately decided to make a false report of that matter up the chain to Compliance and thus up to Mr Wigley; sixthly, that Compliance decided on its own responsibility, to make the report; and seventhly, that the Relationship Department was only concerned with its own protection.[7]Having gone through the transcripts of the telephone conversations

the judge said this in paragraph 43:

“If it had been the case that they or either of them [that is C or R] thought that there might be grounds on which others might form a suspicion, they would not in my judgment have been acting dishonestly or, if it is different, in bad faith in putting those matters in a money laundering report in the way in which they did in order for the decision to be made by those above them. However that may be, there is in my judgment no basis in the new material for inferring that either was acting without a genuine suspicion which, one must remind oneself, is concerned with possibilities not probabilities even in its statutory sense in this context. I therefore regard the amendments as speculative, not based on any evidence and having no real prospect of success.”
[8]I can only say that I agree with the judge’s reaction to his examination of those transcripts. Mr Downs submitted on more than one occasion that all he had to show was that there was an arguable case of dishonesty on the part of C and R and of course that is right. However, the truth is, having looked at the transcripts in details, I cannot see that there is any arguable case of dishonesty. There is no suggestion that it was the size of the transaction alone that was causing the suspicion. Even if there was, it does not seem to me that that can conceivably be a ground for saying that the reporting was dishonest in the sense that Relationship had no genuine suspicion but decided to make a false report. We have allowed Mr Downs to develop his argument without regard to the normal considerations that one applies in cases of this kind, that this is very much a matter of the judge’s discretion and an appeal would require, as is well known, a departure from principle on the part of the judge in order for this Court to interfere with the judge’s discretion. For my part I would say that this is not a case where I would leave it with the judge’s discretion. I agree with the judge and it would be quite wrong for these amendments to be allowed. We have also allowed Mr Downs to develop the argument without regard to the fact that this is pre-eminently a case management decision for the judge. Popplewell J has far more than knowledge than this Court can ever have of the facts, details and intricacies of this case, having conducted a case management conference over three days.[9]In those circumstances there is no need for me to engage with other arguments that Mr Downs put forward as to how the judge could be criticised for saying that, if these transcripts did show evidence of fraud, they showed no more than what had already been disclosed to the claimant and the allegations could have been made earlier, nor is there any need to engage with Mr Downs’ criticism of the judge’s decision that this is the kind of major addition to the pleaded case which should not in any event be allowed so close to the date of trial. I rest my judgment solely on agreement with the judge in what he says in paragraph 43.[10]Lastly, Mr Downes complains that he ought to have been allowed to amend his reply along the lines of the amendments which he was not permitted to make to his particulars of claim because the amendments of the reply are merely consequential on an amendment to the defence by the Bank to plead an implied term or, if not merely consequential, at least allowable on the basis that the defence must be allowed to be controverted. Again, this is very much a matter for the judge at first instance. He considered that the relevant paragraphs of the reply which he ordered to be struck out were mere mirrors of the amendments which he was refusing the claimant to make to his particulars of claim. I agree with the judge about that and I note that his order is merely that paragraphs 8(a) and 9(a) of the claimant’s re-re-amended reply are struck out. It is not as if all of the proposed amendments to reply should be struck out. The judge isolated those which he thought mirrored the particulars of claim and that was well within his discretion. I would therefore dismiss this appeal.[11]I agree. I would only add that it is necessary to underline what Longmore LJ said about the reluctance of this Court to interfere with decisions that are far best left to the judge who has an intimate knowledge of the case through his case management obligations which Popplewell J was satisfying. It is difficult to see, therefore, particularly in the light of the only reasonable reading of those transcripts what arguable point Mr Downes QC had. We might have had some glimpse of what they were had we had the opportunity to read the reasons given for granting permission. We were deprived of that opportunity and one can only therefore charitably assume that it was the excellence of Mr Downes’s advocacy that persuaded the lord justice to grant permission. Alas, it was not an advocacy that persuaded me. I too would dismiss this appeal.[12]I agree with both judgments.

Order

Application dismissed

Cited in 4 later judgments