Vanquis Bank Limited v TMS Legal Limited [2025] EWHC 1599 (KB)

[2025] EWHC 1599 (KB)Case No KB-2024-000744
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 25/06/2025
Before
MR JUSTICE JAY
Between
VANQUIS BANK LIMITEDClaimantTMS LEGAL LIMITEDDefendant
Edward Levey KC and Gillian Hughes (instructed by Herbert Smith Freehills Kramer LLP) for ClaimantSaima Hanif KC and Chloë Bell (instructed by Kingsley Napley LLP) for DefendantHearing Hearing date: 10 June 2025
Approved JudgmentThis judgment was handed down remotely at 10.30am on 25 June 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................MR JUSTICE JAY

INTRODUCTION

[1]The parties to these proceedings are the Claimant, Vanquis Bank Limited (“Vanquis”), a bank, and the Defendant, TMS Legal Limited (“TMS”), a firm of solicitors.[2]TMS applies to strike out Vanquis’s Claim Form, Particulars of Claim and proposed Amended Particulars of Claim (“Am PoC”) (the proposed amendments are not opposed qua amendments, without prejudice to TMS’s applications) pursuant to CPR r. 3.4(2)(a) and/or (c), and/or for summary judgment pursuant to CPR Part 24.[3]Both parties have filed evidence supporting their respective cases. Almost all of that evidence amounts to commentary and legal argument, and is inadmissible. That said, I can see that it may have been of some value at an earlier stage in this litigation in permitting the parties to set out their respective cases for the benefit of their opponent, although strictly speaking that should have been done by a more conventional route. In my view, there is virtually no difference between the approach I should be taking to these two applications; and, to the extent to which there is, I will apply the test under Part 24 which is more favourable to TMS. The governing principles are well established and Vanquis is entitled to contend that its pleaded case should be considered at its reasonable pinnacle.[4]All issues of law can appropriately be resolved in this context save where it is arguable that the law is developing and further evidential inquiry may be required. All disputed questions of evidence, both primary and inferential, should be resolved for these purposes in Vanquis’s favour, unless I should be satisfied that a contrary proposition advanced by TMS is unanswerable. I do not lose sight of Lewison J’s fuller exposition in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch), but given that the principles are not in dispute nothing more from me on this topic is required.[5]Vanquis’s pleaded cause of action is causing loss by unlawful means. The parameters of that tort have been explained in modern times, but not necessarily conclusively established, in a trilogy of cases of the highest authority, namely: OBG Ltd v Allan [2007] UKHL 21; [2008] 1 AC 1 (“OBG”), JSC BTA Bank v Ablyasov (No 14) [2018] UKSC 19; [2020] AC 727 (“JSC”), and Secretary of State for Heath v Servier Laboratories Ltd [2021] UKSC 24; [2022] AC 959 (“Servier”). The essential issue for my determination is whether the facts of this case may be accommodated within the proper bounds of this tort. VANQUIS’S CASE Essential Facts

VANQUIS’S CASE

[6]I take the essential facts from the Am PoC and the limited selection of the documents that have been placed before me.[7]Vanquis specialises in “second chance” lending to individuals with low or adverse credit histories. TMS specialises in filing financial mis-selling claims (“irresponsible lending claims”) on behalf of their clients. Until March 2024 TMS’s only qualified solicitor dealing with these claims was Ms Penelope Hill, and since then that solicitor was Mr Andrew Higgs.[8]In outline, TMS alleges that Vanquis provided unaffordable credit to its clients, violating various regulatory obligations. The irresponsible lending claims are based on the assertion that Vanquis failed to conduct adequate affordability checks before issuing credit cards or increasing credit card limits. These checks require lenders to assess matters such as the client’s ability to repay from income or savings, although there is no fixed checklist: assessments are required to be fair, reasonable and proportionate.[9]The prescribed claims process entails clients first complaining to the lender (who is then required to investigate the claim and submit a “final response letter”); and, if dissatisfied, clients may escalate the issue to the Financial Ombudsman Service (“the FOS”). The FOS may order redress including the refunding of interest and/or charges and compensation for distress.[10]Once the FOS has received more than three complaints against the same lender in the same financial year, the lender is required to pay a fee to the FOS regardless of outcome. The fee was £750 per complaint, reduced to £650 in April 2024.[11]Complaints must be filed within six years of the event, alternatively within three years of complainants becoming aware, or when they ought reasonably to have become aware, of the issue. The FOS can reject late complaints unless certain stated exceptions apply.[12]Vanquis contends that its lending practices for new customers involve affordability checks (including client-provided income data, interrogating credit agencies, and soft and hard credit searches) and applying low credit limits (£250-£1,200) with modest monthly payments. Credit limit increases are based on updated data, Vanquis’s position being that offers are made only if customers are deemed capable of handling increased limits.[13]TMS claims to offer expert assistance in filing complaints, although Vanquis maintains that in reality claims are handled by unqualified staff under minimal supervision. Vanquis argues that, given the general and unparticularised manner in which complaints are presented to it, the involvement of TMS does not materially enhance the latter’s clients’ prospects of success. Further, Vanquis asserts that TMS’s clients are told that credit suspension usually only occurs if claims succeed. In fact, it is said that lenders typically suspend credit upon receiving a complaint. Vanquis’s case is that credit suspension is standard practice in the industry, further or alternatively is required by a series of regulatory obligations.[14]TMS operates on a “no win no fee” basis. It charged its clients up to 45% of any redress obtained (reduced to 30% after July 2024 due to SRA caps). These charges apply even if the redress is in the form of a write-off of debt.[15]Vanquis contends that TMS owes a number of legal and ethical obligations to its clients, arising under contract (the obligations being either express or implied) and (I simplify) through the regulatory scheme. In particular, TMS must(1) act in the best interests of its clients,(2) have a system of proper governance,(3) obtain client authority before proceeding, and(4) only submit claims when it has reasonable grounds to do so and sufficient information on which to base a decision to proceed. It is said that TMS’s specific duties in respect of these claims (whether at the first stage or at the point of referral to the FOS) include undertaking reasonable enquiries to assess the viability of individual claims (and if such information is lacking, identifying the further information that is required and then obtaining it), confirming the client’s relationship with Vanquis, providing sufficient information for Vanquis to identify the account, warning clients about the likelihood of credit suspension, and exercising reasonable care and skill when presenting claims.[16]Vanquis further contends that TMS made a number of “merits representations” to its clients to the effect that their claims are properly arguable and that the solicitors have sufficient information in their possession to make that judgment. For this purpose Vanquis relies on TMS’s express Terms of Business, its regulatory obligations, the fact that TMS holds itself out as having the necessary experience in this area as well as the wherewithal to prosecute claims of this type, and the fact that once the application process has been completed, TMS notifies its client whether the claim has passed its quality control procedures, and if it does, confirmation is given that TMS is willing to submit an irresponsible lending claim on his or her behalf and to act in relation to such a claim.[17]Vanquis’s case is that TMS makes these “merits representations” with the intention that they be relied on by clients by authorising and/or permitting TMS to file irresponsible lending claims on the latter’s behalf. Vanquis’s argument is that these merits representations are made recklessly because TMS in any individual case does not care whether or not they are true, and knows from experience that many of the claims submitted are not properly arguable and/or has done insufficient work to ascertain in any individual case whether the claim is arguable.[18]I will be examining Vanquis’s case based on the implication of terms as well as the “merits representations” in due course. As for the pleading based on express terms, TMS’s relationship with its clients is governed by a Terms of Business Agreement which I have considered. TMS imposes on itself an express obligation only to pursue a complaint or claim when it has reasonable grounds to do so and sufficient information on which to base this evaluation. A “complaint or claim” is defined as a submission to the Lender but my reading of these Terms is that it also applies to the later submission to the FOS. At all events, what is material here is that the express obligations I have mentioned clearly apply at all stages of the procedure.[19]TMS’s claims submission process requires clients to complete a basic online form or questionnaire the provisions of which I have examined. There is no requirement to submit documentary proof of credit card ownership. The questionnaire does not seek any information from TMS’s clients about the affordability checks that Vanquis may have undertaken, and there is no attempt to gather detailed financial hardship data. Nor does the questionnaire investigate the timing or causes of any financial difficulties. Thus, it is Vanquis’s case that the information in this questionnaire falls short of enabling TMS properly to assess whether Vanquis carried out sufficient affordability checks at the time of extending credit; and, more generally, falls short of being sufficient for a proper merits assessment overall.[20]Vanquis’s case is that clients are prompted to confirm that they only recently became aware of the issue. They are asked to sign a confirmation statement in these terms:
“I only recently understood that I had cause to complain when [TMS] represented my interest regarding irresponsible lending. I considered my financial issues to be the problem and I didn’t link it to any irresponsible lending by the lender.”
[21]Vanquis says that this statement is no doubt intended to attempt to fulfil the three-year rule although it ignores the objective element of the test. I would add (and on this specific topic I feel able to express an opinion) that the statement is entirely leading and that clients should not have been asked to sign it in these terms.[22]TMS in the first instance submits an “initial covering letter” to Vanquis which contains no more than a pro forma letter and a completed questionnaire. No particulars are given of the allegations that Vanquis should never have offered the client “this unaffordable lending” and failed to carry out sufficient checks to ensure that the borrowing would be repaid. The financial claim advanced in the “initial covering letter” is for a full refund of fees, interest and charges, “other out of pocket expenses” (not particularised) and a payment for distress and inconvenience (not explained).[23]In its “final response letters”, Vanquis sets out its reasons for either upholding or rejecting the complaint. In the latter instance, it explains the steps it says it has taken to explore the intended borrower’s individual circumstances. Although the final response letters follow a set pattern, I accept the submission of Mr Edward Levey KC for Vanquis that on the face of things the final response letters are not pro forma and are the result of some degree of investigation by its employees.[24]TMS has referred some but not all of the complaints rejected by Vanquis to the FOS. It completes the FOS complaints form and usually sends a copy of Vanquis’s final response letter. What TMS does not do, says Vanquis, is seek to engage with the latter’s reasons for rejecting the complaint. All that the submission to the FOS entails is a two-sentence letter stating that “we are not satisfied that the complaint has been handled correctly or fairly and request that an Ombudsman review it”. The pro forma complaint form issued by the FOS would take no more than a minute or so to complete, and states – under the rubric “how have you been affected, financially or otherwise?” – “I have been financially disadvantaged”. No further details are given.[25]Vanquis avers that TMS began to submit irresponsible lending claims on behalf of clients in October 2022. The number of these claims increased substantially in January 2023, since when there has been a flood.[26]Analysing the claims across the board:(1) As at 31 August 2024, about 33,000 claims had been submitted. Of these, 32,758 had been considered by Vanquis.(2) Of the claims considered, 2,686 were then withdrawn by TMS, and of the remaining 30,072 claims 41.1% were rejected as being out of time, 35.8% were rejected on the merits, 7.8% were partially or fully upheld, and the remaining 15.3% were referred by TMS to the FOS before they had been resolved by Vanquis.(3) Of the 12,250 considered and resolved by the FOS (approximately 5,000 more had not been considered as at August 2024), 10,267 (i.e. 83.8% of the 12,250) were either rejected by the FOS (47.7% of the 10,267), or were withdrawn or closed (i.e. 36.1%). Of the balance of 16.2%, 6.3% were partially or fully upheld by Vanquis, and 9.9% were upheld by the FOS. None of the distress claims has been upheld. As for the claims that were closed, this was because they were either duplicates or TMS failed to provide the basic financial information as requested by the FOS.(4) None of the claims was upheld on the basis of information provided by TMS: it was on the basis of financial information provided in response to requests from Vanquis or the FOS.

The Pleaded Formulation of Vanquis’s Claim in Tort

[27]Vanquis contends that TMS is liable to it for causing loss by unlawful means from no later than January 2023 onwards.[28]In summary:(1) Vanquis has been inundated with claims which were submitted recklessly and indiscriminately and in breach of TMS’s duties to its clients: the majority of these claims should never have been brought (because they were not properly arguable, and/or were brought without client authority, and/or were advanced on the basis of information which did not enable Vanquis to identify the customer, and/or were advanced without giving a warning that credit cards would or were likely to be suspended), and the minority of claims that succeeded did so only through the work of Vanquis itself or the FOS.(2) In relation to the claims that were not properly arguable, TMS failed to advise its clients of this before submitting claims on their behalf and/or that the merits representations were untrue.(3) The submission of irresponsible lending claims interferes with the relationship between Vanquis and its clients: in line with market practice and Vanquis’s regulatory obligations, it cannot continue to extend credit in these circumstances.[29]Although TMS’s predominant purpose is to benefit itself – its business model is all about winning as many cases as possible, yet in reality TMS would know that most will fail – it is contended that it is to be inferred that TMS’s intention or purpose was, at least in part, to cause loss or damage to Vanquis.[30]Dealing with the allegations of breach of duty in more detail, Vanquis contends that TMS’s breaches of duty inhered in the inadequacy of the questionnaires, the failure to undertake reasonable enquiries of its clients into the affordability checks undertaken etc., and the failure to undertake reasonable investigations into the objective element of the three-year limitation extension.[31]Vanquis contends that since January 2023 at the latest, TMS must have appreciated that the majority of the claims it was submitting were defective in the various ways I have mentioned. Vanquis’s final response letters set out the true position: that appropriate affordability checks in the individual cases had been carried out etc.[32]Further, Vanquis contends that from January 2023 at the latest, TMS was aware of its ongoing breaches of duty and/or acted recklessly, TMS’s conduct was grossly negligent, and the merits representations were untrue and made fraudulently, in the sense that TMS did not care whether they were true or false. Vanquis submits that it is to be inferred that TMS’s clients authorised or permitted the solicitors to proceed in reliance on the merits representations and in the mistaken belief that TMS evaluated that the claims were properly arguable.[33]Vanquis’s case is that but for TMS’s acts or omissions the vast majority of the irresponsible lending claims would not have been brought. Mr Levey was less than entirely clear when I asked him whether it was Vanquis’s case that TMS’s resources would not have permitted the existence of a different business model, from which it may be inferred that none of these irresponsible lending claims would have been brought had there been no breach of duty. My interpretation of para 69A of the Am PoC is that Vanquis does not as matters stand put their case that high. Maybe it will in due course. Given that it is not the contention of Ms Saima Hanif KC for TMS that the pleaded loss and damage claim should be reduced to reflect the practical reality that on the currently pleaded case Vanquis would have had to deal with some claims in any event (I would add, more than the low percentage that in fact succeeded), it is unnecessary for me to comment further.

Loss and Damage

[34]This is claimed under a number of heads.[35]Vanquis contends that it has had to engage additional temporary members of staff to deal with these unmeritorious claims (loss as pleaded: £2.8M), it has wasted management time (at approximately £930,000 p.a.), it has had to pay fees to the FOS (over £9M), and has lost profits (at least £270,000).

THE ESSENTIAL ELEMENTS OF THE TORT

[36]I may take this section of my judgment from the skeleton argument of Ms Hanif and Ms Chloë Bell on behalf of TMS. This is the appropriate moment to record that, despite my conclusions as to the merits of TMS’s case overall, the skeleton argument was a model of clarity and succinctness, and Ms Hanif’s submissions were concise and well presented. I understand TMS’s strategic reasons for attempting to strangle this litigation at an early stage.[37]The essence of the tort has been well encapsulated by Lord Hoffmann in OBG in these terms:
“47. The essence of the tort therefore appears to be (a) a wrongful interference with the actions of a third party in which the claimant has an economic interest, and (b) an intention thereby to cause economic loss to the claimant …”
[38]Breaking this down further, I agree with TMS that this cause of action has four ingredients:(1) Unlawful acts used against, and independently actionable by, a third party;(2) Interference with the actions of the third party in which the claimant has an economic interest;(3) Intention to cause loss to the claimant by the use of unlawful means; and(4) Loss in fact caused to the claimant.[39]It is appropriate to use these four ingredients, limbs or elements of the tort as the legal matrix for examining the legal viability of Vanquis’s claims on the pleaded facts.[40]By way of prelude to the main issues, I should address a number of preliminary matters. First, TMS relies on the existence of the regulatory framework and the ability of the SRA, the FCA and the FOS to investigate the manner in which high-volume irresponsible lending claims are being advanced. Ms Hanif submitted that the existence of this regulatory scheme, including a complaints process, militates against there being a private law remedy; or, at the very least, against the parameters of the tort being extended.[41]Whereas it is of course correct to point out that complaints about TMS’s possible failure to comply with its various obligations may in due course have to be investigated by the Solicitors’ Disciplinary Tribunal, I do not consider that this is by any means an answer in public policy terms to Vanquis’s claim. To my mind, the present case is far removed from the sort of situation where the Court is considering whether the tort of negligence should be widened to fit a novel factual structure. The third stage of the well-known tripartite test laid down in Caparo Industries Plc v Dickman [1990] 2 AC 605 (HL) requires an evaluation of public policy or what is fair, just and reasonable, but similar considerations do not apply to this species of economic tort. If Vanquis is correct in contending that the facts as pleaded fall within the scope of the tort as properly understood, perhaps with a modest expansion to reflect the novel nature of the claim, I fail to see how the existence of a regulatory or disciplinary route can make a difference, particularly in circumstances where that route affords no avenue of compensation for Vanquis.[42]If, on the other hand, Vanquis’s case required a significant extension of the common law, Ms Hanif’s argument would still fail to guide my thinking. My analysis would be that any significant extension could only be justified if the principles laid down in highest authority permitted it. They do not.[43]The second preliminary matter is that one may envisage circumstances in which solicitor/client privilege might impede a proper examination of one or more of the essential elements of the tort. However, TMS does not rely on privilege in its defence to this claim, and my analysis would be that Vanquis in the particular circumstances of this case is not required to penetrate the veil of any privilege in order to make good its arguments.[44]Thirdly, it is well established that there is no tort of malicious prosecution of civil claims: see Gregory v Portsmouth City Council [2000] 1 AC 419. In my judgment, this is a factor (not in fact relied on by TMS) which slightly militates against any expansion, if required, of the tort under consideration, but it is far from being dispositive.[45]During oral argument Mr Levey submitted that if the merits of Vanquis’s case demanded that there be a legal remedy, I should confer such a remedy. At one point he invoked the memory of Lord Denning. Although I would agree with him that he has, as it were, selected the best horse on which to run, it does not necessarily follow that these factual circumstances can be accommodated within existing principles just because the merits appear to be with Vanquis. On reflection, I should make it clear that Mr Levey was not seeking to suggest that Lord Denning did not apply a principled approach to the common law and its development, nor was he suggesting that anything other than a correct application of existing principles was sufficient for his purposes.[46]Finally, I should deal with a core submission advanced by Ms Hanif that this economic tort applies only to two situations, viz.:(1) where the parties are in direct competition with each other, and(2) where there is a labour dispute. It is true that the development of this tort at the end of the 19th Century and the beginning of the 20th Century was based on cases which possessed these characteristics: see, for example, Allen v Flood [1898] AC 1 and Quinn vLeathem [1901] AC 495. It is also true that in OBG some members of the House of Lords expressed themselves in terms which might have suggested a narrow approach to the tort: see Lord Nicholls (at para 167 – cited below), and Baroness Hale in one sentence, at para 306. However, it is relevant in my view that OBG was a competition case and for that reason it is not surprising that some members of the Appellate Committee sought to tether their reasoning to the factual context under direct consideration. But it is also pertinent that Lord Hoffmann at paras 49 and 62 (see below) expressed himself more broadly, as did Lord Nicholls at para 166 and Baroness Hale elsewhere in para 306. I set out the relevant portion of her speech:
“ … Nevertheless, the common thread is striking through a third party who might otherwise be doing business with your target, whether by buying his goods, hiring his barges or working for him or whatever. The refinement proposed by my noble and learned friend, Lord Hoffmann, is entirely consistent with the underlying principles to be deduced from the decided cases. It is also consistent with legal policy to limit rather than to encourage the expansion of liability in this area. In the modern age, Parliament has shown itself more than ready to legislate to draw the line between fair and unfair trade competition or between fair and unfair trade union activity. This can involve major economic and social questions which are often politically sensitive and require more complicated answers than the courts can devise. Such things are better left to Parliament. The common law need do no more than draw the lines that it might be expected to draw: procuring an actionable wrong between the third party and the target or committing an actionable (in the sense explained by Lord Hoffmann at para 49 above) wrong against the third party inhibiting his freedom to trade with the target. …”
(emphasis supplied, to indicate the one sentence that may arguably avail TMS)[47]In my judgment, Ms Hanif is incorrect to seek to confine the parameters of the tort in this way. The two situations she instances may be paradigm cases but they are not defining categories. The common law does not operate in such a manner. The correct analysis involves distilling out of relevant authority the principles and rules that underpin the tort, recognising always that the common law writes nothing in stone. The relevant rules under consideration are the four ingredients Ms Hanif has helpfully set out for my consideration, assented to by Mr Levey and receiving their wellspring in dicta of Lord Hoffmann.[48]Before I turn to analyse the four ingredients of the tort in the context of TMS’s applications and the parties’ submissions, it is convenient at this stage to address a congeries of pleading points.

PLEADING POINTS

[49]Ms Hanif submitted that Vanquis’s plea of breach of express contractual terms was sufficient for its purposes, and that the other allegations were, variously, unnecessary, unparticularised and unfounded. I must say at the outset that a pleading being unnecessary or surplus to requirements is usually not a proper basis on which to strike it out, and in the circumstances of this case I decline to do so.[50]Ms Hanif was critical of the way in which the Am PoC were presented. The express terms relied on are pleaded under para 36. The implied terms are under para 37, the fiduciary duties under para 38, and TMS’s regulatory obligations under para 43. The “specific duties in relation to irresponsible lending claims” are set out in a compendious way under para 44 with reference to “paras 36, 37, 38 and/or 43 above” without differentiating between these latter paragraphs. Ms Hanif complains that it is impossible to know how these specific duties are said to emanate from the more general formulations set out earlier, and which specific duty derives from which general duty. She made a similar submission in connection with the allegations of breach of duty which form the basis of Vanquis’s case on unlawful means: see para 68.[51]The so-called “merits representations” are pleaded under paras 52A-F and then picked up in the context of breach under para 68. Ms Hanif made the same point hereabouts.[52]In my judgment, the pleader has adopted a style which is not uncommon. A different pleader might have treated the general and specific formulations as one, and have set out particulars of the duties relied on in connection with each individual cause of action. This pleader has sought to identify in general terms the cause of action, has then particularised the duties that are said to flow without clearly differentiating which specific duty flows from which general duty, and then made the consequential allegations of breach. In some circumstances that would be too vague a pleading, but in my judgment not in these.[53]As for Ms Hanif’s argument that her clients are left in the dark as to which general duty applies to which specific duty, I see no force in that complaint. The nexus between the general and the specific is clear enough, and the reader simply has to make a straightforward comparison. Indeed, virtually all the specific duties seem to me to flow from the general duties imposed by the express and implied duties, not least because the content of these duties is the same: to act reasonably in a number of ways (I simplify).[54]In my judgment, the implied duties arise under statute (see the first formulation under para 37) and not because they are so obvious that they go without saying. Ms Hanif may be right to draw attention to this minor deficiency but in circumstances such as these I am not proposing to put a line through a few words in the Am PoC.[55]It is true that Vanquis’s case on fiduciary duty is not as clearly pleaded (in terms of the specific duties) as it might be, but during oral argument Mr Levey clarified the position. He submitted that TMS is acting in breach of its fiduciary duty to its clients if it does not care one way or the other whether their claims are viable: by acting in that way, TMS is preferring itself over the interests of its clients. Maybe that should have been expressly spelt out, maybe it is so obvious it goes without saying. I leave the matter there.[56]Ms Hanif was similarly critical of the pleading in the context of the tort of deceit. She did not submit that in principle at least this tort was unavailable to Vanquis although I have my reservations. It is clear that Vanquis is relying on the second limb of Lord Herschell’s formulation in Derry v Peek [1889] 14 AC 337. It is a constant theme of Vanquis’s case that TMS is insouciant as to the merits of its clients’ cases. If that is right, it seems to me that the present facts are capable of being accommodated within the concept of recklessness.[57]I consider that there is some force in Ms Hanif’s argument that para 68 of the Am PoC contains a somewhat vague allegation of negligence and breach of “common law duties”. I am far from convinced that Vanquis has a concurrent tort claim in these circumstances, and I am not sure that “common law duties” adds anything to the mix. However, although I invite Vanquis carefully to consider these averments before I grant permission to amend, I am not proposing to strike out these few words in the overall scheme of things.[58]A similar objection, with similar weight, was made to the allegation of “gross negligence” in the context of the Derry v Peek claim (para 69.6). Frankly, I do consider that this is somewhat duplicative because the difference between recklessness and gross negligence on these assumed facts must be minuscule. Furthermore, I am not sure what “gross negligence” means in the context of a tort claim. I am not proposing to grant permission for para 69.6(b) and that should be removed from the final version. Pre-empting any unnecessary debate between the parties on this topic, this decision has no impact on the issue of costs.[59]I take a different view in relation to Vanquis’s pleading of regulatory duties. Vanquis is not saying that these are actionable in their own right; they are not. These merely inform the content of the contractual duties that are properly actionable. I also reject Ms Hanif’s submission that the statement in the Terms of Business that “we comply with the SRA Standards and Regulations” is not a contractual term because it appears in what seems to be the introductory part of the document. My evaluation is that this is part of the contract, although – as I have already said – the “SRA Standards and Regulations” are not actionable per se.[60]I asked Mr Levey to explain why he thought he needed all these various causes of action, some of which clearly overlapped, when the express contractual terms would surely do. His frank answer was that, although the point was not being taken by Ms Hanif at this stage, it was not entirely clear whether a notional breach of contract claim by the third party could constitute unlawful means for the purposes of the tort. I touch on this below. I understand where he is coming from, and say no more about it.[61]Finally, I am now in a position to examine the four elements of this tort.

UNLAWFUL ACTS

[62]As Lord Hoffmann explained in OBG:
“49. In my opinion, and subject to one qualification, acts against a third party count as unlawful means only if they are actionable by that third party. The qualification is that they will also be unlawful means if the only reason why they are not actionable is because the third party has suffered no loss. … … 57. [I]t is not for the courts to create a cause of action out of a regulatory or criminal statute which Parliament did not intend to be actionable in private law.”
[63]Lord Hoffmann, together with Baroness Hale and Lord Brown, were in the majority on this issue.[64]Returning to the issue I left hanging at §60 above, I do not understand TMS’s case to be that a breach of contract between TMS and its clients, including a breach of the implied terms of that contract, cannot be relied on for present purposes. The authors of Clerk & Lindsell on Tort, 24 edn., consider that “on balance, … a breach of contract ought to constitute “unlawful means” for the purposes of the tort of causing loss by the use of unlawful means” (see para 23-90). As I have said, Ms Hanif did not at this stage of the litigation seek to persuade me to take a different view.[65]In addition to the express and implied terms of contract, Vanquis has in its quiver the breach of fiduciary duty claim and the deceit claim. I have commented on the negligence and breach of common law duty claim/s, and leave the matter there.[66]In short, I have no difficulty with the proposition that Vanquis is relying on a number of unlawful acts for the purposes of this first limb of the tort.[67]Ms Hanif did not advance a point of principle in relation to this first limb. Her argument was grounded on a series of pleading points. I have dealt with those. I therefore refuse TMS’s applications in connection with the first limb.

INTERFERENCE WITH THE ACTIONS OF THE THIRD PARTY

[68]It is common ground that the interference limb remains an essential ingredient of the tort. The classic exposition of this limb appears in Lord Lindley’s speech in Quinn v Leathem, at pages 534-535:
“A person’s liberty or right to deal with others is nugatory, unless they are at liberty to deal with him if they choose to do so. Any interference with their liberty to deal with him affects him.”
[69]In OBG Lord Hoffmann approved this passage without qualification. He stated that the tort does not “include acts which may be unlawful against a third party but which do not affect his freedom to deal with the claimant” (para 51).[70]In Servier, the Supreme Court rejected the contention that the interference limb should be dispensed with. Lord Hamblen JSC , citing directly from para 269 of Lord Walker of Gestingthorpe’s opinion in OBG, added this:
“53. I do not, for my part, see Lord Hoffmann’s proposed test as a narrow or rigid one. On the contrary, that test (set out in para 51 of his opinion) of whether the defendant’s wrong interferes with the freedom of a third party to deal with the claimant, if taken out of context might be regarded as so flexible as to be of limited utility. But in practice it does not lack context. The authorities demonstrate its application in relation to a wide variety of economic relations. I would be favour a fairly cautious incremental approach to its extension to any category not found in the existing authorities.”
[71]Ms Hanif’s submissions under this heading were more compelling than they were elsewhere. By way of summary (a transcript of the proceedings is available, so a full exposition of her argument is not required):(1) TMS’s actions cannot be said to have interfered with their clients’ freedom of action in relation to Vanquis. The latter exercises freedom of choice in deciding whether to suspend the extension of credit.(2) The bringing of complaints by TMS’s clients is not an impingement or restriction on their freedom of action vis-à-vis Vanquis. These complaints may impact on Vanquis’s decision-making, but that is not relevant for the purposes of this tort.(3) Even if it may be standard practice for some or many banks to react in this way, that reaction remains voluntary.(4) As for Vanquis’s new case – that suspension of credit is compelled by the regulatory framework to suspend credit – an analysis of the provisions relied on does not bear this out, and expert evidence is inadmissible to make this good.(5) As a matter of logic, there can be no interference in relation to clients who are no longer customers of Vanquis.[72]Ms Hanif also raised a couple of further pleading points which I propose to address at the appropriate time.[73]Mr Levey’s submissions were attractively and compellingly presented. Initially, I may have evinced a modicum of scepticism, but by the end sufficient of my doubts were dispelled – at least for the purposes of these applications. Mr Levey observed that Vanquis’s legal team was at one stage “beguiled” by TMS’s case on this case. I confess that whilst Mr Levey was advancing his submissions, I was also somewhat beguiled. That sensation had disappeared by the time I was preparing this judgment.[74]In short, Mr Levey relied on a distinction between what he called “general interference” and “specific interference”, and submitted that his client’s case succeeded on the wider formulation. In that regard he submitted that any interference should suffice, and that the concept is certainly broad enough to include the actions of TMS in bringing a complaint against Vanquis that the latter has acted in breach of contract and of regulatory duty. In the alternative, he submitted that, if Vanquis’s responsive actions were standard practice in the banking world (and that included Vanquis’s practice) and/or compelled by a suite of prescriptive regulatory duties, then this was a paradigm case of “specific interference” and the case should go forward.[75]An encapsulation of Mr Levey’s on “general interference” submission appears at page 129 of the transcript: “But the point is that what we call general interference, and as a general proposition, if it is accepted, which it obviously is, that causing a third party not to do business with a claimant is an interference, because they decide they don’t like the look of the claimant because of the unlawful means, and they take their business elsewhere, a fortiori if they cause the third parties to bring a claim against us, a fortiori that is an interference.” (I have notionally amended the transcript in one minor respect either to correct a verbal slip by Mr Levey or an error of transcription)[76]Mr Levey submitted that if his case on “general interference” were right, then it would apply equally to past customers of the bank. He accepted that the case on “specific interference” could not be deployed in this way.[77]My point of departure is to observe that the authorities do not recognise this distinction between the general and the specific. Mr Levey was deploying neat labels to characterise what seems to me to be his main case and then, if he needed it, his alternative case. The first question for me to resolve is whether Mr Levey’s main case is correct.[78]I was taken to a number of first instance authorities. I think, with respect, that these are of limited value. I say that not out of disrespect for judges exercising a co-ordinate jurisdiction but in recognition of the obvious consideration that those of us working at the coal-face are not in the business of formulating the principles at a high level of generality but of humbly understanding and then applying the law. The relevant exercise of formulation is to be found in the utterances of Lords Lindley, Hoffmann and Hamblen.[79]Touching on just two of these first instances decisions, Ms Hanif relied on Floyd J’s dictum in para 25 of his judgment in Future Investments SA v Federation International de Football Association [2010] 1019 (Ch); [2010] IlPR 34. All that Floyd J said was that there was a need for precise inquiry into the question of whether the defendant’s actions did in truth interfere with the third party’s freedom of action in relation to the Claimant. I may agree with that enjoinder, but Floyd J was not reformulating the test. Both parties cherry-picked their way through the judgment of Lavender J in Domestic & General Group Ltd. v Premier Project Holdings Ltd [2024] EWHC 2654 (KB). I agree with Mr Levey that there is far more in this authority which avails him than Ms Hanif. For example:
“221. It is not a requirement that the third party’s freedom was completely overborne, merely that it was interfered with. … 223. The position is different in the case of customers who cancelled their Plans with the claimants after they had found out that they had been deceived, since the deception was, ex hypothesi, no longer operating on them. They had a choice whether or not to cancel their Plans with the claimants, but that choice was affected by what they had done under the influence of the misrepresentation, i.e. by the fact that they had taken out a Plan with the claimant.”
[80]I continue to have some difficulty in accepting Mr Levey’s “general interference” or wider formulation because it is not immediately obvious that the bringing of a complaint by a client necessarily interferes with her freedom of choice as distinct from Vanquis’s. Mr Levey’s high-level submission neatly avoids having to consider the consequences, if any, to the client. To my mind, and here I agree with Ms Hanif, it is the repercussions for the third party – the client of both TMS and Vanquis – which are critical.[81]Even so, I take Mr Levey’s point that the dicta of Lords Lindley and Hoffmann in particular support a broad approach. I consider that it is at least arguable that causing a client, present or past, of Vanquis to lodge a complaint of irresponsible lending, undoubtedly a serious allegation, amounts to TMS bringing about an interference with the key relationship. This is particularly so if the complaint turns out to be without foundation. Further, it is at least arguable that the making of any complaint of this sort is likely to have consequences: it is not a neutral act. Accordingly, although I have considerable reservations about Mr Levey’s main case, I am not disposed to strike it out.[82]I am not ignoring Ms Hanif’s complaint that the case on “general interference” is not specifically pleaded. However, it amounts to a legal formulation which in my opinion does not have specifically to be set out in a pleading that requires no more and no less than an averment of the facts and matters on which a party relies. In any event, this aspect of Vanquis’s case, whether admissibly or not, appears in the evidence it has filed.[83]The narrower formulation, “specific interference”, brought both counsel into the proverbial nooks and crannies. I see the issues as being relatively straightforward, at least at this stage of the litigation. The “specific interference” formulation impliedly accepts that an examination of the consequences is required. Vanquis’s contention is that what it does in responsive or reactive terms is not voluntary. It follows that TMS’s actions in bringing about a state of affairs in which its and Vanquis’s clients launch a complaint against Vanquis also results in a state of affairs in which Vanquis suspends the credit. Thus, on this argument there is an unbroken chain of causation between act and consequences, and, in substance and reality, an interference with the third party’s relationship with Vanquis.[84]Vanquis pleaded at the outset that it was standard practice of banks to suspend credit in these circumstances. Pace Ms Hanif, that pleading included an averment that it was also Vanquis’s practice. Had the position been otherwise, Vanquis would have come close to misleading the Court. It will be clear from the transcript that during the hearing I explored the possible reasons for a bank operating in this way. The premise of my exploration was that a bank would have to be acting reasonably. Whether or not that premise is correct, and Mr Levey disputed it, does not matter. What I said was that a bank might have sound commercial, prudential and ethical reasons for suspending credit in circumstances where it was being alleged that the bank should never have extended credit in the first place. A bank might also want to mitigate its potential loss.[85]Ms Hanif’s answer to that was that Vanquis cannot have it both ways. If, as it alleges, these irresponsible lending claims should never have been brought, it cannot be heard to say that the appropriate response to such claims is to assume that they may be well-founded. There is no merit in that argument: frankly, it rings hollow. Just as TMS does not know whether an individual claim is or may be well-founded, because it has not investigated it, so does not Vanquis – unless and until it starts to investigate the claim and the FOS upholds its decision.[86]Ms Hanif pressed the argument that Vanquis was acting voluntarily and that its actions are in any event nothing to the point. I consider that there are two flaws in this argument which I have already touched on. First, if Vanquis was acting pursuant to standard practice in the industry, still more so if required to do so (see below), I do not understand how it was acting with freedom to decide. I cannot accept Ms Hanif’s point that it does not matter whether there is a standard practice or not: one bank, or many banks, are still acting voluntarily. In my judgment, it does matter. I repeat what I have said about commercial, prudential and ethical factors. Secondly, and this harks back to my reasoning appearing at §83 above, if the focus is on the actions of Vanquis’s clients, TMS has brought about a state of affairs which interferes with the bilateral relationship between bank and customer: there are no breaks in the causal chain.[87]In my judgment, it is also relevant that by January 2023 TMS knew that it was Vanquis’s policy to suspend credit but did not advise their clients to that effect. This factor enhances the contention that there is a potentially unbroken chain of causation.[88]An issue arises as to how custom and practice in the banking world is likely to be proved at trial. Ms Hanif’s submission was that Vanquis does not propose to adduce expert evidence on this issue. Mr Levey’s riposte was it does. In my judgment, expert evidence would be admissible to prove custom and practice, although evidence of fact may also be required.[89]It follows that the case on so-called “specific interference” is tenable even without the proposed amendment.[90]The proposed amendment is not free from difficulty but I have no intention in acceding to TMS’s applications. The regulatory obligations relied on are quite general and do not appear to indicate in terms that suspension of credit is mandated. Mr Levey stated that Vanquis has been advised by an expert that “appropriate action” under CONC.6 would include taking this step. In my opinion, without such evidence this formulation of the claim probably would not succeed (alternatively, would add nothing to the originally pleaded formulation). There is a lack of consistency in first instance authority as to whether expert evidence is admissible in these circumstances. These decisions turn on their individual facts. Insofar as there is a clear principle, expert evidence is not admissible to prove what a legal obligation means. However, I think that it is at least arguable that it is admissible to prove how a duty, read in conjunction with other duties, either is or should be applied in practice.[91]I suspect that at the end of the day Vanquis’s amended formulation may well collapse into its original formulation. That said, in the context of applications of this sort, I am not prepared to refuse permission for the proposed amended formulation in the exercise of my case management powers.[92]For all these reasons, Ms Hanif’s submissions in connection with this second element or limb of the tort cannot be accepted.

INTENTION

[93]As I have said, at para 46 of OBG Lord Hoffmann cited with approval Lord Lindley’s judgment in Quinn v Leathem as correctly describing the rationale of the Tort. On the issue of intention Lord Lindley said: “if the interference is wrongful and is intended to damage a third person, and he is damaged in fact—in other words, if he is wrongfully and intentionally struck at through others, and is thereby damnified — the whole aspect of the case is changed: the wrong done to others reaches him, his rights are infringed although indirectly, and damage to him is not remote or unforeseen, but is the direct consequence of what has been done”.

Lord Hoffmann added:

[94]“62. In the unlawful means tort, there must be an intention to cause loss … [I]t is necessary to distinguish between ends, means and consequences. One intends to cause loss even though it is the means by which one achieved the end of enriching oneself. On the other hand, one is not liable for loss which is neither a desired end nor a means of attaining it but merely a foreseeable consequence of one’s actions.” (see, also, Lonrho v Fayed [1990] 2 QB 479, at 488-89 (Dillon LJ), 494 (Ralph Gibson LJ) and 494 (Woolf LJ))[95]Lord Nicholls, who was ad idem with the majority in OBG on this issue, said this:
“ 164. I turn next, and more shortly, to the other key ingredient of this tort: the defendant's intention to harm the claimant. A defendant may intend to harm the claimant's business either as an end in itself or as a means to an end. A defendant may intend to harm the claimant as an end in itself where, for instance, he has a grudge against the claimant. More usually a defendant intentionally inflicts harm on a claimant's business as a means to an end. He inflicts damage as the means whereby to protect or promote his own economic interests. 165. Intentional harm inflicted against a claimant in either of these circumstances satisfies the mental ingredient of this tort. This is so even if the defendant does not wish to harm the claimant, in the sense that he would prefer that the claimant were not standing in his way. 166. Lesser states of mind do not suffice. A high degree of blameworthiness is called for, because intention serves as the factor which justifies imposing liability on the defendant for loss caused by a wrong otherwise not actionable by the claimant against the defendant. The defendant's conduct in relation to the loss must be deliberate. In particular, a defendant's foresight that his unlawful conduct may or will probably damage the claimant cannot be equated with intention for this purpose. The defendant must intend to injure the claimant. This intent must be a cause of the defendant's conduct, in the words of Cooke J in Van Camp Chocolates Ltd v Aulsebrooks Ltd [1984] 1 NZLR 354, 360. The majority of the Court of Appeal fell into error on this point in the interlocutory case of Miller v Bassey [1994] EMLR 44. Miss Bassey did not breach her recording contract with the intention of thereby injuring any of the plaintiffs. 167. I add one explanatory gloss to the above. Take a case where a defendant seeks to advance his own business by pursuing a course of conduct which he knows will, in the very nature of things, necessarily be injurious to the claimant. In other words, a case where loss to the claimant is the obverse side of the coin from gain to the defendant. The defendant's gain and the claimant's loss are, to the defendant's knowledge, inseparably linked. The defendant cannot obtain the one without bringing about the other. If the defendant goes ahead in such a case in order to obtain the gain he seeks, his state of mind will satisfy the mental ingredient of the unlawful interference tort. This accords with the approach adopted by Lord Sumner in Sorrell v Smith [1925] AC 700, 742: ‘When the whole object of the defendants' action is to capture the plaintiff's business, their gain must be his loss. How stands the matter then? The difference disappears. The defendant's success is the plaintiff's extinction, and they cannot seek the one without ensuing the other.’”
[96]Ms Hanif’s case on this topic has a number of strands. First, she argued that the Am PoC are insufficiently particularised. The unlawful means is not the submission of the irresponsible lending claims but the alleged breaches set out under para 68 of that pleading. Secondly, she submitted that TMS’s means of achieving its end of making money was by submitting the complaints in the hope that they would succeed (TMS would only be paid by its clients in the event of success), not specifically submitting unmeritorious complaints or inundating Vanquis as is alleged. Thus, TMS would have acted in the same manner “regardless of whether any of the legally cognisable unlawful means are made out”. Thirdly, the point is made that TMS’s intention would be attributed to any solicitor or barrister acting under a CFA. Fourthly, it is said that Vanquis’s pleading is confused and vague, and does not contain a concise statement of the facts necessary to make out the tort.[97]Finally, and in reliance on para 166 of Lord Nicholls’ speech in OBG, Ms Hanif argued that intention in these circumstances requires specific intent, and “it has not been possible to identify a single authority where a claim of negligence or a concurrent breach of contract was a sufficient basis for a successful claim for the tort” (see para 75 of TMS’s skeleton argument).[98]I am not impressed by these arguments. I may agree that the threshold for establishing intention is a high one and nothing less than a specific intent will do. Vanquis is not saying that it was, and is, TMS’s aim or purpose to cause economic loss, but it is squarely Vanquis’s case that the result (i.e. economic loss) was part of TMS’s intention as explained in OBG, in particular by Lord Hoffmann at para 62. Vanquis does not have to prove that this consequence was either a predominant part of TMS’s intent or TMS’s desired end. Put another way, Vanquis’s economic loss (subject to TMS’s separate arguments on causation) was a virtually certain consequence of TMS’s actions and TMS knew this to be the case: see, in the different context of criminal law but where the meaning of the concept of intention is the same, Smith & Hogan on Criminal Law, 16th edn., page 93. In my judgment, whether TMS possessed this requisite high level of knowledge and intent can only be proven as a matter of inference and would depend in part on how its witnesses were cross-examined at trial (they would be unlikely to admit it). In my judgment, it is at least a possible inference that the masterminds of this economic model did possess the requisite degree of knowledge and intent.[99]The editors of Smith and Hogan have something to say about the concept of “specific intent”: see para 3.2.1.5. For the avoidance of doubt, I am not using “specific intent” in its narrow meaning of aim or purpose.[100]There is nothing in the point that the pleading is vague and confused. My preceding paragraph unpacks the Am PoC rather than adds to it. Nor am I attracted by TMS’s other pleading point about what the unlawful means amount to or consist in. Para 68 of the Amended Particulars of Claim are clear enough and TMS has latched onto only part of the wording. The correct analysis is that TMS’s breaches of duty caused TMS to lodge these irresponsible lending claims and that in turn caused Vanquis loss.[101]I consider that Ms Hanif’s argument about negligence and concurrent breaches of contract conflates two issues. The first issue is whether Vanquis has a tenable case on “unlawful acts”: I have already addressed that. The second is whether TMS perpetrated these acts with the requisite intention. Whether TMS acted in breach of contract within the relevant contractual framework entails an examination of what it did, or failed to do, vis-à-vis its clients. Whether TMS acted intentionally vis-à-vis Vanquis entails a separate issue.[102]I agree with Mr Levey that TMS has mischaracterised Vanquis’s case. Vanquis’s case is that TMS has no idea which claims will succeed and does not care. Its business model would not work if(1) all claims failed, or(2) it had to investigate whether a claim was viable before prosecuting it. However, its business model does work if only a relatively small proportion of these claims succeed, provided of course that only minimal effort needs to be expended to achieve that outcome across the board. TMS would not have acted in exactly the same manner had it complied (on Vanquis’s case) with its obligations to its clients. Thus, it may properly be said that intent is capable of being established as an inferential or secondary fact once the business model is properly conceptualised.[103]I simply cannot accept the contention that TMS’s intention would be attributed to any solicitor or barrister operating on a CFA. That was not my experience when working for claimants on a CFA, even in one case where there were 30,000 clients. Indeed, my solicitors and I proceeded on the basis that there was a duty to ensure that each individual claim was reasonably arguable.[104]For all these reasons, I therefore reject TMS’s case under this third rubric.

CAUSATION

[105]Ms Hanif did not press this issue in her oral submissions, but I should deal briefly with the manner in which it was advanced in writing.[106]Ms Hanif submitted that it is well established that it is necessary to be satisfied that the damages sought are referable to the act causing the pecuniary loss which constitutes the tort. Damage which is suffered by a claimant which is not the consequence of interference with a third party’s freedom of action is not within the purview of the tort. On this platform the point is made that the only pleaded loss which is linked to the alleged interference with the client/customer’s freedom to deal with Vanquis is the alleged loss of profits at para 72.6 of the Am PoC.[107]In resisting this aspect of the case, it seems to me that Ms Hanif has latched onto a formulation advanced in the witness statement of Mr Blake on behalf of Vanquis and alleged deficiencies in that statement. However, the witness statement is inadmissible on this and many other issues, and in my view it is not incumbent on a claimant in a case such as this to explain by evidence how it advances its case. The explanation comes via by the pleadings and Mr Levey’s written submissions.[108]Ms Hanif did not contend that some notional discount should be given by Vanquis for the claims which were properly brought. She was right not to go that far, at least at this stage. It follows that the claim should be examined at this juncture on the basis that none of the irresponsible lending claims should have been brought. On that premise, I consider that it is fairly obvious that Vanquis may well have sustained the types of loss it has pleaded. Claims of this species are familiar enough from my experience of other cases. Vanquis will have needed to do more work. It will have needed to pay fees to the FOS which – if the claims had not been brought at all – would not have been incurred. Loss of profit may well have arisen. Whether these claims succeed in whole or in part will depend on a close examination of Vanquis’s financial data and other evidence on the topic. Expert accountancy evidence may also be required. None of this can be resolved now.[109]For all these reasons, I see no merit in TMS’s objections under this rubric.

CONCLUSION

[110]I dismiss both TMS’s applications. In my view, TMS has fallen well short of persuading me that the Am PoC should be struck out under r. 3.4 and/or that TMS should have summary judgment under Part 24.[111]The facts of this case are novel but I cannot accept that their legal viability depends on an extension of existing principles. Vanquis succeeds on the application of well-established principles to a new factual pattern. The reason why this sort of claim has not been brought in the past is that for various reasons it can only stand a chance of succeeding on egregious facts. If Vanquis’s case is right, this would be an example of egregious conduct by TMS. As I sought to explain to TMS at the end of the hearing, I am not to be understood as expressing any view as to whether Vanquis’s case is right. I simply do not know, and I have only heard one side of the story.[112]The parties should agree a draft Order in the light of this judgment. That Order should include a provision that Vanquis has 14 days from the date of the Order in which to finalise the Am PoC. Mr Levey and Ms Hughes should consider tidying it up in the light of my observations. I am not expecting any substantial re-write, just a few adjustments. The final draft should be submitted to me for consideration after Ms Hanif and Ms Bell have had the opportunity to make brief observations.[113]The parties should consider what further case management directions should be made at this stage. The standard directions as to filing and serving a Defence would be appropriate, as well as the standard directions as to Disclosure. The parties should address the question of when there might be a case management conference before a Master, who would then make directions leading to a trial.[114]As I indicated at the end of the hearing, I am proposing to resolve any issues as to costs and permission to appeal in writing before I finalise the Order.