On the second day of Christmas, the High Court gave to me…two LIBOR reps

04 December 2018. Published by Davina Given, Partner

With Advent upon us, and Christmas on the horizon, RPC takes a musical look back at the most important English judgments of 2018. Liability for all failures of numbering, rhythm and rhyme is hereby excluded.

The long-running and hard-fought saga of Property Alliance Group v Royal Bank of Scotland [1] came to a close with the Court of Appeal's judgement in March 2018,  after four and a half years and at least 12 reported decisions. So what will we remember from the litigation?  


First, perhaps, the unusual number of decisions on privilege that emerged - including some early Christmas presents in 2015. 

  • In June 2015, Birss J held that genuine settlement discussions between an institution and a regulator could be subject to without prejudice privilege (see here).
  • In November 2015, Snowden J held that documents prepared by solicitors as part of the proceedings of an internal committee could be privileged on the basis that they were part of the continuum of communications between lawyer and client (see here).
  • In the same month, Birss J held that communications which only one side knew were for the purposes of the litigation would not be privileged (see here).

Mezzanine duty

Second, claims arising out of interest rate swaps had revived the idea of a "mezzanine duty", by which banks would be obliged to take reasonable care to ensure that the information they provide is both accurate and sufficiently full to enable the recipient to make a decision on an informed basis.[2]  The Court of Appeal in PAG poured very cold water on this and reverted to the standard principles for imposing a duty of care.[3] Claims based on such a duty are likely to be more difficult in the future. 

LIBOR representations and GRG actions

Third, it was accepted that two broad representations that (1) the bank was not seeking to manipulate GBP LIBOR, and (2) it did not intend to do so in the future, could be implied from the bank's conduct.  Further, the powers of the bank (acting through the now infamous GRG team) were not wholly unfettered, and had to be exercised in its legitimate commercial interests. 

This was a pyrrhic victory for PAG itself, since it was unable to prove on the facts that the representations had been false or that the GRG's actions were not in pursuit of legitimate commercial interests.  But the outcome may give some support to other claims which rely on allegations of misrepresentations as to LIBOR (or other benchmarks) or the actions of the GRG.

Perhaps then PAG v RBS may loom large as the ghost of cases yet to come….

For more detail on the Court of Appeal's judgement, see here.  For the High Court judgement, see here. 

 The Twelve Judgments of Christmas (2018)

On the first day of Christmas, the High Court gave to me… a privilege in E-N-RC.

On the second day of Christmas, the High Court gave to me…two LIBOR reps.

On the third day of Christmas, the High Court gave to me…[to be continued]

[1] [2018] EWCA Civ 355.  Leave to appeal to the Supreme Court was refused.
[2] Most successfully revived in Crestsign v NatWest [2014] EWHC 3043 (Ch).  The duty was not accepted in a number of other High Court cases such as Thornbridge v Barclays [2015] EWHC 3430 (QB). 
[3] Voluntary assumption of responsibility or the three-fold test in Caparo Industries v Dickman [1990] UKHL 2  (ie (1) loss was a reasonably foreseeable consequence; (2) the relationship between the parties was of sufficient proximity; and (3) it would be fair, just and reasonable in all the circumstances to impose a duty).

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