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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> HSBC Bank PLc v David Hick Antiques Limited and Ors (Royal Court : Hearing (Civil)) [2025] JRC 072 (17 March 2025) URL: https://www.bailii.org/je/cases/UR/2025/2025_072.html Cite as: [2025] JRC 072, [2025] JRC 72 |
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Discovery - Claim of misrepresentation
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Before : |
Advocate David Michael Cadin, Master of the Royal Court |
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Between |
HSBC Bank Plc |
Plaintiff |
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And |
David Hick Antiques Limited |
First Defendant |
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The Directors, les Six Rues Limited |
Second Defendant |
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And |
The Directors, Le Jardin de la Chapelle Limited |
Third Defendant |
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Mr David Hick |
Fourth Defendant |
Advocate N. H. MacDonald for the Plaintiff.
Advocate W. A. F. Redgrave for the Defendants.
judgment
the MASTER:
1. This is my judgment in relation to an application dated 29 January 2025, by the First Defendant, David Hick Antiques Limited ("DHAL"), for specific discovery against HSBC of three classes of documents -
(i) all material it holds, whether held within personnel files or elsewhere, in respect of complaints of mis-selling Interest Rate Hedging Products ("IRHP"), when the person selling the product was Debbie Parker;
(ii) all material it holds in respect of the complaint by Client D, against the Plaintiff, to the Channel Islands Financial Ombudsman of mis-selling of an IRHP; and
(iii) a copy of the final document produced in 2013 by HSBC following an internal review into the sale of the IRHP to DHAL in 2007.
2. In January 2021, HSBC brought proceedings against DHAL, Mr Hick and two other companies in respect of a loan and associated guarantees. Those proceedings were defended, and an Answer and Counterclaim was filed on 16 April 2021, and subsequently amended in April 2022.
3. The Defendants accepted that monies were due to HSBC under the terms of the loan and the guarantees but alleged that they had a counterclaim for set off arising out of the mis-selling of an IRHP by HSBC in relation to the loan. That claim for "mis-selling" is particularised in the Amended Answer and Counterclaim on the basis of specific misrepresentations by Debbie Parker of HSBC which DHAL now alleges were false or misleading. As a result of that IRHP, DHAL alleges that its businesses suffered losses amounting to some £10m.
4. In September 2021, Master Thompson granted summary judgment (reported at HSBC Bank Plc v David Hick Antiques Limited and Ors [2021] JRC 227) in favour of HSBC on the basis that the Defendants' Counterclaim was prescribed. The Defendants appealed and in March 2022, Bailhache JA, for the reasons set out in a judgment reported at David Hick Antiques Limited and Ors v HSBC Bank Plc [2022] JRC 072, allowed additional evidence to be adduced and adjourned the appeal to a full hearing. By a consent order dated 22 April 2022, the parties agreed that the Master's decision in relation to DHAL's Counterclaim alone would be set aside, and judgment against the Defendants on the claim would be stayed pending determination of the Counterclaim. Subsequently, the matter has proceeded in respect of DHAL's Counterclaim alone.
5. By an Act of Court dated 28 September 2022, Master Thompson gave directions ordering, amongst other things, the provision of discovery protocols. HSBC's protocol was dated 5 October 2022 and provided that it would search emails, document management systems, and hard copy documents by date range, custodian and search terms. It also stated that -
"6.10 In addition to applying the HSBC Search Terms, as set out above, HSBC confirms that it will also conduct ad hoc searches for:
- policies, procedures, marketing, pricing and training materials relating to swap and cap products sold in 2007 in both the UK and Jersey;
- customer suitability assessment materials for Global Markets products sold out of Jersey in 2007;
- any internal analysis conducted by HSBC in respect of the selling of the same or broadly the same Swap Product that was sold to DHI in 2007;
- any commission, incentive and/or bonus arrangements, applying to Debbie Parker, in force in 2007; and
- details of any complaints or disciplinary proceedings against Debbie Parker.
6.11 The searches set out at 6.10 above will be conducted in isolation and not as part of the searches set out more generally at paragraphs 2 to 7 of this discovery protocol. As regards these ad hoc searches, HSBC proposes to conduct targeted searches in repositories where it considers such material would most likely be retained (however, in view of HSBC's data retention policy of 10 years (with limited exceptions), HSBC expects that all legacy product material (including material relating to interest rate hedging products) will have been destroyed). Additionally, Ms Parker has not been employed by HSBC for some time and, therefore, it is not certain whether HSBC will hold any information responsive to the searches envisaged by the final two bullet points in paragraph 6.10 above. The details of those targeted searches will be set out in HSBC's discovery affidavit in due course..." (emphasis added)
6. An affidavit of discovery was sworn by Mr Gradidge on behalf of HSBC on 3 June 2024. It contained the requisite endorsement from Advocate MacDonald as the Advocate with overall responsibility for the conduct of the case. In it, Mr Gradidge stated that searches had been carried out across the human resources' repositories, and beyond Ms Parker's basic personnel information, there was nothing relevant and in particular, there were no grievances or disciplinaries listed against her.
7. Correspondence took place between the parties, and on 24 September 2024, I gave further directions clarifying that "the reference to "complaints against Debbie Parker" shall include complaints of mis-selling IRHPs, when the person selling the product was Debbie Parker" and requiring, amongst other things, HSBC to confirm whether documents relating to complaints against Ms Parker had been found and withheld, or whether no such documents had been located.
8. Appleby, on behalf of HSBC, wrote to Baker & Partners, acting for DHAL, on 20 October 2024 noting that they, and their predecessors, understood that searches in relation to complaints against Ms Parker would be focussed on Ms Parker's human resources file rather than the bank's global database and that -
"62(a) HSBC does not believe that there were ever any disciplinary proceedings against Ms Parker, with respect to any complaints received from customers or otherwise.
Complaints were made to and against HSBC by its customers in connection with transactions facilitated via Ms Parker, but there is nothing to suggest any such complaints were ever retained in any human resources records, or other file relating to her.
b) HSBC has withheld confidential material concerning third parties who raised complaints and claims against HSBC with respect to transactions which involved Ms Parker on the basis that such material is not relevant. HSBC also notes that such material is confidential, with respect to persons unconnected to these proceedings; and HSBC believes that any further documentation concerning such complaints would be predominantly privileged, save possibly for limited exceptions such as possibly correspondence initiating a complaint." (emphasis added)
"ii. If there was a proper process at HSBC for selling IRHPs, but one that Debbie Parker did not follow, then that would be indicative of her having acted improperly, and thus support DHAL's claim that she misrepresented matters to him.
iii. If Debbie Parker was responsible for any other IRHP sales that led to complaints then that would plainly be relevant. If a number of customers complained that she had misled them about swap products within her brief time in Jersey then that makes it more likely, where there is a conflict of evidence, that she misled DHAL."
10. As part of the discovery provided, HSBC disclosed two documents in which Client D's full name was given -
(i) a note to HSBC's Management Committee dated 12 December 2013 regarding historic IRHP sales which referred to Client D who was said to intend making a claim for consequential loss;
(ii) an internal email dated 8 December 2017 which states that -
"At the end of 2016 provisions were raised to cover potential costs in respect of the Hick and [Client D] swap complaints"
11. DHAL seeks disclosure of all material relating to that complaint. HSBC's position is that disclosure of documents referencing the Client D Complaint was inadvertent and the name of Client D should have been redacted.
12. According to a letter from Baker & Partners dated 4 October 2024, HSBC prepared an internal review of Mr Hick's swap in 2013, and the bank had, according to Mr Hick, agreed to share that review with him but had not done so. Baker & Partners therefore asked for a copy of the finalised review, noting that several previous drafts had apparently been disclosed.
13. By a letter dated 29 November 2024, Appleby stated that -
"19. The review to which you refer is an internal document used for purposes of considering the bona fide settlement of the dispute between HSBC and DHI. As such, it is (and remains) confidential and subject to "without prejudice" privilege."
14. Although DHAL's summons was originally drafted to include all material held by HSBC relating to complaints of mis-selling IRHPs where the person selling the product was Debbie Parker, by the time of the hearing, DHAL had reflected on the matters advanced by HSBC (including the decision in Claverton Holdings Limited v Barclays Bank PLC [2015] EWHC 3603, referred to below) and had refined its application to seek in relation to the first and second categories set out in its summons -
"1 a search for any complaint of mis-selling of an IRHP made against HSBC in the Channel Islands and Isle of Man where the following features are present:
a. Debbie Parker was involved in selling the IRHP;
b. A swap product had been sold when a cap product was an available alternative; and
c. The customer was considered by the bank to be non-sophisticated.
2. In respect of any complaint which the Plaintiff identifies pursuant to paragraph 1 of this order, the Plaintiff shall give discovery and inspection of:
a. The documents necessary to evidence the nature of the complaint, including (if applicable) any complaint that the swap product was applied to a larger proportion of the loan than had been agreed;
b. Any evidence of what the customer was told at the time of the selling of the product;
c. The name and address of the customer."
15. This refined approach now brings the application made in respect of Client D within its parameters.
16. In support of that refined application, DHAL noted that as part of its discovery, HSBC disclosed document HSBC-001593 entitled "Interest Rate Protection Review". This document referred to a review of IRHP's carried out by the UK's Financial Services Authority ("FSA") and the procedure that HSBC had consequently adopted in the UK to deal with the issues presented. It noted that the Channel Islands and the Isle of Man were outside the remit of the FSA but that reviews of sales undertaken in the islands would be carried out. The document includes the name of DHAL in an appendix and recorded that -
"Reviews are undertaken only for customers considered "non-sophisticated" in line with the FSA guidelines. In very general terms a sophisticated client is one where annual turnover exceeds GBP6.5m, assets of GBP3.26m and 50+ employees
To date we have received 14 complaints (re 16 deals) across all islands There are a further 10 live swap deals (GBP6.25m), for customers considered non-sophisticated where complaints have not been received, plus 15 expired deals (GBP10.6m) that could be subject to complaint in future
In all cases, the reviews concluded that the lack of indicative breakage costs to exit the swap, requires remediation to be made. In all cases the customers were advised that there would be costs to exit if the swap was cancelled at any time, and that such cost could only be assessed at the time of breakage, however this in itself was not sufficient to allow the customer to make a reasoned choice between other products."
17. DHAL relies on that document to assert that there were 39 complaints in the Channel Islands and the Isle of Man, all relating to non-sophisticated investors, of which DHAL was one, and Client D another, that all had a common factor in terms of a lack of indicative breakage costs. If that is correct, it submits that the complaints made by those customers, and/or the material relating to those complaints, may be relevant to the claim brought by DHAL and should, at the very least, be reviewed by HSBC's legal team for relevance and disclosed, if appropriate.
18. HSBC's position was that amongst other things, these documents were not relevant for the purposes of DHAL's claim and that it would, in any event, be disproportionate for HSBC to review them for the reasons set out in Mr Gradidge's affidavit dated 20 February 2025:
"36. In practical terms, in order to comply with DHI's request, HSBC would have to first identify each client to whom DP would have sold IRHPs during her 19 year tenure at the bank. This in and of itself is an onerous task given DP was employed between October 1997 and September 2016, HSBC's systems and data repositories have been subject to significant changes within and since that period and this data is not held on one particular system. On the best information available to my client as of today, I am instructed that DP sold in excess of 300 IRHPs during her time at the bank. Any complaints prior to December 2020 relating to UK customers are stored on a system that also serves as a central client file repository for UK commercial banking clients, with information on that system being stored by client, as opposed to there being a distinct file or repository for complaints or particular types of transaction. From this information, HSBC would then need to take the following steps:
(a) Manually review each IRHP to identify the client to whom that product was sold;
(b) Identify what information it retains in relation to each client, taking into account its retention periods in each of the UK and Jersey, system changes and the likely historical nature of these client relationships;
(c) Conduct a further manual review of each client's file
37. A separate repository of files pertaining to certain customers in the Channel Islands and Isle of Man who were sold IRHPs has been located which contains 39 separate client files. HSBC does not know precisely how it was compiled, but it is unlikely to be a comprehensive repository of all files relating to IRHPs sold in the Channel Islands and Isle of Man as more IRHPs than 39 would have been sold.
(a) I estimate that it may only take about under an hour to establish which of these customers lodged a complaint in respect of the sale of their IRHP(s) and determine if DP sold the relevant IRHP
(b) If it were then found that DP sold an IRHP, and that the whole client file should be reviewed, then, without reviewing the files, it is difficult to estimate how long it would take to review each client file and that would vary as most of the files are more than 100 pages in volume with some being several hundred pages in volume. Reviewing at 60 pages an hour would take at least two to six hours."
19. It is clear from Mr Gradidge's explanation of the steps that would have to be undertaken, that HSBC has not identified the customers to whom Ms Parker sold IRHPs, nor has it identified the customers referred to in document HSBC-001593, nor has it reviewed the 39 client files relating to Channel Islands and Isle of Man customers. Similarly, in relation to Client D, Mr Gradidge deposes in his affidavit sworn on 20 February 2025 that the complaint was made orally at a meeting and that -
"42 HSBC has not assessed whether the Client D Complaint is in any way even remotely comparable to the situation that gives rise to [DHAL's] claim, because such exercise is irrelevant and unworkable for the reasons outlined above..." (emphasis added)
20. In my judgment, what flows from these paragraphs is that HSBC's objections to disclosure are based on theory rather than fact in that none of the documents have been reviewed. In such circumstances, the Court is entitled to scrutinise assertions of irrelevance.
21. The test to be applied in relation to specific discovery was set out by Commissioner Thompson in Macleod v The Channel Islands Cooperative Society Limited [2024] JRC 109 where he adopted the following summary of the applicable principles, albeit noting that in exceptional circumstances, an affidavit might not be required:
22. In this case, two detailed affidavits of discovery have been sworn by Mr Gradidge on behalf of HSBC, and both contain the requisite advocate's endorsement such that there is a presumption that HSBC has complied with its discovery obligations.
23. That presumption is strengthened by the fact that the parties appear to agree that the Plaintiff has complied with the terms of its discovery protocol. HSBC has carried out the structured searches required, and insofar as the ad hoc searches listed in paragraph 6.10 are concerned, according to Mr Gradidge's affidavits, it has carried out "targeted searches in repositories where it considers such material would most likely be retained". Insofar as those searches did not provide any further documents relating to "complaints or disciplinary proceedings against Debbie Parker", Mr Gradidge has not simply relied upon the search but according to his affidavit of 20 February 2025 -
"(d) I have since consulted with [Debbie Parker] and she informed me, consistent with the absence of documentary evidence retrieved in connection with these matters, that no disciplinary proceedings were ever instituted against her; nor has she been the subject of any complaint to the Jersey Financial Services Commission or any other regulator."
24. Discovery protocols are frequently used in complex cases and set out how parties intend to meet their discovery obligations in accordance with Practice Directions 17/07 and 17/08. If protocols are agreed by the parties and/ or ordered by the Court, they provide a benchmark for what constitutes a reasonable search, in line with the Overriding Objective and in the context of the particular litigation. That reasonable search should produce the documents necessary for the purposes of the litigation, albeit that as anticipated in paragraph 17(a) of Practice Direction RC 17/08, it may not produce all of the relevant electronic documents. If the document landscape does not alter, compliance with a discovery protocol gives rise to a presumption that any undiscovered, relevant documents are not necessary for the just disposal of the action, as otherwise they would, and should, have been identified in the protocol. However, if the document landscape changes, parties should work together to apply their protocol to the new repositories (Rassmal v Investments LLC v Al Suwaiket and Sons [2024] JRC 104).
25. In my judgment, the document landscape has changed in that in the course of discovery, HSBC has unexpectedly identified HSBC-001593 referring to 39 complaints about IRHPs in the Channel Islands and the Isle of Man, and has also located a repository of 39 customer files relating to IRHPs. Given that the subject matter is IRHPs, there is a possibility that these files might contain information relating to "complaints against Ms Parker", which is accepted to be a relevant area for search according to HSBC's discovery protocol. The issues are therefore whether -
(i) these files contain material relevant to a matter in issue, albeit that they have not been reviewed; and
(ii) if they do, whether an order for specific discovery is necessary for the just disposal of the action.
26. Without having reviewed these documents, HSBC's submission is that they are irrelevant. Relevance has to be determined by reference to the pleadings. In this case, DHAL alleges that on 7 June 2007, Mr Hick attended a meeting with Ms Parker at the offices of his accountant and that she informed him that there was no fee for the IRHP and 50% of the loan had to be covered by it. Thereafter there was a call between Mr Hick and Ms Parker in which she referred to 100% of the loan being covered, and there is a transcript of that call. DHAL alleges that HSBC represented that -
(i) the IRHP was a suitable product for DHAL and the most suitable product for DHAL;
(ii) there was no product that would protect DHAL against interest rate rises that was more suitable; and
(iii) if the IRHP were not accepted, the loan could not be made.
27. HSBC denies that these representations were made and pleads extensively (in paragraphs 18 to 28 of its Reply and Answer to Counterclaim) as to what did, or did not, take place in the meetings between the bank and Mr Hick. In particular, HSBC pleads that it was "under no duty to, and did not, provide Mr Hick with any advice relating to the suitability of interest rate hedging products more generally" (paragraph 18(c) of the Reply and Answer to Counterclaim).
28. In O'Brien v Chief Constable of South Wales [2005] 2 AC 534, the House of Lords considered similar fact evidence in the context of civil proceedings. Bingham LJ held that -
29. As to how those competing arguments are to be balanced, in JP Morgan Chase Bank v Springwell Navigation Corporation [2005] EWHC 383 (Comm) the English High Court struck out allegations in a pleading that a bank official, engaged in selling a financial product to the defendant, had made similar statements to other shipping customers at the bank in a similar position, on the basis that they were not logically probative of any of the following matters:
"34...(a) that the contractual relationship was in any case the same as in the case of Springwell and Chase; (b) that each had the same investment objectives or attitude to risk, or that each had the same views on emerging markets; (c) that each had the same level of sophistication; or (d) that each dealt with Chase in the same way."
30. In Claverton Holdings Limited v Barclays Bank PLC [2015] EWHC 3603, the claimant brought proceedings for negligence in relation to the provision of an interest rate swap, and specifically named two employees at Barclays, Messrs Bulloch and Challis, as the individuals who gave the advice and recommendations about which the complaint was made. It sought an order for specific discovery of other allegations of complaints of mis-selling swaps by these employees initially on the basis that "evidence of other complaints and allegations against Messrs Bulloch and Challis would clearly and obviously be probative of matters alleged in the present case", albeit that it subsequently accepted that "The only potential relevance was if other cases contained allegations that similar oral representations or statements were made by the relevant persons, supporting the likelihood that they had been made in this case." In the course of the hearing, it appears that the claimant's counsel made numerous attempts to refine the application, eventually alighting on "limiting it to complaints and allegations which had resulted in an admission by Barclays or a finding by the Financial Ombudsman Service against Barclays." The Court held that -
31. Advocate Redgrave submits that -
(i) on the basis of HSBC-001593 (referred to in paragraph 16 above) there were 39 non-sophisticated IRHP customers in the Channel Islands and the Isle of Man, including DHAL and all of those cases had the common factor of breakage costs not being sufficiently disclosed;
(ii) details of those 39 customers must exist and HSBC has identified a repository of 39 files (referred to in paragraph 17 above) which it could review against the list to ensure that it has all of the relevant client files;
(iii) those customer files could then be reviewed to ascertain whether Ms Parker had any involvement and if she did, then the review could focus on whether there were additional similarities with DHAL's case in terms of the amount of the loan covered and the representations made;
(iv) if sufficient similarities were to be found, Advocate Redgrave would wish to contact the customer with a view to calling them to give similar fact evidence at trial.
32. This refined approach limits the number of additional files to be reviewed by HSBC to 39, readily-identifiable, files as opposed to the 300 or so customer files scattered across HSBC's systems dealing with all of the IRHPs sold by Ms Parker whilst working for the bank. Whilst this is a more manageable task, it is still likely to be a significant task for the reasons set out by Mr Gradidge and referred to in paragraph 18 above.
33. In my judgment, the difficulty with Advocate Redgrave's approach is that each customer is an individual, with their own peculiar characteristics, and their own specific transactions. Representations made about the suitability of an IRHP, or the alternatives to a particular IRHP, made to a customer in relation to that customer's transaction have limited relevance, if any, to representations about suitability made to DHAL in relation to its transaction. Each customer, and each transaction, is unique, even if there might be superficial similarities. In my judgment, representations made to other customers are not logically probative of anything in relation to DHAL.
34. Nor is the fact that representations might have been made to another customer logically probative of anything in relation to DHAL. For example, even were there to be evidence that Ms Parker gave advice on swaps to another customer, that would not be probative of the fact that she gave such advice to Mr Hick. Nor would it undermine HSBC's denial that it gave such advice to Mr Hick.
35. Nor does the fact that Ms Parker might have been a common denominator change that. Each complaint is still the unique product of an action, by an employee of HSBC, to a customer, in the lights of the applicable circumstances. Ms Parker's common involvement only addresses one factor. Even if Ms Parker were to have had a particular way of working which was reflected in her interactions with other customers, such that the fact rather than the substance, of her interaction with another customer might be conceivably probative of her actions, it could have no more than tangential relevance to DHAL's claim given the specific representations pleaded.
36. Moreover, even to assume that any material relating to one client might have relevance at all to DHAL as it alleges in paragraph 9 above requires a significant amount of speculation and an unjustified leap of logic:
(i) If established, the fact that Ms Parker may not have followed HSBC's proper process for another customer is not probative of an allegation that she misrepresented matters to Mr Hick; at best it might support an allegation that she did not follow proper process in relation to Mr Hick, but no such allegation is pleaded.
(ii) If established, the fact that other customers complained that Ms Parker had misled them about IRHPs is not probative of an allegation that she misled DHAL.
(iii) Even to get to a position of such complaints being potentially probative, the stars would have to align such that the complaints would have to be similar, in relation to customers with similar circumstances and characteristics, and arise in similar circumstances. There is no evidence of such serial misbehaviour on the part of Ms Parker and indeed, the absence of any complaints or disciplinary proceedings recorded against, or notified to, Ms Parker strongly suggests the contrary.
37. Accordingly, I find that the material in the files relating to Channel Islands and Isle of Man customers who complained about IRHPs is not relevant to DHAL's proceedings.
38. Even were I to be wrong about relevance, and the representations made to one customer to have some probative value about the representations made to DHAL, I think that that probative value would be very limited, and it is far from plain and obvious to me that the trial judge would even allow such evidence to be adduced.
39. However, if such issues are to be raised and explored fairly at trial, it would require the Court to examine in detail all of the circumstances relating to those other complaints, including the characteristics of the customer, the nature of their interactions, and any documentary evidence relating to those complaints, which may not necessarily all be in the possession of HSBC. As with Claverton, the risk of satellite issues derailing the trial becomes very real.
40. That risk is compounded by the fact that unlike in Claverton, Advocate Redgrave wishes to contact the customers with a view to calling them to give evidence. Whilst that avoids the risk of adducing unsubstantiated complaints (which was one of the criticisms in Claverton), it will require other customers to be identified, and contacted, which may not be straightforward given issues of confidentiality and the time that has elapsed since the complaints were made. Once contacted, those customers will be invited to engage in a process relating to events which occurred many years ago. There is no guarantee that they can do so, will do so, or will do so expeditiously. Even with active case management, there is the risk of significant further disruption to the current proceedings which have already been extant for 4 years and which relate to events occurring nearly 18 years ago.
41. Further, given the limited potential relevance, if any, of the material, I accept that, for the reasons set out in Mr Gradidge's affidavit, that it would be disproportionate for HSBC to identify, extract and review all of the 39 complaint files relating to Channel Islands and Isle of Man customers.
42. In my judgment, even were the material to be relevant, I would not regard discovery of that material necessary for the just disposal of the action. I therefore decline to make any order for specific discovery under paragraph 1 of DHAL's summons.
43. HSBC submits that the 2013 Review is subject to without prejudice privilege and is therefore protected from disclosure. In support of these submissions, HSBC relies upon the decision of the English Competition Appeal Tribunal in Sportradar AG v Football Dataco Ltd [2022] CAT 29, where the tribunal noted that the authorities were uncontroversial and included the principles that -
44. These principles relate to admissibility rather than discovery, and this point is commented on in Matthews and Malek on Disclosure, 6th edition 2024, at 14.01 -
45. Mr Gradidge deposes in his affidavit of 20 February 2025 that -
"46. In any event, the 2013 Review is an internal document used for purposes of considering the bona fide settlement of the dispute between HSBC and DHI. The 2013 Review is clearly marked in red capital letters "WITHOUT PREJUDICE SAVE AS TO COSTS" and, while such a label is not determinative in itself, the document is indeed confidential and subject to without prejudice privilege.
47. The 2013 Review was prepared in the context of, and for considering, settlement negotiations with DHI. Before then DHI had submitted its complaint to HSBC on 10 March 2010 "
46. I have not been provided with a chronology of the discussions or negotiations between the parties. However, on the pleadings the parties agree that -
(i) in August 2012, HSBC admitted that some of the underlying principles behind the UK Financial Services Authority's review into swaps mis-selling could be relevant to DHAL (paragraph 20 of the Amended Answer and Counterclaim and paragraph 30 of the Reply and Answer to Counterclaim); and
(ii) Mr Hick reached a settlement with HSBC in February 2014 (paragraph 21 of the Amended Answer and Counterclaim and paragraph 31 of the Reply and Answer to Counterclaim).
47. Accordingly, given the timing of events and the labelling of the document, I accept that this document was prepared for the purposes of without prejudice negotiations with a view to settling the issues between DHAL and HSBC.
48. The list of documents exhibited to Mr Gradidge's affidavit refers to two separate excel documents (which have not been provided me) and, in Schedule 3, it claims privilege for -
"Correspondence between the Plaintiff and the First Defendant in a genuine attempt to settle the dispute between the Plaintiff and the Defendant"
49. Given that Mr Hick has not seen a copy of the 2013 Review, it does not appear to have been sent and is therefore not covered by the claim for privilege in the List of Documents as it is not "correspondence". According to Mr Harris' affidavit of 12 February 2025, HSBC did not disclose the 2013 Review in its discovery, but it did disclose what appeared to be working documents for that review.
50. In my judgment, the 2013 Review should have been disclosed in the sense of being listed in HSBC's list of documents, and any claims for privilege in relation to that document should have been properly particularised -
(i) As Griffiths LJ held in Rush & Tompkins Ltd v Greater London Council [1989] 1 AC 1280 at 1303 -
(ii) RCR 6/17(3) provides that -
51. The real issue between the parties is as to whether the 2013 Review can be inspected, notwithstanding that it was not covered by the claim for privilege in the list of documents.
52. Internal settlement documents are often prepared by or for lawyers and fall within the ambit of legal professional privilege. HSBC has not claimed legal professional privilege in relation to the 2013 Review and when pressed in submissions, Advocate MacDonald was unable to say that the 2013 Review had been prepared with or for lawyers, either internal or external. Nor did he submit that the dominant purpose of the document would have been the obtaining of legal advice. In such circumstances, legal professional privilege cannot apply (Waugh v British Railways Board [1980] A.C.521) and HSBC relies upon "without prejudice" privilege.
53. In Rabin v Mendoza [1954] 1 W.L.R. 271, Denning LJ held that -
54. Romer LJ went further and in that case held that -
55. Rabin v Mendoza was approved by Griffiths LJ in Rush & Tompkins at 1304A as authority for the proposition that in a two-party case involving just the plaintiff and defendant, neither is entitled to discovery against the other of without prejudice documents, with discovery in this context being production of the listed document. There is a jurisprudential debate as to whether this is founded on implied contract or public policy, or both, but in my judgment that debate does not assist in the determination of the issue before me -
(i) HSBC submits that this was prepared as a working document in the course of a period of negotiations between it and DHAL, and as such, is privileged;
(ii) whereas from DHAL's perspective, the 2013 Review was not sent to it by HSBC and it cannot be subject to without prejudice privilege. It submits that it is supported in this conclusion given that DHAL believes that drafts of this document have been disclosed and inspected, albeit that in the absence of inspecting the 2013 Review, it cannot say so definitively.
56. In my judgment, the position is accurately set out by the learned editors of Passmore on Privilege, 5th edition, at 10-006 -
"As Lord Hope put it in Ofulue v Bossert:
" the rule is generous in its application. It recognises that unseen dangers may lurk behind things said or written during this [negotiation] period, and it removes the inhibiting effect that this may have in the interests of promoting attempts to achieve a settlement."
As will be seen, that generosity is apparent from the fact that the without prejudice rule is now very much wider in scope than it was historically, with the result that it is not limited merely to the making of specific admissions against interest or offers made in the course of settlement negotiations: rather it extends to encompass the full content of the negotiations undertaken to seek a settlement."
57. That last sentence in Passmore is founded on the speech of Clarke LJ in Oceanbulk Shipping & Trading SA v TMT Asia Ltd [2010] UKSC 44 where he held that:
27. The without prejudice rule is thus now very much wider than it was historically. Moreover, its importance has been judicially stressed on many occasions, most recently perhaps in Ofulue, where the House of Lords identified the two bases of the rule and held that communications in the course of negotiations should not be admissible in evidence. It held that the rule extended to negotiations concerning earlier proceedings involving an issue that was still not resolved and refused, on the ground of legal and practical certainty, to extend the exceptions to the rule so as to limit the protection to identifiable admissions."
58. In my judgment, the "full content of the negotiations" referred to by the editors of Passmore includes drafts and internal discussions about offers and approaches to settlement. The fact that a draft offer did not materialise into an actual offer is irrelevant if it were prepared for the purposes of negotiations. To hold otherwise would undermine the whole purpose of the privilege, and require a contextual analysis of the offers made and any drafts rejected to determine whether the claim for privilege was made out.
59. Whilst according to Mr Hick, HSBC offered to share the 2013 Review with him, it never in fact did so. Had it been shared on a without prejudice basis, he would have known the contents but still been unable to inspect it on discovery. There is no evidence that it would have been shared on an open basis. In the absence of an express waiver, there is no basis for ordering inspection.
60. Accordingly, I find that the 2013 Review is privileged and cannot be inspected by DHAL.