Date:

Carol Ann Gatt v Barclays Bank plc & Mark Williams [2013] EWHC 2 (QB)

Summary

The Claimant failed to show that the Bank was liable in contract, negligence or defamation where it had sent credit reports about her husband to credit reference agencies stating that an account, which was a joint account with her, was "delinquent" because the overdraft exceeded the agreed limit.

Facts

Carol Ann Gatt (the “Claimant”) claimed damages from Barclays Bank plc (the “Bank”) for breach of contract, negligent misstatement and defamation, and the Bank counterclaimed for the amount outstanding on an overdraft and joint loan account.

The Claimant and her husband, co-defendant Mark Williams (“Mr Williams”), together ran a property development business which was funded in part by lending secured on their multi-million pound property.  Mr Williams had a history of exceeding his overdraft limit on his account with the Bank and then retrospectively obtaining the Bank's agreement to an increase in the overdraft limit.

His overdraft was converted into a joint loan with the Claimant which was secured on their joint property.  After the loan was credited to Mr Williams's sole account to pay off the overdraft, he continued to borrow on his sole account exceeding the authorised overdraft limit.  The subsequent overdraft on Mr Williams's current account was cleared by the transfer of £228,000 from the joint account, putting that account into overdraft.  The joint account had an authorised overdraft limit of £250,000 for four months, after which it reverted to its original level of £1,500.  After the limit had reverted to £1,500, the Claimant and Mr Williams sought to re-mortgage their property with another bank.  The third party bank refused to re-finance on the basis that its checks at the credit reference agencies revealed Mr Williams's account with the Bank was "delinquent" (not in "default") because he had a credit limit of £1,500 but an overdraft of £260,000.  The account was a joint account but the Claimant had not consented to the disclosure of her credit information to the credit reference agencies.

The Claimant accepted that the account was overdrawn to that extent but maintained that the borrowing at that level was authorised by the Bank's relationship manager (the “RM”).  Therefore, the Claimant claimed that it was untrue for the Bank to imply to the credit agencies, and to those they passed the data to, that Mr Williams and/or the Claimant had substantial unauthorised borrowings.  

The Claimant’s case was that the Bank's false statement to the credit reference agencies had the foreseeable consequence that the Claimant and her husband were unable to re-mortgage their home to raise finance needed for their business and that in turn led to the collapse of their business, the loss of their home and other assets, and Mr Williams’ bankruptcy.

Judgment

The statement that the authorised overdraft limit was only £1,500 was true and this fact was recorded on bank statements and letters from the RM sent to the Claimant and Mr Williams.  The Bank had authorised a limit of £250,000 for four months only (after which it went back to £1,500).

Though the overdraft limit had been exceeded, the account was not set as in ‘default’ since Mr Williams was in discussions with the Bank about his level of borrowing.  Mr Williams could not have succeeded in a claim for breach of contract in respect of the publication of the information to the agencies since it was true information falling within the permitted categories for disclosure.  As for the Claimant, the Bank had complied with its contractual obligation not to disclose any confidential financial information about her.

The Bank owed a duty to the Claimant in negligence, since it knew that she was a joint holder of the account and a co-director of the business which was largely dependent on Mr Williams's credit.  Therefore, both proximity and foreseeability of damage were established.  However, there was no breach of duty since the information was true and not misleading and was disclosed by the Bank pursuant to its obligations under data-sharing agreements and with Mr Williams's consent.

In relation to defamation, Mr Williams would be taken to have authorised any defamatory statement, and therefore could not have sued upon it, but that did not apply to the Claimant's claim.  The Bank’s Defence might well have been ‘qualified privilege’ whereby it could legitimately pass information to the credit reference agencies for onward transmission by them to their subscribers (see Macintosh v Dun [1908] A.C. 390 andLondon Association for the Protection of Trade v Greenlands Ltd [1916] 2 A.C. 15).  Qualified privilege could be defeated by malice but there was no evidence of that.  The Claimant's claim in defamation would also fail for lack of identification and/or defamatory meaning.

The Bank's counterclaim succeeded.  When Mr Williams authorised the Bank to debit the joint account with the amount of his sole overdraft he had the Claimant's authority, both ostensible and actual, to do so, and the Claimant was therefore personally liable to repay the Bank all sums due under both the joint loan account and the overdrawn joint current account.

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