Mark Wolfe & Anor v HSBC UK Bank Plc

Lord Justice Nugee: Introduction

1. This appeal is against the striking out of the claim of the Claimants, Mr and Mrs James.

2. Mr and Mrs James are former customers of the Respondent bank, HSBC UK Bank plc ( “HSBC” ). They brought a claim against HSBC in the Bristol District Registry of the High Court. HSBC applied for summary judgment against Mr and Mrs James, or to have the claim struck out.

3. The application was heard by HHJ Blohm KC sitting as a judge of the High Court ( “the Judge” ). On 23 October 2023 he gave an oral judgment, largely accepting HSBC’s submissions but adjourning the case for further submissions on one point. The case came back to him in July 2024 and he gave a second oral judgment on 17 July 2024. Mr and Mrs James had invited him to re-open his first judgment but he declined to do so. They had also applied for permission to amend their Particulars of Claim, but he dismissed that. In the event he held that the claim should be struck out in its entirety, and by an Order dated 23 July 2024 so ordered.

4. Mr and Mrs James now appeal with the permission of Warby LJ. We have had the benefit of well-argued submissions on their behalf from Mr Alex Troup KC, and on behalf of HSBC from Mr James Purchas, who appeared with Ms Anna Hoffmann.

5. For the reasons that follow I prefer those of Mr Purchas and would dismiss the appeal. Facts

6. Since the claim has been struck out there has been no trial, and the facts have not been found. But the facts alleged by Mr and Mrs James are as follows.

7. The story starts in 2004. Mr and Mrs James were then customers of HSBC. They had a number of accounts including a joint Premier current account (ending 4885) ( “the Joint Premier account” ), and a joint Property account (ending 4907) ( “the Joint Property account” ).

8. In September 2004 HSBC opened a new account in the name of Mrs James. This was a loan account (ending 0807) ( “the Loan account” ) and initially showed a debit of £49,000 lent to Mrs James. Mr and Mrs James’ case is that she never took out such a loan, and that they knew nothing about the Loan account until much later, in 2010, as explained in more detail below.

9. On 14 March 2005 £25,000 was debited from the Joint Property account and credited to the Loan account, thereby reducing the amount of the (ostensible) loan to Mrs James. A much smaller transfer in the sum of £147.22 was made from the Joint Premier account to the Loan account in November 2005, and thereafter monthly transfers were made from the Joint Premier account to the Loan account in sums ranging from £140 to £285 to cover interest. This continued until October 2008 by which time the total of the monthly transfers was some £5,500. The Joint Premier account was closed in November 2008.

10. In early 2010 Mr and Mrs James were looking to re-mortgage their property in Stoke Bishop, Bristol to take advantage of lower interest rates. But their mortgage adviser told them that there was a problem with the re-mortgage as HSBC had registered a default against Mrs James in the sum of £28,306.88. Their case is that this came as a complete surprise to them. They assumed at first that it was an administrative error, but on 7 May 2010 HSBC formally demanded that Mrs James pay that sum as being the balance outstanding on the Loan account. She did not pay because she had not taken out any such loan.

11. The next thing that happened was that Mr and Mrs James received a debt collection notice in relation to the Loan account from a debt collection agency called Metropolitan Collection Services ( “MCS” ). It appears that MCS was part of the HSBC group which HSBC used to try and agree repayment terms with customers in default. Mr James called them to explain that they had no knowledge of the loan.

12. On 21 June 2013 Mr and Mrs James made a formal complaint to HSBC. That elicited a response dated 31 July 2013 ( “the 31 July 2013 letter” ). I will have to look at the 31 July 2013 letter in more detail below but for present purposes note that it included a statement that HSBC was unable to provide details of the opening date of the Loan account or a copy of the credit agreement. Mr James e-mailed HSBC to express their disappointment at HSBC’s failure to answer their queries about the opening of the account, but HSBC’s response on 30 August 2013 was that it had completed its investigation.

13. On 4 September 2013 Mr and Mrs James made a data subject access request ( “SAR” ) to HSBC. In response HSBC provided a very small number of documents. These included statements for the Loan account, but not the opening statement (which would, or might, have shown where the monies had gone), nor any documentation in relation to the opening of the account.

14. In April 2014 Mr and Mrs James complained to the Financial Ombudsman Service ( “FOS” ) that HSBC had asked Mrs James to repay a loan she had never taken out. But on 21 November 2014 an adjudicator at FOS wrote to the effect that she was unable to recommend upholding the complaint. Mr and Mrs James had the right to ask the Ombudsman to review their case, and did so. But on 8 May 2015 the Ombudsman gave her final decision agreeing with the adjudicator that the complaint should not be upheld.

15. After further fruitless correspondence with HSBC, Mr and Mrs James made a second SAR to HSBC on 6 September 2016. In response HSBC disclosed a significant amount of further documentation on 17 October 2016. This included a Credit Approval and Risk Management Report (referred to as “the CARM report” ). But it still did not include the opening bank statement.

16. Mr and Mrs James took legal advice, and on 5 June 2017 Mr Marc Brittain of 3 Paper Buildings wrote a letter of claim to HSBC on their behalf. HSBC responded that it would not accept the claim as it was out of time for a claim for breach of contract.

17. In August 2017 Mr and Mrs James instructed Mr Pat Tomlinson, who was a former banker with expertise in forensic accountancy and banking practice, to review all the documents they had received from HSBC. Mr Tomlinson completed his investigation and reported to them in April 2018. He concluded that the documentation, in particular the CARM report, revealed that there could be no other explanation but that the Loan account had been set up fraudulently and probably by a rogue bank employee.

18. Mr and Mrs James subsequently instructed Gould & Swayne Solicitors, who ultimately issued a claim form on their behalf against HSBC.

19. It does not appear that Mrs James has ever been sued for the outstanding balance on the Loan account. HSBC’s evidence in support of its application to strike out the claim in March 2023 (see below) was that the Loan account debt was sold by HSBC “a number of years ago” and that HSBC had contacted the purchaser who had told it that the account had been closed as statute-barred. The proceedings

20. The claim form was issued in the King’s Bench Division of the High Court in the Bristol District Registry on 13 October 2022.

21. The “Brief details of claim” endorsed on the claim form were as follows: “Damages and appropriate restitutionary, declaratory and/or injunctive relief arising out of the Defendant’s breaches of contract and/or negligence and/or deceit/fraud in the setting up of a loan account in or about September 2004 in the name of the Second Claimant but without the Claimants’ knowledge or authority and the subsequent unauthorised withdrawal of funds from the Claimants’ actual accounts with the Defendant in instalments between 2005 to 2008, together with the Defendant’s refusal to return those monies, leading to losses incurred by the Claimants, including the value of the monies unlawfully removed from the Claimants’ accounts, losses arising out of their subsequent inability to borrow money at more favourable rates and other consequential losses.”

22. Particulars of Claim were subsequently served, dated 26 January 2023. These were settled by counsel (not Mr Troup). It is I think helpful to refer to them in some detail.

23. Paragraphs 1 and 2 introduce the parties (HSBC being referred to as “the Bank”), and plead the Joint Premier and Property accounts.

24. Paragraphs 3 to 13 deal with the Loan account, including the fact that a loan was recorded as having been provided to Mrs James without her knowledge or authority, the transfer from the Joint Property and Premier accounts of £25,000 on 14 March 2005 and of small monthly payments between 2005 and October 2008, and the demands made by HSBC. Paragraph 11 refers to a threat by HSBC to notify Mrs James to credit reference agencies if she continued to default and Paragraph 12 pleads that in or around May 2010 the Bank carried out that threat by reporting Mrs James to a number of credit reference agencies, including Experian, Equifax and Callcredit, alleging, wrongly, that she was responsible for repayment of the balance on the Loan account.

25. Paragraphs 14 to 17 plead the various investigations made by Mr and Mrs James (the two SARs, and Mr Tomlinson’s report).

26. Paragraph 18, under the heading “Fraud by the Bank” pleads as follows: “18. The loan account was set up by an unidentified employee or employees of the Bank without the authority or knowledge of the Claimants in order to defraud the Claimants out of monies in their accounts.” That is followed by extensive particulars, drawn from Mr Tomlinson’s report, which support the allegation that the Loan account was not genuine, and that it was neither opened nor operated normally.

27. Paragraphs 19 to 21 are grouped under the heading “False and deceitful representations and conduct”. Paragraph 19 pleads as follows: “19. By fraudulently opening the loan account and removing monies from the Claimants’ accounts, the Bank, through its dishonest employee(s), committed the tort of deceit. The Bank, through its dishonest employee(s), knew that each of the representations set out below were false and fraudulent and that the conduct described below was fraudulent.” That is followed by particulars of representations. It is not necessary to set them all out; they include for example a false representation by the Bank, by opening the Loan account in the name of Mrs James, that she had taken out such a loan account when she had not, which the Bank acted on by debiting monies from the Claimants’ accounts; false representations by making demands that it was entitled to do so when it was not; and false representations to various credit reference agencies, and to FOS, that Mrs James was in default when she was not, thereby affecting her creditworthiness.

28. Paragraphs 20 and 21 plead as follows: “20. As the Bank, through its dishonest employee(s) intended, the false representations and conduct set out above were each acted upon in the sense that monies were removed from the Claimants’ accounts, and Mrs James’ ability to obtain credit was affected.

21. In making each of those false and fraudulent misrepresentations, the Bank, by its fraudulent employee(s), intended to make a gain for itself (or, alternatively) for its unidentified bank employee or employees) and/or to cause loss to the Claimants.”

29. Paragraph 22, under the heading “Limitation” pleads, in anticipation of a limitation defence, that the claim is not barred by limitation as follows: “22. To the extent that it may be suggested that all or any part of the Claimant’s claim is barred by the operation of section 2 of the Limitation Act 1980 , the Claimants will rely upon section 32 of the 1980 Act on the grounds that: 22.1 the Claimants did not discover the fraud until a date within six years of the commencement of this claim on 13 October 2022 ( section 32(1) (a)); and 22.2 in any event, the Claimants’ right to bring a claim for fraud was deliberately concealed from them ( section 32(1) (b)).”

30. This is then expanded on, Paragraph 23 pleading that the Claimants, despite exercising reasonable diligence, did not discover the fraud until they received Mr Tomlinson’s report on 17 April 2018, or alternatively until they received the CARM report on or around 27 October 2016; and Paragraphs 24 to 26 pleading that certain information was deliberately concealed from them by HSBC.

31. Paragraph 27 pleads that the Claimants have suffered loss and damage, particularised as the sums removed from the Joint Premier and Joint Property accounts, and losses arising out of their inability to re-mortgage, including losses from having to sell their home and move to rented accommodation and various ongoing and other losses flowing from that.

32. Paragraphs 28 and 29 set out the relief they claim, repeated in the prayer for relief, namely (i) a declaration that Mrs James did not take out the loan and is not liable to repay it; (ii) an injunction prohibiting HSBC from continuing to seek payment from Mrs James and continuing to represent to credit reference agencies that she is in default; (iii) restitution and/or repayment of the sums removed from their Joint Premier and Property accounts together with interest; (iv) damages; (v) aggravated damages; and (vi) interest.

33. On 13 March 2023 HSBC applied to strike out the claim, or for summary judgment, on the grounds that it disclosed no reasonable cause of action or was barred by limitation. The first Judgment

34. HSBC’s application was heard by the Judge on 23 October 2023. He gave an oral judgment at the conclusion of the hearing ( “the first Judgment” ). We do not have an approved transcript as it appears that the recording was lost by the Court; but Ms Hoffmann, who appeared for HSBC, made a note of the judgment. Although not verbatim, it is a reasonably full paraphrase of the judgment, and was agreed between the parties to be accurate (and the Judge was content to proceed at the second hearing (see below) on that basis).

35. Having set out the background and what was pleaded in the Particulars of Claim, the Judge first considered the question of summary judgment. He accepted that the factual case was fully set out. But he continued (at [24] of Ms Hoffmann’s note of his judgment): “24. … However, what are the causes of action? It is not negligence and that does not seem to be pursued. And mistake we will come on to. What is complained about is that there was a fraud and deceit. The difficulty for the Claimants is that the common law does not know a doctrine of fraud as a cause of action, it knows a cause of action based in deceit. However this requires a representation and the relevant party relying on that representation to their detriment.

25. The problem here is that it is obvious that the Claimants did not rely on anything to their detriment. As soon as they found out about the transaction and the existence of the account, they queried it and denied it. It is therefore hard to see how a claim in deceit can succeed.”

36. He then went on to consider the claim that HSBC had traduced the Claimants and damaged their creditworthiness. He said that the difficulty with that is that it seemed to him to amount to an assertion of malicious falsehood for which the limitation period is one year, so that even on Mr and Mrs James’ case such a claim would be statute-barred (at [26]).

37. He then considered whether there was a sufficient factual case that the documents such as the CARM report were false documents, and concluded that there was indeed an arguable case that the documents were false and fraudulent. But he added that he could not see that a claim in deceit or malicious falsehood could get off the ground (at [32]).

38. He continued at [33]: “The pleading does seek restitution and says that £25k+ was taken from the Claimants’ joint account. It seems to me at least arguable that the consequence of that is that the Bank is a constructive trustee of the £25k and the other smaller withdrawals. If this had been a transaction taken in cash and if that was done dishonestly, it seems to me that the Claimants have a very good case to say that there was a constructive trust. Whether the same thing works when there is a bank account on paper is a point that needs to be investigated. It is a point that I have raised in the course of submissions and understandably counsel have been cautious to make definitive submissions on this new point. But that seems to me the basis of the claim that seems to be arguable.”

39. His conclusion therefore was that, subject to that possible constructive trust argument, HSBC’s application for summary judgment was correct (at [36]).

40. He then considered limitation. At [37] he said that if his initial view that there was an argument in constructive trust was right, it would not be subject to any limitation. But he went on to consider s. 32 of the Limitation Act 1980 ( “ ) in case he was wrong on the summary judgment point. LA 1980 ”

41. That required identifying when a person exercising reasonable diligence could have discovered enough information to bring an action in fraud. At [43] he said: “In 2013, she [ie Mrs James] knew three things: a) that the loan had been taken out in her name and that she had not received the money; b) that payments (£25k+) had been made from her joint account to the Loan Account and c) that there were representations made about a re-negotiation of the repayment of the plan which she says did not take place. So, there would have appeared to be someone writing down a record of Mrs James behaving in a way that she did not.” As appears below the third of these was taken from the 31 July letter.

42. He then posed the question whether those three facts that Mrs James knew in 2013 justified a finding that dishonesty was pleadable by her in 2013. At [46] he held that they did, saying: “Those factors – the fact of payment out and the creation of correspondence she avers was false could not be explicable on the basis of negligence or innocence but more likely fraud, even an ongoing fraud.” His conclusion therefore was that, if it were material, time started to run for a cause of action based on fraud at the latest in 2013; and hence that in so far as a claim based on fraud were arguable it would have been statute-barred before the claim was issued (at [47]).

43. He then said that he would be minded to strike out all of the claim except for the bit that related to the constructive trust, on which he needed further submissions. He gave directions for counsel to exchange written submissions and said that he would then decide whether to deal with the matter on paper or whether a further hearing was needed (at [48]-[49]).

44. No Order was drawn up at that stage, and all consequential matters were adjourned. The second Judgment

45. Mr Troup, who had by then been instructed to act for Mr and Mrs James, duly filed written submissions on 6 November 2023. He had also prepared draft amended Particulars of Claim and an application to amend was brought at the same time. The draft amendments sought to add (i) a plea that in removing the monies from the Joint Premier and Joint Property accounts, making demand on Mrs James, reporting her to credit reference agencies and failing to provide a proper response to the first SAR, HSBC acted in breach of its contractual duties to act only on the instructions of Mr and Mrs James and to use reasonable skill and care; (ii) a plea that the monies removed from the accounts were held by HSBC, or their traceable proceeds, on constructive trust for Mr and Mrs James; and (iii) an alternative restitutionary claim to such monies or their proceeds, based on the proposition that where money is stolen, the victim remains its legal and beneficial owner.

46. In his submissions Mr Troup identified these causes of action and the legal basis for them. He also accepted that all of them were subject to a 6-year limitation period and hence prima facie statute-barred. So far as the constructive trust claim was concerned, this therefore differed from the view expressed by the Judge in his first Judgment that no limitation period would apply. Mr Troup explained that this was because the constructive trust for which he contended was not an institutional constructive trust (where the trust is independent of, and precedes, the wrong complained of) but a remedial constructive trust (where the trust is imposed as a result of the wrong), and that the Supreme Court had held that a 6-year limitation period applies in the case of the latter: Williams v Central Bank of Nigeria [2014] UKSC 10, [2014] AC 1189 .

47. That meant that he also needed to challenge the Judge’s conclusion that Mrs James had enough knowledge to start time running in 2013. Mr Troup, having made the point that strictly speaking the Judge had only decided when time started running for the fraudulent misrepresentation claim (and that that was technically obiter as he had decided no such claim existed), invited the Judge to re-open his decision on the point under the so-called Barrell jurisdiction (after re Barrell Enterprises Ltd [1973] 1 WLR 19 ). This is the principle that a Judge has jurisdiction to reconsider his or her judgment at any stage until it has been perfected by being embodied in a sealed Order. The leading case is now that of the Supreme Court in AIC Ltd v Federal Airports Authority of Nigeria [2022] UKSC 16 , [2022] 1 WLR 3223 , and before us counsel referred to the jurisdiction as “the AIC jurisdiction” , which I am content to adopt.

48. Mr Troup’s argument was based on the submission that the Judge had made a mistake and misunderstood what the 31 July 2013 letter from HSBC was saying. I explain the detail of this point below.

49. Ms Hoffmann, for HSBC, initially filed written submissions, also dated 6 November 2023, in which she explained why the claim for constructive trust would be subject to a 6-year limitation period and hence time-barred. After seeing Mr Troup’s submissions (in which he had accepted as much) she filed further submissions inviting the Judge not to re-open his first Judgment.

50. The Judge heard argument on 17 July 2024 and again gave his decision in an oral judgment at the end of the hearing ( “the second Judgment” ). Having gone through the history, he dealt with the substantive question quite shortly. He said that he did not consider that he had made a mistake at all, and that in those circumstances the Barrell (or AIC ) jurisdiction did not come into play; but even if he had considered the matter afresh in the light of Mr Troup’s submissions, he would have come to the same view (at [17]). He therefore declined to vary the first Judgment.

51. An Order dated 23 July 2024 was drawn up giving effect to his decisions. The substantive part of the Order (i) provided that the Court declined to amend the first Judgment (ii) struck out the entire claim and (iii) dismissed the application to amend. He also ordered Mr and Mrs James to pay the costs and refused permission to appeal. Grounds of Appeal

52. Permission to appeal was granted by Warby LJ. He described the pleaded Grounds of Appeal as overlong and discursive and directed the parties to agree a list of issues.

53. This has been done. The agreed list of issues identifies one overall issue, namely whether the Judge was wrong not to amend the first Judgment under the AIC jurisdiction.

54. This has been broken down into 5 sub-issues as follows: (1) Did the Judge make a mistake in interpreting the letter of 31 July 2013? (2) Would the alleged mistake have affected the Judge’s conclusion on limitation (ie that time started to run in 2013)? (3) Was that conclusion open to him on the evidence before him? (4) Was that conclusion incorrect for alternative and/or additional reasons? (5) Was the Judge therefore wrong not to amend the first Judgment? Overview

55. Before coming to the particular issues argued before us, it may be helpful to give an overview of the position.

56. First, there has been no appeal against the Judge’s decision in the first Judgment that the pleaded claims in fraud and deceit should be struck out. We have therefore heard no argument on this aspect of the case. But I think the Judge was plainly right. Fraud, as the Judge rightly said, is not itself a separate cause of action; it is a description of behaviour which may be an ingredient in various causes of action. Deceit, by contrast, is a cause of action, but the essence of the tort is that the claimant was deceived by the defendant. That normally requires the claimant to have been taken in by lies told by the defendant, to have acted in reliance on them, and to have suffered damage accordingly. Here, although the original pleading pleaded a number of false representations by HSBC, Mr and Mrs James were not deceived by them, and as the Judge rightly said it is obvious that they did not act in reliance on the representations to their detriment.

57. Second, the argument on appeal, as explained in more detail below, is that the Judge was wrong to find that Mr and Mrs James knew enough to plead fraud in 2013. This is then said to have had the effect of extending the limitation period for the claims sought to be pleaded in the draft amended Particulars of Claim under s. 32 LA 1980 . This section provides, so far as relevant: “ 32 Postponement of limitation period in case of fraud, concealment or mistake (1) Subject to subsections (3), (4A) and (4B) below, where in the case of any action for which a period of limitation is prescribed by this Act , either— (a) the action is based upon the fraud of the defendant; or (b) any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant; or … the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.”

58. It is not disputed that for the purposes of s. 32(1) (a) an “action based upon the fraud of the defendant” does not mean any action in which the defendant is alleged to have acted fraudulently, but only one where fraud is a necessary allegation to establish the cause of action: see Beaman v ARTS [1949] 1 KB 550 , a decision of this Court on s. 26(a) (the corresponding provision) of the Limitation Act 1939 , and Seedo v El Gamal [2023] EWCA Civ 330 , [2023] Ch 473 at [43]. Mr Troup said this was the case with both the constructive trust claim and the restitutionary proprietary claim which he sought to plead, each being in his submission based on the fraud of HSBC. I accept that that is at the lowest arguable. But it is difficult to see that the same is true of the breaches of contract sought to be alleged, none of which is dependent on fraud. They are all framed as breaches of contractual duties, namely only to act on instructions and to exercise reasonable skill and care. As I understood it, Mr Troup was inclined to accept as much.

59. Nor do I think s. 32(1) (b) LA 1980 takes matters any further. A “fact relevant to the plaintiff’s right of action” means a fact without which the cause of action is incomplete: see Johnson v Chief Constable of Surrey (CA, 19 October 1992), AIC Ltd v ITS Testing Services (UK) Ltd, The Kriti Palm [2006] EWCA Civ 1601 , [2007] 1 All ER (Comm) 667 at [323] (Rix LJ), [384] (Nourse LJ) and [453] (Buxton LJ), and Seedo v El Gamal at [77]. Since what is said to have been concealed are various matters which demonstrate that the Loan account was opened and operated fraudulently, none of this would appear to be relevant to the breach of contract claims either.

60. That therefore leaves the constructive trust and proprietary restitutionary claims, which I can take together. The essence of both claims is that when HSBC transferred the £25,000 (and the other smaller sums) from the Joint Premier and Property accounts to the Loan account, the Bank received money belonging to Mr and Mrs James and held, or still holds, such money (or its traceable proceeds) for Mr and Mrs James either as constructive trustee, or on the basis that they remain the owners of it.

61. I think there are real doubts whether any such claim is well founded, leaving aside any question of limitation. I have no problem with the proposition that if A acquires B’s property by fraud, A may hold the property on a constructive trust for B; or with the proposition that if A is in possession of B’s property, B can recover it. But I think there is real difficulty in fitting either proposition to the (alleged) facts of the present case. It is trite law that the relationship between a bank and its customer is, absent some special feature, that of debtor and creditor: see for example Chitty on Contracts (36 th edn, 2026), Vol II, §37-342. If a customer’s bank account is in credit, that simply means that the bank owes the customer money (and vice-versa if the account is overdrawn). So although we talk of having money in the bank, that does not mean that a customer with a credit balance can lay claim to any particular money or other asset held by the bank; what it means is that the customer has a chose in action consisting of the right to claim payment of the credit balance from the bank. All of this is well established and uncontroversial.

62. As Newey LJ pointed out in argument, this means that when HSBC transferred the £25,000 from the Joint Property account to the Loan account, HSBC did not acquire any particular asset from Mr and Mrs James. The effect of the transfer was that HSBC reduced (or claimed to have reduced) the credit balance on the Joint Property account, and hence the amount it owed them (and the value of their chose in action). But it did not mean that there was any specific asset transferred to HSBC, or identifiable in its hands. I think it very doubtful in those circumstances whether there was anything for a constructive trust or restitutionary claim to attach to.

63. But it was conceded before the Judge on the second hearing that it was arguable that a constructive trust could arise on the facts alleged, and no attempt was made to resile from this on this appeal. So we heard no argument on the point, and I will proceed on the assumption that the constructive trust and restitutionary claims would, subject to the question of limitation, have a real prospect of success, despite my doubts about it.

64. Hence it is that the only issue argued before us was whether the Judge was right to conclude that Mr and Mrs James knew enough in 2013 to plead fraud, broken down into the five issues identified above (see paragraph 54). Issue (1) – did the Judge make a mistake in his first Judgment?

65. To explain this issue, it is necessary to consider the 31 July letter from HSBC in more detail. The letter was sent by Ms Julie Glithero, a Customer Services Manager, to Mrs James in answer to the complaint that she and her husband had made (see paragraph 12 above). It consists of 5 pages. These are not numbered but counsel are agreed both what the correct order is and that the copy of the letter before the Judge on the first hearing unfortunately had the pages out of order.

66. If the pages are put into the correct order, the letter can be seen to deal in turn with 3 separate accounts. The first is the Loan account (ending 0807), the second the Joint Premier account (ending 4885), and the third a sole account in the name of Mrs James (ending 4893). On page 1 Ms Glithero refers to the three accounts and says she will deal with them on a case by case basis. On page 2 she deals with the Loan account (0807), and this continues down to the third paragraph on page 3. The rest of page 3 concerns the Joint Premier account (4885), and this continues down to the second paragraph on page 4. The rest of page 4 concerns Mrs James’ sole account (4893). Page 5 then contains some concluding remarks.

67. In the bundle in front of the Judge at the first hearing, however, pages 2 and 3 were transposed so that the order was 1, 3, 2, 4 and 5. The possible significance of this is explained below.

68. As already referred to, on page 3 Ms Glithero first finishes dealing with the Loan account (0807) and then in the fourth paragraph turns to the Joint Premier account (4885) as follows (I have added numbers for ease of reference): “[4] Our records confirm the Joint Bank Account ending 4885 was also referred to MCS, following the instigation of the bank’s Demand procedures…” She then makes certain comments on what copy documents are available for the account, and continues: “[7] In view of your comments surrounding this account (in respect of the recovery actions adopted) I have again liaised with MCS today in order to clarify the events prior to the sale of your account. [8] They have informed me that in the absence of a repayment plan being mutually agreed, the account was forwarded to DG Solicitors on 5 December 2008. Although an arrangement was made whereby payments of £302.00 would be repaid on a monthly basis, following a change in circumstances (unemployment within the household), contact was made to DG Solicitors on 19 December 2008, during which this offer was reduced to £100.00 per month.” When the letter is read in its correct order, it seems to me entirely clear that the account referred to in these paragraphs is the Joint Premier account (4885), not the Loan account.

69. In Mrs James’s witness statement in opposition to HSBC’s application, she commented on the supposed repayment arrangement referred to in paragraph [8] on page 3 of the letter as follows: “The 31 July 2013 letter … also set out details of an allegedly agreed repayment plan which had no relation to our actual circumstances. It recorded an agreement for repayments of £302 per month but then reduced, following “ unemployment within the household ” to £100 a month. I have no idea where this information is supposed to have come from. No such repayment plan had ever been agreed with me, and there was no “ unemployment within the household ”. HSBC said, at this point, that it had no documents in relation to the opening of the loan account…”

70. It will be recalled that in the first Judgment the Judge said, when considering when time started running for limitation purposes, that Mrs James knew three things in 2013. I have set out the relevant passage above (see paragraph 41) but repeat it here for convenience: “In 2013, she knew three things: a) that the loan had been taken out in her name and that she had not received the money; b) that payments (£25k+) had been made from her joint account to the Loan Account and c) that there were representations made about a re-negotiation of the repayment of the plan which she says did not take place. So, there would have appeared to be someone writing down a record of Mrs James behaving in a way that she did not.” The third of these is evidently a reference to what was said in paragraph [8] on page 3 of the 31 July letter, and Mrs James’ evidence in relation to it.

71. Mr Troup’s submission was that the Judge had been misled by the order in which the pages of the letter appeared in the bundle before him into thinking that what was said about the repayment plan had been a reference to a repayment of the Loan account. I am prepared to accept that this is possible, as there is undoubtedly reference to the Loan account at the top of page 2, so someone quickly scanning pages 1, 3 and 2 in that order might have assumed that page 3, including what was said about the repayment plan in paragraph [8], was all dealing with the Loan account.

72. But I do not regard it as at all certain that the Judge did make such a mistake. If one reads the whole of page 3, it seems pretty clear, even if the letter is read in the wrong order, that from paragraph [4] onwards the letter is dealing with the Joint Premier account. And although one has to be a bit cautious about the note of the first Judgment, which was admittedly not verbatim, it is noticeable, as Mr Purchas said, that according to the note, the first two things which the Judge said Mrs James knew expressly refer to the Loan account, but the third does not. The Judge made it clear at the second hearing that he did not have a complete recollection of everything from the first hearing, but what he said in his second Judgment was this: “16. I should note that my judgment at (c) says there were representations made about a renegotiation of the repayment of the plan which he says did not take place. Mrs James, at paragraph 18 of her witness statement herself says no such repayment plan had ever been agreed with her and there was no unemployment within the household. Reference to the plan is simply a reference to the plan as it is referred to both by Mrs James and in the letter. I do not consider that I made a mistake in phrasing matters as I did, although again I appreciate that this was an ex tempore judgment and I am reliant on the helpful note that has been provided.”

73. I think that leaves it rather uncertain whether the Judge did or did not mis-read the 31 July letter at the time of the first hearing, and whether he did or did not assume that the repayment plan related to the Loan account. I do not think the Judge can be criticised for not having any clear recollection of the point. I will proceed on the assumption that he may have made the mistake that Mr Troup ascribed to him, even though, as the Judge himself says, that does not mean that there is any mistake in the way in which he is recorded as having expressed himself in the first Judgment. Sub-issue (2) – Would the alleged mistake have affected the Judge’s conclusion that time started to run in 2013?

74. Here I think the position is clear. The Judge considered this in his second Judgment as follows (at [17]): “I should add that, even if I had considered the matter afresh in the light of Mr Troup’s submissions, I would have come to the same view.”

75. Mr Troup, somewhat faintly, suggested that he should have given more reasons for that conclusion. But I do not think that was necessary. He had already explained that it was plain that it was being asserted that someone had sought to make an arrangement to repay £302 per month, subsequently reduced to £100 per month, and that it was probably the same person who arranged the payment of £25,000 from the Joint account to the Loan account who was responsible. He had said that what he had to decide was “whether those facts justified the satisfaction of section 32 by reference to Sofer and the requirements set out there and I concluded that they did” (second Judgment at [14]). He had also cited from his first Judgment at [46] where he concluded that the facts he had referred to “could not be explicable on the basis of negligence or innocence but more likely fraud, even an ongoing fraud” (see paragraph 42 above).

76. The reference to Sofer is to Sofer v SwissIndependent Trustees SA [2020] EWCA Civ 699 ; and the reference to the requirements there set out is to the judgment of Arnold LJ (with whom Patten and David Richards LJJ agreed) at [23], where he endorsed the following summary of principles governing the pleading of dishonesty which had been provided by counsel: “i) Fraud or dishonesty must be specifically alleged and sufficiently particularised, and will not be sufficiently particularised if the facts alleged are consistent with innocence: Three Rivers District Council v Governor and Company of the Bank of England (No.3) [2003] 2 AC 1 . ii) Dishonesty can be inferred from primary facts, provided that those primary facts are themselves pleaded. There must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must be pleaded: Three Rivers at [186] (Lord Millett). iii) The claimant does not have to plead primary facts which are only consistent with dishonesty. The correct test is whether or not, on the basis of the primary facts pleaded, an inference of dishonesty is more likely than one of innocence or negligence: JSC Bank of Moscow v Kekhman [2015] EWHC 3073 (Comm) at [20]-[23] (Flaux J, as he then was). iv) Particulars of dishonesty must be read as a whole and in context: Walker v Stones [2001] QB 902 at 944B (Sir Christopher Slade).” This should now be read subject to the more recent examination of the question in Persons Identified in Schedule 1 to the Re-Amended Particulars of Claim v Standard Chartered Bank plc [2024] EWCA Civ 674 , [2024] 1 WLR 4589 (see in particular at [47ff] per Newey LJ), but this decision was not available at the time of the Judge’s first Judgment and in any event represents, if anything, a slight relaxation of the requirements for pleading fraud.

77. In these circumstances the Judge’s reasons are sufficiently apparent. Whether the repayment arrangements related to the Loan account or to the Joint account, it remained the case that “there would appear to be someone writing down a record of Mrs James behaving in a way that she did not”, and the Judge evidently considered that this fact, together with the other facts he referred to (the unauthorised opening of the Loan account, and the unauthorised transfer of the £25,000), were sufficient to enable Mrs James to plead fraud since they could not be explicable as negligent or innocent and an inference of fraud was more likely. I do not think he needed to give any fuller reasons than that. Sub-issue (3) – Was that conclusion open to him on the evidence before him?

78. That means the essential question is whether that was a conclusion the Judge was entitled to come to. I will say straightaway that I think it was.

79. Mr Troup submitted that it made all the difference that what was said in the 31 July letter about the repayment plan in fact referred to the Joint account not the Loan account. He said that that did not prove fraud and was consistent with innocence. It was not sufficient to tilt the balance.

80. But I agree with Mr Purchas on this. The significance of the explanation of the repayment arrangements given in the 31 July 2013 letter was not whether they related or not to the Loan account, but that they revealed to Mrs James that there was a record of repayment arrangements being agreed in her name, and then renegotiated in the light of family circumstances, all of which was on her case entirely fictitious. It is indeed very difficult to understand how that could have happened by mistake or innocently. When combined with the unauthorised opening of the Loan account in her name, the drawing down of £49,000, and the transfer of £25,000 and the lesser sums from the Joint accounts, again all unauthorised, I think the Judge was fully entitled to conclude that the more likely explanation was that a fraud had been committed by someone at HSBC, and hence that time started to run in 2013.

81. It follows that the Judge was right not to re-open his first Judgment under the AIC jurisdiction, and I would therefore dismiss the appeal. Lord Justice Singh:

82. I agree. Lord Justice Newey:

83. I also agree.