Primary Group (UK) Ltd & Ors v The Royal Bank of Scotland Plc & Anor, Court of Appeal - Chancery Division, April 11, 2014, [2014] EWHC 1082 (Ch)

Resolution Date:April 11, 2014
Issuing Organization:Chancery Division
Actores:Primary Group (UK) Ltd & Ors v The Royal Bank of Scotland Plc & Anor

Neutral Citation Number: [2014] EWHC 1082 (Ch)

Case No: HC12B02711



Royal Courts of Justice

Rolls Building, Fetter Lane, London, EC4A 1NLL

Date: 11 April 2014

Before :


- - - - - - - - - - - - - - - - - - - - -

Between :

- - - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - - - - - -

Alain Choo-Choy QC and Michael Fealy (instructed by Quinn Emanuel Urquhart & Sullivan LLP) for the Claimants

Charles Hollander QC and Edward Brown (instructed by Addleshaw Goddard LLP) for the First Defendant

Stephen Rubin QC and Matthew Parker (instructed by Reynolds Porter Chamberlain LLP) for the Second Defendant

Hearing dates: 18-20, 24-27 March, 1-2 April 2014

- - - - - - - - - - - - - - - - - - - - -



Topic Paragraphs

Introduction 1

The witnesses 2-19

Primary's witnesses 2-7

RBS' witnesses 8-14

Direct Line's witnesses 15-19

Approach to fact finding 20-21

Missing witnesses 22-23

The facts 24-173

Primary's claim against RBS 174-205

The law 175-184

Incorporation of contractual terms 176

Contractual interpretation 177

Implication of terms 178

Collateral assurances 179

The banker's duty of confidentiality 180

Assessment of damages for breach of confidence 181-184

Assessment 185-205

Implied obligation of confidence 186

Incorporation of the 2005 Terms & Conditions 187

Construction of the 2005 Terms & Conditions 188

Application of the SLF 189

Was RBS entitled to disclose the Medway reports to Direct Line 190-192

absent the assurances?

Should there be an inquiry as to damages? 193-205

Primary's claim against Direct Line 206-260

The law 207-250

The elements of an equitable claim 207-208

The necessary quality of confidence 209

Circumstances importing an obligation of confidence 210-235

The scope of an equitable obligation of confidence 236-237

Obligations in respect of third party information 238-240

Unauthorised use 241-245

Without lawful excuse 246-247

Liability for breach of an equitable obligation of confidence 248-250

Assessment 251-260

Applying a subjective test 255-257

Applying an objective test 258-260

Overall conclusions 261-262


  1. The Second Claimant (``Primary Group'') is the parent company of a group which has carried on business in the non-life insurance industry since 1997. The First Claimant (``Primary UK'') is a wholly-owned subsidiary of Primary Group. From 1997 to 2007 the First Defendant (``RBS'') provided banking services to the Claimants (collectively, ``Primary''). At the times that are relevant to this dispute, both RBS and the Second Defendant (``Direct Line''), then called The Royal Bank of Scotland Insurance Ltd (frequently referred to in the contemporaneous documents as ``RBSI''), were subsidiaries of The Royal Bank of Scotland Group plc (``RBS Group''), but Direct Line is no longer a subsidiary. Direct Line was a competitor to three subsidiaries of Primary UK including GBI (Holdings) Ltd which traded as Swiftcover (``Swiftcover''). Primary contend that, when Primary expressed concern about this, RBS assured them of confidentiality. On 17 January 2006 Primary UK entered into a Senior Facilities Agreement with RBS (``the SLF''), which contained a number of covenants by Primary UK. Primary UK was soon in breach of two of those covenants. This led to RBS taking various steps, including instructing KPMG LLP to prepare reports on Primary's financial position referred to as ``the Medway reports''. It is common ground that RBS disclosed copies of the Medway reports to at least one individual in Direct Line without seeking or obtaining Primary's consent and that that individual used the Medway reports at least for the purposes of advising RBS. Primary contend that this constituted an actionable breach of confidence by both RBS and Direct Line. Primary also contend that their information was disclosed more widely and that it was used for Direct Line's own purposes. RBS and Direct Line both deny committing any breach of confidence. In the alternative, RBS and Direct Line contend that any breach sounds only in nominal damages.

    The witnesses

    Primary's witnesses

  2. Philip James is a founding director and the majority shareholder of Primary Group. He was a claimant in these proceedings, alleging that RBS had disclosed his personal asset schedule to Direct Line, but that claim was abandoned at the beginning of the trial. Mr James clearly feels strongly that Primary was badly treated by RBS, specifically RBS's Special Lending Services (``SLS'') division. Furthermore, he was very keen to ensure that he presented his side of the story as fully as possible. Yet further, some aspects of his evidence are difficult to reconcile with the documentary record. Counsel for RBS submitted that Mr James was ``a thoroughly unreliable and partisan witness''. I think this goes too far, in particular in so far as it suggests that Mr James was deliberately untruthful. Furthermore, I do not accept some of the criticisms which counsel made of Mr James' evidence. For example, counsel criticised Mr James for referring to his payment of £10 million to Primary (as to which, see below) as an ``injection'' of money, but that is how it was referred to by RBS in several contemporaneous documents. Nevertheless I agree that Mr James was not a very reliable witness, and I have therefore treated his evidence with caution. As will appear, however, on the point that matters most, I have concluded that I accept his evidence.

  3. Lord Carter of Coles has been the Chairman and a non-executive director of Primary UK since 1999. He was a member of its audit and remuneration committee from 2002 to 2007 and was chairman of the special committee described below from 2006 to 2007. He has held a number of commercial positions, and has had a distinguished career in public life which has included chairing a number of government reviews. Lord Carter was a very clear and direct witness.

  4. Dr Margaret Downes was a non-executive director of Primary UK from 2002 to 2007 and non-executive Chairman of Primary Insurance Co Ltd (``PICL'') from 2002 to 2009. She was formerly a partner of Coopers & Lybrand Ireland, President of the Institute of Chartered Accountants in Ireland and a non-executive director and Deputy Governor of the Bank of Ireland. Dr Downes was another very clear and direct witness.

  5. Susan Bradbury was a finance director for various entities within RBS Group from 1994 to 2004. During this period she was finance director for UK Insurance Ltd (``UKI''), which was part of the Direct Line Insurance Division, when it acquired Churchill Insurance Co Ltd (``Churchill'') and when it sold an insurance portfolio to UK Underwriting Ltd (``UKU''), a subsidiary of Primary UK. In October 2004 she left RBS Group and joined Primary. Shortly afterwards, she was appointed as Chief Financial Officer. She was a director of Primary UK and an officer of Primary Group. She is presently working for a new insurance start-up. Ms Bradbury struck me as a very capable person and as a good witness.

  6. Andrew Blowers started his career in the insurance industry in 1989. From 2001 to 2003 he was Executive Director of Sales and Marketing for Churchill. He left the company when it was acquired by RBS Group. Shortly afterwards, he and a group of colleagues established GBI (Holdings) Ltd, which traded as Swiftcover, and Mr Blowers became the Chief Executive Officer. Swiftcover was a subsidiary of Primary UK until it was sold to Axa. Mr Blowers is currently Chairman and a non-executive director of Qmetric Group Ltd. He was a straightforward witness.

  7. Alastair Murray is a chartered accountant and a director of Primary UK and Primary Group. He was a straightforward witness.

    RBS's witnesses

  8. Nicola Baker worked for GE Capital in mergers and acquisitions and private equity for several years before joining RBS's SLS division from 2003 to 2007. She is now Executive Director in RBS's Capital Resolution division. She was rather defensive in her manner, and appeared uncomfortable at points in her evidence.

  9. Michael Birch worked for Barclays Bank from 1989 to 2002. He was employed by RBS's SLS division from 2002 to 2011. He is now Lead Business Analyst with the Pensions Regulator. On the whole, he was a clear and careful witness; but he too exhibited some discomfort at certain points in his evidence.

  10. Richard Kerton started working for RBS in 1987 and joined the Insurance Team in 1999. In 2005 he was appointed to lead a Transaction Team in the Financial Institutions Group (FIG). He was Primary's relationship manager from mid 2004 to July 2005. He is now Managing Director of the Financial Institutions Structured Finance Team at RBS. He was a straightforward witness.

  11. Roland Stumpf worked for Barclays Bank in various roles from 1989 to 200. He then joined Chubb Insurance as a senior underwriter. He joined RBS's Insurance Team, which was a specialised unit within FIG, on 18 July 2005 and became Primary's relationship manager. He is presently Director in the Commercial Banking group at Coutts Bank, a subsidiary of RBS Group. He was a straightforward witness.

  12. Derek Sach joined RBS to set up SLS in 1992. He was in 2005-2007, and remains, Head of SLS, which has since been re-named Global Restructuring Group. He was a clear and direct witness.

  13. Christopher Dewis obtained a degree in Commerce (with a major in Accounting and Finance) from the University of Tasmania, after which he was employed as a financial analyst by the Department of State Development from January 1989 to October 2002. From October 2002 to July 2004 he worked for Australian and New Zealand Banking Group. He joined RBS as a Regulatory Risk...

To continue reading