Holmcroft Properties Judicial Review decision

The decision goes against Holmcroft but the duty of care argument is strengthened and the decison will be appealed

We have now just heard the judgement on Holmcroft that is best summarised by the leading Partner from Mischon de Reya James Oldnall:

Commenting on today's decision, James Oldnall, the lawyer at Mishcon de Reya who led the case for Holmcroft properties said: "Whilst naturally we are disappointed with today's decision, there are two aspects of the judgment that are surprisingly encouraging. The first is how finely balanced the decision appears to have been with regards KMPG's role as independent reviewer in the compensation process, and whether it was playing a public function. We always knew that it was a bold move to make an application for judicial review, and the fact that the hearing was granted at all was unexpected to many. Today's judgment makes it clear that this point is not clear cut [judgment paras 38, 39, 41 - below]. We believe it offers very credible grounds for appeal and will be making an application to do so.

"The second encouraging part of the judgment is that it quite explicitly indicates that there is value in pursuing an alternative legal route to securing compensation for affected businesses, focusing on the issue of breach of duty [judgment para 50, below]. This bodes very well for the Group Litigation action that we have commenced in this regard, which is generating significant interest that today's clarification on Holmcroft will only increase.

"So, whilst it is a shame that our client must continue to fight for fair compensation for his losses, this is by no means the end of the road."

Judgment references
Para 38: We have not found this question to be easy to resolve but ultimately we consider that KPMG's duties do not have sufficient public law flavour to render it amenable to judicial review. We reach this conclusion for a number of interrelated reasons, although there are certainly pointers in favour of amenability.

Para 39: In our view there is some artificiality in treating KPMG as merely assisting Barclays in its compliance obligations, as occasionally happens in the ordinary course of affairs. This was more than a mere private arrangement and the Bank would never have conferred the veto power upon KPMG unless required to do so by the FCA as part of its regulatory functions. Moreover, Barclays did not have a free hand in the appointment; it had to be approved by the regulator. The voluntary arrangement was coupled with the reporting requirements which were imposed by statute. KPMG was undertaking its duties both for Barclays and for the FCA so as to assist the latter in the effective performance of its regulatory functions.

Para 41: Notwithstanding these powerful pointers in favour of amenability, we have finally concluded, not without some hesitation, that the public element is not sufficiently strong

Para 50: Having said that, if it were to be established that either of these rights do exist – and in particular if there is a contractual remedy directly against Barclays – they would certainly be more appropriate remedies to pursue

The Judgement can be downloaded from here

Guto Bebb, MP for Aberconwy and Chairman and Founder of the APPG on Interest Rate Swap Mis-Selling, has previously called for a new investigation into how the banks performed and behaved during the compensation process. On today's decision, he said:

"This decision further illustrates the failures of the FCA's review into the behaviour of the banks. Some 18,000 rate swap products were mis-sold, to unsophisticated customers who remain unable to claim appropriate compensation for their losses. There is a real risk that if this case is concluded here, the banks will take it as permission to return to the unsavoury practices that caused so much damage to so many small businesses. This decision must be appealed so that banks remain under the scrutiny of the law, and businesses are able to continue their fight for justice."

it is clear from this result and the recent settlement between RBS and Crestsign that removes the appeal scheduled for April that the options for those who are still seeking fair redress are now narrowing down as rapidly as the closure of the FCA review.

In publicising this far from negative result I would draw your attention once more to the funded Group Acton that is referred to in the narrative above that can be found at: http://www.mishcon.com/missold_irhp

This offers claimants a second opinion on their legal position and the strength of the associated claim for the reasonable price of £2,000 (+VAT) as well as providing the gateway into the group action.

Once part of the group action the ongoing cost will be covered by the funder Therium.

If you have not accepted the banks offer then please act now to enable Mishcon to assess your case and then to act to preserve your positon.

For further information either contact Miscon de Reya on 020 3321 7000 or myself Adrian Maurice on 01732 862522

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