Morley v The Royal Bank of Scotland plc

Morley v The Royal Bank of Scotland plc [2021] EWCA Civ 338

The claimant borrower defaulted on a financial agreement, totaling £75m.  Both parties agreed that a considerable chunk of £10m would be ‘written off’ by a number of properties being transferred to the defendant lender.  The rest of the properties would remain with the defendant but at a payment of £20.5m to the claimant. 

The claimant borrower brought a claim for breach of duty; failure to provide banking services with reasonable skill and care, intimidation and economic duress based on a threat of appointment of receivers if no agreement was reached to transfer a portion of the properties to the claimant.  The court found that there was no threat as it was not a threat to perform an unlawful act.  The defendant appealed.

On appeal, the court held that the threat must be to coerce the claimant to take the action in question.  Coercion is an essential ingredient in economic duress, whether the action is lawful or unlawful.  The court did not find that the claimant had been coerced, therefore, a vital part of their claim was missing.  The court also found that the service provided was to make funds available for drawdown, which the court found the defendant lender had complied with.  The idea that the receivers were agents of the claimant and that they owed a duty to him was dismissed and in any event, no breach was found. 

The claimant’s appeal was dismissed.

Intimidation and coercion are serious actions and therefore, should be clearly distinguishable from the normal day-to-day commercial negotiations.