UK: Finance Litigation Briefing - September 2017

Last Updated: 15 September 2017
Article by Turon Miah and Ian Weatherall

Single signature bank mandate binding on partnership

The High Court has recently considered whether a one signature bank mandate was sufficient to bind a partnership to various loan agreements.

In Kotak v Kotak & Royal Bank of Scotland PLC (Third Party) and anor, the third party proceedings against the Royal Bank of Scotland PLC (the Bank), arose out of a partnership dispute between the claimant and defendant brothers. The defendant's claim against the Bank sought declarations that a number of loans entered into between the partnership and the Bank (or its predecessor in title) between 2004 and 2010 were not binding on the partnership.

The partnership had provided a bank mandate in 1997 which provided that the signature of one of the two partners constituted sufficient authority to the Bank to 'pay cheques ... accept other written instructions to make payments by any means ... and for all other purposes ...' The mandate also included an indemnity from the two partners to the Bank for 'any overdraft caused or increased...or for any other purpose'.

The defendant alleged his signature on the relevant loan agreements had been forged. He also alleged that in signing the agreements, the claimant had not been carrying on in the usual way of business carried on by the partnership (property development and buying and letting of commercial property). Therefore, the agreements were not entered into with the apparent authority of the partnership pursuant to s5 of the Partnership Act 1890 (s5 PA).

For the purposes of the claim against the Bank, it was assumed that only the claimant had signed the loan agreements. The defendant argued that:

  • as the loan agreements contained a signature section which provided that it be signed by all the partners as principals, no other mode of acceptance was available. The Bank had intended that, notwithstanding the single signature mandate or the actual or ostensible authority that an individual partner might have pursuant to s5 PA, both partners had to sign for the agreements to be binding; and
  • the authority of the single signatory on the mandate was limited to the everyday operations of the partnership's bank account, such as payments out from those accounts, and was never intended to extend to loans.

The High Court held that there was no legal requirement that a loan agreement could only arise under a signed contract. It was not a pre-condition of the loan agreements, as opposed to the advance of the funds provided for by them, that they should only come into existence when signed. Construing the terms of the loan objectively, the court found that the Bank had intended to lend to the claimant and defendant acting in partnership, not to them individually. The signatory provisions in the loan agreements did not mean that they could only bind when signed by both partners. It would have been contrary to the Bank's own common sense business interests to deprive itself of the protection afforded by s5 PA, or the single signature bank mandate, to impose such a requirement.

As to the ambit of authority and indemnity under the mandate, the words 'for all other purposes' or 'for any other purposes' would be redundant if it did not cover all purposes relating to the ordinary banking relationship between the Bank and the partnership and, again, that could not have been the intention of the parties when they entered into the mandate. Entering into a loan agreement fell squarely within the ambit of an ordinary banking relationship and so was within the ambit of the mandate. The scope of the mandate was sufficient to bind the partnership and both the claimant and defendant to the loan agreements, irrespective of any question of forgery or actual authority. The ostensible authority arising from the mandate was sufficient to bind the partnership and the third party claim against the Bank was dismissed.

Things to consider

The construction of the wording of the mandate made commercial common sense as it gave rise to, and enabled, a simple and straightforward working relationship to exist between the Bank and its customer. The loan agreements were usual to the kind of business carried on by the partnership and so binding on it.

Bankrupt's estate did not re-vest in bankrupt after discharge

In Evans and Fox v Carter, the issue before the court was where the benefit of an interest in property which formed part of the bankrupt's estate, but which arose only after the bankrupt was discharged, vested. Did it vest in the trustees in bankruptcy (TIB) or in the discharged bankrupt?

Prior to her bankruptcy, a bank obtained a possession order over the defendant's and her husband's property. The defendant appealed the possession order alleging the charge had been obtained through her husband's undue influence over her (the Appeal). The defendant was made bankrupt before the Appeal took place. Her solicitors sought confirmation from Evans and Fox (the defendant's TIB), that they could continue to act on the Appeal for the defendant, notwithstanding that her interest in the property had vested in the TIB.

Following her discharge from bankruptcy, the defendant succeeded on the Appeal. The bank charge was set aside as against her. The defendant contended that as the Appeal had been successful after her discharge, her half share of the property did not fall within the bankruptcy estate but was, in effect, after acquired property. The TIB did not agree - the defendant's interest in the property was vested in her at the time of the bankruptcy and so in them thereafter, and their interest in it had not changed as a result of the possession order being set aside. The TIB sought a declaration as to their interest in the property.

At first instance the district judge found that the TIB had not made it clear in correspondence with the defendant that they would retain the benefit of the Appeal if successful. He found that the defendant would not have continued the Appeal if she had not believed she would benefit personally from her action. The district judge held the interest had re-vested in the defendant by reason of the unjust enrichment that would otherwise occur.

The TIB successfully appealed that decision. The High Court held the question was whether the TIB should have known that the defendant was pursuing the Appeal because she expected to benefit personally from its success. There was no evidence that they had such knowledge, especially given the acknowledgment from her solicitor that her interest in the property was part of the bankruptcy estate. There was nothing in the correspondence making it clear that the defendant expected her former interest in the property, which had vested in the TIB on her bankruptcy, to revert to her if she succeeded on the Appeal.

It was not unjust for the TIB to retain the benefit of the successful action for the benefit of all the defendant's creditors. However, it would be manifestly unjust not to give the defendant credit for her unrecovered legal costs and time spent pursuing the claim.

Things to consider

The defendant's solicitor's acknowledgment when seeking permission to continue to act for her that her interest in the property was part of the bankruptcy estate was fatal to her argument. However, to decide otherwise would be unjust to the defendant's creditors as a whole.

Judge erred in analysis of evidence of mortgage payments

In Landmark Mortgages Ltd v Bamrah (PR for the estate of Bamrah) and anor, the High Court found the judge at first instance had fallen into error in her analysis of the evidence relating to alleged payments made by the defendant to the claimant.

The claimant's predecessor in title provided a re-mortgage to Mr Bamrah in the sum of £200,000. Under the terms of the re-mortgage, the accumulated debt thereunder fell due immediately upon Mr Bamrah's death. That sum was not repaid following his death and the claimant started possession proceedings. The defendants defended on the basis that Mrs Bamrah had an overriding interest in the property but lost on that point. The point under appeal was in relation to the amount of judgment awarded to the claimant.

The debt outstanding was £355,475 but the judge granted judgment for only £200,000 being the amount of the original loan. The judge rejected the accuracy of the claimant's computerised records on the basis of her interpretation of a paragraph in one of the claimant's witness statements. She took that evidence as conceding that three cheque stubs produced by the defendant showed payments had been made to the claimant. However, as those three payments, totalling £1,500, were not reflected in the claimant's records, the judge held, as a result, they could not be relied on as being accurate. She considered it appropriate to slash the claim down to the capital sum originally advanced.

On appeal, the High Court held the judge had erred. The three cheque stubs in question were part of nine cheque stubs exhibited to the witness statement and referred to as 'various payment stubs provided by' the defendant. The statement acknowledged that a number of payments had been made intermittently up to July 2012. Six of those nine cheque stubs showed the payee as the claimant, were dated before July 2012 and were shown in the claimant's computerised records as having been received and credited to the account. Of the three stubs in question, two were dated after July 2012, one was not dated at all, all three referred to Mrs Bamrah as the payee and none of them were reflected in the claimant's computerised records.

The High Court held that the witness statement did not concede that any payments had been made after July 2012, just up to July 2012, and that was entirely consistent with the dates, or lack of a date, on the three controversial stubs. The witness had not said that all the cheque stubs reflected payments that had been made and had not conceded that the three cheques had been paid to the claimant.

Although the defendants had disclosed some of her bank statements which showed payments being made, and which were entirely accurately reflected in the claimant's transaction statement, she had not disclosed bank statements for the relevant period relating to the three cheque stubs either at trial or on appeal. Those statements would have helped resolve the question.

There was no evidence on which the first instance judge could have properly concluded that the three cheque stubs related to payments to the claimant. The appeal was allowed. Judgment in the full sum of £355,475 was given along with an order for possession of the property, there being no evidence that the defendants could afford to pay that sum within a reasonable time, or at all.

Things to consider

It would appear from the judgment that the judge at first instance failed to understand the significant fact that the three cheque stubs did not name the claimant as payee or record anything as attributing the payments to the mortgage. It is easy to say with hindsight that if the witness statement had spelled this out, the court at first instance would perhaps have concluded differently.

Delivering a claim form by way of information only does not equate to good service

The High Court has recently refused to validate retrospectively service of a claim form on a defendant's solicitors where the claim form was sent to them 'for information'.

In Caretech Community Services Ltd v (1) Oakden, (2) Allcare Community Care Services Ltd and (3) Berry, the claimant had attempted to serve the claim form on Berry by way of a process server delivering it to her home. The claimant had also sent a copy of the claim form by post and email to solicitors advising Berry. The accompanying letter stated that the claim form was sent to them 'for information' and no response pack was included. Those solicitors were not on the record as acting for Berry and were not authorised to accept service.

At a previous hearing, the court rejected the claimant's evidence that Berry had been served with the proceedings. The claimant therefore sought retrospective validation of service of the claim form by an alternative method i.e. on the solicitors, pursuant to Civil Procedure Rules 6.15(2) (CPR 6.15(2)).

Berry argued that there could only be retrospective validation under CPR 6.15(2) where there had been mis-service, i.e. an attempt to serve had gone wrong, and not where there had been non-service in the sense of a complete failure to deliver the claim form - which was the position in her case. Berry argued that CPR 6.15(2) allowed retrospective validation of service by an alternative method or at an alternative place, not both together and there was no good reason to make an order as required by CPR 6.15(1).

The High Court held that it was unhelpful to divide cases into those of mis-service or non-service as the court had the power to validate service retrospectively where there had been errors as to method and place.

While it was a necessary condition of granting relief that the claim form had come to a defendant's notice, that did not, without more, constitute a good reason to make an order under CPR 6.15(2).

Berry had received notice of the claim form before the period of its validity for service expired. However, her solicitors were not authorised to accept service and only a copy, not the original, had been sent to them. Crucially, the claim form had been delivered to the solicitors expressly on the basis of 'for information', and not by way of service. That being the case, and the steps having been taken expressly not for the purpose of service, relief was not available under CPR 6.15(2). For the court to hold otherwise would introduce uncertainty into the rules.

If that was wrong, the court held that there was no good reason in this case to exercise its discretion under CPR 6.15(1), to allow documents delivered on the express basis that they were not being served, to be retrospectively validated as good service.

In addition, the claimant had known about the dispute as to service before the expiry of the claim form, had known Berry's address for service and could have served the claim form by post at any time before its expiry but had failed to take steps to do so.

Things to consider

Once again, this judgment shows the court's rigorous approach to applications for indulgence where there has been a failure to observe the rules for service of a claim form. The four month period for service within the jurisdiction is perceived to be a generous time limit and the courts will not grant relief where no obstacles stood in the way of service.

In case you missed it:

Risk of challenge to fees charged in finance agreements

A recent case concerning a receivables finance arrangement has the potential to affect the extent to which lenders can charge fees and expenses to their clients.

Anyone wishing to understand and mitigate the risks arising from this decision, can read on to find out more from our Banking and Finance experts.

Insolvency Litigation: recent cases and issues - August 2017

The Court of Appeal has confirmed that a term could not be implied into a conditional fee agreement between a liquidator and solicitors, and that the solicitors would only be paid out of recoveries made. However, the liquidator was not liable for the fees because of a common understanding between the parties. We cover this, and other issues affecting the insolvency and fraud industry, in our regular update.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
7 Nov 2019, Seminar, Birmingham, UK

Providing content specifically tailored to the needs of GCs and Heads of Legal working in government organisations and their affiliates.

14 Nov 2019, Seminar, London, UK

Providing content specifically tailored to the needs of GCs and Heads of Legal working in government organisations and their affiliates.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions