Home Information Cases Fine Care v Natwest Markets Plc [2020] EWHC 3233 (Ch)

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Fine Care v Natwest Markets Plc [2020] EWHC 3233 (Ch)


The Defendant bank, Natwest Markets Plc, had not acted in breach of duty or made any misrepresentations to the Claimant in the course of the sale of an interest rate collar in July 2007.

Laurie Brock was instructed by Dentons UK and Middle East LLP on behalf of Natwest Markets Plc, led by Edward Levey QC of Fountain Court Chambers.


The Claimant (“Fine Care”), a company engaged in the provision of nursing and care homes, entered into a structured interest rate collar (the “Collar”) with the Defendant (the “Bank”) on 19 July 2007. The Collar had a notional value of £4 million and was for a term of five years, extendable by two years at the option of the Bank.

The economic effect of the Collar was that: (i) Fine Care paid an interest rate on £4 million of between 5.50% and 6.50% to the Bank, depending on where UK Base Rate set each quarter (whilst receiving floating UK Base Rate from the Bank); (ii) if UK Base Rate set above 6.50%, Fine Care would be protected at 6.50% (and would receive a net payment under the Collar from the Bank); but (iii) if UK Base Rate set below 5.50%, Fine Care would make net payments to the Bank under the Collar (which would increase progressively as UK Base Rate fell).

Following the financial crisis in 2008, UK Base Rate fell to (and remained at) historically low levels, with the consequence that Fine Care was required to make significant net payments to the Bank under the Collar.

Fine Care alleged that the Bank “mis-sold” the Collar to it, alleging in summary that: (i) the Bank had assumed a responsibility to advise Fine Care and had breached an advisory duty of care which it thereby owed to Fine Care; (ii) the Bank had made negligent mis-statements to Fine Care; and/or (iii) the Bank had made misrepresentations to Fine Care. 


Bacon J dismissed the claim.

As a matter of context, Bacon J rejected Fine Care’s complaint that it was “over-hedged” under the Collar because, at the time the Collar was entered into, it had borrowing with the Bank of approximately £1 million (whereas the Collar was for a notional of £4 million). The discussions between Fine Care’s controlling director (Hassan Somani) and the Bank leading up to the Collar had concerned not only the existing (and anticipated future) borrowing of Fine Care but also the borrowing of £4 million of another company controlled by Mr Somani (Somani Hotels Limited), which, at the material time, was with Allied Irish Bank but which, it was anticipated, would shortly be (and which subsequently was) refinanced with the Bank. The Collar was intended as hedging protection for both Fine Care and Somani Hotels, it being envisaged (at the time the Collar was entered into) that at least part of the Collar would be novated to Somani Hotels Ltd in due course.

On the facts, the Bank had not assumed an advisory duty of care in relation to the Collar. The relevant documentation made clear that, ostensibly, the Bank was acting in a non-advisory role. Whilst the Bank’s salesperson had provided explanations as to the benefits (and risks) of hedging generally and of various hedging products, he had not “steered” Mr Somani towards the Collar, still less advised him to enter into that specific product. Mr Somani had not been as unsophisticated as Fine Care had suggested and had well understood that hedging products carried risks as well as benefits.

Any doubt on this question was resolved by the Bank’s Terms of Business, which expressly provided that the relationship was non-advisory. Whilst Fine Care alleged that the Bank’s Terms of Business were unreasonable (for the purposes of the Unfair Contract Terms Act 1977 and the Conduct of Business Rules), relying on the decision of the Court of Appeal in First Tower Trustees v CDS [2019] 1 WLR 637, the clauses in question were of a different nature from those under consideration in First Tower (in that they simply defined the Bank’s primary rights and obligations), were therefore not subject to a test of reasonableness, and were, in any event, reasonable.

In any event, Fine Care’s two specific allegations of breach of advisory duty of care (which also formed the basis for its claims in breach of contract, negligent mis-statement and misrepresentation) failed on the facts:

(1)  Whilst Fine Care alleged that the Bank had failed to inform it that the Collar would prevent it from borrowing further money and/or would impede its further development plans, there was no evidence that the Collar had done so: although Fine Care alleged that the Collar had “killed off” a further development loan of £2.4m, the evidence showed that the Bank had remained willing to advance that loan in 2008 and 2010 (after the Collar had been entered into and UK Base Rate had fallen), albeit on slightly different terms which reflected changes in the market and the Bank’s development funding criteria. Nor was it inevitable, at the time that the Collar was entered into in July 2007, that the Collar would prevent Fine Care from refinancing with another bank; the difficulties which Fine Care later encountered in this regard were as a result of the unprecedented later drop in interest rates, which no-one had (nor could have) foreseen.

(2) Whilst the Bank accepted that its salesperson had told Fine Care that the Collar (or part of it) could be novated to different entities controlled by Mr Somani if those entities wished to accept such a novation, that representation had been correct. The Bank had not given advice or made any representation that such entities would definitely be willing to accept such a novation in future. Although, ultimately, no novation of the Collar had taken place, that had not been because the Bank blocked such a novation and/or required additional security for it to happen (on the contrary, by 2010 the Bank positively wanted the novation to happen). Rather, it had been because, at least by 2010, the Collar was significantly “out of the money” and therefore the other “Somani” entities had not been willing for it to be novated to them.

A link to the judgment can be found here.

Chancery Division
Mrs Justice Bacon
Judgment date
27 November 2020
[2020] EWHC 3233 (Ch)