NatWest wins claim over swaps sold to Glasgow property investors

A High Court judge has dismissed claims that a Glasgow chiropractic clinic with a significant property portfolio has been forced into insolvency due to mis-selling and conspiracy at RBS. RBS’s Global Restructuring Group has been the target of a string of claims and a regulatory investigation. As a result, the bank has put aside £400m to compensate customers. However, in a ruling handed down today, Mr Justice Jacobs ruled that, in this case, the claimants hadn’t managed to establish the bank’s liability. The case was brought by Australian chiropractor Clayton Perks, his wife and business associates. Through a company and partnership, the claimants ran chiropractic practices and bought properties in Glasgow and other cities to be used as investments and clinics. By 2006, the claimants had 16 properties, funded by loans from RBS. In 2007, they bought an interest rate hedging product, in the form of a swap, from RBS. The product was designed to protect them from a rise in interest rates, which could leave them exposed owing to the size of their debts. This is a strategy that, according to the ruling, may have worked had it not been for the financial collapse of 2008-9. In response to the crisis, the Bank of England slashed interest rates from 5% to 0.5%, an all-time low, leaving the claimants on the wrong end of the swap. According to the claimants, it left them owing £8,000 a month, of £100,000 a year. Then, in 2009, the claimants took on another swap from RBS based on LIBOR, rather than the base rate, and RBS moved the business over to the Global Restructuring Group, which dealt with debts. The 2009 swap failed to solve their problems, and the business went though further restructuring in 2011. The claimants argued that the first swap was mis-sold and the second swap was forced on them. The case went to trial earlier this year. In his ruling, the judge said that Dr Perks was an “unsatisfactory witness” who made speeches instead of answering straight questions. The judge also said that the witnesses recollections were clouded by the passage of time. He said that there “is no evidence whatsoever” that the business was transferred to the Global Restructuring Group because of “an ulterior motive on the part of RBS”. He said there were “genuine and indeed compelling business reasons” for the action. In fact, he said, the named individuals at RBS “acted with integrity and that there is no substance in the case of conspiracy”, he ruled. CJ and LK Perks Partnership (2) Clayton John Perks (3) Leanne Kay Perks v NatWest Markets Plc (Formerly the Royal Bank of Scotland Plc) QBD (Mr Justice Jacobs) 29 March 2022 Photo © Shutterstock