Playboy Club London Ltd v Banca Nazionale Del Lavoro Spa [2018] EWCA Civ 2025 (12 September 2018)

The Playboy Club sought to bring a deceit claim against BNL after losing a negligence claim concerning a fraudulent credit reference provided by a bank employee. The Court of Appeal held it was not an abuse of process to bring the separate deceit claim, as significant new evidence emerged during the negligence trial.

Facts

The appellant, Playboy Club London Limited (‘the Club’), operated a casino offering cheque cashing facilities to customers subject to satisfactory bank references. In October 2010, a customer named Mr Hassan Barakat sought to use this facility. Burlington, a company associated with the Club, obtained a credit reference from Banca Nazionale Del Lavoro SpA (‘BNL’) purportedly signed by Ms Paola Guidetti, a BNL employee. The reference stated Mr Barakat was creditworthy up to £1,600,000 per week.

Relying on this reference, the Club granted Mr Barakat a cheque cashing facility. He drew cheques totalling approximately £1.25 million equivalent in Euros, purchased gaming chips, and departed with £427,400. The cheques were subsequently returned unpaid as forgeries. Mr Barakat disappeared and could not be traced.

Procedural History

The Club initially brought a negligence claim against BNL in March 2013. At trial before HHJ Mackie QC, the Club succeeded. However, on appeal, the Court of Appeal held that BNL owed no duty of care to the Club, as the credit reference had been addressed to Burlington, not the Club. This decision was subsequently confirmed by the Supreme Court.

During the negligence trial, significant new evidence emerged in cross-examination of BNL’s witness, Mr Turlon. It was revealed that Ms Guidetti had been dismissed by BNL for dishonesty in another transaction where she had falsely denied her signature on bank drafts. The Club also later obtained evidence suggesting Ms Guidetti had been involved in a similar fraud against another London casino, Les Ambassadeurs, in summer 2010.

In April 2016, the Club commenced separate proceedings alleging deceit. BNL applied to strike out this claim as an abuse of process, contending the Club could and should have brought the deceit claim alongside the original negligence claim. HHJ Bird granted the strike-out application.

Issues

The central issue was whether it was an abuse of process for the Club to bring its deceit claim in separate proceedings after having pursued and lost its negligence claim.

Key Legal Questions

• Whether the Club could and should have pleaded deceit before the trial of the negligence claim
• Whether new evidence emerging at and after trial justified bringing separate proceedings
• The application of the Henderson v Henderson abuse of process doctrine

Judgment

The Court of Appeal (Lord Justice Sales, with Lady Justice Gloster agreeing) allowed the appeal and held that the Club’s deceit claim was not an abuse of process.

The Applicable Legal Principles

The court applied the principles from Johnson v Gore-Wood & Co Ltd [2002] 1 AC 1, which requires a broad, merits-based judgment taking account of public and private interests. Lord Justice Sales emphasised that while claims could have been raised in earlier proceedings, this does not mean they should have been raised, such as to render later proceedings necessarily abusive.

Reasons for Allowing the Appeal

Lord Justice Sales explained that although a deceit claim could have been introduced alongside the negligence claim, it was not incumbent upon the Club to do so. He noted the serious nature of pleading fraud and the particular caution required when making such allegations against a bank employee, given the reputational consequences for both the individual and the institution.

Significantly, the court found that the new evidence from Mr Turlon’s cross-examination and regarding the Les Ambassadeurs incident was highly material. This evidence demonstrated that Ms Guidetti had previously lied to her employer about the genuineness of her signature on official bank documents, suggesting dishonesty. The court considered this strengthened the Club’s deceit case considerably.

Lord Justice Sales stated that it would be unfair to preclude the Club from bringing its deceit claim based on significant new material not previously available. He noted the distinction between cases of fraud and dishonesty on one hand, and negligence and incompetence on the other, observing that the issue of deceit had not previously been decided between the parties.

Implications

This decision clarifies the application of abuse of process principles where new evidence emerges that materially strengthens a claim in fraud or deceit. It confirms that:

• Parties are not obliged to plead speculative fraud claims alongside stronger claims in negligence
• The emergence of significant new evidence after trial may justify bringing separate proceedings
• Courts will not lightly shut out parties from pursuing genuine claims unless abuse of process is clearly established
• The burden lies on the party alleging abuse to demonstrate manifest unfairness

The judgment reinforces the principle that pleading fraud requires careful consideration and solid evidential foundation, and that legitimate caution in this regard will not necessarily preclude later proceedings when stronger evidence becomes available.

Verdict: Appeal allowed. The Club's deceit claim was not an abuse of process and should be permitted to proceed to trial.

Source: Playboy Club London Ltd v Banca Nazionale Del Lavoro Spa [2018] EWCA Civ 2025 (12 September 2018)