On 26 February 2021, Mr Justice Waksman gave judgment on a long-running claim for fraudulent misrepresentation brought by PCP Capital Partners LLP and PCP International Finance Ltd (“PCP”) against Barclays Bank Plc. Waksman J dismissed the claim on the grounds that PCP had failed to establish that it had suffered any loss as a result of the events complained about.
The claim stemmed from a capital raising carried out by Barclays in October/November 2008, at the height of the global financial crisis. Barclays raised over £5 billion from Qatari and Abu Dhabi interests.
PCP alleged that the original intention had been for Abu Dhabi interests to participate in the capital raising via special purpose vehicles (“SPVs”) owned by PCP, pursuant to an agreement made between Sheikh Mansour bin Zayed Al Nahyan of Abu Dhabi and Amanda Staveley of PCP, under which Sheikh Mansour was to provide 40% of the subscription amount to which the SPVs were committed, and PCP was to arrange non-recourse debt financing for the remaining 60% (amounting to £1.95 billion). In exchange for raising the non-recourse debt financing, PCP was to receive a 10% interest in the underlying investment and 10% of the profits it made.
In the event, PCP did not raise 60% (or any) non-recourse debt financing, and shortly before completion of the subscription it lost control of the SPVs to Abu Dhabi (which alone arranged financing for the investment). PCP subsequently received £30 million from Abu Dhabi for its work on the transaction.
PCP alleged that the outcome would have been different but for fraudulent misrepresentations made to it by Barclays in the course of negotiating the subscription agreements for the capital raising. In particular, PCP alleged that Barclays represented that PCP was getting the “same deal” as the Qatari interests for participation in the capital raising, and that this was falsified by an Advisory Services Agreement (the “ASA”) which Barclays entered into with Qatar at around the same time as the capital raising. PCP’s primary case was that the ASA was a sham. PCP also alleged that Barclays had provided a loan to Qatar knowing or intending that the loan be used to fund Qatar’s participation in the capital raising, amounting to the provision of unlawful financial assistance.
PCP alleged that, but for the misrepresentations, it would have negotiated additional value from Barclays equivalent to that received by Qatar for its participation in the capital raising; and that, with the benefit of this additional value, it would have been able to secure the benefits of the remuneration agreement originally agreed with Sheikh Mansour.
Waksman J accepted that the “same deal” representation (and another related representation) was made to PCP. He rejected the allegation that the ASA was a sham, and the allegation of unlawful financial assistance. However he held that the ASA and the loan nevertheless falsified the relevant representations, on the basis that they were part of the “deal” which Qatar received for its participation in the capital raising. He further held that the relevant individual at Barclays had made the representations knowing of their falsity.
However, Waksman J rejected PCP’s case on causation and loss. He accepted that PCP would, in the counterfactual, have been able to negotiate some additional value from Barclays, but rejected the claim that this would have made any difference to how events in fact unfolded.
In particular, he held that there was no real and substantial chance in the counterfactual of PCP raising 60% non-recourse debt financing in the market conditions of November 2008 on the terms and in the time frame necessary to perform PCP’s side of the remuneration agreement with Sheikh Mansour: PCP would therefore have lost control of the investment, and failed to secure the benefits of the remuneration agreement, in the counterfactual just as it did in actuality.
Waksman J further held that there was no real and substantial chance in those circumstances of PCP achieving any alleged alternative terms of remuneration with Sheikh Mansour.
Accordingly, the claim was dismissed. The judgment is a significant application of ‘loss of chance’ principles, which have been the subject of a number of recent authorities, to a complex counterfactual situation.
Jeffery Onions QC, Alexander Polley and Oliver Butler appeared for Barclays at the trial (together with David Quest QC and Charlotte Eborall), instructed by Colin Passmore and Adam Brown of Simmons and Simmons LLP. The full judgment is available here. A summary prepared by Waksman J is available here.