Jurisdiction(s):
United Kingdom

Morley v RBS: No bank duty of reasonable skill and care after loan expiry; only mortgagee duties; internal policies not actionable; economic duress fails without coercion (England and Wales)

Published on: 23 March 2021

Published by a LexisNexis Restructuring & Insolvency expert

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Article summary

Morley (trading as Morley Estates) v Royal Bank of Scotland plc [2021] EWCA Civ 338 What are the practical implications of this case?

This decision clarifies the boundaries of a bank’s obligations to its client and demonstrates how those responsibilities shift over the course of their dealings. Where a borrower has taken out a secured lending facility, the bank’s duty to deliver banking services with reasonable skill and care ceases when the contractual loan period ends. After that point, the bank is only bound by the express provisions of the mortgage and the equitable duties inherent in that security relationship (for example, the recognised obligation to exercise reasonable care to realise a proper price for the collateral). It is not correct to read into the mortgage an implied contractual duty of reasonable skill and care. In addition, the Court of Appeal endorsed RBS’s position that any alleged non-compliance with its internal policy documents—unknown to the customer and potentially aspirational—cannot of itself ground a claim for breach of duty by the customer. Consequently, customer attempts to point to departures from internal procedures will not, in the ordinary course and without more, provide a foundation for a claim advanced by them usually...

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