In Ildar Uzbekov v Revolut Limited [2024] EWHC 98 (KB) (Admin), the High Court found that a breach of contract claim for nominal damages and declaratory relief against Revolut in the context of the claimant having been “de-banked” amounted to an abuse of process and struck it out. Whilst claims for tort, breach of confidence and misuse of private information have been previously struck out for abuse of process, this is the first instance where this was done in a claim for breach of contract. 

Background

Revolut’s standard terms provided that the bank could immediately close or suspend a customer’s account in exceptional circumstances, which included instances where the bank had reason to suspect that the customer was behaving fraudulently or that the customer’s continued use of the bank account could damage Revolut’s reputation or goodwill. 

Revolut blocked and closed the claimant’s account and then reversed transactions worth £11,000, based on media coverage which alleged that the claimant was involved in money laundering. It submitted that it had good reason to suspect that the media reports were true even though it was not in a position to determine the truth of the allegations, and wanted to protect itself from the potential damage to its reputation or goodwill caused by the claimant’s continued use of his account.

The claimant submitted that he was the victim of a smear campaign which included the publication of online articles suggesting that his family, which has connections to a late Russian oligarch, was involved in money laundering. He complained that Revolut (and four other banks) had taken these smears at face value and closed his accounts, and it was important for him to have the record corrected. He also cited Nigel Farage’s recent and well publicised “de-banking” and claimed that there is a public interest element involved in ensuring that financial institutions, including “new technological start-ups”, comply with their contractual terms and act with care when making decisions regarding their customers’ accounts. Acknowledging that Revolut’s conduct caused him no compensable loss (as he eventually got back the £11,000), he claimed that the bank had caused him distress and embarrassment, and asked for nominal damages and a declaration to the effect that the bank had no good reason to suspect him of money laundering and had breached its contract.

The court’s observations

Traditionally, a claimant has had the right to have his day in court and seek damages for breach of contract even if the loss is small. Such claims are generally heard in the interests of establishing, determining or protecting a legal right or for vindicatory purposes. However, since the introduction of the CPR, the claimant’s right to have such a claim adjudicated is tempered by the “overriding objective” which enables the court “to deal with cases justly and at proportionate cost” having regard to appropriate use of the court’s time and resources. Citing Lord Phillips MR’s decision in Jameel v Dow Jones & Co Inc. [2005] QB 946 (“Jameel”), the court explained that due to the overriding objective, “an abuse of process is of concern not merely to the parties but [also] to the court.” The court noted that the principle in Jameel (which was a tort case) has since been applied to other causes of action and there is no reason why it could also not apply to a breach of contract claim or a case concerned with the grant of declaratory relief. This is because the court has an all-pervasive entitlement to protect the defendant from incurring disproportionate costs and deploying its limited judicial resources towards more deserving litigants.

As to the ask for declaratory relief, the court noted that as a matter of principle, the grant of a declaration would not be justified (and would not amount to justice to the claimant) if it served no useful purpose to the claimant. Whether or not it serves a useful purpose falls to be determined objectively, and a declaration must not be granted “merely because the rights, facts or principles have been established and one party asks for a declaration.”

In relation to this claim, the court noted five key features: 

1. even if the claimant had a legitimate reason to prove the falsity of the allegations against him, the relief sought would not establish the falsity of those allegations and would thus not vindicate his reputation;
2. there are other better ways in which the claimant could vindicate his reputation, such as by bringing defamation proceedings against the media companies (which the claimant had indeed brought in the UK and elsewhere and which would “in principle offer a route to an authoritative determination of the falsity of the allegations”);
3. whilst the relief sought may provide some subjective satisfaction to the claimant, it would not serve a useful purpose in his future relations with third parties because a judgment against Revolut would not bind a third party, such as the four other banks which closed his account;
4. the claim was entirely backward looking, the relationship between the claimant and Revolut had ended and any declaratory relief or nominal damages would not impact the legal position of the relationship going forward; and
5. there are other more appropriate mechanisms than a breach of contract / declaratory relief claim for protecting the public from the improper closure of accounts by financial institutions, such as a complaint to the Financial Ombudsman Service.

Based on the above features, the court found that there was no real prospect that the claimant would be granted declaratory relief at trial, and that the claimant’s claim for nominal damages and declaration should be struck out as an abuse of process as per the Jameel principles and given the significant costs that the Defendant would otherwise incur in defending the proceedings. Referencing Lord Phillips MR’s litmus test from Jameel, the court found that “[t]he game is not worth the candle.” 

Comment

This decision reinforces the importance of the overriding objective (and in particular the proportionate and just allocation of the court’s resources) to the court when exercising its case management powers, including when deciding which claims are permitted to proceed to trial. In determining what directions or orders a court will make in the conduct of the proceedings, the focus of the court will be to facilitate a just resolution of the issues in the proceedings, although not all costs.