‘Carney v Rothschild’ Unfair Relationships Case
HHJ Waksman QC, sitting as a Judge of the High Court, has handed down a detailed judgment in Carney v N M Rothschild & Sons Ltd  EWHC 958 (Comm). This was a financial mis-selling claim. The Defendant (“the Bank”) had entered into loan agreements (“the Loans”) with the Claimants to provide funds for them to invest. The Claimants said that a representative of the Bank misrepresented the level of risk associated with the investment scheme and its efficacy as a way of avoiding inheritance tax. They alleged that this generated an ‘unfair relationship’.
The Bank relied on “Basis Clauses”, namely contractual terms defining the scope of its non-advisory relationship with the Claimants and stating the absence of any representations made by it that could be relied upon.
General Comments on Unfair Relationship Test
 The Court noted that while a discretion arose when granting a remedy under s140B, the prior determination of whether or not there was an ‘unfair relationship’ was “more than an exercise of discretion” and involved “forensic judgment”.
 ‘Unfair relationships’ allegations were often co-extensive with other (possibly time-barred) causes of action, such as negligence or misrepresentation. “Generally speaking” the elements of those other causes of action (e.g. duty of care or inducement) must be made out under ‘unfair relationships’. “Otherwise there is a danger that the analysis of their significance or otherwise becomes blurred and uncertain.”  It followed that if any allegation of negligent advice were relied upon as part of the ‘unfair relationship’ case, it should conform to the essential elements of the advisory duty of care (e.g. that there was an assumption of responsibility and the statements went beyond the sort of recommendations which a seller of a product might typically give as part of the sales process).
 As to causation, in cases of wrong advice and misrepresentation, it would be “odd” if relief were granted if they did not have “some material impact on the debtor when deciding whether or not to enter the agreement”. If the debtors would have entered the loans in any event, that must surely count against a finding of ‘unfair relationship’.
[53(3)] The words “on behalf of” the creditor connote an agency relationship; there is no need to construe them more widely.
General Comments on Basis Clauses
Basis clauses differ from exclusion clauses (which are subject to statutory control), because they delineate the scope of the parties’ primary relationship, rather than excluding an existing liability.  While the functional consequence of the two types of clauses might be the same, this conceptual distinction has always been observed.  Categorising the clause is a question of substance, not form.
 The modern way of looking at basis clauses is to regard them as contractual estoppels. They are generally unobjectionable in the commercial (as opposed to the consumer) context.
 In determining whether the Basis Clauses here were in fact exclusion clauses within UCTA, the Court should look (in the context of the non-advice clause) at the extent to which there were other oral or written indications that this was an advisory relationship and at whether they were simply one or two of a myriad of standard terms. In the context of the clauses about representations, the Court should look at the extent to which clear representations had been made and were objectively intended to be relied upon.  It was noted that for consumers under contracts entered on or after 1st October 2015 (governed instead by the Consumer Rights Act 2015), it did not matter whether the relevant clauses constituted “exclusion clauses” for the purposes of assessment.
 This was the first case where the efficacy of “Basis Clauses” was to be tested in relation to an ‘unfair relationship’ claim.  In the context of ‘unfair relationships’, the issue was not the narrow one of whether a particular clause was exclusionary, although that must remain a “highly pertinent” question.  If the relevant clauses were outwith UCTA, that meant that their “impact” in respect of ‘unfair relationships’ was “much less”.
Application to Facts
 There was no giving of advice, as distinct from a sales pitch. - The Bank never assumed an advisory role; the Claimants had a separate financial adviser involved and while it is possible to have more than one adviser, in many cases this will be unlikely.
 If there had been any advisory duty, the Basis Clauses would have negatived this.  They were not exclusion clauses for the purposes of UCTA, for a number of reasons including the presence of other clear written indications that this was not an advisory relationship and the fact that they were not buried in the small-print.  In any event, they would have been “reasonable” under UCTA.  On the facts of this case, the analysis and result of the UCTA “reasonableness” test and the ‘unfair relationships’ test should be the same.
 There were no actionable misrepresentations.  Even if there had been, the Basis Clauses established a contractual estoppel; they served the useful function here of removing a grey area as to what might be a ‘representation’ given that many of the statements were made orally in a quasi-social setting. - In any event, the clauses were “reasonable” under UCTA and so not “unfair” under s140A.