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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Royal Bank of Scotland Plc v Carlyle  ScotCS CSOH_3 (13 January 2010)
Cite as:  CSOH 3,  ScotCS CSOH_3
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OUTER HOUSE, COURT OF SESSION
 CSOH 3
OPINION OF LORD GLENNIE
in the cause
ROYAL BANK OF SCOTLAND PLC
WILLIAM DEREK CARLYLE
Pursuers: Munro; Brodies LLP
Defender: Dunlop; MBM Commercial LLP
13 January 2010
 In this action, the pursuer ("the Bank") claims the sum of £1,449,660 with interest from the date of citation until payment. Its case is straightforward. It says that, pursuant to agreements dated 24 and 25 July 2007 ("the loan agreements"), it lent the defender £845,000 and £560,000 to assist with the purchase of Plot 5, Queen's Crescent, Gleneagles Hotel, Perthshire ("the property" or, sometimes, "Plot 5"). The funds were drawn down on 7 August 2007. The repayment date was stated in the loan agreements to be 12 months from drawn down, i.e. 6 August 2008. The defender failed to make repayment by that date. The principal sum sued for is the total amount lent under the two loan agreements plus interest accrued to a certain date, together with interest thereon at the statutory rate from the date of citation until payment.
 Apart from an issue about the repayment date, the defender does not challenge any of the above. However, he says that he only entered into the loan agreements on the basis of an assurance given by the Bank that it would make available additional funding of up to £700,000 for the proposed development of Plot 5. He contends that the assurance was given by the Bank in the knowledge and with the intent that he would act on it by entering into the loan agreements. Contrary to that assurance, the Bank did not provide the funding for the development costs when called upon to do so. The defender's case is that the assurance given by the Bank amounts to a collateral warranty of which the Bank were in breach. He counterclaims damages in an amount in excess of the Bank' claim, and has withheld payment of sums due to the Bank under the loan agreements pending resolution of his claim for damages. In the alternative, he contends that by reason of having given him that assurance, in reliance upon which he entered into the loan agreements, and having, despite that, failed to provide the funding, all to his detriment, the Bank is personally barred from seeking repayment of the loan at this stage.
 The matter came before the court at a proof for answer on the claim and counterclaim. The defender was appointed to lead. In addition to giving evidence himself, he called two other witnesses, namely: Colin Hamilton, an accountant by training, who was at the material time Financial Controller with Carlyco Ltd., a company set up by the defender in 2005 and of which the defender was managing director; and Helen Hutchison, who was at the material time employed by the Bank at its Motherwell branch as Assistant Director in commercial banking. The Bank called no evidence. In the event, there was little dispute about the material facts. At the end of the proof, Mr Dunlop, for the defender, put in suggested findings-in-fact which, he submitted, were largely uncontroversial and, in any event, were established on the evidence. In this he was substantially correct; but I propose, nonetheless, to summarise the evidence and set out my conclusions in my own words.
The defender's evidence
 The defender is a property developer. Since 1991 he has been engaged in property development projects with the support of the Bank. It gave him a bridging loan on his first house. Typically he would purchase a plot of land, develop the plans for building on the plot, carry out the building work, and live in the property briefly, before selling it on and moving on to the next project. As the business expanded, he engaged Colin Hamilton to be his financial adviser or consultant. Mr Hamilton had contacts within the banking world and experience of dealing with banks. His strength was in presenting proposals to the Bank. When there was a project, the defender and Mr Hamilton would present it to the Bank together.
 In 2005 the defender decided to set up a property development company, which he called Carlyco Ltd. It did not begin trading until 2006. It was set up for a specific project, namely the purchase and development of a site at East Kilbride known as Stewartfield Grove. The Bank provided funding for this development, as it had for other developments.
 In February 2007 the defender became aware of two plots of land for sale at Queen's Crescent, Gleneagles, in Perthshire. They were being offered for sale by the Gleneagles Hotel. Having looked at the plots and discussed them in detail with Colin Hamilton, and generally done his homework, he decided to approach the Bank. The intention was that he would develop one of the plots (Plot 5), while Carlyco would purchase and develop the other (Plot 2). He spoke to Helen Hutchison at the Bank and arranged a meeting for 4 pm on Monday, 26 March 2007.
 Colin Hamilton attended the meeting of 26 March 2007 with the defender and made a note immediately afterwards. Ms Hutchison (commercial banking) and Rebecca Young (private banking) were there representing the Bank. As part of their presentation, the defender and Colin Hamilton put forward a schedule setting out the purchase price of each plot, the amount of stamp duty etc., the Build Cost (or development cost) based on a 10,000 ft.² house, the estimated sales value, and the realisable profit on the basis that those figures were correct. The purchase price for Plot 5 was estimated at £1,250,000, with that for Plot 2 £975,000. The Build Cost in each case was £700,000. It was a feature of the purchase contracts envisaged for each site that there would be a buy-back clause. This was something which the vendors were insisting on, as was made clear in the brochure. The effect of the clause was that the purchaser of the plots would be tied to a target completion date of 31 March 2011. If he had not by that date completed the construction of the dwelling house on the site to such a stage that it was wind and watertight, with all external finishes and features and hard landscaping works completed, then the vendors would be entitled to require the purchaser to sell his interest in the property back to them at the original purchase price. The reason for this was that the Ryder Cup golf tournament was due to take place at Gleneagles later in 2011, and it was thought undesirable for there to be half-completed houses spoiling the outlook. The buy-back clause was discussed at the meeting, and the note of the meeting makes it clear that the defender "specifically and clearly stated" that, if the Bank was to provide funds for the deposits on the plots,
"then the balance [of the purchase price] for the plots and the Build/Development Costs must be provided as they needed to be built".
The defender asked for "a full commitment on the proposal or nothing". The note records that Ms Hutchison and Ms Young understood this and were enthusiastic about the proposal, and said that they would put the proposal in full to Edinburgh (i.e. to the Bank's head office) and push for it to be approved.
 Colin Hamilton and the defender both gave evidence confirming this account of the meeting. The defender said this in his witness statement:
"26. I recall that at the meeting I clearly pointed out to them that there would be three stages for the provision of funding: (1) deposit funding; (2) land purchase; and (3) build costs. Even at that stage I stressed to them that it was a full development proposal and so if we went ahead with the deposit and the land purchase then the development funds really must follow because the land itself is no use to me. That is when I said 'so please do not give me the money for the land unless you give me the money for the build'."
The defender confirmed orally, in his evidence in chief, that he said words to that effect. If there had been any qualification on the part of the bank at any stage, he would not have gone ahead - he would not have looked elsewhere for funding. In a later paragraph he explained that, after he had said this, Ms Hutchison confirmed that the Bank would definitely have the appetite for the project. She needed, of course, to refer to head office, and to the Bank's underwriter (as the defender called him), for approval. But she was the one who would make the running in terms of putting it all together. She said that the project would need to be done as a joint project between commercial and private banking, with commercial taking the lead. She was aiming to get 100% funding for the project.
 Two days after the meeting with the Bank, the defenders submitted offers to purchase the two plots on the strength of the positive feedback from the meeting. However, in doing so, he was not committing himself or Carlyco to the purchase and was still in a position to withdraw if the Bank's reaction was ultimately negative.
 Over the next days and weeks the defender was occupied in looking at design options for the proposed development, and checking and investigating everything connected with it, before being in a position to commit himself to any significant financial cost. During this period he had various telephone conversations with Ms Hutchison and occasionally with Ms Young. On 24th of April 2007, he e-mailed Ms Hutchison to tell her that his offers for the plots had been accepted (at £995,000 for Plot 2 and an increased figure, £1,350,000, for Plot 5), and that he therefore now required an early decision on a commitment in principle from the Bank to ensure that the opportunity was not lost due to delay. He pointed out that the vendors were pressing for missives to be concluded immediately, and that on conclusion of missives a deposit of 5% would be due on each plot. He was attempting to delay conclusion of missives, and noted that the details of the buy-back clause were quite elaborate and would require to be negotiated during the course of the missives being concluded. With this in mind, he added, it would be beneficial to have early input from a bank appointed solicitor to reduce future complications. However, there was little point in that "until we have a commitment in principal (sic) to the project". He asked the Bank to tell him what information it needed to be able to give an early decision on commitment to the proposal.
 During April and May 2007 the vendors' solicitors were pressing hard for the deposit to be paid and the defender was doing his best to delay. During this period, as the defender put it, the Bank were doing some work in terms of "setting up my assets", which he regarded as normal practice. I take this to mean that the Bank was assessing the extent of its proposed commitment in light of the defender's existing commitments and the security which the defender was able to offer.
 Towards the end of May 2007, Ms Hutchison and Ms Young advised that they could advance the deposit monies in early June. The defender's recollection was that Ms Young told him first in relation to the private side of the deal and then Ms Hutchison confirmed it from the company side. Ms Young telephoned him and said "that's your deposit all sorted". He replied that that was good, but added:
"obviously remember the deposit money is no use to me, the same as the land money is no use to me, unless the development funding is available also. I really need commitment on the full proposal".
To which, according to him, Ms Young responded:
"Yes we know that, you made that clear at the outset, but Helen Hutchison is dealing with that side of things through Edinburgh. Commercial is leading on that proposal but private banking is supportive".
This provided confirmation that the Bank was fully aware of the fact that funding for the deposit, or the purchase, was of no value unless funding for the development was also available; and it made it clear to the defender that for any commitment on development funding he was to look to Ms Hutchison.
 The defender continued stalling with the vendors until he had sorted out the question of funding. In early to mid-June Ms Hutchison told him that, on the commercial side (i.e. for Plot 2), the funding for the deposit would be by way of an overdraft increase for the company, Carlyco; whereas on the private side (Plot 5) the deposit funding would be by way of an increase in the defender's mortgage facility on another property, 11 Countess Gate.
 According to the defender, Ms Hutchison told him on 5 June 2007 by telephone that the deposit monies would be available. He again said words to the effect:
"please do not give me the deposit money unless anything else is agreed".
According to him, her response was:
"don't worry, we wouldn't give you the money for just the land ... it wouldn't make sense for the Bank, especially with the buy-back clause".
He ended this conversation by saying that he was not even going to pay the deposit until the decision on the funding of the whole project was through. He explained that this was the only reason for the delay in committing to the purchase. He was aware that there were other potential purchasers interested in the plots and that there was a risk that he would lose them if he delayed too long in paying the deposits; but he was not prepared to commit himself until the Bank confirmed that it would provide the development funding.
 On 14 June 2007 Ms Hutchison telephoned the defender. The defender described her manner as enthusiastic. According to the defender, she said:
"You'll be pleased to know it's all approved, Edinburgh are going for it for both houses."
He said that she commented that he did not seem very happy about it, and he replied that he was happy about the news but for him it simply marked the beginning of the hard work in developing the houses. In his account of the meeting, the defender said that he was "pleased but not overly surprised" by the confirmation that it was all approved, since the Bank's attitude had throughout been positive. The defender took from his conversation with Ms Hutchison the fact that the Bank was supporting the whole proposal. On the strength of this conversation, he instructed Fiona Bryson, his and Carlyco's solicitor, to pay the deposits on the plots. At that point he became committed to the project.
 Ms Hutchison called the defender on about 20 June 2007, and the defender arranged to meet her at 3.00pm the next day to sign the paperwork. The paperwork was a document entitled "Credit Approved Indicative Terms for Carlyco Limited" ("the Indicative Terms") dated 21 June 2007. The amount to be advanced was £2.587 million. It was described as being advanced by way of "Bridging Finance". The purpose of the loan was described in this way:
"Purchase of plots 2 & 5, The Queen's Crescent, Gleneagles £2.35m plus costs, roll up of fees & 6 months interest."
Beside the marginal note "Repayment" it stated:
"Reduction in facility to £700k to emanate from sale of 11 Countess Gate, Bothwell & personal funding from RBS Private Banking in relation to mortgage on 5 Countess Gate & self-build financing for plot 5 The Queen's Crescent.
Residual £700k to convert to land bank loan."
The document also provided for security for the loan in the form of the security already held by the Bank, together with a Standard Security over Plot 2, and a guarantee from the defender as a director of Carlyco, that Guarantee to be supported by Standard Securities over Plot 5, as well as two existing securities over Nos. 5 and 11 Countess Gate, Bothwell.
 The defender said that he was not concerned ("there was ... no reason for alarm bells to ring") when he was asked to sign paperwork only for the purchase price. He relied upon the assertion by Ms Hutchison in her telephone call that all was agreed. This was the way in which funding had been provided for the earlier project at Stewartfield, where the Bank, having agreed in principle to provide funding for the purchase and build costs, had done the paperwork for the purchase first and, later and quite separately, done the paperwork for the build (development) cost. The defender said that the final amount of the development funding was not confirmed at this stage. This, too, was how it had happened in the past. It needed to be worked out exactly in due course depending on the final costings and input and on what came in from the sale of 11 Countess Gate and from the Stewartfield development. However, the Bank was well aware of the estimate of £700,000 from the initial proposals.
 So far as Plot 5 is concerned (and I am not here concerned with Plot 2), the Indicative Terms were followed, a month later, by two separate loan agreements, signed on 24 and 25 July 2007. In terms of those agreements, the sums (£845,000 and £560,000 respectively) were advanced to the defender personally. The agreements were in identical terms. It is sufficient to identify the terms of the loan agreements by reference to that for £845,000. The agreement took the form of an offer by the Bank, signed in each case by Rebecca Young, and accepted by the defender. It began by saying:
"This offer details the terms and conditions upon which ... (the 'Bank') is able to offer [the defender] ('you') a personal secured loan (the 'mortgage'). It explains your and the Bank's rights and responsibilities in respect of the mortgage ..."
Sections 3, 4 and 5 set out, respectively, "your mortgage requirements", a description of the mortgage and the overall cost of the mortgage. So far as material, they provided as follows:
"3. Your mortgage requirements
You require a mortgage of £845,000 to assist with the purchase of Plot 5 ...
No fees have been added to this amount but the fees you need to pay are shown in Section 8.
The Repayment Date will be 12 months from the date on which the mortgage is drawn under Clause B of the general terms.
This mortgage will be an interest only mortgage secured by:
1. a first Standard Security held by the Bank over 5 Countess Gate ... - the estimated value of this is £1,000,000;
2. a first Standard Security held by the Bank over 11 Countess Gate ... - the estimated value of this is £1,290,000;
3. a first Standard Security to be granted in favour of the Bank over Plot 5 ... - the estimated value of this is £1,350,000;
Details of this and any other security to be provided by you in respect of this is mortgage are contained in Clause E of the general terms.
4. Description of this mortgage
This is a mortgage, offered by the Bank, at a variable rate of 2% per annum above the Bank's base rate ... giving a current rate payable of 7.75% per annum.
This mortgage must only be used for the purpose detailed in Section 3 above. This mortgage is subject to further preconditions, undertakings and conditions that you must comply with. Please refer to the general terms for full details."
The "General Terms" are set out later in the document. In addition to reiterating the requirement for security, to which I have already referred, they provided by clauses F (Repayment) and H (Default) that, in the event of a failure by the defender to make any payments in accordance with the terms of the mortgage, or in the event of any other Event of Default, the bank could give notice declaring the mortgage to be at an end and requiring repayment of all sums advanced under the mortgage.
 Ms Hutchison left her employment at the Bank soon after the defender concluded missives for the purchase of the plots. From about the beginning of November 2007, the defender communicated with Mark McClymont, who had been second in command to Ms Hutchison. Mr McClymont telephoned the defender in December 2007 to ask when he would need the funding for the development at Gleneagles. He explained to him that if he wanted to start using it in January it was getting "quite tight" to have it in place for then. The defender said he would not actually need it until about March and that was acceptable to Mr McClymont. He did not want to draw down the loan for the development until he needed it, otherwise he would be paying interest for a longer period than was necessary. He contacted Mr McClymont again in January 2008. He was put on to speak to Louise Burnett, who had been appointed as successor to Ms Hutchison. He said that he wanted the funds available from early March 2008. The defender's impression was that she did not seem to understand the deal and the way it was being structured. There were various discussions with Louise Burnett and, on one occasion, Rebecca Young. In July 2008 the defender was told that banking management had been transferred to Specialised Lending Services at Edinburgh. Further discussions took place. It is not necessary to go into the events which happened thereafter in detail. In August 2008 the Bank made it clear that it would not provide funding for the development. The Bank called in the loan and commenced this action in mid-August, seeking and obtaining warrant for inhibition and arrestment on the dependence of the action.
Ms Hutchison's evidence
 Although it differed in some of the details, Ms Hutchison's evidence was largely supportive of the defender's position. She first became aware of the defender's interest in Gleneagles in March 2007. She recalled a meeting with the defender and Colin Hamilton on 26 or 27 March 2007. She did not think that Ms Young was there - having seen the note of the meeting I think that she was wrong about this and, though nothing turns on this, I accept the defender's evidence that Ms Young was there. Ms Hutchison recalled that the defender and Colin Hamilton presented the project and showed a Schedule of Projected Costs. Her recollection was that the defender's priority was to get the Bank to commit to paying the deposits so that he could secure the sites. The balance of the purchase price would not have to be paid until about February 2008, so he was not looking for additional money from the Bank until then. By that time he hoped to have sold the house at 11 Countess Gate; and the development at East Kilbride (Stewartfield) would have been built out, releasing some further funds for the purchase of the Gleneagles plots. The buy-back clause required by the Gleneagles Hotel, which she recalled, meant that the plots definitely had to be built out. As she said in her statement:
"I knew at the time that [the defender] would have to do the construction and development work and that he would not be able to simply flip the plots onto another purchaser."
She remembered that the defender and Colin Hamilton presented a reasonably detailed proposal in relation to the development project at Gleneagles. The proposal mentioned the costs of the development and eventual projected sales.
 Although her recollection was that the defender was, at that stage, asking for funding for the deposits, Ms Hutchison did recall that, at the meeting, there was discussion about development funding. She knew that the defender was going to be asking for development funding. She was also aware that the Bank would need to fund the development. As she put it:
"The Bank would not have advanced funding for the purchase of the plots if they did not have the intention or appetite to fund the development as they knew that the plots would revert back to Gleneagles Hotel if they were not developed within a specific time period and this would have resulted in a loss to the Bank."
Because one of the plots was to be purchased by the defender and the other by the company, Carlyco, she had to involve Ms Young who was responsible for private banking. The defender already had a mortgage on 11 Countess Gate through the Bank's Private Banking department. She thought he also had a self-build facility on 5 Countess Gate, again arranged through Private Banking. It was Private Banking which would fund the deposit on Plot 5 at Gleneagles, with Commercial Banking funding the deposit for Plot 2 which was to be purchased by Carlyco. She was taking the lead in submitting the proposal to Edinburgh. For the purpose of putting in her credit submission, she discussed the project with David Smith, the Bank's "Roaming Credit Analyst" (as she described him), who would give a "heads up" on whether the thing would work or not. She therefore knew, before she put it in, that the credit submission was likely to be accepted.
 Ms Hutchison had no specific recollection of the e-mail exchange on 24 and 25 April 2007. She did recall speaking to Fiona Bryson in May 2007 and telling her that, although the Bank was not going to fund 100% of the development, it would not be advancing the deposit funding at all if it was not going to advance some of the development funding. Ms Hutchison said that there would have been further meetings, but she did not remember the details. By this time, the date for settlement of the purchase price had come forward; they were no longer looking at a February 2008 settlement date but one considerably earlier. Miss Hutchison submitted a credit submission, initially in relation only to the deposit. Her evidence in relation to the telephone conversation of 14 June 2007 differed slightly from that of the defender. Her recollection was that she told him that the Bank had approved funding for the purchase of the site (without mentioning funding for the development). The deposit was paid in June; and the defender signed the "Indicative Terms" document on 21 June 2007.
 Taken overall, the tenor of Ms Hutchison's evidence was that the defender was told on various occasions that funding for the development would be advanced. This is a matter of considerable importance. Accordingly, I quote below certain passages from her witness statement:
(a) "I confirm that Derek was told that funding would be advanced. That was me, I told him that. I have explained below what I mean by that. That would have been at a meeting when we reviewed the Indicative Terms and Conditions, which would I think have been in June."
(b) "I confirm that I told him that funding would be advanced, but no amount specified and that he would have to deliver on a couple of things to allow the funding level and structure to be discussed in depth. I confirm that what I mean by that is that I told him that in general terms development funding would be advanced. The intention was that the Bank had an appetite to cover the development funding. I confirm I told Derek that at that subsequent meeting. They wouldn't have advanced the money for the purchase of the plots if they didn't have an appetite but Derek knew that he would have to deliver before we would consider and discuss the level of development funding."
(c) "I am asked if [the defender] ever said to me please do not give me the money to buy these plots if you are not going to give me the money to develop them. I can confirm that [the defender] definitely did say to me 'Please do not give me the money for the purchase unless you are going to give me the funding for the development'. I specifically recall that. That remains my position. I am quite clear that he did say that to me. My recollection is that he said that to me at that subsequent meeting in around June, at about the time the Indicative Terms letter was issued. I am asked if this conversation took place at the original meeting in March, on 26 or 27 March. I don't think it did. I think it took place at a later meeting I had with Derek some time in June, probably on the date of the Indicative Terms letter of 21 June 2007."
(d) "There was no point in the Bank giving him the money to purchase the plots if they didn't intend to give him development funding. The Bank had an appetite to fund the development, there were just no guarantees as to at what level. Because of the buy back agreement and the fact that the development had to be developed out I knew we couldn't just flip it on and that was well documented. We knew that. ...".
(e) "There was no discussion in relation to 'at what level will the Bank fund the development?' There was however a general discussion about the Bank funding the development generally, but no detail discussed about the level of funding. There was a recognition that the Bank would consider the development funding and a general understanding that in due course this would be provided at some level."
(f) "No absolute assurance of development funding was given but in principle there was a general understanding that there would be development funding in due course, with the details still to be worked out. I did confirm that the Bank had an appetite to fund the development, although I did not give him an assurance of the level of funding that would be given. That would depend on where Derek was financially by the time the funding was required, as he had to bring some money into the equation. Clearly the plots had to be developed, the Bank knew that, they had seen and had copies of the buy back agreement with Gleneagles. There would have been a loss if they hadn't been developed."
(g) "We wouldn't allow him to purchase the plots if we weren't prepared to consider providing the funding for the development at a later date because it wouldn't be sensible for us otherwise."
(h) "I am asked what I understood Derek to be saying when he said 'Please do not give me the money to buy these plots if you're not going to give me the money to develop men'. I clearly understood that he was saying, don't give me the money for the purchase if you're not prepared to fund the development. I definitely did understand that. That was conveyed to the Royal Bank's head office in the credit papers as well."
(i) "I am asked what my response was when Derek said, 'Please do not give me the money to buy these plots if you are not going to give me the money to develop them'. My recollection is that I said in response: 'The Bank would not be advancing the site purchase if we didn't have the intention to fund the development. The credit guys liked the site and the project.' I am clear that that was my response."
 It will be seen from the above passages that Ms Hutchison was clear that the defender had said to her: "please do not give me the money for the purchase unless you are going to give me the funding for the development", or words to the like effect. Surprisingly, no admission was made of this in the Bank's pleadings. At a preliminary hearing in this action, Mr Dunlop, who appeared for the defender, expressed concern that the Bank's pleadings on this matter lacked candour. He called upon the Bank to state in its pleadings whether or not it was accepted that the defender had said this to Ms Hutchison. The Bank continued to make no admission. It emerged during the proof that the Bank had for some considerable time, and long before it was called upon to clarify its position, had in its possession a precognition from Ms Hutchison confirming that the defender had said this. At the proof, Mr Dunlop reiterated his complaint about lack of candour. In my opinion he was fully justified in this complaint. It is incumbent upon a party in any litigation, not only in a commercial action, to make admissions of facts averred by the other party which he knows to be true. A non-admission is appropriate only if the truth of the averment is not known (hence the standard averment "not known and not admitted"); otherwise it lacks candour. In my opinion, the pleading of the Bank's case on this matter fell far below the standard which the court is entitled to expect. No doubt I shall be addressed further on this in connection with the question of expenses.
 The defender was never given anything in writing to say that development funding would be given. In a later part of her statement, Ms Hutchison said that she had, in fact, never submitted a request for development funding prior to the purchase of the plots. There was only a comment, in the credit submission, that the Bank would be approached for future development funding. The level of that funding would be dependent on what the eventual profit was from 11 Countess Gate and from East Kilbride. She then said this:
"I am asked whether there is any possibility that [the defender] was unclear about what was happening. I would say not. I am asked if he understood that the Bank were guaranteeing the development? I would say that there was a general understanding that development funding of one level or another would be forthcoming however. I think that's fair. I had told him that development funding would in due course be advanced, subject to terms and sorting out the level. He was issued with the Indicative Terms and that made it clear what he had to do in terms of reducing the loan. ...".
"It is fair therefore to say that [the defender's] clear understanding was that in due course the Bank would support the development funding. By 'support' I mean 'provide' development funding, subject to terms and conditions to be worked out with Derek in due course. I am clear that that would have been Derek's understanding at the time of our providing the funding for the purchase of the plots. ..."
"When he had said 'Please do not give me the money to purchase these plots if you are not going to give me the money to develop them', I had said in response, 'The Bank wouldn't advance the site purchase if we didn't intend to fund the development'."
Ms Hutchison confirmed that this was still her position. So far as she was concerned, the defender understood, and this was the Bank's position as well, that development funding would be available in due course, subject to terms and conditions and at a level to be worked out with the defender.
The Bank's internal documents
 I was referred to a number of internal Bank documents showing the consideration given to the application for finance. I need not refer to all of them. There was a meeting within the Bank on 27 April 2007 attended by Ms Hutchison, Ms Young and David Smith, the purpose of which was to consider the defender's wish to purchase and develop properties being offered by the Gleneagles Hotel and to structure borrowing accordingly. According to the Minute of the meeting, to which I was referred, there was discussion about the existing facilities for Carlyco and for the defender personally. For Carlyco it was noted that there was a loan, fully drawn down in the amount of £675k, in respect of land at Stewartfield; there was a development facility for Stewartfield, currently drawn to the amount of £592k; and there were two Bonds in place totalling some £85k. So far as concerned the defender personally, there was a self-build facility of £430k, currently drawn down in the amount of £250k; and an offset mortgage of £730k on 11 Countess Gate, Bothwell, where the defender was currently living. The self-build facility was for the property at 5 Countess Gate, which was anticipated to be completed over the next two months and would then become the defender's main residence for the next two years until the proposed Gleneagles development was completed. It was anticipated that the defender's personal borrowing would be repaid through the sale of 11 Countess Gate, which was being exposed for sale at offers over £1.2 million. The anticipated selling price was £1.4 million. The sale proceeds would be used to repay all the defender's personal borrowings and also to contribute to Carlyco's Stewartfield project. When all this was done, the defender would be living in 5 Countess Gate. The Stewartfield project was expected to be fully sold within a twelve month period, in time to develop the proposed Gleneagles project.
 The Minute went on to consider the proposed Gleneagles transaction. It noted that the defender had been successful in bidding for the two plots (though the purchase price for Plot 5 was incorrectly stated to be £1.25 million, instead of the correct figure of £1.35 million which the defender had communicated to the Bank on 24 April 2007). It outlined the terms of the deal, in particular the requirement for a 5% deposit on conclusion of missives and the existence of the buy back clause. The balance of the price was due to be paid by April 2008 which, it was noted, was in line with the anticipated completion of the Stewartfield development, so that "potentially the only funding required would be the payment of the deposits" of £50,000 for Plot 2, to be funded through Commercial Banking, and £62,500 for Plot 5 to be funded through "retail" (i.e. Private Banking). Ms Young suggested that the simplest way for the defender to fund the personal deposit was through a £65,000 increase in his offset mortgage, to be repaid when 11 Countess Gate was sold, but Mr Smith was concerned that this might be a step too far. The Minute records that at a subsequent meeting it was in fact agreed. For the deposit on Plot 2 of £50,000, it was thought that the simplest way would be to lend against the existing Stewartfield property. On being questioned about this document, the defender described the statement that the only funding required might be payment of the deposits as an "amazing scenario", "ridiculous" and "a fantasy". That had never been suggested to him as a possible scenario. He was looking to the Bank to underwrite the entire project. He was not sure whether 11 Countess Gate was even on the market by then. The Stewartfield development was unlikely to be completed before December 2007. If he had only been looking for the funding for the deposits, he would not even have gone to the Bank.
 A Sanction Summary Sheet dated 2 May 2007, dealing with both the defender and Carlyco, named Ms Hutchison as the Core Primary Risk Manager. As part of the Risk Report in that document, which referred to the discussions in the earlier Minute, it was noted that, whilst the initial facilities requested by commercial and retail banking were fairly modest, "the customers' commitment to buy and fund development of the plots is substantial and relies on successful completion and sale of Stewartfield development and sale of 11 Countess Gate." There was then discussion of the progress of the Stewartfield development, which led to the comment that the writer (Louise Tindall, the Risk Manager in Commercial Banking) was "comfortable that the existing debt will be repaid and some cash available towards the balance/purchase of plot 2". This appears to imply a recognition that the Bank did not think that the sale of the Stewartfield development would provide sufficient cash even for the balance of the purchase price of Plot 2. There was then a reference to the buy-back clause in the contracts. The document then set out the "Lending Proposition". The defender's offers to purchase had been accepted, and they were now moving towards missives, at which point a 5% deposit required to be paid. It was anticipated that settlement would take place in February 2008, at which point the Bank could obtain a Standard Security. The plots had to be developed and could not be sold on until complete because of the buy-back clause. It was noted that Plot 5 would be purchased by the defender personally. Private Banking had sanctioned an increase in the current offset mortgage by £65,000 to accommodate payment of the deposit. The purchase price for plot 5 was £1.25 million. It noted that 11 Countess Gate was being marketed at offers over £1.25 million with an anticipated selling price of £1.4 million. On the sale of 11 Countess Gate, retail exposure would be repaid, with the defender retaining the house at 5 Countess Gate, with an estimated value of £1 million plus anticipated cash of £250,000 dependent on the sale price achieved. Retail had indicated that they were happy to provide a further self-build facility (secured on 5, Countess Gate and the Gleneagles plot) in order for him to build out Plot 5 at a total cost of £2.01 million. This was the figure in the defender's initial proposal put forward at the meeting of 26 March 2007. The figure of £2.01 million was the total cost for plot 5, including the £700,000 build cost.
 A "Commercial Customer - Existing Property Development Application" dated 14 June 2007 again named Ms Hutchison as the Core Primary Risk Manager. It rehearsed much of the same information as before, but went on to set out the Lending Proposition. It noted that the defender required to settle for the plots (i.e. to pay the deposits) by 27 July in order to avoid the risk of losing them. Private Banking was unable to have two self build fundings and a mortgage all in place contemporaneously, and therefore Commercial Banking was requested to fund the site purchase and costs, with Private Banking taking over the funding of Plot 5 once the proceeds of sale (estimated at £1.4 million) were received from the sale of 11 Countess Gate. This was clearly an internal matter between Commercial Banking and Private Banking. The proposed facility, described as a "bridging facility" was in the amount of £2.587 million to accommodate the site settlement of Plots 2 and 5, to include legal and professional costs and roll up of six months interest and bank fees. The buy-back clause was mentioned, and it was noted that the plots "have to be developed and cannot be sold on until complete". Again it was noted that Private Banking had sanctioned an increase in the current offset mortgage by £65,000 to fund the deposit on Plot 5. After discussion about the sale of 11 Countess Gate, it was again noted that:
"Retail have indicated they are happy to provide a further self-build based on [certain security] to build out Plot 5 Gleneagles - total cost £2.01m."
This had, as I understood it, been communicated by Rebecca Young to Helen Hutchison by e-mail before that date. It is to be noted that this figure of £2.01 million includes the £700,000 development cost for the site. Clearly Private Banking had sought and obtained authority to fund the development cost as well as the purchase.
 A "Commercial Customer - Existing Credit Application" dated 27 June 2007 is interesting only because it shows the discussion within the Bank as to the breakdown of the funding as between Private Banking and Commercial.
 I accept the evidence led on behalf of the defender. The defender himself impressed me as an honest and, in the main, reliable witness. My only hesitation about his evidence was as to the number of times he says he told Ms Hutchison and/or Ms Young words to the effect: "do not give me the money for the purchase unless you are going to give me the funding for the development". I find it hard to accept that he said it in substantially the same terms on each of the occasions on which he maintained he said it. However, I do not think that he was deliberately exaggerating. And the point is of little significance. What is important is that it is clear beyond a shadow of a doubt that he did say something to this effect on at least one occasion before committing himself to the purchase of Plots 2 and 5, and that his concern on this score was clearly understood by Ms Hutchison and Ms Young of the Bank. Mr Hamilton, who was also, in my opinion, an honest and reliable witness, confirmed it in relation to the initial approach; and so more generally did Helen Hutchison. She too was patently honest.
 The evidence given by Ms Hutchison substantially corroborated that given by the defender. His evidence, in short, was that, because of the buy-back clause, he could not afford to take a loan to pay the deposit, or to pay the balance of the purchase price, without being sure that he could borrow to complete the development. Otherwise he would stand to lose a great deal of money. He explained this to Ms Hutchison, though it hardly needed explaining because the Bank was aware of the buy-back clause and of the consequences, both to the defender and to the Bank, of the development not being completed. Ms Hutchison said that she understood. Whether it was said on one occasion or more than one occasion, and in precisely what terms on each occasion, does not matter. I am satisfied that it was said on at least one occasion, probably more (particularly in response to indications that funding for the deposit was approved), before the defender committed himself to the purchase. Whether Ms Hutchison applied within the Bank for funding for the development as well as the purchase cost also does not matter. But if she had a reservation as to whether or not the Bank was committing itself to the funding, that should have been made clear to the defender. In my opinion he was fully entitled to believe, and did believe, from the conversation on the telephone on 14 June 2007, set in the context of the previous discussions, that the Bank were committing themselves to supporting the whole project, that is to say both advancing the purchase price and providing a facility for the build cost.
 The most significant difference between the defender and Ms Hutchison was as to the information which she gave the defender over the telephone on 14 June: was it, as the defender maintained, that funding for the development had been approved ("it's all approved"), or, as she recalled, only that funding for the purchase had been approved? On this issue I have no hesitation in preferring the evidence of the defender. According to his evidence, which was not challenged and which I accept, there had already been at least two conversations in which Ms Hutchison and/or Ms Young had told him that the deposit was available (or "sorted" as it was put on one of these occasions): see above at paras. and . In both cases he had reminded them that the deposit was of no use without a commitment to funding of the development. As Ms Hutchison knew, a decision to advance the whole of the purchase price would similarly have been of no use to him without such a commitment. In those circumstances, Ms Hutchison's version of the conversation of 14 June 2007 makes little sense. She would have known that telling him that the advance of the purchase price had been approved was not going to advance matters; and if this is what she had told him, he would in my opinion have repeated yet again that that was of no use to him without a commitment on the development funding. I find it much more credible that Ms Hutchison gave the defender to understand during that telephone conversation that funding for the whole project, including the development, was approved. She may not have said it in precisely those terms. The defenders' evidence was that she said: "You'll be pleased to know that it's all approved, Edinburgh are going for it for both houses." I accept that evidence. Against the background of previous discussions, the parties' knowledge of the buy-back clause, and the Bank's awareness that a commitment to fund the deposit and the purchase was of no use to the defender unless there was also a commitment to fund the development, a statement the "it's all approved" and that Edinburgh were "going for it" would have made it clear to the defender that the Bank was committing itself to funding the development and not just the purchase. And the Bank, through Ms Hutchison, ought to have realised this even if they did not if fact intend to convey this impression.
 Other points of difference between Ms Hutchison's evidence and that of the defender largely reflected the different viewpoint from which they saw the discussions. They were of little importance, but in so far as there were differences I would prefer the evidence of the defender. His eye was very much focused on this project. For Ms Hutchison, this was no doubt one of many potential loan transactions; for the defender it was the only one at the time. For Ms Hutchison, the point about not going ahead unless development funding was assured was important - the Bank stood to lose if the development did not go ahead because of the buy-back clause, but they had other security and could look to the defender personally if it went wrong. For the defender, however, the point was crucial - he stood to lose everything if funding for the development was not available and the buy-back provision was activated.
 Some play was made by Ms Munro, for the Bank, of the written loan documentation signed by the defender. I accept that its terms did not mirror the oral assurances given by the Bank. They related to funding for the purchase price, not for any development costs. But the defender explained, and this was not challenged, that previous funding had been dealt with in the same way - an oral commitment to purchase and development funding, followed by written loan documentation relating only to the advance of the purchase price and, only later, further written documentation for the development funding. There was nothing in the documentation which he signed which should, in my opinion, have caused him to question the Bank's commitment to the development funding. There was no reason, as he put it, "for alarm bells to ring".
 Had I been in doubt about the commitment given orally by the Bank, I would have had to take account of the Bank's failure to call relevant witnesses. This point does not, of course apply to Helen Hutchison who, though not called by the Bank, was called by the defender. However, Rebecca Young was a potentially significant witness who could have confirmed or contradicted the main aspects of the defender's story and helped on the question whether funding for the development was approved within the Bank. Mark McClymont would also have had useful evidence to give. According to the defender's evidence, he telephoned him in December 2007 to ask when he would need the funding for the development, a conversation which, if true (and it was not challenged) is consistent with him having an understanding that the Bank had previously given an assurance about the development funding. No doubt his conduct was informed by what he had been told within the Bank. Neither Ms Young not Mr McClymont were called to give evidence. In those circumstances, I should draw such inferences from the defender's evidence about matters in which they were involved and about which they could have given evidence as are most favourable to the defender: see O'Donnell v McKenzie 1967 SC(HL) 63 at 71, 73, and Davidson v Duncan 1981 SC 83 I would, had I otherwise been in doubt about the assurances given by the Bank about funding the development, have drawn the inferences most favourable to the defender; and, in particular, I would have inferred: (a) that Rebecca Young supported the defenders' evidence of events in which she participated; (b) that she did confirm (as reported in the Bank document of 14 June 2007) that Private Banking had expressed a willingness to provide £2.01 million to build out Plot 5, a sum which included £700,000 development cost; and (c) that when Mr McClymont took over from Ms Hutchison, he was given to understand from within the Bank that the Bank had committed itself to providing the funding for the development.
Collateral warranty - the law and its application to the facts
 There is no magic in a collateral warranty or contract. It is simply a contract, usually oral, which is collateral or ancillary to another contract (the principal contract) between the same parties. Its existence, formation and interpretation are governed by the same rules as apply to similar questions in relation to other contracts. Its peculiarity, if it can be called that, lies in its relationship to another (the principal) contract between the parties. Classically, a collateral contract is derived from a representation or promise made by one party to the other in the course of negotiations for the principal contract, which representation or promise is intended to have binding effect (notwithstanding that it is not included in the terms of the principal contract), on the strength of which the person to whom the representation or promise is made agrees to enter into the principal contract. Mr Dunlop referred me to four authorities: Dick Bentley Productions Ltd. v Harold Smith (Motors) Ltd.  1 WLR 623; J. Evans & Son (Portsmouth) Ltd. v Andrea Merzario Ltd.  1 WLR 1078, 1081; Esso Petroleum Co. Ltd. v Mardon  1 QB 801, 817, 825-6 and 831; and Inntrepreneur Pub Co. (GL) v East Crown Ltd.  2 Lloyd's Rep. 611. The principle was stated most clearly in Dick Bentley Productions Ltd. v Harold Smith (Motors) Ltd. by Lord Denning MR at p.627:
"If a representation is made in the course of dealings for a contract for the very purpose of inducing the other party to act upon it, and actually inducing him to act upon it, by entering into the contract, that is prima facie ground for inferring that it was intended as a warranty. It is not necessary to speak of it as being collateral. Suffice it that it was intended to be acted upon and was in fact acted upon."
Many of the cases are concerned with representations or statements of fact. In Dick Bentley, the issue was whether a representation of fact could amount to a warranty sounding in damages. Esso v Mardon was concerned with an estimate or forecast of throughput in the future - that too might be presented as a warranty of fact, namely that the estimate was arrived at with skill and care. But, as was made clear in Evans v Merzario, the principle is not confined to representations of fact. It applies also to promises as to the future:
"When a person gives a promise or an assurance to another, intending that he should act on it by entering into a contract, and he does act on it by entering into the contract, we hold that it is binding"
see per Lord Denning MR in Evans v Merzario at 1081F.
 Ms Munro did not dispute the legal principles underpinning the defender's case. She concentrated her submissions on whether the test was met, accepting that, if collateral warranty was established, the Bank was in breach of it. She submitted that the defender had to establish that someone within the Bank assured him that the Bank would advance £700,000 at a later date for the development of Plot 5 with the intention of inducing him to enter into the loan agreements. The case failed, she submitted, because one could not derive from the statements or non-statements relied on by the defender an assurance that the Bank would advance such development funding. Further, there was no basis, objectively, for finding that anything was said or not said with the intention of inducing the defender to enter into the contract. Any commitment was a commitment in principle only, and was dependent on the extent of the defender's other borrowings at the time the development funding was needed. In his evidence, the defender had recognised that there was a connection at a general level between the development funding and his other borrowings. She accepted that she had not put to the defender in cross-examination that he ought to have known that the Bank would review the roll-out of future funding after the initial drawdown, but she argued that the defender should have been aware that outstanding borrowings on Countess Gate were linked to the financing of the development of Gleneagles. All statements made by the Bank were made in the context of an acknowledged interdependency. It would have been clear to a reasonable outside observer that there was nothing absolute about the Bank's commitment to provide development funding. Further, there was no express assurance given by the Bank. As a matter of law, only an express statement could give rise to a collateral warranty. There was no express statement in the telephone conversation of 14 June 2007 that development funding would be made available. There were, it was accepted, statements that the Bank was supportive, understood the position, understood that the plots had to be built out and understood that funding would be required. The Bank was effectively saying that it was up to the defender to decide whether or not to go ahead without a firm commitment from it. Accordingly, no promise to provide the funding could be implied and the collateral warranty case fell at the first hurdle. There was a separate question whether, even if a promise could be implied, the parties intended it to be binding. The clear answer to that was: No. The parties were committed at the time of entering into the loan agreements on 24 and 25 July 2007. It could not have been intended that a statement made six weeks earlier should bind the parties in advance of them entering into the loan agreements. In support of her submissions Mr Munro relied on the cases to which I have referred and on the decision of the House of Lords in Heilbut Symons & Co. v Buckleton  AC 30, at 32 and 47. On the importance of context, she referred me to the decision of Lord Hodge in Parks of Hamilton (Holdings) Ltd. v Colin Campbell (17 December 2008 unreported,  CSOH 177) at para..
 In Heilbut Symons & Co. v Buckleton, the House of Lords held that there was no evidence sufficient to support a finding of collateral warranty. Lord Moulton, whilst accepting the possibility of a collateral warranty, cautioned against too ready a willingness to find one established. He said this (at p.47):
"It is evident, both on principle and on authority, that there may be a contract the consideration for which is the making of some other contract. 'If you will make such and such a contract I will give you one hundred pounds,' is in every sense of the word a complete legal contract. It is collateral to the main contract, but each has an independent existence, and they do not differ in respect of their possessing to the full the character and status of a contract. But such collateral contracts must from their very nature be rare. The effect of a collateral contract such as that which I have instanced would be to increase the consideration of the main contract by 100l., and the more natural and usual way of carrying this out would be by so modifying the main contract and not by executing a concurrent and collateral contract. Such collateral contracts, the sole effect of which is to vary or add to the terms of the principal contract, are therefore viewed with suspicion by the law. They must be proved strictly. Not only the terms of such contracts but the existence of an animus contrahendi on the part of all the parties to them must be clearly shewn. Any laxity on these points would enable parties to escape from the full performance of the obligations of contracts unquestionably entered into by them and more especially would have the effect of lessening the authority of written contracts by making it possible to vary them by suggesting the existence of verbal collateral agreements relating to the same subject-matter."
Lord Moulton's cautious approach is a salutary reminder that in all cases where the question is whether parties have entered into a contract and, if so, on what terms, it is important to have regard not only to the nature of the statement made by one party to another but also to the context in which it was made. This is emphasised by Ormrod and Shaw LJJ in Esso v Mardon. At p.825H-826C, Ormrod LJ, having reviewed a number of the authorities and the "tests" propounded in them, said this:
"In my judgment, these tests are no more than applied common sense.
A representation of fact is much more likely to be intended to have contractual effect than a statement of opinion; so it is much easier to infer that in the former case it was so intended, and more difficult in the latter. Similarly, where statements of future fact or forecasts are under consideration, it will require much more cogent evidence to justify the conclusion that such statements were intended to be contractual in character. It is, therefore, with respect to Mr. Ross-Munro's argument, not an answer to say, simply, that the statement relied upon was an expression of opinion or a forecast and therefore cannot be a warranty. In my view, following Lord Moulton in the Heilbut, Symons case, at p. 50, the test is whether on the totality of the evidence the parties intended or must be taken to have intended that the representation was to form part of the basis of the contractual relations between them."
Shaw LJ said this (at p.831D-E):
"What is clear from that case is that the answer to the question warranty or no warranty cannot be given by looking simply at the words which are used. How must the respective parties have regarded the representation when it was made? How were they then related respectively to the subject matter? What was the purpose of making the representation and might it influence the outcome of what was in negotiation between the parties?"
In Inntrepreneur Pub Co. (GL) v East Crown Ltd. the claim based on collateral warranty failed inter alia because of the existence of an "entire agreement" clause. But, in para.10 of his judgment, Lightman J identified what he called "the relevant legal principles regarding the recognition of pre-contractual promises or assurances as collateral warranties" in the following five propositions:
"(1) a pre-contractual statement will only be treated as having contractual effect if the evidence shows that the parties intended this to be the case. Intention is a question of fact to be decided by looking at the totality of the evidence;
(2) the test is the ordinary objective test for the formation of a contract: what is relevant is not the subjective thought of one party but what a reasonable outside observer would infer from all the circumstances;
(3) in deciding the question of intention, one important consideration will be whether the statement is followed by further negotiations and a written contract not containing any term corresponding to the statement. In such a case, it will be harder to infer that the statement was intended to have contractual effect because the prima facie assumption will be that the written contract includes all the terms the parties wanted to be binding between them;
(4) a further important factor will be the lapse of time between the statement and the making of the formal contract. The longer the interval, the greater the presumption must be that the parties did not intend the statement to have contractual effect in relation to a subsequent deal;
(5) a representation of fact is much more likely intended to have contractual effect than a statement of future fact or a future forecast."
Propositions (1) and (2) make the point that the well-known principles of contractual interpretation apply to collateral contracts as they do to other contracts. In all such cases, any assessment of the meaning of what was said between the parties must depend on the context. So also must the question of whether the party making the statement is to be held bound by it. Propositions (3) and (4) identify particular aspects of the context which are likely to be of great importance. So too, though in a different way, does proposition (5). The exercise for the court is, as Ormrod LJ put it in Esso v Mardon, one of applied common sense having regard to the need for caution emphasised by Lord Moulton.
 I have already found that in the telephone conversation of 14 June 2007, Ms Hutchison made a statement which, viewed objectively in the context of what had gone on before, meant that the Bank was committing itself to providing the development funding. I have taken into account Ms Munro's reference to the fact that the Bank was throughout concerned to assess the state of the defender's borrowing - and it is true that, in the context of considering the whole proposal, there were discussions about when properties might be sold and loans repaid - but this does not lead to the conclusion that it must have intended to keep its options open about whether to advance the development funding until later. It is equally consistent with the Bank having wanted to consider this carefully before deciding to commit itself to the whole package of funding. The defender was entitled, in my opinion, to take the view that the state of his indebtedness was a matter which the Bank had already taken into account. The Bank knew from what the defender had said on more than one occasion, that the defender was not going to go ahead with the purchase unless he had an assurance that he would get the development funding. In those circumstances I have no doubt that, viewed objectively, the Bank's statement (which was reasonably interpreted to be such an assurance) was intended to be binding or, as it is sometimes put, to have contractual effect; and was reasonably understood as such. The factors mentioned by Lightman J in propositions (3) to (5) have much less significance in this case than they might do in others. As to (3), the undisputed evidence was that on one or more previous occasions the Bank orally committed itself to the full package of funding, but did not present documentation covering all aspects of the loan at the one time. The defender said that, in light of this, the fact that the loan documentation only covered the purchase price did not concern him. That position is understandable. There is little significance, therefore, in the fact that neither the Indicative Terms signed on 21 June 2007 nor the loan agreements signed on 24 and 25 July 2007 included a term dealing with future development funding. As to (4), the Indicative Terms were signed within a week of the confirmation given by the Bank on 14 June 2007 that funding would be made available for the development. Indeed, that telephone call was the trigger for the signing of that document, and led, without further negotiation, to the loan agreements being signed a month later. So the question of timing does not tell against the defender's case on collateral warranty. As to (5), it is true that what is relied on here is a promise as to the future. But that is what the defender was looking for all along, as the Bank knew or ought to have known. Nor was it casually thrown out by the Bank; on the contrary the defender kept pressing for it and waiting until it came before committing himself. In the circumstances of this case, I do not perceive that to be a difficulty.
 I am satisfied that the defender has made good his case that the Bank gave him an assurance that funding would be made available for the development at Plot 5 in an amount of up to £700,000. It did so in circumstances where it knew (or ought to have known) that he was waiting for such an assurance before committing himself to the purchase. It knew, therefore, that he would rely on that assurance in going ahead with the purchase and entering into loan agreements with the Bank. He did rely on it in the manner anticipated. The case for collateral warranty had been made out.
Was the promise sufficiently certain?
 Ms Munro raised the question of certainty. She argued that questions remained unresolved. What amount was to be advanced? And on what terms? She referred to Gloag on Contract (2nd Ed.) at p.11 and MacArthur v Lawson 1877 4 R 1134. The test was whether it was possible to frame a decree of specific implement. Here the promise or assurance was too vague. I disagree. The amount of the advance sought was set out in the initial proposals submitted to the Bank. It was £700,000 then and it never changed. Whether it would all be taken up would depend on progress in the sale of other properties, but that does not affect the principle. The Bank knew that that was what it was being asked for, and by its response that was what the Bank committed itself to, a facility of up to £700,000 to fund the building out of Plot 5. The rate of interest was never going to be an issue - the parties would know what rates were being applied to other loans. Nor was the term of the loan likely to be a real issue. Mr Dunlop referred me to the well-known passage in the Opinion of the Lord President (Clyde) in R&J Dempster Ltd. v The Motherwell Bridge and Engineering Co. Ltd. 1964 SC 308 at 328. I do not consider that the promise which I have found to have been made gives rise to any real problems of uncertainty.
 Ms Munro raised a question of Ms Hutchison's authority to bind the Bank. After some discussion, however, she did not press the point. In my opinion she was right not to do so. It was, in my opinion, surprising that the Bank should have taken this point. Ms Hutchison was clearly held out by the Bank as the person through whom its decision would be communicated to the defender. She had actual authority to communicate the Bank's decision. She did in fact communicate the Bank's decision to the defender. She told the defender, put short, that the Bank had agreed to fund the development. She thereby bound the Bank. He was entitled to rely on what she said whether or not she was accurately representing the Bank's position. But it was suggested that Ms Hutchison only had authority to communicate decisions that were in fact made. I do not accept that, but even if were so it does not assist the Bank. The statement which Ms Hutchison made to the defender carried with it the implication that the Bank had had indeed decided to approve the funding. It was evidence of the Bank's decision, indeed the only evidence before the court as to the Bank's decision. No evidence was called to suggest that the Bank had not in fact approved the development funding. And in the absence of witnesses called by the Bank, the court will draw inferences most favourable to the defender. In those circumstances it is not shown that Ms Hutchison exceeded her authority. But as I have said, the point was ultimately dropped, and I need not consider it in more detail.
 As an alternative to collateral warranty, the defender raised a case of personal bar. Mr Dunlop recognised, however, that there were difficulties in such a case. The issues of representation and reliance were the same. However, the consequence of the plea, if successful, might be to prevent the Bank ever calling in the loan. That would not be equitable. I consider that Mr Dunlop was correct in identifying the difficulties. Further, on the facts I have found established, the plea of personal bar adds nothing to the defender's case. If, as I have found, the representation and reliance are both made out, and it is found that the Bank intended its assurance to be binding, then the plea of personal bar is unnecessary. If they are not made out, it will fail.
 For the reasons explained above I am satisfied that the defender succeeds in his case of collateral warranty. Before pronouncing an interlocutor to this effect, I shall, as requested by the parties, put the case out By Order for discussion as to further procedure.