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You are here: BAILII >> Databases >> United Kingdom Supreme Court >> Carlyle (Scotland) v Royal Bank of Scotland Plc (Rev 1) [2015] UKSC 13 (11 March 2015) URL: https://www.bailii.org/uk/cases/UKSC/2015/13.html Cite as: 2015 SC (UKSC) 93, 2015 SLT 206, [2015] UKSC 13, 2015 GWD 10-175 |
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Hilary Term
[2015] UKSC 13
On appeal from: [2013] CSIH 75
Carlyle (Appellant) v Royal Bank of Scotland Plc (Respondent) (Scotland)
before
Lord Neuberger, President
Lord Kerr
Lord Clarke
Lord Reed
Lord Hodge
JUDGMENT GIVEN ON
Heard on 20 November 2014
Appellant Roddy Dunlop QC Alasdair N McKenzie (Instructed by MBM Commercial LLP) |
Respondent Richard Keen QC Alastair Duncan QC (Instructed by Brodies LLP) |
LORD HODGE: (with whom Lord Neuberger, Lord Kerr, Lord Clarke and Lord Reed agree)
The bank's action
The Lord Ordinary's findings of fact
"On 14 June 2007 Ms Hutchison telephoned [Mr Carlyle]. [He] described her manner as enthusiastic. … she said: 'You'll be pleased to know it's all approved, Edinburgh are going for it for both houses'. … 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."
Counsel, clarifying that finding, informed this court that the deposits were paid on 14 June 2007, which was before the conclusion of the contract to purchase plot 5.
The decision of the Inner House
(i) that on a proper objective analysis Ms Hutchison's telephone statement on 14 June 2007 was simply informing Mr Carlyle of an internal decision to approve the funding in principle (paras 57 and 61);
(ii) that the prior transactions between the bank and Mr Carlyle and also the events after the telephone conversation of 14 June 2007 (in particular the signing of the indicative terms and the written loan agreements) showed that the bank was not under any legal obligation until there was a written loan agreement (paras 57 and 62-63); this was consistent with normal banking practice (para 60); and
(iii) that the alleged promise or warranty was not legally effective as the parties had not agreed terms that were essential to the loan contract including maximum draw down, interest rates, time of draw down, method and time of repayment, and securities (para 58).
The Second Division also commented on a pleading point, namely that Mr Carlyle had pleaded a collateral warranty rather than a promise to provide the full funding for plot 5 (para 59). But the court did not decide the appeal on the basis of that point.
The bank's case on appeal
Discussion
(i) The role of the appellate court
"It can, of course, only be on the rarest occasions, and in circumstances where the appellate court is convinced by the plainest considerations, that it would be justified in finding that the trial judge had formed a wrong opinion."
Lord Reed summarised the relevant law in para 67 of his judgment in Henderson in these terms:
"It follows that, in the absence of some other identifiable error, such as (without attempting an exhaustive account) a material error of law, or the making of a critical finding of fact which has no basis in the evidence, or a demonstrable misunderstanding of relevant evidence, or a demonstrable failure to consider relevant evidence, an appellate court will interfere with the findings of fact made by a trial judge only if it is satisfied that his decision cannot reasonably be explained or justified."
When deciding that a judge at first instance who has heard the evidence has gone "plainly wrong", the appeal court must be satisfied that the judge could not reasonably have reached the decision under appeal.
(ii) The opinion of the Second Division
"Without specification of the essential elements of [the provision of banking facilities] (including the maximum draw down, interest rates, time of draw down, method and time of repayment and securities), there could be no concluded agreement capable of enforcement."
Mr Dunlop QC challenged this statement as a legal error. He referred to the decision of the House of Lords in Neilson v Stewart 1991 SC (HL) 22 in which it was held that in Scots law the contract of loan implied an obligation to repay and did not require express terms as to the rate of interest or the date of repayment. In this case the parties to the loan were clearly identified and the parties had proceeded on the basis that Mr Carlyle would need up to £700,000 for the development of plot 5. Mr Keen QC did not dispute that it was possible to have a valid contract of loan without an express statement of the elements which the Second Division had listed. He suggested in his written case that the Second Division had been considering what the parties would have treated as essential to their bargain in this case and not what were the bare essentials of a contract of loan in the general law.
"The Court has an entirely neutral approach when determining whether the parties intended to enter into a contract. Having decided that they had that intention, however, the Court's attitude will change. It will then do its best to give effect to their intention and, if at all possible, to uphold the contract despite any omissions or ambiguities (Hillas & Co Ltd v Arcos Ltd (1932)147 LT 503; [1932] All ER 494, R & J Dempster Ltd v The Motherwell Bridge and Engineering Co Ltd 1964 SC 308 and Attorney-General v Barker Bros Ltd [1976] 2 NZLR 495)."
I agree with that statement which supports Lord Glennie's approach, although there may need to be further evidence in the next stage of this case about the prior dealings between the parties and any shared understandings in order to determine what terms are to be included by implication.
(iii) Mr Keen QC's additional points
(iv) A collateral warranty
(v) The bank's application to amend
Conclusion