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Mr Carlyle v Bank of Scotland (Scottish Case and Supreme Court)


by Expert Evidence

This case concerned a property developer and a bank, and a loan to fund not just the purchase of a plot of land, but the building of a new house on that land.

Mr Carlyle applied to the Royal Bank of Scotland (‘the Bank‘) for a substantial loan making it clear to the Bank that the loan was to fund the purchase and
development of a piece of land. His purchase of the land was subject to a ‘buy-back’ clause which gave the seller power to re-purchase the plot of land if
construction of the house was not completed within a specified time. In his discussions with the Bank prior io the loan being concluded Mr Carlyle drew attention to the buy-back clause. This was also reiterated in subsequent phone calls with the Bank. The loan was approved on 14 June 2007 but in August 2008 Mr Carlyle was told that the Bank would not be providing money for the construction element of the project and made a claim against him for £1,449,660 plus interest. Mr Carlyle defended the action and counterclaimed for his loss of profit on the enterprise. The court had to decide whether, on an objective assessment, the Bank intended to enter into a legally binding promise to lend the defendant money not just for the purchase of the land but also to build the house on it.

The Lord Ordinary found that there was a collateral warranty to make development funding available to Mr Carlyle and that the Bank was in breach of it. The Bank appealed and the court (the Second Division of the Inner house) allowed the Appeal, whereupon Mr Carlyle took his claim to the Supreme court.

Wise men speak because they have something to say;Fools because they have to say something. Plato

The Supreme court unanimously allowed the appeal and set aside the previous judgement, remitting the case to the Court of Session. It relied on the findings of the original judge (the Lord Ordinary) who had heard all the evidence and stated that, on an objective analysis, the judge had a reasonable evidential basis for finding that the Bank made a legally binding promise to provide development funding in the telephone telephone call on 14 June 2007. Once it had been found that the Bank had the intention to make a legally binding promise, there was a requirement to look for ways to give effect to that promise.

Link: Carlyle v Royal Bank of Scotland Plc [2015] UKSC 13

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