James Michael Shanley Against Clydesdale Bank Plc
| Jurisdiction | Scotland |
| Judge | Lady Wolffe |
| Neutral Citation | [2019] CSOH 75 |
| Docket Number | CA47/16 |
| Date | 04 October 2019 |
| Court | Court of Session |
| Published date | 04 October 2019 |
OUTER HOUSE, COURT OF SESSION
[2019] CSOH 75
CA47/16
OPINION OF LADY WOLFFE
In the cause
JAMES MICHAEL SHANLEY
Pursuer
against
CLYDESDALE BANK PLC
Defender
Pursuer: Sanders; Jones Whyte Law
Defender: Dunlop QC, MacGregor; CMS Cameron McKenna Naba rro Olswang LLP
4 October 2019
Introduction
Background
[1] This action concerns a bridging loan (“the Bridging Loan”) provided by the defender to
the pursuer and his wife (who is not a party to this action) in December 2008 for the purchase of
a property in Ettrick Road (“Ettrick”) pending the sale of the pursuer’s property (co-owned
with his wife) at Frogston Road, Edinburgh (“Frogston”). Missives were concluded in May
2008 with a Mr and Mrs D (“the purchasers”) for their purchase of Frogston, with a date of
entry of 12 December 2008. The purchasers in fact never completed the purchase of Frogston.
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The defender subsequently declined to grant a mortgage to the pursuer for his purchase of
Ettrick, principally because he was unable to provide sufficient proof of income. Frogston was
eventually sold off in 2013 and the Bridging Loan repaid.
Pursuer’s grounds of action
[2] Putting it at its simplest, by this action the pursuer seeks recovery of the cost of the
Bridging Loan. The action, which has been in dependence since 2014, has undergone a
prolonged evolution resulting in a Closed Record approaching 50 pages. While the pursuer has
been a party litigant at some points during that period, the pleadings were framed by Counsel
and the pursuer was represented at the proof. The grounds of the pursuer’s action include
breaches of contract and delict -the latter framed essentially as a Hunter v Hanley standard of
liability - as well as breach of statutory duty in the form of the Mortgages and Home Finance
Code of Conduct Sourcebook (“MCOB”). The breaches of MCOB concern the facility letter
(“the Facility Letter”) associated with the Bridging Loan. The first two grounds of liability
depend on the pursuer proving that the Bridging Loan was provided in the context of an
“advisory relationship” (as that was explained in Standard Chartered Bank v Ceylon Petroleum
Corp [2011] EWHC 1785 (“Standard Charter”) at paragraph 505, adopting the analysis of Gloster J
(as she then was) in JP Morgan Charter Bank v Springwell Navigation [2018] EWHC 1186, and in
Grant Estates Ltd (in liquidation) v The Royal Bank of Scotland [2012] CSOH 133 (“Grant Estates”) at
paragraph 73). (In this opinion I shall use the phrase “advisory relationship” in the sense more
fully defined in these authorities.) The financial adviser was said to be David Meek
(“Mr Meek”), a relationship manager of the defender who was the point of contact (putting it
neutrally) between the defender and the pursuer. The pursuer avers (in article 10) that but for
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any breach, the pursuer would not have concluded missives for the purchase of Ettrick and
would not have accepted the Bridging Loan from the defender.
The defender’s position
[3] The defender’s position is, first, that there was no advisory relationship. Second, even if
there were, the pursuer’s first two grounds of liability (in contract and delict) are precluded
because they only arise in the context of an advisory relationship, which is outwith the scope of
their relationship (as non-advisory) as defined in the basis clause (“the basis clause”) or because
these two grounds are contractually barred by reason of a contractual non-reliance provision
(“the non-reliance clause”) in the facility letter signed on 15 December 2008 (“the Facility
Letter”). (The relevant part of the Facility Letter is reproduced at Appendix A. The basis clause
is in section 2 and the non-reliance clause is in the sixth unnumbered paragraph in section 14
thereof.) The defender did not argue that the basis or non-reliance clauses excluded MCOB. To
that extent, the MCOB ground was free-standing. Separately, not every breach of MCOB sounds
in damages. In particular, not all breaches of an MCOB duty render a lender liable for loss
arising from lending (per Zaki and Others v Credit Suisse (UK) Ltd [2013] EWCA Civ 14 (“Zaki”)
because a borrower is not entitled to compensation for an otherwise suitable investment just
because there has been some breach (Zaki, at para 107). In relation to causation, the pursuer
must prove that but for any breach of duty, he would not have proceeded with the Bridging
Loan.
Scope of Preliminary Proof
[4] I heard a six-day preliminary proof restricted to liability and causation. The issues of
quantification and contributory negligence, should they arise, were outwith the scope of the
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