Remit From The Sheriff Appeal Court In The Appeal David Kennedy Against The Royal Bank Of Scotland Plc
| Jurisdiction | Scotland |
| Judge | Lord President,Lord Drummond Young,Lord Brodie |
| Neutral Citation | [2018] CSIH 70 |
| Date | 15 November 2018 |
| Docket Number | XA18/18 |
| Court | Court of Session |
| Published date | 15 November 2018 |
FIRST DIVISION, INNER HOUSE, COURT OF SESSION
[2018] CSIH 70
XA18/18
Lord President
Lord Brodie
Lord Drummond Young
OPINION OF LORD CARLOWAY, the LORD PRESIDENT
in the Remit from the Sheriff Appeal Court
in the appeal
DAVID KENNEDY
Pursuer and Appellant
against
THE ROYAL BANK OF SCOTLAND PLC
Defenders and Respondents
Pursuer and Appellant: McIlvride QC; Harper Macleod LLP
Defenders and Respondents: DM Thomson QC, S Murdoch (sol adv) ; Burness Paul LLP
15 November 2018
Introduction
[1] This appeal concerns the pursuer’s term loan arrangements with the defenders. The
pursuer avers a breach of contract; being the defenders’ early termination, and demand for
repayment, of three loans. The issue is whether any obligation to make reparation in respect
of the alleged breach has prescribed under section 6 of the Prescription and Limitation
(Scotland) Act 1973.
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Procedural history
[2] The action was raised on 2 April 2015. On 21 April 2016, after a debate, the sheriff
found that the pursuer had pled a specific and relevant case of breach of contract, but held,
as a matter of relevancy, that any obligation to make reparation had prescribed. He
sustained the defenders’ plea-in-law to that effect but dismissed the action, rather than
assoilzing the defenders. The Sheriff Appeal Court allowed the pursuer’s appeal on
prescription. They held that there was no “material” on which the sheriff had been entitled
to reach the conclusion that the defenders’ demand, for repayment of substantial sums of
money within a short period of time, was bound, as at that moment, to cause the pursuer
loss. A preliminary proof on prescription was allowed and the cause was remitted to the
sheriff. The same sheriff, who had already dismissed the action, heard the proof. On
23 October 2017, he reached the same conclusion on prescription; this time holding that the
defenders had been in breach of contract, but that they should be assoilzied on the basis of
prescription.
[3] The pursuer appealed again. The appeal was appointed provisionally to the SAC’s
accelerated procedure. However, on 18 January 2018, on joint motion, it was remitted to this
court in terms of section 112 of the Courts Reform (Scotland) Act 2014 “given the current
flux in the law of prescription” and because the appeal raised “novel and more particularly,
complex, issues”. On 29 August 2018, the court allowed the defenders to lodge late grounds
of cross appeal.
Background
[4] The pursuer runs a car sales business. He also owned nine “buy to let” residential
properties, which were subject to standard securities in favour of the defenders. These
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enterprises were supported by three term loans, including a revolving one. By letter dated
8 February 2010, the defenders purported to terminate the loans before the expiry of the
terms, citing an irretrievable breakdown in the bank-customer relationship. They gave the
pursuer two days in which to repay £532,077.88. If the loans were not repaid, the defenders
stated that they would follow their specified debt recovery procedure. By letter of
12 February 2010, following representations by the pursuer’s solicitor, the defenders
extended the period for full repayment to 60 days from 12 February. The pursuer’s evidence
was that he had been the subject of a proceeds of crime investigation, having sold cars to
persons believed to be involved in organised crime, but no proceedings had been taken
against him. There was no evidence from the defenders about this.
[5] On 4 March 2010, the pursuer wrote to the defenders referring to the unfavourable
environment in which to secure alternative finance and the costs associated with
legal/valuation work, along with arrangement and security fees. In the absence of a
satisfactory explanation for the breakdown in the banking relationship, the pursuer could
not obtain alternative finance. Over the course of March and April, he contacted friends and
associates, whom he thought might be interested in purchasing the properties at full value,
so that he could satisfy the demand for repayment. His efforts were unsuccessful. In early
March 2010, the pursuer’s wife offered to obtain funding in her own name to purchase the
properties. On 22 March, she had an offer in principle, of loan facilities at a level of 75% of
the total value of the nine properties, from Birmingham Midshires. On or about 25 March,
dispositions and standard securities were executed by the pursuer and his wife. The
instructions to the solicitor, who acted for all parties, were that the conveyancing and
security transactions were only to proceed if and when the funds from Birmingham
Midshires became available.
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