Scottish Court of Session Decisions

[1] This action arises out of a series of banking transactions between the appellant and the respondents. Before 1994, the appellant had at least three accounts with the respondents, namely, (1) a personal current account in his own name, No. 270336: (2) a personal term loan account, No. 275621: and (3) a current account in the name of "John Tominey trading as Lundie Properties", No. 272061.

[2] The present action was raised against the defender and appellant by the pursuers and respondents in the Sheriff Court, Glasgow in 1994. It contained craves for payment of four sums allegedly due. The first crave was for a balance of £10,997.78 due on account no. 270336 as principal, the account being overdrawn, and the second crave was for payment of a sum of interest due on that account. The third crave was for payment of £75,606.16 as principal due on the term loan account no. 275621 and the fourth crave was for a sum due as interest on that account. After certain procedure, there was a debate before the sheriff on 24 June 1996. By that time, the first and second craves had been satisfied by the application of sums arrested elsewhere by the respondents. As regards the term loan, the position was that the term for repayment had not expired, but the respondents maintained that the loan had become repayable because the appellant had been in default in respect of account no. 270336. In brief, the appellant's defence was that the alleged default had arisen only because the respondents had not followed his instructions in respect of the crediting of a cheque paid by him to them. The appellant lodged a counterclaim seeking compensation for loss caused to him by the respondents' action in realising certain insurance policies which they held on security.

[3] On 3 July 1996, the sheriff (Gordon) dismissed the counterclaim but allowed a proof before answer in respect of the outstanding craves, numbers 3 and 4. On 16 August 1996, the appellant was found liable to the pursuers in the expenses of the debate. On 27 August 1996, the appellant lodged a note of appeal against the interlocutor of 3 July 1996. Sundry procedure followed, including a sist for possible settlement, but there was no settlement and the appeal was never heard. On 28 May 1998, the sist was recalled. On 30 July 1998, the appeal was dismissed for want of insistence. On 3 March 1999, the appellant's solicitors withdrew from acting and since that time he has represented himself.

[4] In April 1999, the respondents lodged a motion for summary decree. By this time, the term of the term loan had expired and it was maintained that the appellant now had no defence to the claim for payment of the principal and interest due in respect of the term loan. On 7 May 1999, the sheriff (Peebles) granted decree for the principal sum. After a further hearing, the sheriff, on 4 June 1999, granted decree for interest on the principal sum and found the appellant liable in expenses for the period up to 23 June 1993, but allowed a proof in respect of expenses after that date. A diet for proof was fixed for 20 July 1999, but the proof did not proceed. Instead, after hearing parties, the sheriff (Raeburn) found the appellant liable to the respondents in the remaining expenses. The appellant then appealed to the sheriff principal, who adhered to the interlocutors of the sheriffs.

[5] The appellant has now appealed to this court. The appellant's principal complaint was that the summary decree should not have been pronounced on 7 May 1999. He maintained that the proof allowed on 3 July 1996 should have proceeded, so that the merits of his defence could have been enquired into. He also sought to refer to the subject-matter of the counterclaim, that is, the bank's action in realising the insurance policies held as security for his obligations to them in a manner which caused him loss.

[6] In his note annexed to the interlocutor of 3 July 1996, the sheriff observed that, although the sums due in respect of the first and second craves, that is the sums due in respect of the personal current account, had been settled, there remained an issue in relation to that account because it was default on that account which, according to the respondents' submission, had rendered the sums claimed in the third and fourth craves payable. In outline, what the appellant had averred was that he had paid a cheque to the pursuers under an express agreement with the bank manager that the cheque should be applied so as to prevent a default situation arising. The cheque was payable to the appellant "trading as Lundie Properties", and it was in fact credited to account no. 272061, and as a result account no. 270336 came into default. Certain arguments were presented to the sheriff to the effect that there was, in any event, an implied appropriation of the sum paid to the account in default, but those arguments were rejected. The sheriff held that the averments of an express agreement with the bank manager that the cheque should be applied to the personal current account, despite the fact that it was made out as payable to the appellant trading as Lundie Properties, required enquiry. The counterclaim, as we have already noted, was founded on allegations that the pursuers had realised insurance policies which had been assigned to them in security, under circumstances which had caused the defender loss. The sheriff considered these allegations but held the counterclaim irrelevant, essentially on the ground that the averments showed that the defender had expressly authorised the pursuers to realise the policies as they had done. Accordingly, the only issue upon which proof was allowed was the issue whether there had been an express agreement to appropriate the cheque to the personal current account so as to prevent a default and the only effect of success in that defence would have been to establish that the amount claimed in respect of the term loan was not due and payable at that time. A successful defence would have had no effect upon the defender's obligation to repay the personal loan in due course, according to its terms.

[7] By the time the matter came before Sheriff Peebles, the term of the loan had expired. Although there is no note from Sheriff Peebles setting out his reasons for granting the summary decree, it is clear that he did so because of a submission made to him that the loan was now due according to its terms. The proof which was allowed in relation to expenses was, therefore, a proof limited to the same issues as would have arisen in the proof allowed by the interlocutor of 3 May 1996.

[8] When the case came before Sheriff Raeburn, the pursuers were represented and the sheriff was told that should evidence be required the pursuers were in a position to proceed with witnesses available to give evidence. The defender made a statement in regard to which the sheriff says:

[9] The opinion of the sheriff principal narrates the history of the action and the decisions of the sheriffs and goes on to say that the defender's submissions failed to appreciate that after August 1996, the date of expiry of the term loan, he had, as a matter of contract, no answer to the pursuers claim for the amount outstanding on the term loan. The sheriff principal observes that there might have been a claim for damages but that the counterclaim had been held irrelevant and the earlier appeal had not been proceeded with and he adds that it was not for him to say whether any other basis of damages might be available. In any event he says that success in the proof would not have had any effect except to find that the defender was not in default in his obligations as at January 1993.

[10] In presenting his appeal, the appellant read a statement and referred to a number of documents. His submissions were not easy to follow and are not easy to summarise, because he repeatedly referred to other accounts, in addition to those listed at the start of this opinion, and to other transactions which had not figured in any way in the pleadings in this action or in any of the previous debates or judgments. He repeated the submission that he could not understand why the proof before answer allowed by Sheriff Gordon had not been able to proceed. He also repeated the submission that the insurance policies had been realised in such a way as to cause him serious loss. In addition, however, he sought to maintain that there had been an agreement to the broad effect that the bank would provide facilities to enable him to continue with and complete certain property transactions. He said that he, or a company or companies under his control, had acquired certain properties with the object of refurbishing them and selling them at a profit. He maintained that it had been understood and agreed that the bank would provide facilities for him to do so and that the loan should be repaid out of the proceeds of these transactions. He further referred to an account in the name of Lundie Properties Limited, which had existed prior to the arrangements for the personal current account and the term loan account being made, and suggested that it had been agreed that that account should be reactivated and used as a means of providing him with the necessary facilities. He made reference to a number of letters relating to Lundie Properties Limited and its account and submitted that in the light of the arrangements for that account and the bank's failure to provide him with facilities, as had been agreed, the claim for payment under the term loan agreement had become invalid. He also maintained that his agreement to the realisation of the insurance policies had been secured by coercion on the part of the bank, who had threatened bankruptcy or liquidation proceedings.

[11] We have considered, so far as we can understand them, the submissions made by the appellant. Many of them relate to matters which are not properly before us because they have not been made the subject of averments in the action and have not previously been referred to. In any event, however, nothing was said to us which appeared capable of providing an answer to the simple claim on behalf of the respondents that the term of the term loan had expired and repayment was therefore due. Even if there is some substance in some of the appellant's submissions, they could only at best justify some claim for damages and no such claim is now before the court. Nothing has been stated to suggest any possibility that the defender has any answer to the claim for repayment of the term loan, which represents money of which he has had the benefit. The appellant explained that the term loan represented a reorganisation of previous obligations but, even taking that into account, nothing has been said to suggest any defence to the claim for repayment. In these circumstances, no reason has been stated for differing from the decision of the sheriffs and the sheriff principal and the appeal falls to be rejected.

[12] We also heard submissions about expenses. It might be suggested that if the defender was correct in his defence, the action was premature and that that should have some effect upon liability for the expenses. On the other hand, when the opportunity for a proof on that question was offered, the defender was not prepared to proceed. In the whole circumstances, we have come to the conclusion that the pursuers are entitled to the expenses of the whole proceedings.