Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION

[2015] CSOH 161

 

CA112/14

OPINION OF LORD TYRE

in the cause

PAUL DICKENS

Pursuer;

against

KEITH VEITCH ANDERSON AND ANOTHER

Defenders:

Pursuer:  Party

Defenders:  Young, QC;  bto

3 December 2015

Introduction

[1]        The pursuer (“Mr Dickens”) was the sole director and shareholder of New Alba (Redwood House) Limited, a company in liquidation which is the second defender in this action.  The first defender (“Mr Anderson”) is an insolvency practitioner who was appointed liquidator of the second defender in December 2006.  Mr Dickens seeks payment of £2,000,000 by Mr Anderson personally or, alternatively, from the second defender, in respect of damages for losses said to have been sustained by him as a consequence of Mr Anderson’s failure in about 2008 to secure the partial discharge of an inhibition of Mr Dickens registered by the second defender on Mr Anderson’s instructions. 

[2]        At a hearing on 13 March 2015, I allowed parties a proof before answer on two specific issues, namely:

(1)        Whether, on or about 21 November 2008 during a telephone conversation between the first defender and Julie Crolla, the first and/or second defenders undertook any contractual obligation or made any representation to the pursuer in relation to the restriction of an inhibition over his property, and if so, what were the precise terms of such an obligation or representation; and

(2)        What were the reasons for the decision of the Woolwich Building Society in or about December 2008 – January 2009 to withdraw their offer to lend to the pursuer.

In order to lay a foundation in fact for his case against either of the defenders, the pursuer requires the first question in the first issue to be answered in the affirmative.  In order to establish a causal link between any breach of contractual or other duty by either of the defenders and the loss allegedly sustained by him, the pursuer requires the answer to the question in the second issue to be the existence of the inhibition.  The onus in relation to both issues rests, in the usual way, upon the pursuer.

 

Background: the debt due by Mr Dickens to the second defender

[3]        The second defender was a single purpose vehicle incorporated to carry out a residential development in Edinburgh.  Following a dispute with its contractor, the second defender was placed in voluntary liquidation and Mr Anderson was appointed as its liquidator.  In the course of the winding up, Mr Anderson raised an action in this court against Mr Dickens in respect of the making of certain payments which appeared to constitute unfair preferences in terms of section 243 of the Insolvency Act 1986.  The action was successful and, on 10 September 2008, decree was pronounced against Mr Dickens for payment to the second defender of sums totalling £280,750 plus expenses (see Anderson v Dickens [2008] CSOH 134).

[4]        Mr Dickens is an experienced property developer with a qualification in quantity surveying.  At the time when decree was granted against him, he owned a number of residential properties in Edinburgh.  These properties, most of which were let to tenants, had a very substantial value.  Borrowings from the Royal Bank of Scotland were secured over some of them, and borrowings from the Clydesdale Bank over others.  Mr Dickens and his wife, Mrs Kathleen Dickens, also owned their private residence (to which I shall refer as the Glenlockhart property), subject to a mortgage in favour of the Clydesdale Bank.  They had, however, entered into missives to purchase a new home (to which I shall refer as the Frogston property).  The missives for purchase of the Frogston property required payment of a deposit of £330,000.  Because Mr and Mrs Dickens did not have liquid funds available to pay the deposit, they entered into an agreement with the sellers to borrow the sum of £330,000 from them, with the loan being secured by a standard security granted over the Glenlockhart property.  This standard security was registered in the Land Register on 12 June 2008. 

[5]        On 4 September 2008, Mr and Mrs Dickens submitted an application to Barclays Bank plc (trading as “the Woolwich”) for a mortgage over the Glenlockhart property.  The application was submitted electronically on their behalf by Mr Derek Petrie, a Woolwich mortgage advisor employed by Barclays.   It was for an interest-only residential loan of £995,000.  The application form disclosed the existing loan in favour of the Clydesdale Bank, with an amount of £670,000 outstanding, but did not mention the security in favour of the sellers of the Frogston property.  The re-mortgage value of the property was stated as £1,660,000.  Under “additional information”, it was noted that “the extra money being raised is to buy another property”.

[6]        On 10 September 2008, the Clydesdale Bank wrote to Mr Dickens setting out the potential consequences of a movement of his mortgage over the Glenlockhart property to another lender.  The bank noted inter alia that the business facility covering his let properties currently had a loan to value percentage of 79.8% and that they would look for this to be reduced to 70%, in addition to repayment of all sums secured over the Glenlockhart property.

[6]        On 19 September 2008, at Mr Dickens’ request, a meeting took place between Mr Dickens and Mr Anderson at a café bar in Edinburgh called Cargo.  Mr Dickens expressed a desire to pay the sum due to the second defender.  What was said and/or agreed at this meeting is a matter of dispute.  Mr Dickens produced a “meeting note” typed shortly after the meeting which included the following “Points Raised”:

“…4.  Security to be offered ie Braid Road.

…6.  The way forward and timescales:

1. Requested list of Assets and Liabilities
2. Braid Road to be sold
3. PD to withdraw ICAS complaint
4. Ask tenants if they would buy the property

7.  Agreement by PD

a)  Decree served by KA

b)  However if payment plan seen to be co-operative, no action taken

c)  Possible 6 months

d)  No Inhibition or Sequestration if PD co-operates.

…9.  K Anderson agreed that PD sell properties.”

Mr Anderson sent an email on the day of the meeting to Mr Leon Breakey, solicitor with MacRoberts, who had been acting for him in the proceedings against Mr Dickens.  This email includes the following:

“Intimated that he is prepared to settle, has no liquid funds at present time, and offered to put in place a standard security over a property he owns at Braid Road in Edinburgh where there is equity of £300k with the property to go on the market immediately…

I requested Dickens to provide a complete list of his assets and liabilities by the end of next week which he has undertaken to provide.  I advised once we are in receipt of this and have carried out investigations we can consider his settlement proposal.  Dickens was looking for an assurance he will not get Sheriff Officers calling at his door.  I advised I would be taking advice but in all likelihood a charge would be served on him once decree has been granted but that charge would not be enforced if settlement arrangements can be agreed.  I advised Dickens that we have the ultimate sanction of sequestration if he does not co-operate and settlement is not received which he understood.”

 

[7]        In his evidence at the proof, Mr Dickens stated that at the meeting in Cargo he offered (i) security over a property at Braid Road before re-mortgaging the Glenlockhart property, and (ii) to put four flats that he owned in Morningside up for sale.  From the sale proceeds and the re-mortgaging of the Glenlockhart property through Barclays/Woolwich he would have ample funds to satisfy the decree against him.  The full proceeds of sale of the four flats could be made available without breaching the loan to value covenant in favour of RBS.  He said that he had proceeded to put the four flats on the market.  According to Mr Anderson’s recollection of the meeting, Mr Dickens offered to put two flats, at Braid Road and South Bridge respectively, up for sale; otherwise the email largely reflected his recollection.

[8]        Mr Dickens duly provided a statement of his assets and liabilities, together with a valuation of the property at Braid Road.  Mr Anderson proceeded on 3 October 2008 to serve a charge on Mr Dickens.  On 6 October, he advised Mr Dickens that his offer, which involved awaiting the sale in adverse market conditions of the Braid Road and South Bridge properties, one of which was jointly owned with his wife, was not satisfactory.  The following day, Mr Dickens telephoned Mr Anderson to complain that he was going back on an agreement reached at the meeting in Cargo.  Mr Anderson denied that any agreement had been reached.  Mr Dickens and Mr Anderson subsequently exchanged letters reiterating their respective positions.  There was no mention in this correspondence by either party of the four Morningside flats.

[9]        On 7 October 2008, Mr Petrie contacted Barclays’ mortgage centre to advise them inter alia  that Mr and Mrs Anderson now needed to borrow £1.2 million, because “they want to pay monies to their letting properties as well”.

[10]      At about this time Mr Dickens instructed RSM Tenon to act as an intermediary in his discussions with Mr Anderson.  Mrs Julie Crolla, then a partner in RSM Tenon, had for some years acted for Mr Dickens regarding his personal tax affairs; she was not an insolvency practitioner.  On 17 October 2008, Mrs Crolla wrote to Mr Anderson, on Mr Dickens’ instructions, to advise him that Mr Dickens had reached provisional agreement with the Clydesdale Bank to release capital against his property portfolio (which included the properties at Braid Road and South Bridge).  Mr Anderson provided Mrs Crolla with a calculation in which he estimated that the sum due to him, inclusive of expenses, was around £350,000, with interest continuing to accrue.

[11]      On 20 October 2008, Mr Anderson applied for and was granted warrant to inhibit Mr Dickens on the basis of the decree obtained against him.

 

Negotiations to discharge the inhibition

[12]      On 31 March 2008, Mrs Crolla informed Mr Anderson that Mr Dickens had made an application to the Debt Arrangement Scheme in order to buy some time.  She also advised that the Clydesdale Bank had declined to advance further funds and that Mr Dickens was trying to obtain funding from other sources.  Mr Dickens still hoped to be able to repay Mr Anderson in full out of the free proceeds of sale of the Braid Road and South Bridge properties, but neither property had yet been sold.  Mr Dickens instructed his then solicitors, Lindsays, to attempt to negotiate a deal with Mr Anderson whereby the inhibition would be restricted to allow the sale of these two properties in exchange for an irrevocable mandate on the remainder of the property portfolio, which failing to raise an action for recall of the inhibition.  This proposal was put to Mr Breakey of MacRoberts on 5 November.  Mr Breakey replied requesting up to date valuations and redemption statements, which were supplied the following day.  The total equity was £315,620.  Mr Anderson’s response, relayed to Mr Iain Penman of Lindsays by Mr Breakey, was that the equity was not sufficient to cover the sum due; that he noted that there were no concluded missives or even offers to purchase the properties; and that the inhibition could be restricted as and when sales took place.  In these circumstances, Mr Anderson was not willing to discharge or restrict the inhibition at this stage.  Lindsays lodged a petition in the Court of Session on Mr Dickens’ behalf for recall of the inhibition.

[13]      On 13 November 2008, Mr Dickens informed Mr Penman that he had secured offers of re-mortgage over the Glenlockhart property.  Mr Penman informed Mr Breakey of this and proposed that the inhibition over that property be loosened to allow the grant of a security for the new loan, out of which all debts, including the sum due to Mr Anderson, would be repaid.  Mr Anderson regarded this as encouraging news.  I should, however, note that none of the voluminous documentary evidence lodged for the proof contains any indication that the pursuer in fact had received any re-mortgage offers at this time.

[14]      On 17 November 2008, Mr and Mrs Dickens met Mr Penman and another Lindsays partner, Mr Derek Nash.  In his note of the meeting, Mr Penman recorded that Mr and Mrs Dickens had received a proposal from the sellers of the Frogston property that in place of the deposit they would pay the sum due to Mr Anderson in exchange for a secured loan agreement.  Mr Penman also noted that Mr Dickens’ other refinancing arrangements were “in principle” only.  Mr Penman sought and obtained an update from Mr Breakey on the sum due to Mr Anderson; the figure quoted was still £350,000.  Mr Penman relayed this information to Mr and Mrs Dickens.

[15]      At this time Mrs Crolla became involved once again in communicating with Mr Anderson on Mr Dickens’ behalf.  In an email dated 18 November 2008, sent to Mr Dickens and the sellers of the Frogston property and copied to Mr Nash and Mr Penman, she reported that she had spoken to Mr Anderson, who had confirmed that as soon as cleared funds were received he would have the inhibition removed from the register.  On 20 November, Mrs Crolla emailed Mr Anderson to inform him that Mr Dickens had an offer from a lender which would release sufficient funds from the Glenlockhart property to pay him the sum of £350,000, but that the lender wanted the inhibition to be lifted from that property only prior to the loan being drawn down.  She sought Mr Anderson’s agreement in principle to proceeding in this way.  The identity of the lender referred to was not disclosed.  There is, however, no further reference in the documentation lodged for proof to a loan by the sellers of the Frogston property.  On 21 November, Mr Anderson sent the following email, timed at 8.11 am, to Mrs Crolla:

“I would confirm that I am agreeable to the inhibition being restricted to exclude that [ie the Glenlockhart] property.  Paul Dickens will need to instruct his solicitors to prepare a discharge for me to sign.  I will also require a mandate in terms of which I will receive the funds either directly from the lender or from the solicitors.”

 

[16]      On the morning of 21 November 2008, Mr and Mrs Dickens attended a meeting at Mrs Crolla’s office at which Alistair Mitchell, another member of RSM’s staff, was also present.  In the course of that meeting Mrs Crolla made a telephone call to Mr Anderson.  The substance of that call is at the core of the first of the issues with which the proof was concerned.  According to Mr Dickens’ account, Mrs Crolla left the room to make the call.  On her return she informed Mr and Mrs Dickens that Mr Anderson had agreed to lift the inhibition if he received a cheque for £10,000.  Mr Dickens was adamant that he had not proposed the figure of £10,000; it must have come from Mr Anderson.  Mrs Dickens’ recollection was to the same effect.  On receipt of this information, Mrs Dickens returned home to collect her cheque book.  She wrote a cheque for £10,000 and handed it in to Mrs Crolla’s office later that day.  The cheque was sent to and received and cashed by Mr Anderson.

[17]      Mrs Crolla remembered meeting Mr and Mrs Dickens in her office on the date when a cheque for £10,000 was sent to Mr Anderson.  She did not recall the telephone call to Mr Anderson.  She had a general recollection of trying to have the inhibition lifted but could not remember any details of the discussions.  She remembered Mrs Dickens leaving the office to go and get a cheque for £10,000.  She could not recall what the payment was for, how the sum of £10,000 had been arrived at, or who had first mentioned the figure.

[18]      Mr Anderson had no specific recollection of the call from Mrs Crolla, although he accepted that it must have taken place.  He was adamant that he did not agree to discharge or restrict the inhibition in exchange for a payment of £10,000.  That would have made no commercial sense and would have been contrary to the position he had taken, supported by the advice of Mr Breakey, that the whole debt had to be paid before the inhibition would be lifted or restricted.  He recalled an offer to make a payment of £10,000 to account of the debt due as an indication that Mr Dickens was serious about resolving matters.  He had not proposed the figure of £10,000.

[19]      At 9.51 am on the same day, Mrs Crolla sent an email to Mr and Mrs Dickens, in which she forwarded Mr Anderson’s email sent at 8.11 am and stated inter alia: “As soon as I receive the cheque I will get it along to Keith Anderson”.  Mr Dickens then left a voicemail message for Mr Nash advising him that he had agreed to pay £10,000 to Mr Anderson to obtain a restriction of the inhibition removing the Glenlockhart property from its scope.  Mr Nash asked Mr Penman to contact MacRoberts to confirm whether they had instructions to this effect, and also asked him to draft a partial discharge of the inhibition.  Mr Penman produced a draft and sent it to Mr Breakey on 24 November.  Mr Breakey sought Mr Anderson’s instructions.  On 25 November, Mr Anderson replied:

“I am not sure that the discharge reflects what has been agreed.

I attach my email to Tenon following our exchange of emails last week.  You will note we were advised Paul Dickens had an offer from a lender and we agreed to restrict the inhibition in exchange for a mandate.  I note Lindsays email makes no mention of the mandate.  What is the position re expenses?  In the discharge is it covered by reference to the extract decree of 10 September?

I would confirm we received on Friday a cheque for £10,000.  This was offered, without any request from [us], as a payment to account and a sign of intent.”

 

[20]      There then followed a period of negotiation between Mr Penman on behalf of Mr Dickens and Mr Breakey on behalf of Mr Anderson as to the terms of a partial discharge excluding the Glenlockhart property from the inhibition.  It is unnecessary to narrate those email communications in detail.  Importantly, the figure of £10,000 was not mentioned.  The issue was rather the mechanics of the discharge procedure.   While this was going on, Mr Dickens continued to explore a variety of funding options.

 

The Woolwich offer to lend

[21]      On 3 December 2008, Mr and Mrs Dickens received a mortgage offer from the Woolwich for the re-mortgaging of the Glenlockhart property.  The loan amount was £1,245,000, payable on 1 January 2009.  Lindsays were instructed to act on behalf of the lender. 

[22]      On 4 December 2008, Mrs Crolla emailed Mr Anderson stating that Mr Dickens was hopeful that funds would be available in the next couple of days to pay him and requesting details of the final amount (if known).  She observed “You will recall that they have already paid £10,000”.  Mr Anderson replied on 8 December attaching his solicitor’s account of expenses and proposing that in exchange for a restriction of the inhibition, Mr Dickens should remit the sum of £324,359.22, being the sum of principal, interest and expenses amounting to £334,359.22 less “payment to account £10,000”.  On 11 December, Mr Breakey sent the partial discharge, executed by Mr Anderson, to Mr Penman to be held as undelivered pending receipt of £302,777.51, being the principal sum due plus interest to 12 December and also on the basis that the sum due in expenses would be held pending agreement or taxation of Mr Anderson’s account and then remitted.

[23]      On 18 December 2008, the Woolwich wrote to Lindsays to remind them that they had yet to receive the certificate of title, which had to be signed and sent at least five working days before the required completion date.  On 29 December, Mr Nash’s assistant, Ms Natalie Barnes, submitted Lindsays’ certificate of title to the Woolwich.  In a covering letter she made the following comments:

“2.       We have obtained a Form 12 Report which shows 2 standard securities.  One standard security is in favour of the Clydesdale Bank and another in favour of [the sellers of the Frogston property].  We have agreed with both creditors that these securities shall be discharged at settlement of the remortgage and accordingly, the Bank will be obtaining a first ranking standard security.  We will receive a further updated search, immediately prior to settlement and confirm the loan funds will be held as undelivered pending receipt of a clear search.

3.         The above mentioned Form 12 Report also discloses that Mr and Mrs Paul Dickens have been inhibited.  We are aware of the circumstances of this and can confirm that a discharge of the inhibition over this property has been drafted and agreed with the liquidator.  This will be delivered upon remittance by us of payment of £334,419.22.  We would propose to use some of the funds being obtained from the remortgage in payment of this.”

 

The settlement date was stated to be 29 December.

[24]      On 30 December 2008, Ms Barnes sent a fax to the Woolwich advising that as Mr and Mrs Dickens were currently in breach of contract (ie in relation to the purchase of the Frogston property) it was a matter of urgency that she be able to draw down funds that day.  She reported this by email to Mr Dickens and appended a note of how the funds to be received from the Woolwich would be applied.  Mr Dickens replied querying whether Ms Barnes had “taken into account that we have paid the Liquidator £10,000 to account a few weeks ago”.

[25]      Funds were not, however received from the Woolwich before Lindsays’ cash room closed on 31 December for the New Year holiday period.  On 5 January 2009, Ms Barnes telephoned the Woolwich stating that one of her colleagues had received a voicemail message that the funds could not be drawn down.  She noted the response from the Woolwich as follows:

“Being advised that the senior underwriter had reviewed it and was not satisfied on a couple of points and these seemed to be regarding the Inhibition Order.  They had details that this was funds due to a company which Paul Dickens was associated with.  This therefore had been passed to an adviser who would contact them at the very earliest tomorrow morning to ascertain whether they should proceed or the application should be cancelled.”

 

Ms Barnes then contacted the Woolwich’s in-house lawyer who confirmed that she was satisfied that there was no difficulty from a legal point of view.  Ms Barnes reported the position to Mr Dickens, who again queried whether the £10,000 “paid to account” was being taken into account.

[26]      On 7 January 2009, Ms Barnes received a call from Barclays (ie the Woolwich).  Her note of the call stated:

“Being advised that the mortgage had been declined as the information which we exhibited was completely different to the information detailed in the mortgage application.  Natalie asking for further information in respect of this and being advised that Barclays were unable to discuss this with her.  They were contacting the mortgage seller who could then speak to the applicant about this matter.”

 

The reference to “the mortgage seller” was to Mr Derek Petrie.  On the same day, the Woolwich sent letters, which appear to be in a standard format, to Mr and Mrs Dickens stating:

“We have carefully assessed your application which, unfortunately, we are unable to accept.  The main reason for our decision is based upon information that we have received from the credit reference agency, which is used as part of our assessment process…”

 

[27]      Further light is cast upon the reasons why the offer of loan was withdrawn by the Woolwich’s internal case notes for Mr and Mrs Dickens’ re-mortgage application.  In circumstances that I explain below, the full set of case notes became available to the court only after the proof had commenced.  They were spoken to by Ms Sharon Jenkinson, a senior operations manager with Barclays who had no personal involvement with Mr and Mrs Dickens’ application.  The following selected entries are of relevance (the names in parentheses are the Barclays employees who contributed the notes):

• 14/10/08 (Lee Maguire):  call from derek@brokers...  the extra lending is to repay the balance on some of his personal BTL mortgages nothing to do with business…
• 30/12/08 (Ashok Balaji):  Natalie@sols called… and requested for funds to be released by today… WE HAVE ALREADY RECVD COT FOR COMPLETION ON 29/12… Mail sent…
• 30/12/08 (Catherine Lloyd):  unsure of sols letter referring to inhibition – referred to legal for guidance
• 30/12/08 (Catherine Lloyd):  zoe from legal phoned she has spoken to sols and advised, on the basis of the information given by her, the funds will be used to discharge the existing liabilities and we will therefore get a first charge over a good and marketable title.  From a security and property perspective ok to proceed but from lending perspective legal wanted to confirm if we had assessed case to repay debts
• 02/01/09 (Dilip Lad):  **HVLT REVIEW** Review comments and noted from our legal team in London – The solicitors acting for applicants state .. both applicants have been inhibited (relating to property) and that discharge of the inhibition over the property has been drafted and agreed with the liquidator… I have concerns with this transaction and it seem it relates to the closure of one of applicants business and therefore looking to decline this file under this transaction…

(“HVLT” stands for “high value lending team”.)

• 05/01/09 (Dilip Lad):  Zoe@legal called – discussed file – she confirmed that the equity release is related to repayment of business borrowings… she advise that an inhibition order was lodge on this property by liquidators as applicant owes monies from a failed business… this order is lifted once the debt is repaid – in view of the funding purpose and that we were told funds had NO Business connection/relation.. file DECLINED – called seller Derek… message left to call me
• 07/01/09 (Dilip Lad):  called Natalie/sols confirmed DECLINE… Derek/seller wasn’t aware of this and he has spoke to the applicant… discussed my comments – decline remain and file closed

 

According to Ms Jenkinson’s evidence, Dilip Lad was (and is) employed by Barclays as an underwriter, with authority to take decisions as to whether to accept or decline mortgage applications.

[28]      For the purposes of this opinion, I need not narrate any subsequent events in detail.  It is enough to note that after January 2009 Mr Dickens remained unable to obtain funding to pay the sum due in terms of the decree in favour of the second defenders.  He was sequestrated at the instance of the defenders on 1 July 2009.  The sum sued for is the loss that he claims to have sustained in consequence.

 

Assessment of evidence: the first issue

[29]      In order for the pursuer to succeed on the first issue, I have to accept his evidence, and that of Mrs Dickens, that he reached agreement on 21 November 2008 that in exchange for payment of the sum of £10,000, the inhibition would be discharged or, at the very least, restricted to allow release of sufficient funds to enable Mr Dickens to pay the sum for which decree had been granted against him, together with interest and expenses.  Support for Mr and Mrs Dickens’ version of events is provided by Mr Nash’s evidence that he received a message from Mr Dickens to the effect that he had agreed with Mr Anderson that a restriction of the inhibition would be granted in exchange for the payment of £10,000.

[30]      I do not, however, feel able to accept this evidence.  I regret to say that I did not find Mr Dickens to be a reliable witness.  At a general level, he has, at the time of the events with which this action is concerned and at the proof itself, made a number of assertions which are either unsupported or contradicted by other evidence which I accept.  His insistence at the proof that he offered to – and did – put the four Morningside flats up for sale is not consistent with the contemporaneous evidence which nowhere mentions these flats.  At various times during the latter part of 2008 he made inaccurate statements regarding the availability of funding: I refer in particular to his statement to Mrs Crolla on or about 17 October that he had obtained the Clydesdale Bank’s provisional agreement to release capital against his property portfolio, when the true position was that he had been advised that the loan to value ratio would have to be improved; his statement to Mr Penman on or about 13 November that he had secured offers of re-mortgage over the Glenlockhart property; and his statement to Mrs Crolla on or about 20 November that he had an offer from a lender which would release sufficient funds from the Glenlockhart property to pay Mr Anderson the sum of £350,000.  His evidence regarding the possibility of an agreement with the sellers of the Frogston property regarding a loan to repay the debt due to the liquidator was unsatisfactory; this may reflect the fact that the sellers were not, to say the least, kept fully informed of Mr Dickens’ difficulties in obtaining funding for payment of either the deposit or the purchase price of the property.  His statement to Mrs Crolla that he had applied for a debt arrangement scheme was contradicted by information subsequently obtained by Mr Anderson from the Accountant in Bankruptcy that no such application had been made.  My impression of Mr Dickens was of someone who did not shy from making inaccurate assertions regarding his financial affairs in order to buy time to obtain funding that he required.  To some extent, for example in relation to ease of realisation of property value, this might be attributable to nothing more than unwarranted optimism.  In other respects, however, it seems to me that Mr Dickens has made statements that he must have known to be incorrect.  I have therefore had to approach his evidence with considerable care before placing weight upon it.

[31]      As regards the payment of £10,000, I accept that Mr Dickens telephoned Mr Nash on the day when the cheque was delivered to inform him that the payment was being made for restriction of the inhibition.  I do not, however, accept that any such agreement had been reached with Mr Anderson. A major difficulty for Mr Dickens is that his evidence as to what was agreed has been inconsistent.  His pleaded case is that Mr Anderson agreed to lift the inhibition not only from the Glenlockhart property but also from the four Morningside flats.  His evidence at the proof, however, was that the agreement was that the inhibition would be wholly discharged.  Neither of these alternatives is credible: as I have already noted, there is no mention of the four flats in any of the documentation lodged for the proof, and I find it quite inconceivable that Mr Anderson would agree to lift the inhibition in its entirety in exchange for a payment of £10,000 at a time when no source of payment of the sum due to him as liquidator was readily apparent.

[32]      It is also significant that there is no subsequent suggestion in any of the correspondence that any such agreement had been reached.  It was denied by Mr Anderson as soon as he received the draft partial discharge prepared by Mr Penman.  Negotiations between agents for Mr Dickens and Mr Anderson continued to be carried on on the basis that payment of the whole sum due would be required in order to obtain a discharge of the inhibition.  Mr Dickens himself referred to the payment on more than one occasion as a payment to account.  Consideration was given to progressing court proceedings for recall of the inhibition, but there is no record of any discussion of proceedings for implement of an agreement.  It may well be that with the passage of time, both Mr and Mrs Dickens now genuinely believe that an agreement was reached.  I do not have to go so far as to find that their evidence of what was said at the meeting on 21 November was untruthful; it is sufficient for me to find, as I do, that it is not reliable.

[33]      On the other hand, I accept both Mr Anderson and Mrs Crolla as credible and reliable witnesses.  They gave evidence in a straightforward manner and with as much detail as one might reasonably expect after a period of nine years.  It is very unfortunate that neither can remember the telephone conversation in the course of which the figure of £10,000 appears to have been first mentioned.  So far as Mr Anderson is concerned, however, I consider that I am entitled to regard his lack of recall and, perhaps more importantly, the absence of a contemporaneous email to his solicitor Mr Breakey, as indications that the substance of the call was not of particular importance to him and did not amount to the entering into of a binding agreement.  It is apparent from the emails lodged for the proof that Mr Anderson was not inclined to take decisions regarding enforcement of the decree for payment without seeking Mr Breakey’s advice; I find it extremely unlikely that he would have entered into any agreement regarding discharge or restriction of the inhibition without advice, let alone one in which the benefit of the inhibition was lost for only £10,000.  There is nothing inherently unlikely about his analysis of the payment as being to account, and no commercial reason why it could not have been accepted by Mr Anderson on that basis.  Such an analysis is supported by the bulk of the contemporaneous documentation.

[34]      For these reasons, I find that neither of the defenders undertook any contractual obligation or made any representation to Mr Dickens in relation to the restriction of an inhibition over his property during the telephone conversation on 21 November 2008 between the Mr Anderson and Mrs Crolla.  I accordingly hold, as a matter of fact, that Mr Dickens fails on the first issue.

 

Assessment of evidence: the second issue

[35]      As regards the second issue, the reasons for the decision of the Woolwich to withdraw their offer to lend to the pursuer must be determined on the basis of the documentation made available to the court.  Mr Petrie’s evidence was essentially second hand, consisting of what he had been told by the Woolwich.  Mrs Jenkinson’s evidence was of little value as she had had no personal involvement in the decision-making process.

[36]      The reasons provided by the Woolwich to Mr and Mrs Dickens and others at the time of the refusal (see above) were equivocal.  The explanations provided to Ms Barnes could be interpreted either as supporting Mr Dickens’ case that the stumbling block was the existence of the inhibition, or as indicating that the decision was based upon failure to provide accurate factual information in the mortgage application.  The standard-form letters sent to Mr and Mrs Dickens appeared to indicate that the problem lay with their credit status, but there is nothing else in the documentation to suggest that this was the true reason for the refusal. 

[37]      A much clearer picture emerges, however, from the Woolwich case file, and in particular from the notes on the file made by the person apparently responsible for taking the decision on refusal, namely Dilip Lad.  These notes indicate unequivocally that the reason for refusal was that part of the loan was to be applied for a business purpose, contrary to the Woolwich’s lending policy, and contrary to the information provided in the mortgage application.  Mr and Mrs Dickens’ intention to use part of the advance for the purpose of paying the debt due to the liquidator was disclosed to the Woolwich in Ms Barnes’ letter dated 29 December 2008; the refusal to lend followed immediately upon that.  I accept the evidence of Mr Petrie and Mrs Jenkinson that this was not, at the material time, regarded by the Woolwich as an acceptable purpose for a residential mortgage.  I accordingly have little difficulty in finding, as a matter of fact, that the reason why the offer to lend was withdrawn was that Mr and Mrs Dickens intended to use part of the funds to be advanced for a purpose which did not meet Barclays’ lending criteria, and not because of the existence of the inhibition either generally or over the Glenlockhart property in particular.

 

Conclusion and disposal

[38]      The inevitable consequence of my decision on the two issues with which this opinion is concerned is that Mr Dickens’ case against both defenders must fail.  There is no useful purpose to be served by further procedure.  I shall accede to the defenders’ motion to sustain their respective second and third pleas in law, repel the pursuer’s pleas in law, and grant decree of absolvitor.

 

Postscript

[39]      I cannot conclude this opinion without expressing the court’s displeasure at the attitude adopted by Barclays Bank in response to requests by the defenders’ agents (BTO) for co-operation in providing evidence relevant to the second of the two issues canvassed at the proof.  The reason for withdrawal of the offer to lend to Mr and Mrs Dickens was a matter peculiarly within the knowledge of Barclays/Woolwich except in so far as communicated by them to another party.  The relevant information was contained within the Woolwich case file for Mr and Mrs Dickens’ loan application.  I note that the first eight pages of this file were provided to agents then acting for the pursuer under a specification of documents granted in June 2014, without any indication that this was not the whole of the file.  I have been provided with copies of email communications between BTO on the one hand and Barclays’ in-house legal department and solicitors on the other, beginning in November 2014 when a request (accompanied by an appropriate mandate from Mr and Mrs Dickens) was first made for identification of an individual able to provide evidence as to the reasons for withdrawal of the offer of loan.  Once it had become apparent in early March 2015 that Mr Petrie, who is a mortgage adviser and not an underwriter, could not provide the information requested, BTO continued, with conspicuous courtesy and persistence, to seek the name of a person within the Woolwich’s High Value Lending Team who could confirm whether the existence of the inhibition had played a part in the decision to refuse the application.  The importance and urgency of the matter was made clear to Barclays.  By July 2015, no substantive response had been received and the matter had been passed to Barclays’ solicitors, TLT, in Bristol.  They too appear to have experienced difficulty in persuading Barclays to provide either the information sought or the name of a suitable witness. 

[40]      Eventually, on 19 August 2015, BTO indicated that if a satisfactory response was not received they would have to resort to citing a senior Barclays employee to attend the impending proof.  This appears to have borne fruit in that TLT intimated that they had identified a possible witness in the High Value Lending Team.  On 24 August, answers to BTO’s questions were provided but the identity of the person providing the information was withheld.  BTO again requested the name of the person in order that he/she could be cited as a witness.  On 27 August TLT intimated that Mrs Jenkinson would provide a witness statement if BTO could supply a draft, which was duly supplied the following day.  By 8 September, however, TLT had informed BTO (apparently as a result of a misunderstanding on the part of TLT) that Barclays had changed their mind and were not willing to co-operate by providing a witness for the proof, and also that there was no longer anyone in the High Value Lending Team who had been employed in that team in 2008.  In response, BTO intimated their intention to apply to this court for an order under the Attendance of Witnesses Act 1854 to compel Mrs Jenkinson’s attendance.  A warrant under the 1854 Act was obtained and served on Mrs Jenkinson.

[41]      At this stage Mrs Jenkinson finally provided a witness statement, received by BTO on 25 September.  A matter of concern arising from the terms of Mrs Jenkinson’s statement was a reference to her having had the opportunity “to review the Bank’s internal file”.  At the commencement of the proof on 6 October, the defenders sought leave to lodge the witness statement late.  I continued the motion pending investigation of the reference in the statement to an apparently relevant document not produced.  On day 3 of the proof, the defenders renewed their motion regarding Mrs Jenkinson’s witness statement and also sought leave to lodge the full Barclays case file which had only been made available to them the previous day.  Those motions were opposed by Mr Dickens.  I was satisfied, under reference to Rule of Court 47.14(2), that the file could not with reasonable diligence have been timeously lodged by the defenders.  With considerable sympathy for Mr Dickens’ position, but having regard to the interests of justice and the obvious artificiality of proceeding without the crucial information contained in the file, I granted both motions. 

[42]  One of the important features of the case file was that it identified for the first time the individual who had made the decision to withdraw the offer to lend.  When Mrs Jenkinson gave evidence, she disclosed that (contrary to information previously given to BTO) Dilip Lad was still in employment by Barclays as an underwriter in their High Value Lending Team.  In response to questions from the court as to why he was not giving evidence, Mrs Jenkinson explained that the Bank had not felt it appropriate for someone at his level to attend court.  She thought that this decision had been taken by the Bank’s legal team.

[43]      I regard the attitude adopted by Barclays/Woolwich to the provision of evidence in this case as wholly unacceptable.  It is only because the reason for withdrawal of the offer to lend was not the only issue for determination at the hearing that the Bank’s lack of co‑operation has not been the cause of a needless and expensive court hearing.  As it is, Barclays’ attitude has undoubtedly increased the costs incurred by both sides in these proceedings.  Prior to the issuing and publication of this opinion, I instructed that a draft of this postscript be sent to Barclays for any comment that they might have on the accuracy of the chronology.  The response received from a director employed in Barclays in-house litigation team included an unreserved apology for any perceived discourtesy to the court or to the parties to this action, as well as an apology on the part of TLT for the misunderstanding that they created regarding Barclays’ willingness to co-operate.  I accept these apologies and, for my part, regard the matter as closed.