Business owner mis-sold tailored business loan by bank loses action for reduction of absolvitor decree

About this case:

• Citation:
  [2023] CSOH 67
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Braid

John Glare had sought to establish that his business would not have failed had he been offered a different type of loan, but had his case dismissed in 2016 before the Outer House of the Court of Session. The bank accepted it had mis-sold him the TBL but did not accept the counterfactual scenario that had presented by the pursuer, and it succeeded in having the original action dismissed.

The case was heard by Lord Braid, with Tariq, advocate, appearing for the pursuer and the Dean of Faculty, Dunlop KC, and Horn, advocate, appearing for the defender.

Perjured evidence

The TBL was granted in February 2008 in the sum of £3.95 million with a fixed interest rate of 7.8 percent per annum. As security for the loan the the bank took a first legal charge over the pursuer’s property, Chantmarle Manor, in Dorset, which he operated as a conference centre and a wedding venue. On 21 September 2009, the bank terminated the TBL on the basis that the pursuer had failed to fulfil various financial covenants, including a failure to make repayments. Chantmarle was sold in 2013 but the pursuer was still left with an outstanding debt to the bank in excess of £2.4 million.

It was the pursuer’s position that, had he not obtained the TBL, we would have been advanced a loan with a variable interest rate and would not have suffered the failure of his business. His original action called before Lord Doherty for a diet of proof in 2015. He held that the pursuer would not have been offered such a loan and instead would have been given a fixed interest rate for the first five years. In any event, he was not satisfied that the pursuer’s business would have survived even if he had been advanced a variable rate loan.

Following that decision, the pursuer unsuccessfully sought review of the interlocutor of 26 January 2016, and had a further action against the bank at the High Court in Manchester dismissed as res judicata and an abuse of process. In his latest action, the pursuer asserted that one of the bank’s witnesses at proof, Mr Campbell, gave untruthful evidence in relation to the way the break costs of the TBL were calculated, and had he known about this he would have quantified his loss differently.

For the bank it was submitted that the action was bound to fail even if the pursuer proved all his averments, as he was not offering to prove that the perjured evidence led to the failure of his case. Counsel for the pursuer submitted that this was setting the bar too high. It was sufficient to show that the proceedings were tainted and that the evidence was material. An analogy could be drawn with an application to introduce new evidence in the course of an appeal.

Any bearing whatsoever

In his decision, Lord Braid began by observing: “It is not averred that Mr Campbell’s witness statement was false: the evidence complained of was adduced in cross-examination. One might well ask what relevance that line of questioning had. Further, and critically, the bank is correct when it argues that the manner of calculation of the break costs was simply not an issue which was relevant in the 2013 action.”

Turning to the substance of the pursuer’s argument, he said: “At its most basic level, the pursuer’s action is irrelevant because it is founded upon an allegation of subornation of perjury but the pursuer does not offer to prove that the perjured evidence had any bearing whatsoever on Lord Doherty’s decision on the evidence led before him, let alone that it caused the pursuer to lose a litigation he would otherwise have won or that the bank achieved decree of absolvitor by having committed a fraud on the court.”

He continued: “The pursuer lost not because of Mr Campbell’s evidence, but because Lord Doherty did not accept the pursuer’s evidence as to what he would have done had he not been offered a TBL; specifically, he did not accept that the pursuer would have sought and been granted a variable interest loan. To the extent that the pursuer’s case is predicated upon the line of authority which shows that subornation of perjury which leads to a judgment in a party’s favour is or may be a ground for reduction of a decree in foro, it is bound to fail.”

Addressing whether reduction was needed to achieve substantial justice, Lord Braid said: “The pursuer’s case amounts to no more than an assertion that if he had known something which he could have found out earlier, he would have conducted his case differently. As the Dean submitted, that could only ever be relevant if a plea of res noviter were advanced, but there is no such plea here, nor could there be.”

He concluded: “In the absence of that, and of any relevant averments supporting reduction of the interlocutors pronounced in the 2013 action, this action is bound to fail. Any further action by the pursuer against the bank would offend against the principle of finality in litigation.”

Lord Braid therefore dismissed the action.