JOHN GLARE AGAINST CLYDESDALE BANK PLC [2024] ScotCS CSIH

FIRST DIVISION, INNER HOUSE, COURT OF SESSION

[2024] CSIH 16

CA55/23

Lord President

Lord Boyd of Duncansby

Lady Wise

OPINION OF THE COURT

delivered by LORD CARLOWAY, the LORD PRESIDENT

in the cause

JOHN GLARE

Pursuer and Reclaimer

against

CLYDESDALE BANK PLC

Defenders and Respondents

____________

Pursuer and Reclaimer: Tariq; BTO Solicitors LLP

Defenders and Respondents: Dean of Faculty (Dunlop KC); Horn; DLA Piper Scotland LLP

2 July 2022

Introduction

[1]

The pursuer seeks reduction of a decree of absolvitor dated 26 January 2016. The

decree followed a proof in a previous action between the parties. The pursuer also

concludes for reduction of interlocutors refusing his motions for review of that decree and

permission to appeal to the UK Supreme Court. The event which appears to have prompted

this action, some years after the decree, is the defenders' attempt to enforce a taxed award of

expenses totalling almost £900,000.

[2]

The pursuer contends that the defenders suborned their Head of Corporate Support,

namely Douglas Campbell, to commit perjury. The commercial judge dismissed the action.

He reasoned that the pursuer had not pled a relevant case that Mr Campbell's evidence had

had any effect on the outcome. Substantial justice was served by upholding the principle of

finality in litigation. The pursuer reclaims that decision.

Background

The first action

[3]

On 14 February 2008 the defenders sold the pursuer a tailored business loan (TBL) of

just under £4m. Interest was at a fixed rate of 7.85% per annum. The term was 25 years.

The TBL was secured over Chantmarle Manor, a property which the pursuer owned and

operated as a wedding venue and conference centre. Clause 8 of the TBL provided that, in

the event of the loan being terminated early, the pursuer would reimburse the defenders for

the "break costs" of unwinding related financial arrangements (portfolio hedging) which the

defenders had entered into with third parties to mitigate the risk of default.

[4]

During the TBL's term, bank variable interest rates dropped to well below 7.85%. On

21 September 2009, the defenders terminated the TBL, because the pursuer had failed to

adhere to various financial covenants and to make the necessary repayments. Break costs in

excess of £700,000 were added to the pursuer's liability to the defenders. The defenders

appointed receivers over Chantmarle in April 2010. In February 2011 the pursuer was made

bankrupt by a third party. In 2013 the receivers sold Chantmarle for just over £2m, leaving

the pursuer owing the defenders just under £2.5m.

[5]

The pursuer considered that the TBL had caused his business difficulties. In 2013 he

raised an action for damages against the defenders based on a contention that they had mis-

sold him the TBL. He averred that, if the defenders had not done so, he would instead have

obtained a variable rate loan. If he had obtained such a loan, his business would not have

failed. He would not have been made bankrupt. He would not have lost Chantmarle. The

defenders admitted liability, but disputed causation. They maintained that the pursuer

would not have obtained a variable rate loan, had he not been mis-sold the TBL. His

business would have failed in any event.

[6]

This first action went to proof in 2015. The Lord Ordinary found in favour of the

defenders ([2015] CSOH 184). He determined that: (i) the "keystone" of the pursuer's case

was his claim that, if he had not been offered the TBL, he would have sought and obtained a

variable rate loan. The Lord Ordinary was not satisfied he would have either sought or

obtained such a loan (para [40]); (ii) the pursuer was not a credible and reliable witness. His

evidence about what he would have done, if he had obtained a variable rate loan, was

heavily influenced by hindsight (paras [31] [32]). That hindsight extended to his account

of past events. This was very different from the view which he had held at the time

(para [33]). He had a propensity to blame his difficulties on the TBL and to dismiss more

obvious causes. At the time when, in 2008, his business was in difficulty, the interest rate on

a variable rate loan would not have been materially different from that on the TBL;

(iii) certain aspects of the pursuer's evidence were incredible (para [34]). These related to his

inability to recollect an application to Lloyds TSB for a fixed rate loan and the availability of

substantial financial assistance from his former wife. The pursuer sought to influence the

evidence of others, notably that of his former wife, for his own benefit (para [35]); (iv) the

defenders would not have offered the pursuer a variable rate loan. The Lord Ordinary

accepted Mr Campbell's evidence that the defenders required protection against the pursuer

becoming unable to service the loan, should interest rates have risen. The pursuer would

probably have been offered the alternative of a 25 year loan with an initial 5 year fixed rate

(para [43]); and (v) even if the pursuer had obtained a variable rate loan, his business would

still have failed (para [47]). The assumptions underpinning the pursuer's case to the

contrary were ill-founded (paras [48] [73]). Accordingly, decree of absolvitor was granted.

The present action

[7]

The pursuer seeks reduction on the basis that the defenders had suborned

Mr Campbell to give perjured evidence in the first action. For the purpose of testing the

relevance of the pursuer's pleadings, that averment must be taken pro veritate. The pursuer

avers that Mr Campbell lied about how the TBL's break costs had been calculated.

Mr Campbell testified that the TBL's break costs arose as a consequence of general portfolio

hedging. This was consistent with the defenders' public pronouncements at the time.

According to the pursuer, this was untrue. Instead, the defenders had entered into

individual hedging transactions for each loan. These were known as mirror swaps. Break

costs on a 5 year fixed-interest loan would have been about £315,000. If the pursuer had had

the benefit of the £400,000 difference between the break cost figures, he would have been

able to sell Chantmarle, re-started a residential property business, and avoided bankruptcy.

This sale and restart contention is materially different from the one that had been advanced

in the first action, whereby, but for the TBL, his business would not have failed.

[8]

The defenders do not accept that Mr Campbell gave perjured evidence. In any event,

they contend that the pursuer's action is irrelevant. The pursuer did not offer to prove that

Mr Campbell's evidence was central to the Lord Ordinary's decision. He did not offer to

prove that Mr Campbell's evidence caused the failure of the "counterfactual" which he

advanced; simply that, instead of claiming that his business would have survived, he would

have, in the course of the first action, advanced the sale and restart scheme.

The commercial judge's decision

[9]

The commercial judge stressed the importance of finality in litigation (Rankin v Jack

2010 SC 642 at para [25]). The principle of finality could be displaced, and a decree recalled,

where the interests of justice so demanded. Reduction was a matter for judicial discretion.

Each case turned on its own facts and circumstances. The remedy was only applied in

exceptional circumstances. The test was higher for decrees in foro than for those in absence.

Reduction should only be granted where it was necessary to ensure substantial justice. The

existence of an alternative remedy was not an absolute bar to reduction (Campbell v Glasgow

Housing Association [2011] Hous LR 7 at para [48]).

[10]

Perjury did not per se constitute a relevant case for reduction. The pursuer must aver

a fresh set of facts which amounted to a fraud on the court (Mackintosh's Tr v Stewart's Trs

(1906) 8 F 467 at 473). Subornation of perjury by a party would be such a fraud (Begg v Begg

(1889) 16 R 550). The pursuer must demonstrate a causal link between the perjury and the

ensuing judgment (Mackintosh's Tr at 474). Although no plea of res noviter was advanced,

the same principle applied. A party may only found upon matters unknown to him during

a previous action, if he can show that he could not with reasonable diligence have

discovered them at the time (McCarroll v McKinstery 1926 SC (HL) 1).

[11]

The pursuer had had the opportunity, in the first action, to recover information

outlining the true position regarding the break costs. He did not take that opportunity. His

explanation for not pursuing this was "reasons of economy". That was not sufficient. The

disputed evidence was adduced in cross-examination, in the course of a line of questioning

which was only tangentially relevant, the defenders having conceded that they should never

have sold the defender the TBL in the first place and thus no break costs ought to have

arisen. This was a "shaky start" to an allegation of miscarriage of justice.

[12]

The pursuer's action was irrelevant because the pursuer did not offer to prove that

Mr Campbell's evidence had any causative effect on the Lord Ordinary's decision. The

pursuer required to plead a link between Mr Campbell's evidence and the Lord Ordinary's

decision. He had not done so. The Lord Ordinary did not refer to the calculation of the

break costs. It was not a material issue before him. The problem was not that the

Lord Ordinary believed Mr Campbell's evidence about break costs; it was that he

disbelieved the pursuer's evidence about what he would have done had the defenders not

mis-sold him the TBL.

[13]

The commercial judge noted the pursuer's position that, had he realised that

Mr Campbell's evidence was untrue, he would have amended his case and advanced his

sale and restart scenario. The judge identified four difficulties with this. First, it relied upon

the bank's public pronouncements as well as Mr Campbell's evidence, but only the public

pronouncements could have influenced the pursuer as Mr Campbell's testimony had been

adduced after the pursuer had closed his proof. Secondly, a motion by the pursuer for leave

to amend, and effectively to restart his case, was very unlikely to have succeeded. Thirdly,

the pursuer was aware of the issue of break costs in the first action, having made

(unanswered) calls in his pleadings about them. He knew, or should have known, that the

first action would be his only opportunity to prove his case, but he had opted not to seek

recovery of the relevant information. Fourthly, any argument based on the amount of the

break costs being lower was misconceived. First, the defenders had conceded in the first

action that no break costs should have been applied. If the defenders were wrong about

that, their error could only have benefitted the pursuer. Secondly, it was obvious that the

break costs of a 5-year fixed interest loan would have been lower than those of a 25-year one.

If the pursuer had the former in contemplation during the first action, he could have

investigated the position then.

[14]

The commercial judge did not consider that Mr Campbell's evidence had resulted in

the Lord Ordinary forming a negative impression of the pursuer's credibility and reliability.

The Lord Ordinary's rejection of the pursuer's evidence was not based upon his acceptance

of Mr Campbell's evidence. The Lord Ordinary's comments (at para [34]), which outlined

his reasoning, were independent of Mr Campbell's evidence.

Submissions

Pursuer and Reclaimer

[15]

The commercial judge erred in holding that, taking his pleadings at their highest, the

pursuer was bound to fail. First, the commercial judge failed to grasp the exceptional and

serious nature of the allegations against the defenders. Mr Campbell was the defenders'

most senior witness. The defenders in the first action had met the pursuer's averments

about the break cost with bare denials. It was not until Mr Campbell gave oral evidence that

any explanation of the break costs had been given. The true position had been concealed

until 2023, after the present action had been raised.

[16]

The pursuer accepted that, although he had not taken all possible steps to investigate

the break costs, he had sought the relevant information in correspondence, placed calls in

the pleadings, and, on the eighth day of the proof, cross-examined Mr Campbell on the

costs. Notwithstanding their duty of candour, the defenders had withheld the information,

failed to engage with the issue in their pleadings, and ultimately suborned perjury. It would

be a substantial injustice for his case to fail because he had not exhausted every avenue.

[17]

Secondly, the commercial judge set the bar too high in requiring the pursuer to prove

that he would have succeeded in the first action, but for the defenders' fraud on the court.

The correct approach was not to ask whether the outcome of the first action, but for the

alleged perjury, would have been different, but whether it could have been different. The

break costs were material to the argument that the pursuer could have advanced in the first

action. The pursuer had to prove what he would have done had the defenders not mis-sold

him the TBL. Had he known the true position, sale and restart would have been viable and

the first action would have succeeded.

[18]

Thirdly, the commercial judge had failed to take the pursuer's averments pro veritate.

He had placed considerable weight on the defenders conceding, in the first action, that no

break costs should have been charged. No such concession had been made. The defenders'

concession related only to the period for which the interest rate would have been fixed.

Break costs would still have been levied on an alternative variable rate loan agreement. The

judge's observations, about the lack of any averments relating to the causal effect of

Mr Campbell's evidence or an offer to prove the defenders' subornation of perjury caused

him to lose the first action, ignored specific averments to that effect.

[19]

Fourthly, the commercial judge erred in finding that the Lord Ordinary's rejection of

the pursuer's evidence was not based on his acceptance of Mr Campbell's testimony. Their

evidence had conflicted. Both had given evidence about the fixed-interest period in an

alternative loan arrangement. The Lord Ordinary accepted Mr Campbell's evidence. By

implication, he must have rejected the pursuer's testimony. The judge had underestimated

the significance of Mr Campbell's evidence on the Lord Ordinary's assessment of the

pursuer's credibility.

Defenders and respondents

[20]

The commercial judge correctly weighed the allegations made against the defenders.

He gave them detailed consideration in his opinion. The break costs were irrelevant to the

Lord Ordinary's reasoning in the first action. They were similarly irrelevant in this action.

The defenders accepted that the TBL had been mis-sold. There would have been no break

costs, because there would have been no TBL. Any deception concerning the quantification

of non-existent costs could never have had a causative effect on the outcome of the proof.

The pursuer was in the same position as the unsuccessful pursuer in Mackintosh's Tr v

Stewart's Trs. All he could do now was disprove a statement made by Mr Campbell in the

course of cross-examination. Like Mackintosh's Tr, this was not enough to found a case for

reduction on the basis of perjury. The Lord Ordinary had attached little, if any, weight to

break costs.

[21]

The commercial judge was correct to hold that the pursuer did not offer to prove that

Mr Campbell's evidence had any bearing on the Lord Ordinary's decision or that it caused

him to lose a litigation which he could have won. The pursuer's case was not that

Mr Campbell's evidence caused the first action to fail. Rather, had he known what he now

knew, he would have advanced a different case. His difficulty was that he had already pled

his case, led evidence, and closed his proof. The Lord Ordinary disbelieved the pursuer.

The judge was correct to find that Mr Campbell's evidence about the break costs had no

bearing on that assessment.

[22]

The commercial judge was correct to rely upon the concession made by the

defenders in the first action about break costs. The proof proceeded on the basis that

liability was admitted. The pursuer failed for reasons unrelated to Mr Campbell's evidence.

Even if the concession had not been made, break costs were mentioned only once in the

Lord Ordinary's opinion, when he excluded them from his hypothetical calculation on

quantum. His alternative case could only be relevant if there had been a plea of res noviter.

Any such plea, and any motion to amend after the pursuer's proof had closed, would have

been bound to fail, given that the pursuer could have discovered the true position during

the first action by using commercial court case management powers or seeking a

commission and diligence.

[23]

The pursuer required to make relevant and specific averments that Mr Campbell's

evidence caused him to lose a case which he should have won (Begg v Begg at 555). The

commercial judge was correct to find that he did not do so. He could not do so because of

the Lord Ordinary's finding that he would not, had he not been mis-sold the TBL, have

obtained a variable rate loan as distinct from a 5 year fixed term loan, variable thereafter.

That was a finding which went to the heart of his case and on which Mr Campbell's

evidence had no bearing. The correct counterfactual was what would have happened if Mr

Campbell had not given the perjured evidence about break costs, or not given evidence at

all. The result would have been the same.

[24]

The commercial judge's treatment of Mr Campbell's evidence was correct.

Mr Campbell's evidence had nothing to do with the Lord Ordinary's critical findings that: (i)

the pursuer would not have sought or obtained a variable rate loan; (ii) the pursuer's

business would not have survived even if had he obtained such a loan; and (iii) the pursuer

had failed to establish loss. Any one of these findings would have been fatal to the pursuer's

case in the first action and none of them were, or could be, challenged in this action.

Decision

[25]

A pursuer in an action for reduction of a decree in foro must demonstrate exceptional

circumstances whereby reduction is necessary to ensure substantial justice, notwithstanding

the principle of finality (Campbell v Glasgow Housing Association [2011] Hous LR 7, Lord

Woolman at para [48] citing, inter alia, Adair v Colville & Sons 1926 SC (HL) 51). The pursuer

must plead: (i) a relevant and specific case that the defender had perpetrated a fraud on the

court (Begg v Begg (1889) 16 R 550, Lord Young at 555); and (ii) a causal link between the

fraud and the outcome (Mackintosh's Tr v Stewart's Trs (1906) 8 F 467, Lord Kinnear at 474).

It is sometimes thought that if, after a decision has been taken, the unsuccessful party can

prove that a witness had perjured himself, that party can seek effectively to retry the case.

Were that to be the position, there would be no end to the investigation of fact in litigation.

[26]

The pursuer avers a causal chain which begins when Mr Campbell was cross-

examined. This was after the pursuer had closed his proof. He maintains that, had he

known the true position, he would have brought that to the court's attention and sought to

amend to advance his sale and restart contention. Thus, the perjury is not said to have

caused the failure of the pursuer's then case. It is claimed that it prevented him from

advancing a different case which would, or at least could, have succeeded. There are several

flaws with this argument. First, any motion to amend and thus to advance an entirely

different case would almost certainly have failed, especially given that the pursuer could not

have satisfactorily explained why that case had not been made earlier (Marine Harvest

(Scotland) v Nemi Forsikring [2011] CSOH 91, Lord Hodge at para [15]). The motion, even if

successful, would have had the effect of adjourning the proof and amending not only the

pursuer's case but allowing the defenders to alter theirs in response. The whole claim for

damages would have required complete reworking and the witnesses re-precognosced and

then examined again in chief and cross. This simply would not have been permitted.

[27]

Secondly, what the pursuer is really attempting is the introduction of res noviter

veniens ad notitiam (newly discovered information) which only came to his attention in 2023.

This is illegitimate not only because that is not what is pled but also because the res (thing)

could have been discovered in the course of the action (Grier v Lord Advocate 2023 SC 116, LP

(Carloway), delivering the opinion of the court, at para [146] citing Rankin v Jack 2010 SC

642, Lord Reed at para 37; McCarroll v McKinstery 1926 SC (HL) 1 Lord Sumner at 7). The

pursuer makes it clear that, prior to the proof, he was interested in the calculation of the

break costs; hence his calls on the defenders. He could have obtained the relevant

information by the relatively simple expedient of a court order.

[28]

Thirdly, the Lord Ordinary was not persuaded that the pursuer would have obtained

a variable rate loan, had he not been offered the TBL. That was the "keystone" of his action

(para. [40]) and "the starting point of his case" (para [46]). The Lord Ordinary considered

the prospects of the pursuer's business, had he obtained a variable rate loan. He concluded

that the business would nevertheless have failed because the interest rates would have been

similar at the time of that failure. He gave no indication that the evidence about break costs

could have had any effect on this conclusion.

[29]

The question for the commercial judge was whether, in the specific circumstances of

this action, the perjury caused the pursuer to lose an action which he would, or at least

could, otherwise have won. He answered that in the negative. The seriousness of the

allegation does not avoid the need to plead a relevant and specific case. Founding upon

bare averments that the pursuer would have succeeded, and then submitting that, because

the pursuer's pleadings are to be taken pro veritate, the commercial judge was bound to hold

that a relevant case had been pled, is not sufficient. The pursuer must state how the

subornation of perjury could have caused the Lord Ordinary to find in his favour. The

pursuer has failed to do that.

[30]

The principle of finality must be applied and the reclaiming motion refused. The

court will adhere to the interlocutor of the commercial judge dated 6 October 2023.

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