Bank Of Scotland v Frank James Junior [1999] ScotCS 9 (8 January 1999)

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By letter dated 1 November, 1991, the appellant applied to the respondents for a U.S. Dollar loan of $160,000. The Bank agreed to lend the sum in a letter dated 11 December, 1991. Sums were drawn on the facility which, together with interest, are said by the Bank to have amounted to $107,106.96 at the date of raising the present action. Further interest has accrued and continues to accrue on the debt. The appellant denied liability to pay the balance alleged to be due. This action was raised in the sheriff court at Aberdeen for payment. The appellant tabled a range of defences on the relevancy and merits of the Bank's claim. In addition, the defences included:

The sheriff held the defences and counterclaim irrelevant, except in relation to quantification, and remitted the principal action to proof on quantum only. The present appeal relates to the sheriff's disposal of the pleas in support of the defences and counterclaim.

In the course of the procedure in the appeal, the appellant amended his pleadings and grounds of appeal to provide greater focus in respect of his breach of contract case. At the hearing, averments that there were duties based on implied terms of contract were deleted by amendment. The pleadings were further amended to reflect the grounds of appeal advanced.

Much of the factual background to the case, and of the inferences which can properly be drawn at this stage from the appellant's averments and from the documents, was not in dispute. The appellant's letter of 1 November, 1991, so far as material, was in the following terms:

In terms of the first two joint adventure agreements between Bon Accord and the appellant, the appellant was to provide funds for investment in specific items of oilfield capital plant to be selected by Bon Accord and agreed in advance. The appellant was to fund the initial transport, import fees and related costs of providing and marketing the equipment until his initial investment was repaid. Bon Accord were to be liable for losses. 80% of the proceeds of sale or rental of the equipment was to be applied in the first place in repayment of the appellant's investment. When that had been achieved, the parties were to divide further sums equally, and were to share equally any additional procurement and marketing costs. The third agreement defined the parties' respective interests in different terms. It is necessary to quote these, since they do not lend themselves readily to summary:

Each contract was terminable on ninety days' notice, and there were rudimentary terms regulating dissolution.

The interaction of the three contracts is unclear. There are no averments about the state of the joint venture accounts at 1 November, 1991. Each agreement related to future transactions. None had a defined term. Mr Clarke, for the appellant, contended that all three contracts ran concurrently. He specifically rejected the suggestion that they might run consecutively. The amount of the potential investment was not specified in any case. Nor was there any defined relationship between the amounts invested and the appellant's sources of finance to make the investment. It appears that it was envisaged that Bon Accord would obtain capital equipment, but until the parties agreed on the acquisition, and apparently on which contractual regime was to apply, there would evidently be no appropriation of any acquisition to any of the three joint ventures. The investment in any or all of the joint ventures had to depend on subsequent agreements as to the scope of the business undertaken.

There was also an undated copy letter of intimation of the assignation to Bon Accord which bears the appellant's signature. In the course of the appeal, Mr Clarke accepted that there might be a question as to the effectiveness of the assignation, and declined to rely on it as a valid transaction. But he emphasised that, valid or not, the assignation was part of the factual context in which the parties had transacted business.

By a further letter dated 1 November, 1991, the appellant granted an irrevocable mandate to Bon Accord to remit his portion of the sums received following disposal or rental of equipment to the Bank, and instructed that the mandate could not be withdrawn without the consent in writing of the Bank.

The intended interaction of the mandate and assignation at 1 November, 1991 is not made clear in the averments. In his averments as amended, the appellant narrates the assignation without comment. It is not clear whether the Bank would have taken over the appellant's role in agreeing acquisitions, or otherwise exercised rights in relation to the executory aspects of the joint adventure contracts under the assignation. It is not clear how the Bank could have disposed of the appellant's interest in the joint ventures, as personal contracts, on the appellant's default in repayment. Since the document was relied on for the purposes of the appeal as part of the background circumstances only, it is unnecessary to resolve these difficulties.

This averment is inconsistent with a view that the assignation was founded on as vesting the appellant's rights in the Bank on intimation, and that remained Mr Clarke's position in argument before us. He relied primarily on the mandate. He contended that Bon Accord owed fiduciary duties to the appellant as joint venturer, and that additional fiduciary duties arose from the mandate. Neither proposition was challenged by Mr Brailsford for the Bank.

In addition to the case based on the documents, the appellant relies on averments that there had been a course of previous dealings between the parties which formed part of the factual context in which the obligations of the Bank under the 1991 loan agreement required to be ascertained. He states that the Bank were also bankers for Bon Accord. Repayment of two previous loans had involved the Bank "monitoring the sums received from BAT in respect of sums due by BAT to the Defender in accordance with the terms of the Joint Venture Agreements and payable to the Pursuers in terms of the Irrevocable Mandates instructing BAT to remit to the Pursuers the sums payable by them to the Defender in accordance with the terms of the Joint Venture Agreements and thereafter crediting amounts due to the Defender, in accordance with the Joint Venture Agreements, towards repayment of these loans. The two previous loans were repaid in full in accordance with this procedure."

In the letter dated 11 December, 1991, approving the loan, the Bank's officer, Mr Leaper, wrote:

The appellant avers that this letter approved the loan "on the terms proposed by the defender including the method of repayment." It is also averred that the Bank "were aware, by virtue of the aforesaid Assignation and Irrevocable Mandate, that the Defender was unable to obtain payment of sums received by Bon Accord until the loan had been repaid".

Before the amendments introduced in the course of the hearing, the same duties were then averred as implied terms of the contract.

Mr Clarke's first proposition was that on a sound construction of the letters of 1 November, 1991, and 11 December, 1991, the loan was to be repayable only from the appellant's returns from the joint ventures. The argument differed from the argument before the sheriff, and she did not deal with the point. The arrangements distinguished three matters: the loan; collateral; and the means of repayment. Separate proposals were made for each, and, properly construed the Bank's letter accepted the proposals without demur. Properly construed the agreement was that there should be repayment only from the proceeds of the joint ventures. Mr Brailsford contended that the documents did not support such a construction. The question was whether failure to secure repayment using the agreed mechanism extinguished the obligation to make repayment which was inherent in loan. The appellant had to demonstrate that the provision for repayment extinguished the obligation if the flow of funds was insufficient to repay the debt. That was not a possible view.

I have no hesitation in preferring the respondents' argument. This issue turns on the terms of the documents. One begins on either view with a loan of a specified sum, at interest, and arrangements for its repayment. For the appellant to succeed it is necessary to read into the terms of the letters an agreement that unless there was a positive return from the joint ventures the loan and accruing interest would not be repaid at all. There is nothing in the language used which could support such a construction. If one has regard to the terms of the assignation, as Mr Clarke invited us to do, the proposals for security were wholly inconsistent with a view that the Bank should look to the payments from Bon Accord and to those alone for repayment. The proposal was that the Bank should have power of disposal of the appellant's interests "in the event of my failing to repay any sum outstanding to the Bank when called upon to do so". The language is appropriate to an ordinary bank loan, repayable on demand, where the lender was to have a normal right of recourse against the borrower. Further, the provision in the Bank's letter of 11 December, 1991 for review of the facility is inconsistent with the view for which Mr Clarke contended. It would have made no sense to review the facility if the appellant were under no liability to repay except from the net proceeds of the joint ventures: the Bank would have accepted a position which was inherently inflexible from its inception. If the Bank had no recourse against Mr James, the appellant, as contended, the review of his facility could have no practical significance. There would be no balance which could be called up in a question with the appellant. Bon Accord were not parties to any agreement to pay the appellant's debt in his place if the repayment mechanism failed. The result of the interpretation proposed would be that the Bank would have undertaken a risk related to the success of a venture over which it had no influence, on what appear in other respects to be ordinary lending terms. There is no support for such an unusual arrangement in the terms of the documents.

However, Mr Clarke contended in the alternative that there was a background of facts and circumstances which formed the factual matrix in which the language used fell to be construed. Having regard to the averments of prior business relationships in particular one could not dispose of the question of construction against the appellant's interests without enquiry. In considering the expectations of the parties in entering into the loan transaction, one had to have regard to that context. Standing what had happened in the past, when the Bank had monitored incomings from the joint ventures, and credited sums to the appellant's loan account when remitted by Bon Accord, and had obtained monthly reports from Bon Accord, and having regard also to the arrangements for future monitoring with Mr Duthie, and their knowledge of the agreements and the mandate, the Bank were to be regarded as having undertaken in dealing with the new loan to do what they had done before. There were averments sufficient for proof before answer on this more broadly based contract case. The previous pattern of the parties' conduct was raised by the appellant in his letter and responded to by the Bank without demur. The Bank acknowledged that they would liaise with Mr Duthie of Bon Accord. There was no perceived irregularity or unusual factor in parties' minds. That could make sense only in the context of the prior dealings of parties, given that the appellant and Bon Accord were each customers of the same branch of the Bank and would not normally have access to the banking transactions of the other. Apart from agreement there was almost a conflict of interest. A practice had developed from their prior dealings on which they relied in making the present arrangements. The obligations averred were things which the Bank had to do. The statements in Mr Leaper's letter were not statements of intention. They could only be construed as undertakings. Counsel accepted that there was nothing in the letters which said in terms that the current arrangement was made on the same terms as the previous arrangements. But the surrounding circumstances were relevant. Facts did not cease to be part of the surrounding circumstances simply because they were related to past events. The appellant's proposals to the Bank, which were accepted, reflected an invariable practice. That is what he offered to prove. The relationship between the parties brought with it the range of duties relied on.

Mr Brailsford contended in reply that there was nothing in the averments to support the argument. The appellant's averments did not disclose any terms of the prior arrangements which might be relevant. There was no averment that it had been agreed that there would be no repayment other than from the proceeds of the joint ventures. There were no relevant averments of surrounding facts and circumstances bearing on the issue. All that was averred about past transactions was that as a matter of fact the earlier loans were repaid by the application of sums remitted from Bon Accord. That was insufficient. In any event prior dealings could not instruct a case such as the appellant now sought to advance. Again we agree with the respondent Bank's position.

In Investors Compensation Scheme Limited v West Bromwich Building Society and Others [1998] 1 All ER 98 Lord Hoffmann gave particular emphasis to the need to have regard to the state of knowledge of the parties in entering into a contract when construing its terms, and set out a series of principles to be followed. He took as his point of departure the speeches of Lord Wilberforce in Prenn v. Simmonds [1971] 1 W.L.R. 1381, 1384-1386 and Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen [1976] 1 W.L.R. 989. His analysis has not had unqualified support. See National Bank of Sharjah v Dellborg, unreported, 9 July, 1997; Scottish Power plc v Britoil (Exploration) Ltd [1997] 94(47) L.S.G. 30 and Bank of Scotland v Dunedin Property Investment Co Ltd 1998 SC 657. But for present purposes three of the principles set out provide the basis for the appellant's argument:

(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract

(2) The background was famously referred to by Lord Wilberforce as the "matrix of fact," but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax. (see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd. [1997] 2 WLR 945

These observations clearly indicate a wide scope for enquiry into the background knowledge of parties in entering into a contract. But they are tools for ascertaining the meaning of the language used: not for supplementing it by the addition of expressions which are not present. However much one looks at the background in this case, it cannot provide the essential deficiency in the agreement from the appellant's point of view. There is nothing which suggests that there is to be repayment of the loan if and only if there is a cash flow from Bon Accord to the appellant sufficient to extinguish the debt appearing on the loan account. Even if the appellant were to prove that the previous loans were repaid as averred, that would not establish that there was a contractual term that those loans would have been repayable only in that way.

The appellant's next contention was that if, properly construed, the contract did provide for personal liability to repay, the Bank had waived its right to call on him for repayment. That argument was not advanced before the sheriff. In the court below the appellant had relied on a general plea of personal bar. Mr Clarke argued that if he were wrong in his contentions on interpretation, there were sufficient averments of waiver to entitle the appellant to proof. He accepted that the relevant tests were as set out in Armia Ltd. v Daejan Developments Ltd. 1979 SC (HL) 56, and James Howden & Co Ltd. v Taylor Woodrow Property Co Ltd. 1998 S.C.C.R. 903. The issue was one of fact. The averments relied on are as follows:

On or about 19 November 1992 the Pursuers sent a letter to the Defender dated 19 November 1992. In terms of said letter the Pursuers stated:

These communications are said to amount to representations by Mr Leaper that the Bank had allowed Bon Accord to delay payment of sums due; that the Bank would obtain payment of the sums from Bon Accord in due course; and that the Bank would not be seeking repayment of the sums directly from the appellant.

In developing his argument, Mr Clarke said that the letter no doubt required interpretation. But the words quoted were capable of bearing the meaning that the Bank were looking solely to Bon Accord for repayment of the loan. There would be nothing unusual in a Bank giving up its strict rights to enforce an obligation. The appellant was entitled to proof of his averments as a whole, and to invite the court, after proof, to infer that the Bank had indeed departed from its right to seek repayment from the appellant. Mr Brailsford argued that the averments relied on for waiver had to be seen in context. The letter of 19 November, 1992 was concerned with a loan for which the appellant was liable. On no view could one construe the passage quoted as an unequivocal abandonment of the right to repayment from the appellant. The averments of oral communications might have reflected Mr Leaper's view of the situation as he saw it. But his interpretation of the parties' arrangements could not affect the issue. Proof of a statement that Bon Accord and not the appellant were "responsible" for repayment would not suffice.

The oral observations attributed to Mr Leaper cannot in our opinion be construed as waiver of the Bank's rights. At highest the averments indicate an expression or repeated expression of his view of the parties' respective obligations. The averments fail to give clear notice of the case to be made. In particular it is unclear whether there were repeated oral assurances, or one only, and there is an absence of specification of the date place and general circumstances involved. It would be unusual for a right which was once waived to be waived repeatedly thereafter. Mr. Leaper's comment is to the effect that the appellant had nothing to worry about because Bon Accord were responsible for repayment, in Mr Leaper's opinion, and not the appellant. His views on that matter, whether or not accurately averred, are inherently different from an abandonment of the Bank's rights which, in the context of waiver, would otherwise have been enforceable at the time the waiver was intimated. The letter, read as a whole, cannot be construed as an abandonment in any event. On the contrary, the letter was written in the context of the annual review of the appellant's facility. It referred to the appellant's current borrowing limit, with an expiry date of 10 December, 1992, and sought information to enable Mr Leaper to renew the facility. The reference to the mechanics of payment require properly to be construed in that context. So viewed, the letter asserts liability. It cannot be construed as a waiver.

The final chapter of the argument related to the appellant's claim for recompense. Mr Clarke abandoned the analysis advanced before the sheriff and reflected in her note. One had to have regard to the fundamental requirements of a remedy for unjustified enrichment. Those were that one person was enriched at the expense of another in circumstances in which it was unjust and unintended that the person advantaged should retain the benefit obtained at the expense of the person who was disadvantaged by the other's enrichment. If those requirements were established, the form of the remedy was a secondary matter: Dollar Land (Cumbernauld) Ltd v CIN Properties Ltd 1996 S.C. 331; and Shilliday v Smith 1998 S.C. (H.L.) 725. The possibility of a remedy in circumstances similar to the present case was recognised in Style Financial Services Ltd. v Bank of Scotland 1996 S.L.T. 421. Counsel also referred to Mercedes-Benz Finance Ltd v Clydesdale Bank Ltd. 1997 S.L.T. 905. If the Bank knew of the fiduciary relationships between the appellant and Bon Accord, and became aware or should have become aware that money had come into the Bank's hands which was intended to have been applied in repayment of the appellant's loan account, and which ought to have been paid over to the appellant or credited to his account, the Bank had no right to sit on their hands and allow matters to take a course which was to the material disadvantage of the appellant. That could not be fair. It would be unfair to allow the Bank to retain the benefit accruing from the reduction of Bon Accord's indebtedness while the appellant remained liable for the unreduced amount of his loan account. Enrichment in this case arose when the money in question was credited to Bon Accord's account, reducing the company's indebtedness to the Bank. Where there was a known fiduciary relationship between two of its customers, the Bank could not fairly sit back and do nothing. That gave rise to an unjust result. After proof, the defenders were assoilzied in Style: 1997 S.C.C.R. 633. The present case could be distinguished. The irrevocable mandate was intended to ensure that the money due to the appellant was transferred by Bon Accord to the Bank for the appellant's benefit. It was not intended to remain at the credit of Bon Accord. The Bank were fully aware of those arrangements. The appellant's contentions were supported by Westpac Banking Corporation v Savin [1985] 2 NZLR 41.

Mr Brailsford accepted Mr Clarke's analysis of the principles applicable. He contended however that there was no basis in averment for a case of recompense. The averments did not disclose any unjustified enrichment of the Bank. One had to have regard to the contracts between the appellant and Bon Accord. Sums became payable to the appellant in events of which the Bank could have no direct knowledge. There were no averments of the sums which were invested by the appellant, nor of the contract under which they may have been invested. The Bank could have no knowledge of the nature and levels of the expenditure which had to be met out of income before any right to payment accrued to the appellant. The mechanisms envisaged for collection of income meant that the gross income had to be collected by Bon Accord and held and applied by them in the first instance. The Bank had no control under its contract with the appellant over such matters. There were problems with ascertaining what fell under the contract in any event. There were problems in ascertaining what percentages might apply to any sums in which the appellant had a right to participate. There were no averments whether Bon Accord had a single business adventure with the appellant, or had independent businesses of its own. There would have to be an accounting between Bon Accord and the appellant. The circumstances were very different from Westpac Banking Corporation and from Style Finance. The averments did not contain a relevant case for recompense.

The appellant's pleadings are less than satisfactory in a number of respects, and Mr Clarke was driven to a degree of imaginative reconstruction to bring the argument within the scope of the authorities. The appellant's averments of the knowledge of the bank derived from the terms of the Joint Venture Agreements have been quoted already. Those averments attribute to the Bank knowledge that the appellant would be entitled to one or other of three percentage shares of "all monies received in terms of" the Joint Venture Agreements. There are averments of the anticipation that the Bank would monitor "the sums received from BAT in respect of sums due by BAT to the defender in accordance with the terms of the Joint Venture Agreements and payable to the Pursuers in terms of the Irrevocable mandates.." The averments at the heart of the unjustified enrichment claim include the averments of the Bank's duties which have been quoted already as being derived from the obligation to monitor incoming funds.

In elaborating the quantification of the claim, the appellant states that "the Pursuers received sums of approximately $205,851.50 Dollars from BAT which were due to the Defender in accordance with the terms of the Joint Venture Agreements". The substance of these averments is repeated in the counter-claim. Mr Clarke accepted that the initial formulation of the parties' anticipation: "that monies due to the Defender in terms of the Joint Venture Agreements would be received by BAT" was nonsense. He accepted that the following proposition that: "the Defender would be entitled to either 80%, 50% or 25% of all monies received" was incorrect. He accepted that the basic averments of the unjustified enrichment claim focused on the gross deposits of Bon Accord and could not be identified with sums due to the appellant. But essentially he contended that these were mere infelicities of pleading and did not detract from the appellant's case. It is necessary to consider whether that is so. Mr Brailsford argued that it was a catalogue of error which undermined the relevancy of the case. There is confusion in the appellant's case between sums lodged by Bon Accord in their own account with the Bank, sums which might be profits of one or other of the three joint adventures, and sums which might be due to the appellant by Bon Accord from the joint ventures. Leaving aside the confusion of the effects of the assignation and mandate, which is apparent in the averments, the knowledge attributable to the Bank suggests an insight into the meaning and effect of the agreements which we do not find obvious. On no view of the agreements was Bon Accord to receive, "monies due to", the appellant. The arrangement, however it was to apply, was for Bon Accord to act on behalf of the joint venture in marketing such equipment as came to be acquired, in accordance with one or other of the joint ventures, and to account to the appellant for sums determined in accordance with the mechanics set out. In the first two agreements any sum due during the initial recovery period would have been determined by an allocation of gross proceeds, after payment of relevant expenses for which the appellant at that stage was liable in full. Under the last agreement, expenses were deducted first and the balance allocated. In each case the regime altered after the initial recovery period. However at all times an accounting would have been required to ascertain the sum which might be due to the appellant or his assignees. However the appellant's case is developed, it depends on the operation the Joint Venture Agreements, to this extent at least, that the agreements must be the initial focus of any analysis of the information actually or potentially available to the Bank. Among the common characteristics of the agreements the following are important. Bon Accord was to manage the ventures. Bon Accord was to use invested funds to acquire, maintain and to market the equipment agreed on. Bon Accord was to keep the equipment on its inventory designated in a particular way. Bon Accord was to be responsible for billing and collecting all sums due to the joint ventures. There was no further provision regulating the handling of sums received by Bon Accord. There was no provision for joint venture banking accounts. There was no provision for Bon Accord to hold joint venture money in a designated account or otherwise to distinguish joint venture receipts from its own general funds. There was no express provision requiring Bon Accord to lodge any sums with the Bank for the company's account. On the contrary, the agreements impose on Bon Accord an obligation to meet joint venture expenditure, without qualification as to the source of funds, as a personal obligation. For example, Bon Accord were to maintain the equipment. There was no provision for the company to recoup maintenance expenditure. In the first two agreeme

The obligations are typical obligations to account. The appellant had no right to any part of any receipt during the initial repayment period, which was all that mattered in this case, since nothing was repaid. The averments which allege a right to participate in Bon Accord's gross receipts are inconsistent with the contracts relied on. But the difficulty is not simply one of confused terminology. Bon Accord were to collect the sums. The appellant can therefore have no quarrel with the initial lodgement of the receipts in Bon Accord's account with the Bank. The obligation to account could arise only at some undefined point after the positive flow of deposits into Bon Accord's account began. The Bank could not in the nature of things know from information derived solely from lodgements when that point arrived. Whether there could be a case based on developing events which came to the notice of the Bank is of no relevance. It may well be that there could be cases in which the correct approach involved retrospective analysis. But, as matters stand the appellant's case is seriously flawed in its insistence on the date of lodgement as the trigger for the Bank's obligation to respond to knowledge of the state of liability between the parties to the joint ventures.

The appellant's pleadings derived most of the particular contractual obligations on the Bank from the provision in the Bank's letter of 11 December that the Bank would "liaise with Peter Duthie to monitor incomings...". In seeking to attribute knowledge to the Bank of the reduction of Bon Accord's indebtedness at the appellant's expense in the context of unjustified enrichment, the pleadings inevitably risked confusion between what the appellant undertook to prove was within the Bank's actual knowledge and what might have been known had the letter contained an undertaking to carry out certain investigations and had the Bank implemented that undertaking. Mr Clarke acknowledged the risk of confusion. But he contended that quite apart from the contractual character of the provision, failure to monitor put in question the Bank's bona fides in a question with the appellant. The Bank could not avoid having reason to believe that there were sums due to the appellant, and that was enough. He invited us to follow Style and the guidance of the New Zealand court in Westpac.

Westpac Banking Corporation knew that their customer, Aqua Marine, sold boats on an agency basis, and that those transactions accounted for three quarters of the company's transactions. The proceeds of all sales were lodged in the company's bank account which was at all material times overdrawn. The bank knew how much was due to boat owners as principals, and in that knowledge put pressure on Aqua Marine to delay payment. Richardson J. cited Thomson v Clydesdale Bank 20 R. (H.L.) 59 for observations of the Lord Chancellor, Lord Herschell and of Lord Shand that there could be exceptions from the general rule that a bank had no concern to inquire into the source of money lodged by its customer. The Lord Chancellor's observation was in these terms:

Much of the discussion in Westpac is taken up with constructive trust. Mr Clarke argued that in Scots law it was sufficient that the circumstances gave rise to a right to recompense generally. As already mentioned Mr Brailsford did not dispute Mr Clarke's analysis of the law. The critical question is whether there are relevant averments in support of the proposition that in this case the Bank had reason to believe that sums lodged by Bon Accord belonged to the appellant and should not have been applied in reduction of Bon Accord's debt. Having regard to the analysis of the Joint Venture Agreements already set out, the lodgement by Bon Accord of receipts from joint venture sales or leases in the company's own account with the Bank was not a requirement of the agreements. But it was one method of implementing the obligation to manage the business, including the collection of sums due. And Bon Accord had a personal interest in the application of joint venture receipts at all material times. By 19 November, 1992, the Bank did have information that a sum of $135,692 was due by Bon Accord to the appellant under the joint ventures. The final draw-down under the loan had taken place in May, 1992 when the total sums of principal borrowed had reached $85,000. Only a small sum was ever repaid. There is sufficient in the averments for proof that the ventures had been profitable by November, 1992, and that there was a sum which Bon Accord should have remitted to the Bank for the benefit of the appellant in terms of the mandate. But that does not show that there was at any stage any sum lodged with the Bank for credit of Bon Accord which was due to the appellant, much less that the Bank knew or had reason to believe that any sum lodged was of that kind. The confusion between sums lodged by Bon Accord with the Bank and the appellant's right to an accounting and payment of any balance brought out in his favour is fatal to the claim for recompense.

In the circumstances we shall sustain the sheriff's interlocutor and remit the case for proof before answer restricted to the quantum of the Bank's claim for payment.

I concur with the opinion delivered by Lord Penrose, in both its reasoning and its conclusions.

I entirely agree with the Opinion of Lord Penrose and have nothing useful to add.

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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Bank Of Scotland v Frank James Junior [1999] ScotCS 9 (8 January 1999) URL: http://www.bailii.org/scot/cases/ScotCS/1999/9.html Cite as: 1999 SCLR 284, [1999] ScotCS 9

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