Tag Archives: Carlyle v Royal Bank of Scotland

UK Supreme Court reverses two more Inner House decisions

Update 12th March 2015

It’s not just a matter of keeping score. As a matter of superficial arithmetic, the United Kingdom Supreme Court decision on Wednesday March 11th in the case of Montgomery v North Lanarkshire Health Board was the fourth time it had overturned a decision of the Inner House of the Court of Session out of the last 6 occasions it had been asked.

It was followed within minutes by the UKSC’s decision in the case of Carlyle v Royal Bank of Scotland. That made 5 out of 7.

The circumstances in each of those five reversals are different and the narratives given by the Supreme Court judges for doing so have deployed a spectrum of language from incredulity to respectful finessing. It remains the case that more judgments have been upheld than reversed since the UK Supreme Court succeeded the House of Lords as the top court in the land in 2009 (see my blog www.lawfulbusiness.co.uk).

However, the blunt terms of the recent decisions must be a concern. Litigants and their legal advisers in Scotland need to have confidence in the predictability and consistency of decisions in Scotland’s highest courts when assessing whether to battle on, withdraw or settle.

Has the Inner House been trying to trace a distinctly Scottish view of cases that has brought it into collision with the thinking of the Supreme Court, notwithstanding the presence of two Scottish judges among its number? Or has the Inner House become inherently more cautious, arguably more conservative than either its own recent predecessors or its current Supreme Court contemporaries.  Has cautious and Scottish become one  on the Scottish bench?

In Montgomery v North Lanarkshire Health Board the UK Supreme Court overturned successive Scottish court decisions that had rejected Nadine Montgomery’s claim for damages following the birth of her son, Sam, at Bellshill Maternity Hospital in 1999.

As a result of complications during delivery Sam was born with severe disabilities.

The case hinged on whether the medical practitioners (who were employed by the Health Board) went far enough in advising Mrs Montgomery of all the potential risks of giving vaginal birth to her son rather than by caesarian section, given that she was slight in stature but Type 1 diabetic  –  often associated with delivering large babies.

The full judgment [https://www.supremecourt.uk/decided-cases/docs/UKSC_2013_0136_Judgment.pdf] sets out the unfortunate facts of the case which were not greatly in dispute.

The broadcast news bulletins understandably have concentrated on the large award,  previously agreed in the region of £5.25m, that has been secured by Mrs Montgomery for Sam’s care.

Of greater significance beyond Mrs Montgomery and Sam individually is that the UKSC took the opportunity to reset the balance between informed consent and medical negligence in tune with the times and current expectations of the relationship between a patient and a practitioner.

In their consideration of the issues  in Scotland, first Lord Bannatyne in 2010 and then an Inner House bench of Lord Eassie, Lord Hardie and Lord Emslie in 2013 stated they were following the approach laid down in the 1985 House of Lords decision in Sidaway v Board of Governors of the Bethlem Royal Hospital and the Maudsley Hospital. It has been the guiding case since and in some respects it may seem unfair to criticise unduly the Inner House for holding the line so clearly drawn 30 years ago by Lords Diplock and Templeman.

Except that it was 30 years ago. Sidaway used to be king. Now it is simply “unsatisfactory”.

Lord Reed asserted: “Since Sidaway, however, it has become increasingly clear that the paradigm of the doctor-patient relationship implicit in the speeches in that case has ceased to reflect the reality and complexity of the way in which healthcare services are provided, or the way in which the providers and recipients of such services view their relationship. “

Taking into  consideration the changing expectations of patients as consumers and the multiplicity  of sources of information available to them, most patients and most doctors now expect “dialogue” about the prospective benefits and risks inherent in a prospective treatment.

It is perhaps an indulgence enjoyed by judges at the very top of the pyramid to decide when the longstanding precedents are no longer fit for purpose. Indeed it is their job.

But a question for the Inner House to address was what had stopped it applying its own intellectual rigour to the Montgomery case and declaring  that its judgment was that Sidaway and associated ‘tests’ were out of date rather than appearing to dig in? Cautious or Scottish?

Lord Reed asserted in another part of the judgment that English courts have effectively been disregarding Sidaway for some time.  As in the 2010 Cadder case did the Scottish bench really not see the signs that the light at the end of a tunnel was a locomotive racing towards it?

Wednesday’s second  reversal of an Inner House decision, Carlyle v Royal Bank of Scotland, is in some respects more embarrassing.  The case itself concerns a dispute between Mr Carlyle, a property developer, and Royal Bank of Scotland over funding he believed had been agreed and confirmed in a phone call with a Ms Hutchison of RBS in June 2007 for the purchase and then development of some plots of land near Gleneagles Hotel in Perthshire.

However, the Bank decided  in August 2008 not to provide funds for building a property on the land for which it had provided a loan in the intitial purchase. Mr Carlyle’s plans foundered. The bank called in the loan and raised an action against him for close on £1.5m.

The judge at first instance in the Court of Session, Lord Glennie, heard witnesses and assessed the evidence and in 2010 gave judgment in favour of Mr Carlyle.

The bank appealed.  In September 2013 a bench of Lord Carloway, Lady Dorrian and Lord Bracadale in the Second Division of the Inner House overturned Lord Glennie’s decision, reinterpreting the evidence that had been heard and substituting its own view of the sustainability of Mr Carlyle’s proposition that he had been given a binding undertaking by the bank.

Wednesday’s Supreme Court decision was extraordinary in itself, verging on Alice Through the Looking Glass.

Lord Hodge said, “Were I deciding the matter at first instance and if the findings of fact record all the material evidence, I think that I might have shared the view of the Second Division (a) that the statement by Ms Hutchison on 14 June 2007 did no more than communicate to Mr Carlyle that the bank had reached a decision in principle to provide funding for the development of the two plots and (b) that the parties were required to take further steps to create a legally binding obligation on the bank to advance that funding.

“BUT”,  Lord Hodge continued,  sweeping the feet from under the Inner House, “deciding the case as if at first instance is not the task assigned to this court or to the Inner House. It is not appropriate to restate at any length in this judgment the dicta from prior cases which this court recently set out in McGraddie v McGraddie  and discussed in Henderson v Foxworth Investments Limited.”

In short, the Inner House might have been right but was only entitled to interfere if there had been an error in law by Lord Glennie or his interpretaton of the evidence was unsustainably wrong and if he was wrong in this case he wasn’t wrong enough so therefore he must be taken to be right: the evidence means what he said it means.

It was not the Inner House’s business to second guess the judge who had actually heard the witnesses.  The evidence means what he said it means

The UK Supreme Court went over this ground in McGraddie v McGraddie in July 2013. The Inner House decision in  Carlyle v Royal Bank of Scotland was delivered in September 2013. They should have known.

However, it may be that lessons are being learned.

In two recent decisions in the Inner House (Coyle v Lanarkshire Health Board, and Little v Glen) the decisions in McGraddie and Henderson were applied without hesistation, and the decisions of the Lords Ordinary (Tyre and Jones respectively) were not interfered with.

I’m told Sheriffs Principal now expect McGraddie to be cited as a reason for repelling appeals on a routine basis.

And slipped into Lord Hodge’s judgment in Carlyle was a masterpiece of understatement that may have gone some way to explaining how wires could have been crossed between a client and the Royal Bank:  “… it is notorious that the prudence which historically has been attributed to Scottish bankers was not always in evidence in commercial and mortgage lending in the years leading up to financial crisis in 2008.”

Carlyle v Royal Bank of Scotland is not entirely over. The Supreme Court did not reinstate Lord Glennie’s determination but set aside the interlocutors of the Second Division dated 12 September 2013 and 3 October 2013, and remitted the case “to a commercial judge in the Court of Session to proceed accordingly”. It may well be that Mr.Carlyle in winning this battle has not yet won the war.