Ahmad & Ors v Bank of Scotland & Ors

A bank’s agreement to allow time for refinancing and the sale of specified secured properties must be construed from its written terms. A restriction on the bank’s security rights must be express or arise by necessary implication; it is not readily inferred while the debt remains payable on demand. A receiver’s appointment may be valid even if it involves a breach of a separate collateral agreement, with the remedy ordinarily sounding in damages. Issue estoppel may arise from an interlocutory decision that finally disposes of a claim on its merits. Receivers do not procure a bank’s breach merely by accepting appointment, and unlawful-means liability requires an intention to cause harm. Evidence of actual marketing and sale is generally stronger evidence of market value than a retrospective desktop valuation.

The claimants were individuals, a partnership and two companies connected with property and textile businesses. They alleged that the Bank had agreed in May and July 2008 to extend lending, refrain from appointing receivers and allow time to sell the Bollo Bridge properties, pursue an insurance claim and obtain planning permission. Receivers were appointed in September 2008 and January 2009.

The claimants sought to amend their pleadings to pursue contractual, estoppel, tort and receivers’ duty claims. The Bank and receivers applied for strike out and summary judgment. Earlier proceedings concerning the individuals’ guarantees and counterclaim had resulted in summary judgment, dismissal of the counterclaim and refusal of permission to appeal.

1. Disposition. The proposed claims had no realistic prospect of success. The action was struck out and dismissed against all defendants.
2. Construction and security rights. The 27 May 2008 letter created the relevant agreement. It granted a final extension to the end of June 2008 and required the Bollo Bridge properties to be marketed if refinancing failed. It did not incorporate earlier discussions, extend to the NIG claim or other charged assets, or suspend the Bank’s rights after June. Any surrender or suspension of security rights required express wording or necessary implication. The loans remained payable on demand, and the September and January appointments were valid.
3. Collateral agreement and estoppel. Even if a collateral agreement had required more time, its breach would sound in damages and would not invalidate an otherwise lawful appointment. The earlier decisions finally determined the individuals’ counterclaim and the loss issue on their merits. Those decisions therefore created cause of action or issue estoppel, notwithstanding that the original applications were interlocutory. The exception recognised in Arnold v National Westminster Bank plc [1991] 2 AC 93 did not apply.
4. Receivers and economic torts. Under OBG v Allan [2008] 1 AC 1, procuring breach is accessory liability. The Bank made the appointments; acceptance by the receivers did not induce a breach. Unlawful-means interference also failed because the receivers intended to realise assets at the best reasonably obtainable prices, not to cause harm. The claims against the receivers consequently failed.
5. Loss and valuation. The actual marketing history and achieved sale prices showed no undervalue. The approach in Ludsin Overseas Ltd v Maggs [2014] EWHC 3566 (Ch) was treated as persuasive. The NIG claim had been settled in line with legal advice and no sustainable loss was shown.

• High Court (Chancery Division): the present action was struck out and dismissed.
• Earlier Chancery proceedings: a District Judge granted summary judgment on the guarantee claim and dismissed the counterclaim. Judge Kaye QC considered a reformulated case and dismissed it on the merits.
• Court of Appeal: Floyd LJ refused permission on paper. Arden LJ refused the renewed oral application for permission and refused the application to adduce fresh evidence.