A property developer who lost a fortune when his bank pulled the plug and refused to finance his plans to build a luxury home within sight of the Gleneagles golf course will get his money back following a Supreme Court ruling.
The developer bought a building plot from the Gleneagles Hotel with the benefit of a bank loan. He had made it plain to the bank that it should not lend him the purchase money unless it was also committed to funding the development itself. He went through with the purchase after a representative of the bank reassured him during a telephone conversation that his proposal was 'all approved'.
However, the bank subsequently refused to fund construction work on the site and called in the £1,449,660 loan, together with interest. The developer's response was to sue the bank in respect of his loss of profit on the project. A judge upheld his claim on the basis that the bank had entered into a contractual obligation to provide him with development funding of £700,000. That decision was later overturned by an appellate court in Scotland.
In unanimously allowing the developer's appeal against the latter decision, the Supreme Court found that, although the nature of the oral agreement was relatively ill-defined, the bank had made a binding and enforceable promise to fund the development. The original judge's conclusions were open to him on the evidence and his decision should not have been overturned.