Royal Bank of Scotland would give developers approval for multimillion-pound projects over the phone, with paperwork following weeks or months later, appeal court judges have heard.
When RBS advanced £1.4 million to Derek Carlyle to buy land at Gleneagles in 2007, the bank knew the site had a 'buyback' clause which made it worthless unless developed, yet it withheld committed development funding of up to £700,000.
RBS is trying to overturn a landmark Court of Session judgement that it incurred a legal obligation to Mr Carlyle when telling him in a phone call "good news, it's all approved" in June 2007.
The bank's counsel Alastair Duncan, QC, had said on Wednesday it was "inherently unlikely" and "commercially absurd" a bank could have agreed to advance £700,000 without anything in writing, and so Lord Glennie had erred in his judgement in 2010.
But Michael Howlin, QC, for Mr Carlyle, said that was how the bank had operated in backing previous developments by Mr Carlyle.
He drew the judges' attention to Mr Carlyle's unchallenged evidence that once the bank's local commercial manager and then its credit department in Edinburgh had assessed a project over several months, final approval for full funding had come "always in a phone call saying 'Edinburgh have approved it'", with paperwork produced when money was drawn down.
He said Mr Duncan's assertion that the words "it's all approved" could not really have that meaning was "plainly wrong".
The Lord Justice Clerk, sitting with Lady Dorrian and Lord Bracadale, questioned how Mr Howlin would maintain Lord Glennie's view it constituted a "collateral warranty" obligation.
Mr Howlin said it was not a term known in Scots law, but was "just a label" which could be used when there were two related contracts.
At stake is a £3m counter-claim by Mr Carlyle against RBS, which was key in his sequestration for a minor debt soon after he won the original case, and in the 12-year bankruptcy restriction order imposed on him.
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