The Royal Bank of Scotland Plc v MccArthy

The Royal Bank of Scotland Plc v MccArthy

Mr McCarthy is liable to RBS for repayment of the PPL loan. RBS did not induce a breach of contract by the LLP, as no request for consent to repay Mr McCarthy's loan was made by the LLP, and RBS did not refuse such a request. The LOU does not confer enforceable rights on Mr McCarthy under the 1999 Act. No implied term or collateral contract exists obliging RBS to require repayment from the LLP. Even if inducement had occurred, RBS would have been justified as a secured creditor.

Parties
Claimant: The Royal Bank of Scotland PLC; Defendant: Michael Patrick McCarthy
Jurisdiction
England and Wales
Judgment Date
21 December 2015
Procedural Posture
Civil / Judgment After Trial
Outcome
Judgment for the Claimant
Legal Topics
Inducement of Breach of Contract, Third Party Rights Under Contract, Implied Terms, Collateral Contract, Secured Creditor Rights, Professional Practice Loans
Contract Law Banking Law Insolvency Law Inducement of Breach of Contract Third Party Rights Under Contract Implied Terms Collateral Contract Secured Creditor Rights +1 more

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Parties

The Royal Bank of Scotland PLC

Claimant

Michael Patrick McCarthy

Defendant

Procedural Posture

Civil / Judgment After Trial

Legal Issues

  1. 1 Whether RBS induced Halliwells LLP to breach its contractual obligations to Mr McCarthy under the Retirement Deed, LLP Deed, and/or Letter of Undertaking (LOU)
  2. 2 Whether Mr McCarthy can enforce the LOU under the Contracts (Rights of Third Parties) Act 1999
  3. 3 Whether there was an implied term in the PPL that RBS would not prevent performance

Ratio Decidendi

Mr McCarthy is liable to RBS for repayment of the PPL loan. RBS did not induce a breach of contract by the LLP, as no request for consent to repay Mr McCarthy's loan was made by the LLP, and RBS did not refuse such a request. The LOU does not confer enforceable rights on Mr McCarthy under the 1999 Act. No implied term or collateral contract exists obliging RBS to require repayment from the LLP. Even if inducement had occurred, RBS would have been justified as a secured creditor.

Court Disposition

Judgment for the Claimant

Orders

  • Mr McCarthy to pay RBS £120,000 plus interest
  • Mr McCarthy's counterclaim dismissed