The Bank Of Scotland v. Dunedin Property Investment Company Ltd [1999] ScotCS 311 (08 June 1999)

The Bank Of Scotland v. Dunedin Property Investment Company Ltd [1999] ScotCS 311 (08 June 1999)

Reimbursement of breakage costs was part of the price for early redemption under Condition 3 of the Loan Stock Deed. The defenders' failure to acknowledge liability for breakage costs at the redemption date meant they did not tender full performance, entitling the pursuers to refuse redemption and to claim interest until full performance was made. There was no basis for implying a term into the Interim Agreement entitling the pursuers to interest on the principal sums from 7 March 1997; interest runs only from the date of citation.

Citation
[1999] ScotCS 311
Parties
Pursuer: The Governor and Company of the Bank of Scotland; Defender: Dunedin Property Investment Company Limited
Jurisdiction
Scotland
Judgment Date
08 June 1999
Procedural Posture
Civil (contract/commercial) / Judgment After Debate on Legal Issues
Outcome
Judgment for the pursuers in respect of entitlement to interest on the loan from 17 April 1996 to 7 March 1997; interest on principal sums to run only from date of citation, not from 7 March 1997.
Legal Topics
Loan Agreements, Early Redemption, Breakage Costs, Interest Entitlement, Implied Terms
Contract Law Banking Law Loan Agreements Early Redemption Breakage Costs Interest Entitlement Implied Terms

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Parties

The Governor and Company of the Bank of Scotland

Pursuer

Dunedin Property Investment Company Limited

Defender

Procedural Posture

Civil (contract/commercial) / Judgment After Debate on Legal Issues

Legal Issues

  1. 1 Whether reimbursement of breakage costs was a condition precedent to early redemption of loan stock under the Loan Stock Deed.
  2. 2 Whether the pursuers are entitled to interest on the loan from 17 April 1996 to 7 March 1997.
  3. 3 Whether interest on the principal sums sued for should run from 7 March 1997 or only from the date of citation.

Ratio Decidendi

Reimbursement of breakage costs was part of the price for early redemption under Condition 3 of the Loan Stock Deed. The defenders' failure to acknowledge liability for breakage costs at the redemption date meant they did not tender full performance, entitling the pursuers to refuse redemption and to claim interest until full performance was made. There was no basis for implying a term into the Interim Agreement entitling the pursuers to interest on the principal sums from 7 March 1997; interest runs only from the date of citation.

Court Disposition

Judgment for the pursuers in respect of entitlement to interest on the loan from 17 April 1996 to 7 March 1997; interest on principal sums to run only from date of citation, not from 7 March 1997.

Orders

  • Pursuers entitled to payment of £1,109,589.04 (interest on the loan from 17 April 1996 to 7 March 1997), with interest at the judicial rate from date of citation until payment.
  • Pursuers entitled to payment of £923,253 (breakage costs), with interest at the judicial rate from date of citation until payment.