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RICHARD DURKIN AGAINST HSBC BANK PLC


Submitted: 22 December 2016

EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

[2016] CSIH 93

XA28/16

 

Lady Paton

Lord Drummond Young

Lord Malcolm

OPINION OF THE COURT

delivered by LORD MALCOLM

in the cause

RICHARD DURKIN

Pursuer and appellant

against

HSBC BANK PLC

Defenders and respondents

Appellant:  Party

Respondent:  Roxburgh;  DLA Piper Scotland LLP

22 December 2016

Introduction and Overview
[1]        In December 1998 Mr Richard Durkin (the pursuer) visited a PC World outlet in Aberdeen with a view to purchasing a laptop computer.  For reasons explained later, this spawned a litigation which reached a final conclusion in the UK Supreme Court in March 2015.  Although the merits of his claim against the suppliers and the bank providing credit facilities were decided in his favour, Mr Durkin was and remains extremely dissatisfied with the damages awarded to him, namely £8,000 plus interest.  He has now raised the present action against HSBC Bank plc (the defenders) as the successors to the original bank, namely HFC Bank plc.  In it he seeks decree for payment of £600,000 as “provisional” damages, plus decree for £12,000 per month until payment.  The sheriff at Aberdeen dismissed the action, primarily on the basis that the pursuer is seeking to re‑litigate issues which were the subject of the first action (res judicata).  That ruling was upheld by the sheriff principal.  Mr Durkin now appeals to this court.  He claims that the present action raises different issues for decision.  The defenders have a subsidiary argument that if any part of the new action is not res judicata, it has prescribed in terms of the Prescription and Limitation (Scotland) Act 1973. 

[2]        The full circumstances of what is a long and complicated matter, plus a summary of the submissions made to this court, are set out in an appendix to this opinion.  The decision of the court is based on the full circumstances, but to make this opinion more readable and understandable for those who do not wish to traverse every detail, what follows is a potted version of the history of events. 

[3]        Mr Durkin wished to purchase a laptop from PC World on credit facilities to be supplied by a bank.  He required the computer to have an internal modem.  He was told that he could take the item home, unseal its box and inspect the equipment.  If it did not have an internal modem it could be returned, and his deposit would be refunded.  The next day he returned the laptop because it did not have an internal modem.  However, although ultimately retaining possession of the computer, PC World refused to accept his rejection, and in due course the bank insisted upon payment under the credit agreement.  Mr Durkin told the bank what had happened, but it relied upon PC World’s assertion that the rejection of the item was invalid.  Subsequently the bank  issued a default notice in respect of Mr Durkin and informed certain credit reference agencies of this state of affairs. 

[4]        Mr Durkin raised an action in Aberdeen Sheriff Court against PC World and the bank claiming that he was entitled to reject the goods and that the contracts with them had been validly rescinded.  After a proof, the sheriff agreed and pronounced declarators to that effect. Mr Durkin also claimed damages from the bank for breach of a duty of care to him when wrongly telling the credit reference agencies that he was in default.  The claim was based upon (a) a general impact on his creditworthiness, (b) that this stopped him from taking advantage of zero interest credit cards, and (c) prevented him from buying a new family home in Spain.  A total sum of £250,000 plus interest was claimed.  The sheriff upheld all three heads of loss, though he quantified total damages at just over £116,500. 

[5]        Mr Durkin was not satisfied with the sheriff’s assessment of damages.  He appealed to the Court of Session.  The bank took advantage of this to cross appeal on the merits and in respect of the damages award.  The First Division of the Inner House of the Court of Session rejected Mr Durkin’s appeal, and upheld the bank’s cross appeal in all of its branches.  It held that the sheriff erred in concluding that the credit agreement had been rescinded.  Furthermore, the bank did not breach any duty of care to Mr Durkin.  The court noted that there had been no challenge to the assessment of £8,000 plus interest for injury to general creditworthiness, but it concluded that the evidence did not establish either of the other claimed heads of loss.  The Inner House revised the sheriff’s findings in fact to reflect this decision. 

[6]        From substantial success before the sheriff, Mr Durkin’s appeal to the Court of Session resulted in complete failure against the bank.  He was left with only the declaratory decree against PC World.  He appealed to the UK Supreme Court.  It held that the First Division erred in reversing the sheriff’s decision on the merits of the action, although it reached this view on different grounds from those presented to it and the courts below.  It also concluded that the bank was in breach of a duty of care to the pursuer.  Thus the unchallenged award of £8,000 plus interest for general damages was restored.  However, given the terms of section 32(4) and (5) of the Court of Session Act 1988, and in the absence of demonstrable error on the part of the Inner House, the Supreme Court held that it had no jurisdiction to interfere with the revised findings in fact and the decision on the other heads of loss.  Mr Durkin’s ultimate recovery was £8,000 plus interest.  He was and remains considerably disappointed and aggrieved by this outcome. 

[7]        Mr Durkin has now raised a fresh initial writ at Aberdeen Sheriff Court seeking decree for damages against the current defenders, who, as the successors to the original bank, stand in their shoes.  The main elements of the claimed losses concern recovery of legal expenses incurred in the first action, valued at £300,000, and the rise in the cost of purchasing a larger family home in Aberdeen since the events in question, again valued at £300,000.  While the action is still based upon the consequences of the notices sent by the bank to the credit reference agencies, there are certain new features in the pleadings, which are noted in full in the appendix to this opinion. 

[8]        The action was dismissed by the sheriff, largely on the grounds that it was seeking to re‑litigate matters decided in the earlier litigation (res judicata).  This decision was upheld by the sheriff principal.  The reasoning of the sheriff and the sheriff principal, and the submissions made to this court in support of the current appeal against the decision of the sheriff principal, can be found in the appendix. 

 

The Law as to Res Judicata
[9]        The main question for decision is whether the sheriff and the sheriff principal were correct to uphold the bank’s plea of res judicata.  The applicable law is well settled, and can be summarised as follows.  The plea, which is found in most developed legal systems, is rooted in the public policy against repeated litigation between the same parties “on substantially the same basis” – Lord President Cooper in Grahame v Secretary of State for Scotland 1951 SC 368 at 387.  In the same passage it is stressed that the court should not concentrate on the specific terms of the conclusions or the pleas in law, but look to “the essence and reality of the matter” and simply inquire – “What was litigated and what was decided?”.  The court is not concerned with whether the first decision was right or wrong.  In Grahame the plea failed because the two actions dealt with “essentially separate and distinct subjects of assessment” – Lord Russell at 392.  Phosphate Sewage Co  v Molleson (1879) 6 R  (HL) 113 makes it clear that simply putting forward new facts to support a claim for relief previously refused will not overcome the plea – Lord Hatherley at 119. 

[10]      In Short's Trustee v Chung 1999 SC 471 the first action was one of reduction of two dispositions brought by a trustee in sequestration based on gratuitous alienations under section 34(4) of the Bankruptcy (Scotland) Act 1985.  Given the meaning of certain provisions in the Land Registration (Scotland) Act 1979, it was discovered that the grant of the reductions had not altered the title to the lands, so in a second action restoration of the properties to the previously infeft proprietor was sought.  A plea of res judicata failed.  The court asked “the fundamental question”, namely, are there common features which lead to the conclusion that the second action would entail “unacceptable repetition of litigation?” The court rejected the submission that the same issue was being litigated.  It derived little assistance from concepts such as a comparison of the medium concludendi of each action, but preferred the “more useful” test adumbrated in Grahame – see at 477H.   The “nature of the (second) action” was different from the first.  A “new matter” was being litigated. 

[11]      In Primary Health Care Centres (Broadford) Ltd v Ravangave 2009 SLT 673 Lord Hodge observed that a plea of res judicata depends upon a prior determination by a court of competent jurisdiction pronounced in foro contentioso;  that the subject matter and media concludendi are the same;  and that (other than in respect of decrees in rem) the parties are the same, or representative of the same parties, or with the same interest.  The modern tendency is to focus on the essence of the matter rather than technical form.  At paragraph 32 his Lordship noted the clear authority that, since there is only one cause of action, all grounds of pleading that a single act amounts to a delict (or breach of contract) must be raised in the same action.  Thus, for example, one cannot seek damages for personal injury at common law, and then, if that is unsuccessful, bring an action based upon breach of statutory duty.  It will not avail a pursuer to raise a new action pleading different facts in support of what is, in essence, the same issue;  which in both of the actions at the instance of Primary Health Care Centres was – are the defenders liable in terms of the lease?  This was said in the context of the pursuers having been prevented from advancing an alternative basis for the claim in the first action, a justification also put forward in the present case by Mr Durkin.  Absent res noviter ad notitiam, a different factual basis will not stop a plea of res judicata if the legal claim has not changed.  In both actions the same legal claim was being litigated, therefore Lord Hodge upheld the plea of res judicata.

 

Discussion and Decision
[12]      It is clear that, however offended Mr Durkin may be by the outcome of the first action, and clearly he is outraged, he cannot use these new proceedings to revisit it and seek to overturn what he sees as an unjust and unfair result.  Applying the above guidance, the key question is whether the new action is an attempt to litigate a matter or matters already decided in the earlier proceedings.  The other requirements of res judicata are met, so if the answer to this question is yes, this appeal will fail. 

[13]      The full details are set out in the appendix to this opinion but, so far as relevant for present purposes, the first action decided: 

1.         Did the bank act wrongfully by breaching a duty of care when it sent the default notices to the credit reference agencies? 

The answer was yes because the contract of sale and the credit agreement had been validly rescinded, and the bank was on sufficient notice of the relevant facts to disentitle service of the notices.  Due care required silence on the part of the bank, at least until the dispute between Mr Durkin and PC World was settled in the latter’s favour, something which never happened. 

2.         Has (a) the pursuer demonstrated that the wrongful act caused loss which entitles him to damages, and if so (b) how is that to be quantified? 

The answer was (a) again yes, since the bank could readily foresee that registration of a default could damage Mr Durkin’s credit, and (b) £8,000 plus interest by way of general damage to his creditworthiness.  The other claimed heads of loss, including that flowing from an inability to purchase a family home in Spain, were refused for the reasons explained in the Inner House;  in summary that the evidence did not provide a proper basis in fact for the sheriff’s findings in that regard.  Mr Durkin now claims that the UK Supreme Court should have restored the judgment of the sheriff in this regard;  but it explained that, given the terms of section 32(4) and (5) of the Court of Session Act 1988, and absent a demonstrable legal error, it had no jurisdiction to interfere with the Division’s findings, which therefore stood undisturbed.  Mr Durkin argues that this decision was incorrect, but for present purposes it matters not whether it was right or wrong;  the issue of the recoverable damages flowing from the wrongful conduct of the bank was determined by the combined decisions of the Court of Session and the UK Supreme Court.  The overall result was that the sheriff’s decision was restored, but with damages limited to £8,000 plus interest. 

[14]      If one turns to the issues raised in the present case, plainly there are differences from the pleadings in the first action, but the basic cause of action remains the same, namely damages for loss caused by the adverse credit references, which in turn were caused by the wrongful communication of the notices to the credit reference agencies.  The differences relate to the categorisation of the delictual act, namely negligent misstatement in the original proceedings, and in the present pleadings, variously malicious and deliberate falsehood (sometimes referred to as defamation);  intentional harm;  and fraud/fraudulent misrepresentation.  The background differs slightly in that, instead of a valid rescission of the contracts, it is claimed that they never existed.  In this regard Mr Durkin lays stress on the refusal of the Supreme Court to allow a similar argument to be pled before it, namely one of failure to purify a suspensive condition concerning the need for an internal modem.  The new action avers that PC World created a false account in Mr Durkin’s name.  It is stated that the bank knew that money was not owed to it and that it was acting illegally and maliciously.  The bank had conspired with the credit reference agencies to damage him.  The previous decision was unjust. 

[15]      The damages now claimed represent reimbursement of legal costs incurred in the first action (£300,000) and the increased cost of buying a larger family home in Aberdeen at today’s prices (£300,000).  It is said that the UK Supreme Court should not have upheld the Inner House decision which was to the effect that there was no causal link between the adverse credit rating and Mr Durkin’s inability to purchase a new home.  The justices should have recognised an error in law in the decision to revise the sheriff’s findings in fact.  But for the bank’s malicious falsehood Mr Durkin would now have the family home he had always desired.  “In case it becomes relevant” the new writ also pleads violation of 11 articles of ECHR. 

[16]      It is clear that the new action is an attempt to re‑litigate matters decided adversely to the pursuer in the previous action, plus an added claim for reimbursement of legal expenses incurred in the course of those proceedings.  The latter claim is plainly irrelevant.  The UK Supreme Court ruled on how the expenses of the first proceedings were to be dealt with, and if Mr Durkin is out of pocket, that is a loss which must lie where it falls.  As for the first part of the claim, Mr Durkin seeks greater damages than he achieved first time around, again by reference to the impact of the entries in the registers and his inability to purchase a new and better family home, albeit this time in Aberdeen, not Malaga.  Once more the loss is said to have been caused by the issuing of the wrongful default notices to the agencies.  It is true that the underlying nature of the wrongful act (or delict) has been re‑categorised as described above, but this does not change the essential issue in dispute, nor the nature of the action.

[17]      The same applies to the offer to prove that the contracts never existed, as opposed to having been rescinded.  In either case, the default notices should not have been issued.  Just as the change of front did not avail the pursuers in Lord Hodge’s case, similar reasoning applies here.  Mr Durkin was refused leave to introduce such a case in the first action because the proposal came too late.  This new action is not a valid method of revisiting that decision.  In any event, even had the new case been introduced, it would not have changed the result.  The revised findings in fact pronounced by the Inner House turned on perceived deficiencies in the evidence led to establish a causal link between the default notices and the losses sought in respect of zero rated credit cards and an inability to buy a new family home.  In this regard nothing turned on whether the bank acted wrongfully because the credit agreement had been rescinded or because it was never properly created.  In the Supreme Court the new argument was proposed as providing an alternative route to success on the merits of the action, given the First Division’s decision on section 75 of the 1974 Act.  However, in the result the UK Supreme Court upheld the pursuer’s claim on the merits, albeit by reference to the common law.  Furthermore, an argument based on extortion when the bank allegedly knew that no debt was owing, summarised at paragraph 17 of the appendix, did not avail Mr Durkin in the Supreme Court.  Nothing turns on the justices’ comments that defamation or intentional harm could have been pled in the original action.  This was in the context of the case having been based solely on the terms of the 1974 Act, and is of no relevance to the question of proof of the extent to which he was prevented from buying a new house.

[18]      Whether attributable to negligence or to a fraudulent and/or malicious desire to harm the pursuer, the fact is that the court is now being asked to reverse the determination in the first action as to the extent of the recoverable losses caused by the bank’s conduct.  Mr Durkin’s opportunity to recover damages for that matter arose in the first action.  That the court is being asked to revisit that issue demonstrates that the plea of res judicata is well founded.  In the phraseology of Lord Russell in Grahame, the “subject of assessment” is the same.  In the language of Phosphate Sewage Co Ltd, whatever different facts or legal arguments are now presented, the nature of the relief claimed remains the same.  To borrow the words of Short's Trustee, the new action is an “unacceptable repetition of litigation” on a matter previously determined in contested proceedings.  The above is consistent with the rule that when damages are sought for a delictual act, successive actions based upon different legal grounds or more recent damages are not allowed.  All damages past, present and future must be claimed in the original action. 

[19]      It is likely that Mr Durkin will find it difficult to reconcile himself to this decision;  but if he reflects on how he would react had he enjoyed complete success in the Supreme Court and then faced a new action seeking restoration of the decision of the Inner House, he might understand the rationale of our law on res judicata

[20]      While the above is sufficient for disposal of the appeal, Mr Durkin’s case faces other difficulties.  Firstly, there is merit in the bank’s fall-back position that if any truly new ground of action had been identified, it would have been unenforceable through operation of prescription.  The pursuer claims that this would be an affront to justice, but no proper basis for disapplying the terms of the Prescription and Limitation (Scotland) Act 1973 has been presented.  Secondly, before the court will countenance an action alleging serious criminal conduct, the averments must set out a relevant and sufficiently specific case.  There must be some ground for assuming that there is a colourable basis for the assertion.  No such claims were made in the first action, and nothing has changed with regard to the known facts.  The case of fraud now put forward, sometimes couched in terms of malicious falsehood, depends upon the proposition that the bank knew that Mr Durkin was not in default of the  credit agreement.  There are no relevant or sufficiently specific averments to support such a case.  In this regard, on occasions Mr Durkin referred to the relevant persons in PC World as acting on behalf of the bank, as he put it, in creating a “false account”.  However, even if there were relevant averments to this effect, that would not bring home a malicious or dishonest intention to the bank. 

[21]      For these reasons, the appeal is refused. 


Appendix

The Judgment of Sheriff Tierney of March 2008 in respect of the First Action

[1]        Sheriff Tierney heard a proof.  His findings in fact can be summarised as follows.  In 1998/1999 the pursuer lived partly in Aberdeen and partly on the Costa del Sol in Spain.  He was an offshore construction surveyor in the oil and gas industry, working throughout the world.  He was highly computer literate.  He decided to purchase a new laptop computer with an internal modem.  On or about 28 December 1998 he visited a PC World outlet in Aberdeen for this purpose.  He made known his requirement relating to the inbuilt modem.  A shop assistant identified a particular make of laptop computer which was in a sealed box.  The only way in which the existence or otherwise of the modem could be ascertained was by removing the laptop from the box and operating it, however the shop’s policy did not allow this to be done prior to the customer having concluded his purchase.  Mr Durkin purchased the laptop on the express basis that it contained an internal modem, but if that turned out to be incorrect, he could return the laptop and rescind the bargain.  He completed the purchase and signed the necessary documentation, paying a sum of £50 towards the price.  He signed a credit agreement with HFC Bank, the current defenders predecessors, to fund the balance of the purchase.  Due to the lateness of the hour, the paperwork in respect of the transaction could not be completed, and thus bears the date 29 December 1998. 

[2]        Mr Durkin took the laptop home and discovered that it did not have an internal modem.  He returned to the store at or about 9.00am the next morning.  He rejected the goods as being disconform to contract, rescinded the contract, and sought repayment of the £50 and cancellation of the credit agreement.  He dealt with a different person from the day before, namely a Mr Andrew Taylor, who refused to accept the rejection of the goods and did not take any steps in respect of repayment of the money or cancellation of the credit agreement.  Mr Durkin left the laptop in the custody of PC World.  He went to work offshore and returned home approximately two weeks later to discover that the shop had delivered the laptop to his home.  He again returned it to them.  He made no payments to the bank in respect of the credit agreement. 

[3]        In or about February 1999 following a request for payment from the bank, the pursuer telephoned and advised that he had rejected the laptop and rescinded the contract.  He told the bank that he rescinded the credit contract.  On 8 March 1999 he wrote to the shop confirming that he had rejected the laptop and seeking repayment of the deposit.  In March 1999 the bank telephoned and required him to make payment under the credit agreement.  He explained that the laptop had been rejected as disconform to contract and that he had terminated the contract with the suppliers and returned the laptop.  He would not pay any money to the bank.  The bank wrote to Mr Durkin on 22 July 1999 stating that if he failed to resume payments under the credit agreement, possible consequences included the matter being reported to national credit reference agencies, and difficulties in the future in obtaining a mortgage or other credit.  The pursuer responded by telephone reaffirming the position previously set out. 

[4]        The bank issued a default notice to the pursuer and caused entries to be made in the registers of the two largest UK credit reference agencies to the effect that he was in default of his obligations under the credit agreement;  that default being said to have commenced on 14 January 1999.  Between then and 2003/4 Mr Durkin telephoned the bank repeatedly and sought to persuade it to remove the notices, but without success.  He was told that he should sort matters out with PC World.  The bank made no inquiry into the assertions that the contract with the suppliers had been validly rescinded.  The credit reference agencies told him that only the bank could remove the entries, which remained on the registers until 2005/6. 

[5]        Sheriff Tierney held that it was a material term of the contract between Mr Durkin and PC World that the laptop should have an inbuilt modem.  There was a material breach of that term and therefore he was entitled to reject the goods and rescind the contract, all of which happened when he returned the goods to the shop on 29 December 1998.  The contract entered into between Mr Durkin and the bank was a debtor/creditor supplier agreement in terms of section 12(C) of the Consumer Credit Act 1974.  PC World being in material breach of the terms of its contract, Mr Durkin was not obliged to make payments under the credit agreement, which had been validly rescinded by virtue of the provisions of section 75(1) of the 1974 Act.  This had been done by the rescission of the contract of purchase and subsequent intimations to the bank that he was rescinding his contract with them because the laptop was disconform to contract.  Declarators were pronounced giving effect to the above findings. 

[6]        Mr Durkin also pled that he had suffered loss and damage as a result of the fault and breach of duty of the bank and therefore was entitled to reparation, said to be in the sum of £250,000 with interest at the rate of 8% per annum from the date of citation until payment.  In respect of this claim the sheriff made certain findings in fact which can be summarised as follows.  In the period prior to January 1999 Mr Durkin was in the habit of funding or partially funding his lifestyle by way of credit cards.  He routinely made use of the 0% interest free credit on transferred balances available from many financial institutions in the UK.  He would transfer a debt due by him to one credit card company to another such company which would offer to charge no interest on the balance so transferred for a specified period, typically 9 to 12 months.  Before the end of the interest free period Mr Durkin would transfer the outstanding balance together with the balance due on new purchases to another credit card provider offering 0% interest on transferred balances.  The commercial benefit to the financial institutions lay in the fact that the majority of customers did not exercise the necessary discipline involved in transferring their balances out of the 0% account at the end of the credit free period and accordingly incurred high interest rate charges.  A borrower seeking such arrangements required to retain a good credit rating, something ascertained by reference to the credit registers. 

[7]        For the reasons set out above Mr Durkin became unable to open new accounts with credit card companies and other lending institutions, therefore he required to continue using existing credit card accounts and paying interest thereon.  He was able to continue to borrow from his existing mortgage provider (Northern Rock) on the basis of the security already granted to it.  The loss caused to the pursuer between mid‑2001 to the end of 2005 consequential on the inability to continue to transfer into 0% accounts was calculated at £6,880. 

[8]        In the autumn of 2003 the pursuer decided to purchase a property in Spain with the intention of living there with his fiancée (by the time of the proof before the sheriff then his spouse).  A house was identified in Malaga.  Since he qualified for a Spanish non‑tax residence mortgage of 70% of the price, the result was that he required to raise a sum of £83,412.  But for the adverse entry in the UK credit agencies he could have funded this from his UK building society and other UK credit sources.  At the time Northern Rock was prepared to advance up to 125% of values secured on UK house property.  The value of Mr Durkin’s home in Aberdeen at the time was £65,000, thus he would have been able to borrow up to £81,250 on the security of that property.  As a result of the non‑availability to him of 0% credit cards the pursuer had funded a number of his purchases since 1999 by borrowing additional funds from Northern Rock on his mortgage account rather than at the higher rates charged by credit card companies.  By April 2003 he had borrowed £55,000.  But for these additional borrowings, by October 2003 he would have owed Northern Rock less than £4,000, thus he could have obtained finance of £77,260 at an interest rate of approximately 6.5%.  He could have funded the balance required, namely £6,512 from credit cards and/or unsecured loans from his bank.  However, the additional borrowings on the mortgage account meant that he could have borrowed only up to £34,436, leaving a balance required of £48,976.  He could not afford to fund borrowing at this level at credit card rates of interest or by way of unsecured loans. 

[9]        For these reasons Mr Durkin was unable to purchase the house in Malaga.  Had he done so it would have increased in value as at December 2006 by £156,386.  The sheriff found that that was the starting point for calculating Mr Durkin’s loss.  In order to realise that profit by selling the property he would require to have made certain payments amounting to £54,592, leaving a net loss of £101,794. 

[10]      In addition the sheriff held that as a consequence of the bank’s negligent misrepresentation that the pursuer was in default of his obligations to them, the pursuer sustained a general loss to his creditworthiness, which was fairly stated at £8,000.  The total damages before interest was £116,674. 

 

The Appeal to the Court of Session
[11]      Mr Durkin appealed the judgment to the Inner House of the Court of Session, claiming that the sheriff made certain errors in his assessment of damages.  The bank took advantage of this to lodge a cross appeal on both the merits and damages.  PC World (the first defender in the action) played no part in the appeal.  The bank submitted that the sheriff erred in holding that the credit agreement had been rescinded under and in terms of section 75(1) of the 1974 Act.  It also submitted that the sheriff had erred in holding that the bank owed a duty of care of the scope contended for by Mr Durkin, and that in any event it had not acted in breach of any duty of care.  In addition the sheriff’s decisions in respect of damages for inability to use credit cards with a 0% rate of interest and loss in relation to the house in Spain were challenged on the basis that the evidence did not establish those claims. 

[12]      The opinion of the court noted that it was a matter of agreement that the pursuer had not put forward any basis other than section 75(1) of the Act for his rescission of the credit agreement.  His case was based upon a decision of Sheriff Principal Reid in United Dominions Trust Ltd v Taylor 1980 SLT (Sheriff Court) 28.  It was held that this case had been wrongly decided and that the sheriff had erred in upholding the argument under the statutory provision.  As a result the cross appeal on the merits of the case was successful. 

[13]      The bank’s cross appeal in respect of what were termed “delictual issues” was also upheld.  This was on the basis that in the absence of any averments or evidence as to the nature of the inquiries which the bank could reasonably have been expected to carry out, and what the outcome of such inquiries would have been, it was not possible to define the scope of any duty of care owed to Mr Durkin or to say that any acts or omissions on the part of the bank amounted to a breach of duty which caused him to suffer loss. 

[14]      It was a matter of concession on the part of the bank that in the event that it was liable to pay damages, an award of general damages for loss of credit was recoverable, and that a figure of £8,000 in that regard was reasonable.  However, in relation to the other heads of damages awarded by the sheriff, it was held that the evidence led on behalf of Mr Durkin fell far short of establishing a number of essential facts.  For example, the sheriff did not hear evidence which entitled him to hold to what extent the pursuer would have made use of zero rate interest credit cards between mid‑2001 and 2005.  The evidence was silent as to whether the pursuer used such cards prior to January 1999 and as to when he first applied for one.  More generally, it was noted that any interest payable over the period would have been affected to a significant extent by the level of Mr Durkin’s expenditure.  In the absence of any detailed analysis comparing his level of expenditure during that period with that during earlier periods it was not open to the sheriff to hold that the additional interest, which he had calculated on a broad brush approach, had been caused by anything other than Mr Durkin’s level of expenditure and by his regular practice of leaving unsettled the outstanding balances which appeared from month to month on his credit cards statements.  The court also stated that it appeared to have been the general level of Mr Durkin’s expenditure, linked to his decision not to become a Spanish tax resident, in which event a 95% mortgage would have been available to him, rather than any non‑availability of zero rate interest credit cards, which led to his being unable to afford to proceed with the purchase of a property in Spain in October 2003. 

[15]      The First Division rejected Mr Durkin’s appeal in respect of the damages award.  The court reflected its findings in relation to the evidence by making various deletions and amendments in respect of the findings in fact and law, all as outlined in the opinion ( [2010] CSIH 49).  The overall outcome was that Mr Durkin retained the declaratory craves in respect of PC World but failed in respect of his claims against the bank. 

 

The Appeal to the UK Supreme Court
[16]      An appeal was marked by Mr Durkin to the UK Supreme Court.  An attempt was made to introduce a new issue as to whether there ever was a contract between the parties, however the justices decided that Mr Durkin should not be allowed to argue that there was no contract of sale and no credit agreement.  This was because throughout the case had proceeded on the basis that there was a contract of sale and a credit agreement.  “The existence of the credit agreement is conclusively determined by the pleadings where it is averred and admitted”.  The submission for Mr Durkin would have been that the intended purchase of the computer was subject to an unpurified suspensive condition in respect of an internal modem, meaning that there was no contract of sale, and consequentially no contract of loan finance with the bank. 

[17]      Standing this decision Mr Durkin could rely only upon his subsidiary argument, namely that the Inner House was incorrect in respect of its decision on the merits.  This involved further consideration of the terms of section 75(1) of the 1974 Act, and the correctness or otherwise of Sheriff Principal Reid’s decision.  It was also submitted that the court had erred in altering the sheriff’s findings in fact regarding the damages to which Mr Durkin would have been entitled had he succeeded on the merits.  The reasons given by the First Division were said to be inadequate and had no proper basis in law having regard to the position of the sheriff as the trier of fact.  Furthermore, the bank did not merely foresee the harm that eventuated when reporting Mr Durkin to the credit reference agencies;  it acted with the intention of harming him in circumstances where it knew or is deemed to have known that it had no justification for its conduct.  On this basis the bank is liable for such harm as occurred unless it was by its nature altogether unforeseeable.  It was submitted that the bank’s conduct amounted to extortion, in as much as it knew or is deemed to have known that Mr Durkin did not owe it any money.  The Supreme Court was urged to reach the decision that the sheriff’s findings and decision on damages should be restored. 

[18]      The judgment of the UK Supreme Court was given on 26 March 2014 - [2014] UKSC 21.  It was noted that the issues for the court were (i) whether Mr Durkin had rescinded the credit agreement (ii) whether the bank was in breach of a duty of care to him, and (iii) whether on the findings of fact any breach of the bank’s duty of care caused him loss exceeding the £8,000 which the sheriff had awarded for loss of credit.  So far as the first issue was concerned, again reliance had been placed upon section 75(1).  The court held that the First Division was correct to hold that this provision did not give Mr Durkin any right to rescind the credit agreement.  However the court was satisfied that, under the common law, he was entitled to rescind the credit agreement.  This was on the view that the law implied a term into the credit agreement to the effect that it was conditional upon the survival of the supply agreement.  On rejecting the goods and thereby rescinding the supply agreement for breach of contract, Mr Durkin was also able to rescind the credit agreement by invoking that condition.  The court excused the fact that Mr Durkin had relied only upon section 75.  That had been caused by the decision in United Dominions Trust.  The court held that its different legal analysis did not amount to a different case and therefore this reformulation of the claim was open to Mr Durkin. 

[19]      The Supreme Court took a different view from the First Division on the issues concerning the delictual case against the bank.  The bank, knowing of Mr Durkin’s assertion that the supply agreement had been rescinded, was under a duty to investigate that matter in order to satisfy itself that the credit agreement remained enforceable before reporting to the credit reference agencies that he was in default.  The bank could readily foresee that registration of a default could damage Mr Durkin’s credit.  If inquiries had been made of PC World the bank would have understood that the rejection of the computer was contested, but it would not have known whether the supplier’s stance was correct.  The bank should have refrained from intimating a default until the issues were resolved in favour of the supplier (which never happened).  It should not have intimated the default without a reasonable basis for the belief that it had occurred, and in so doing it acted in breach of its duty of care to Mr Durkin. 

[20]      Turning to the quantification of Mr Durkin’s loss, it was noted that there was no dispute regarding the £8,000 award for injury to his general creditworthiness.  In relation to the request that the Supreme Court should restore the sheriff’s award of damages in respect of the extra interest paid and loss of the capital gain on the Spanish property, it was held that section 32(4) and (5) of the Court of Session Act 1988 presented “an insuperable difficulty”.  The First Division had held that the evidence before the sheriff did not establish the extent to which Mr Durkin would have made use of 0% interest rate credit cards over the relevant period and altered the relevant finding in fact to exclude this claim.  Similarly, the much larger claim for loss of the capital gain on the Spanish property was based on the proposition that his inability to borrow on his credit cards at 0% interest had caused him to borrow more from Northern Rock, which had a security over his home.  That borrowing used up funds which would otherwise have been available to pay the deposit on the Spanish property.  The First Division concluded that there was no evidence to support the sheriff’s crucial finding that Mr Durkin’s additional borrowing from Northern Rock was caused by the non‑availability of 0% credit rather than by the general level of his expenditure, and again the relevant finding in fact was altered.  As a result, on the findings in fact there is no causal link between the adverse credit reference and Mr Durkin’s inability to fund the purchase of the Spanish property.  In the light of the terms of section 32(4) and (5) of the 1988 Act the Supreme Court held that, in the absence of a demonstrated legal error, it could not go behind the altered findings in fact. 

[21]      The overall result was that the appeal was allowed and a declaration granted that Mr Durkin was entitled to rescind and did validly rescind the credit agreement by giving notice to the bank in about February 1999.  Damages resulting from the bank’s breach of duty of care were confined to injury to his credit in the sum of £8,000.  Subsequently it was ordered that interest on the damages award would run at 8% from 1 August 1999.  As to expenses, Mr Durkin received an award of his costs in the Supreme Court as against the bank and the interlocutor of the sheriff as to expenses in his favour was restored.  The bank was awarded its expenses in the Inner House. 

 

The Current Court Action
[22]      Mr Durkin has now raised a fresh initial writ at Aberdeen Sheriff Court seeking decree against the successors to the bank for payment of the sum of £600,000, stated to be “provisional damages”, plus £12,000 per month from the date of citation until payment.  At the outset it is pled that he did not enter into an agreement with the original bank.  An agent for the bank at PC World created “a false account” in his name.  This is described as a fraud which is being investigated by the police.  The original bank is described as having “maliciously placed a default on the pursuer’s credit files despite having been informed that money was not owed to them by the pursuer”.  The default “annihilated” Mr Durkin’s creditworthiness, preventing him from buying a family home.  The bank, knowing that they had acted illegally, defended an action to have his creditworthiness restored, which is claimed to demonstrate malice.  “The bank continues to rely on procedural quirks and their influence on the judiciary to deny justice”.  Reporting him as being in default for money that was not owed was “a malicious falsehood and a fraudulent misrepresentation”.  Actuated by malevolence the bank has conspired unscrupulously, regardless of law, to injure Mr Durkin and his family.  “The conspiracy with the credit reference agencies is a powerful and dangerous engine which is employed (by the bank) for the perpetration of organised and ruinous oppression”.  It is averred that the illegality of the bank’s action was affirmed by the UK Supreme Court, which claimed that it did not have jurisdiction to award reparation found to be due by the sheriff court in 2008.  “This fresh claim seeks to overcome this perversion of justice that also resulted in costs from the Scottish Court of Session being awarded against the pursuer in March 2015”.  Amongst other things it is averred that the Supreme Court was not a court of competent jurisdiction and that the Inner House acted inappropriately in favour of the defender in turning a blind eye to the evidence and ignoring the findings of the sheriff court.  The Inner House ought to have agreed with the sheriff that reparation is due to Mr Durkin and to have increased the sum awarded by the sheriff.  “None of the matters raised by the pursuer in this fresh action have been previously decided”.  It is averred that when the pursuer attempted to raise a new argument in the prior litigation, the bank complained of being prejudiced if it were allowed.  “It had been assumed from the outset that the prior litigation would be sufficient to achieve redress for the pursuer and his family.  The earlier rulings of both the Sheriff Court and the UK Supreme Court would suggest this to be a fair assumption.” 

[23]      It is averred that in March 2015 the UK Supreme Court in awarding costs against the pursuer (in respect of the Inner House proceedings) failed to acknowledge that expenses would not have been incurred had the defender not acted illegally in the first instance.  Without reparation and reimbursement of expenses, with interest, from the earlier case the pursuer remains unable to buy a family home.  House prices in the Aberdeen area have more than doubled since 2003.  By maliciously refusing to remove the malicious falsehood at a point in the pursuer’s life when he was attempting to set up a family home in a rapidly rising market the defender has intentionally caused devastating loss to the pursuer by unlawful means.  Reference is made to some of the findings of the sheriff in the original action.  It is averred that the bank’s industry continues to send letters to credit reference agencies on a daily basis threatening with credit annihilation if they do not pay the money demanded, something which amounts to extortion.  The bank annihilated the pursuer’s credit rating for no other reason than malice and then continued to force the pursuer into the courts to try and resolve matters where it is comfortable that it can influence the judiciary to rule in its favour.  “By way of analogy, they have drowned a child, gloating as the child helplessly struggles to hold on to life.  They are now refusing to revive the child claiming to have no moral duty to do so.  How is this not malice?”  The pleader questions how the UK Supreme Court justices managed to rule that “there is no causal link between the adverse credit reference and Mr Durkin’s ability to fund the purchase?”  The defender has been called upon to make reparation to the pursuer allowing him to buy a family home of a similar type to that which he aspired in 2003, including redress for the original defamation and continuing distress.  The sums craved are based on approximate losses of £300,000 in expenses from the previous action and the anticipated increase in the cost of buying a similar family home today, estimated at £300,000.  The UK Supreme Court, by ignoring facts and pleadings and the pursuer’s submissions regarding alterations of the sheriff’s findings, arrived at a point where it was unable to reinstate damages awarded by the sheriff court, claiming that the pursuer had not demonstrated the legal error he actually did demonstrate in the submissions.  Following through with this “deception”, it claimed not to have jurisdiction to award outstanding damages.  This has led to this fresh claim based on malicious falsehood. 

[24]      It is claimed that the First Division acted unlawfully when it “altered evidence”.  This is a reference to the Division’s conclusion that certain findings were not open to the sheriff on the evidence.  Mr Durkin now disputes this decision.  The argument had always been and remains that the pursuer was unable to obtain a mortgage due to the default, described in the new case as a malicious falsehood rather than simply a negligent misstatement.  If the malicious falsehood had not been made, the pursuer would now have the family home that he has always aspired to and court action would have been unnecessary.  Aspects of the First Division’s ruling are described as “completely outrageous”.  Facts should not be ignored in preference to “hogwash theories”. 

“The First Division in altering facts unlawfully have contributed greatly to the suffering of the pursuer and his family instigated by the relentless malice of the defender.  Of course the First Division also failed to apply common law to the pursuer’s case as at least the supreme justices managed to do”. 

 

Should the pursuer finally be allowed to buy a family home he would have no intention of selling.  The family home would remain a family home at all times. 

[25]      The initial writ pleads violation of 11 articles of the Human Rights Act “in case it becomes relevant”.  The pursuer’s pleas in law variously refer to malicious falsehood, interference with the pursuer’s right to contract with others, conspiracy to defraud and injure, and fraudulent misrepresentation. 

[26]      The defences, amongst other things, call upon the pursuer to specify the basis for the allegation of malicious falsehood.  It is averred that the Supreme Court decision represented a final determination by a competent tribunal of the dispute between the pursuer and the bank.  The present action is an attempt to re‑litigate a matter which has already been finally determined and which is now res judicata.  In so far as the pursuer has raised any new basis for his claim in the present action (which is denied), this is unsubstantiated by relevant factual averments and has prescribed.  Furthermore, the bank has paid the sums awarded to the pursuer in the Supreme Court decision.  The respective solicitors who dealt with the prior litigation are presently in correspondence in relation to taxation and settlement of the parties’ respective accounts of expenses.  The bank is not obliged to deal with matters in any way other than as directed by the Supreme Court.  This court has no jurisdiction to disrupt the decisions of the Supreme Court either in relation to the merits of the pursuer’s claim or the final costs order.  The pursuer’s losses have already been the subject of a final determination by a competent tribunal.  The defender pleads res judicata and separately prescription in terms of section 6 of the Prescription and Limitation (Scotland) Act 1973. 

 

The Decision of Sheriff Summers on Res Judicata
[27]      The matter came before the sheriff at Aberdeen.  The pursuer contended that new matters were raised in the present action.  Furthermore, they had not prescribed because the prior litigation interrupted the period of prescription.  The new matters were his case of fraudulent misrepresentation and the fact that the bank had created a false bank account in his name.  The pursuer expressed his profound disappointment with the justice system in general and the Inner House and Supreme Court in particular. 

[28]      The sheriff noted that the action arises from the same facts and circumstances as did the action that was ultimately litigated by the pursuer up to the Supreme Court.  He referred to the pursuer’s averments in the earlier action to the general effect that the bank advised credit reference agencies that the pursuer was in default under the credit agreement, representations which were untrue and which the bank knew or should have known to be untrue.  The bank knew or should have known that credit reference agencies would rely upon this matter when providing references in relation to the pursuer.  As a result the pursuer suffered loss and damage.  The sheriff made reference to the averments of loss, including the attempt to buy a family home in Spain.  The sheriff then summarised the pursuer’s pleadings in the current action.  The “malicious falsehood” repeatedly referred to is not explained but appeared to be the intimation to credit reference agencies that he was in default of the credit agreement.  The same conduct was the basis for the allegation of malicious falsehood and fraudulent misrepresentation. 

[29]      Having compared and contrasted what was litigated in the previous action and the facts upon which that action was based with the present action, it seemed to the sheriff that the pursuer was seeking to litigate again the issues that had already been litigated.  He expressed this view looking at the essence and reality of the matter, rather than the technical form, a reference to a passage in the opinion of Lord President Cooper in Grahame v Secretary of State for Scotland 1951 SC 368 at 387.  It was clear that the pursuer raised the current action on the basis of the same facts as the earlier action, albeit he used different legal terms to describe the facts.  There was no new case of “a malicious falsehood” – there was no new case of “malice” – there was no new case of “fraudulent misrepresentation”.  There was a reference towards the end of the first article of Condescendence to “an agent for the bank at PC World created a false account in the pursuer’s name”.  It was not clear to the sheriff what that meant.  It was entirely unfocused and not expanded upon.  It was not something that appeared to have been litigated in the earlier action, but on the basis of the pleadings as they stand it could not give rise to any remedy. 

[30]      The pursuer was seeking to recover the damages which he unsuccessfully sought in the earlier action, namely the “anticipated increase in costs of buying a similar family home today”.  Beyond that he also sought to recover losses of approximately £300,000 in relation to expenses from the previous action.  As best as the sheriff could gather, the pursuer was trying to recover a combination of the extra judicial expense to which he was put and sums due in respect of awards of expense made against him.  The sheriff stated, “plainly he is not entitled to do that”.  So far as the plea of res judicata is concerned the sheriff concluded that the subject matter of the present action was the same as that of the earlier proceedings.  Looking at the substance of the two cases, the points in controversy were the same.  The aim of the pursuer is to disrupt the decision of the Supreme Court.  Once again the pursuer is seeking to litigate the defender’s breach of duty to him and his entitlement to damages.  There is no element of res noviter.  The sheriff concluded that references to malicious falsehood, malice, fraudulent misrepresentation and other alleged wrongs all related to the facts which were litigated in the earlier action. 

[31]      In any event, even if there had been part of the claim which was not subject to the plea of res judicata, it would have prescribed in the normal course of events in 2004.  The pursuer’s case had no real prospect of success, hence the sheriff assoilzied the bank. 

 

The Appeal to the Sheriff Principal
[32]      That judgment was appealed to the sheriff principal.  The sheriff principal agreed with the decision and reasoning of the sheriff.  He stated: 

“Even after due allowance is given for the pursuer having no legal training, his pleadings are essentially incoherent.  Nothing he said during the course of the hearing before me changed that.  Instead, he did himself no service by accusing the Inner House judges of having lied and the Supreme Court justices of having tried to deceive the public.  He concluded that he was ‘the victim of dishonest judges’”. 

 

The pursuer claimed to be raising three new principles in law, namely (i) causing loss by unlawful means, (ii) fraudulent misrepresentation, and (iii) conspiracy to defraud.  The sheriff principal agreed with the sheriff that there was no case properly pled in respect of any of those principles, accepting for now that all of them were recognised in Scots law.  “Instead, in so far as he attempts to set out a foundation for them at all, he proceeds merely by way of assertion.  Accordingly, the averments are wholly lacking in specification”. 

 

The Current Appeal to the Court of Session
[33]      Mr Durkin appealed this decision to the Inner House of the Court of Session.  The grounds of appeal can be summarised as follows.  The courts below failed in their duty to protect an innocent party from injustice.  It is clearly in the public interest that the “oppressive working of the banking industry”, described for the first time in this new action, be ruled upon in favour of the victims.  In the earlier action the Inner House judges “falsely reported on evidence and facts thereby manifesting an ulterior motive to defeat justice and subverting the process of court by fraudulent means”.  The UK Supreme Court summed up the prior litigation by ruling that “a credit default is not linked to creditworthiness, despite quoting evidence confirming the contrary!”  Reference is made to various passages in the decisions of the sheriff and the Inner House in the earlier action and to excerpts from the transcript of evidence in the sheriff court.  It is stated that the element of fraud had not been considered in the earlier action.  “Attempts to introduce it during the appeal process were poo-pooed … for fear of prejudicing the perpetrator who is the defender”.  The present action includes evidence which is more recent than the prior litigation.  “It is a factual impossibility that this evidence can possibly have been considered before it arose”.  The prior litigation was decided on the assumption that fraud had not taken place and that the credit agreement was legitimate.  Fraud did take place and the credit agreement should never have been in existence.  The present action is based on an entirely different matter as described by both supreme justices and previous counsel for the defender in 2014.  “From this matter stems a multitude of new legal arguments in addition to the fresh legal arguments that have arisen since 2008”. 

[34]      A table is included in the grounds of appeal indicating that the first action dealt with the following issues:  (i) right to rescind the credit agreement (ii) liability for breach of duty and (iii) quantum.  The current action raises the following issues:  (i) fraud – there should not be a credit agreement (ii) damages for sustained defamation and intentional harm (iii) quantum (not dealt with by the Inner House) (iv) causing intentional harm by unlawful means (v) fraudulent misrepresentation (vi) conspiracy to defraud, and (vii) human rights abuses (including earlier unfair trial).  It is stated that the courts below erred in claiming that the pursuer had been successful in the prior litigation.  If he had been successful the pursuer would now be living in a suitable family home, similar to that to which he aspired in 2003.  Unless appropriate redress is paid, he will be unable to afford such a home.  He will struggle in retirement and his children’s upbringing will be compromised.  Had the sheriffs asked questions about the averments, the pursuer could have clarified them.  “Instead the sheriffs sought to deny justice”.  Furthermore, in assuming that the pursuer is seeking the same level of damages as in the prior litigation, the sheriffs fell into error.  Damages continue to deepen until the present day and beyond.  The fresh and “undisputed evidence” is that a fraudulent credit account was set up in the pursuer’s name in early 1999 by an agent for the bank for a sale that never existed. 

“The defender ought to have refrained from attempted extortion of monies from the pursuer by threats of credit annihilation via credit reference agencies and debt collectors.  The defender ought not to have conspired with credit reference agencies to cause the pursuer intentional harm.  The defender ought not be subjecting the pursuer to a tortuous legal process and attempting to dodge justice by relying on quirks within the judiciary that have allowed them to do exactly that.  The sheriffs ought to have allowed a hearing on the new evidence”. 

 

[35]      In the answers to the grounds of appeal the defenders state, amongst other things, that the Supreme Court determined that the appellant should not be entitled to argue that there was no contract of sale and no credit agreement.  This was because the prior litigation proceeded on the basis that there was a contract of sale and a credit agreement.  That matter was conclusively determined by the pleadings where it was averred and admitted.  Furthermore, the appellant has made no relevant averments of fraud in his pleadings.  In any event, any new basis of claim has prescribed.  The pleadings do not disclose any relevant ground of action that has not already been litigated or time barred.  The sheriff suggested to the appellant that he might wish to seek an adjournment in order to consider matters further, however this offer was declined.  In the circumstances the sheriff was correct to conclude that the appellant had no real prospect of success. 

 

Mr Durkin’s Note of Argument
[36]      Mr Durkin elaborated upon his case in a note of argument.  It is submitted that “only the finality of a correct judgement should be protected, not an incorrect one”.  A passage from a judgement of Lord Upjohn is quoted to the effect that estoppel must be applied so as to work justice, not injustice.  The subject matter of this cause and that of the prior litigation “is completely different”.  Lady Hale said so after the appellant attempted to introduce it into the prior litigation.  Senior counsel for the bank agreed.  It is an abuse of process that the respondents and the sheriffs below now claim that the new case of intentional harm has been decided, when clearly it has not.  The prior litigation proceeded on the assumption that a credit agreement between the appellant and the respondent was valid;  however it was not.  An agent for the bank processed a post‑dated credit agreement knowing there was no sale to which it related.  Reference is made to paragraph 35 of the sheriff’s note, which states that the averment as to an agent for the bank at PC World creating a false account in the pursuer’s name “is not something that appears to have been litigated in the earlier action”.  He proceeded to say that it could not, on the basis of the pleadings as they stand, give rise to any remedy for the pursuer.  The averment was not clear as to meaning, was entirely unfocused, and not expanded upon.  In his note of argument Mr Durkin comments that the sheriff has failed to observe that the agent for the bank has committed fraud on behalf of the bank.  It is stated that before the sheriff principal the appellant attempted to clarify this pleading as follows. 

“A false account was set up in the pursuer’s name for a laptop which he had absolutely no intention of buying.  It was set up after the defender knew that the pursuer had no intention of buying the laptop.  If the pursuer is allowed to proceed to trial he will be very happy to focus and expand on this until it is accepted that it is a factual impossibility that he is not a victim of fraud at the hands of the defender and that he remains a victim.  If the sheriff persists with the theory that the fraud cannot give rise to remedy based on the current pleadings the pursuer would be grateful for a further explanation and an opportunity to adjust the pleadings accordingly.  Clearly that opportunity would be in the interests of justice.” 

 

[37]      It is stated that very clear evidence of fraud has been lodged in the form of a post‑dated sales receipt, time stamped at 16.48 on 29 December 1998.  “It is impossible for the contract to have been processed before this time.  By that time the agent for the respondent knew that there was no sale and ought not to have processed the post‑dated agreement”.  Reference is then made to the prior litigation where the appellant averred “the first defenders continued to process the finance agreement with the second defenders, signed by the pursuer the previous day, despite advice from the pursuer that it would be unlawful to do so.”  It is submitted that a crucial finding of fact indicating that the respondents have defrauded the appellant is yet to be established.  PC World defrauded the appellant on behalf of the bank.  When attempts were made to introduce this new fact and new legal arguments into the prior litigation, agents for the respondent accepted them as entirely different, as did the majority of justices.  For the current agents for the bank to be arguing the complete opposite is abusive and only adds to the harm inflicted on the appellant and his family.  Nothing said by the justices ruled out that the agreement existed as a result of fraud.  They merely proceeded with their ruling on the assumption that the agreement was legitimate.  They did so because that had been assumed, albeit wrongly, from the outset of the prior litigation.  The reality is that it was not; “as is now clearly demonstrated in this cause”.  Besides admitting that the contract existed, the appellant had also averred that it ought not to have existed.  Evidence was lodged to that effect but was not referred to.  The fact that the agreement had been fraudulently processed had not been established and this new fact is what the appellant is attempting to base this new and completely different cause upon.  The submissions to the sheriff principal included the following: 

“The pursuer did NOT buy the laptop.  The contract was processed after the pursuer had confirmed that he was uninterested in buying the laptop.  It had been deliberately post‑dated so that it would not be processed if the laptop turned out to be useless to the pursuer.  The defender had fraudulently created a false account in the pursuer’s name.  It is a factual impossibility that this is not fraud and is critical in this fresh claim”.

 

The essential starting point is the fraudulent misrepresentation, where the respondent created a false credit account in Mr Durkin’s name, then, following a period of attempted extortion, destroyed his creditworthiness by conspiring with credit reference agencies to have the false account registered as being in default. 

[38]      In the context of alleged conspiracy, Mr Durkin continues: 

“An agent for the defender together with the defender and the credit reference agencies, regardless of the law, create false accounts that annihilate the creditworthiness of victims denying them a fundamental right of liberty to contract with others.  It is almost impossible for victims to raise legal proceedings while they remain financially ruined for six years.  This was not litigated in the prior litigation.  It is most certainly not res judicata and the ruinous oppression that the industry continues to subject society to will persist until it is decided.  This is a huge opportunity for a just judiciary to make a difference.  It is the first claim of its type in the UK.  It needs to succeed for the sake of us all.” 

 

The note of argument states that the appellant had no idea that the judiciary in the appeal courts would act dishonestly.  The appellant is claiming greater damages than those sought in the prior litigation.  It must be plain to the reasonable man that the appellant finds himself in an unjust position.  Common sense did not extend to the realisation that it was the default that prevented the appellant obtaining a mortgage.  Clearly the default is the causal link that prevented him from setting up a family home in 2003, before marrying and starting a family.  That was the harm that the bank intended to inflict on the appellant. 

[39]      Under reference to the aforesaid table it is submitted that the points of controversy are not the same.  The appellant requires to be put back in the same position that he would have been in, in 2003, had the bank not prevented him from buying a family home.  It is now 2016.  House prices continue to rise and the bank refuses to cover the difference and reimburse expenses from the prior litigation, together with interest, which continues to accumulate.  In addition Mr Durkin seeks damages to cover his inability to plan for retirement while being embroiled in litigation instigated by the bank’s continuing unlawful actions.  The bank is intentionally harming the appellant by refusing to put matters right. 

“The respondent is aware that judges in the Inner House were untruthful about evidence and ignored the appellant’s appeal while supreme justices chose to ignore the appellant’s submissions that those actions were unlawful.  This constitutes a breach of the appellant’s human rights.  All of these points of controversy were not considered in the prior litigation.” 

 

[40]      Reference is made to a passage in the decision of Lord Hodge in Primary Health Care Centres (Broadford) Ltd v Ravangave 2009 SLT 673 at paragraph 37 that “ … the plea of res judicata in Scotland does not extend to the English doctrine of issue estoppel …”.  The sheriff principal rejected the new grounds on the basis that the “averments are wholly lacking in specification”.  This plea had been repelled by Sheriff Summers and was not appealed.  Accordingly, the sheriff principal was not entitled to hold that the pleadings were lacking in specification.  Even if he had been entitled to do so, he ought to have allowed the appellant an opportunity to explain anything that he was uncertain about. 

[41]      Mr Durkin submits that: 

“Additional fraud and collusion seems to have emanated from the judiciary itself, where judges have colluded to state falsely that there was no evidence to support the appellant’s claim followed by the collusion of justices to state falsely that the appellant had not submitted that the former collusion was unlawful.” 

 

Mr Durkin submits that a legal error had been demonstrated in the case to the Supreme Court under reference to the submission that the reasons provided by the First Division for interfering with the sheriff’s findings are inadequate, and that the alterations made had no proper basis in law having regard to the position of the sheriff as trier of fact.  The alterations made to the sheriff’s findings in relation to quantum themselves “proceeded on an error of law”.  It is submitted that the justices “falsely stated that there was no demonstrated legal error and failed to recognise a causal link, despite ruling in paragraph 33 of the judgment that the bank “could readily foresee that registration of a default could damage Mr Durkin’s credit:  it said so in its letter of 22 July 1999 …” The ruling of the Supreme Court is described as “absurd”.  The justices referred to the letter from the bank which stated “If you do not resume payments … you may have difficulty in the future in obtaining a mortgage …” With a common sense approach, that letter proves the intentional harm.  It was exactly what happened and gave rise to the prior litigation, the purpose of which was to encourage the removal of the default preventing the appellant from buying a family home.  The value of the claim at the time of the initial writ in 2004 had been set at only £7,000.  It was the bank’s choice to defend unlawful actions that “exponentially deepen the harm to the appellant”.  The Inner House judges acknowledged the letter, but entirely ignored it when pronouncing that the respondent had done nothing wrong.  “They ruled falsely that evidence heard by the trier of fact did not exist.”  There follows certain criticisms of passages in the decision of the Inner House.  Reference is also made to certain passages from the evidence in the original action.  Paragraph 55 of Sheriff Tierney’s ruling is cited: 

“He explained his intention to buy a house in Spain on a non‑tax residence 70% mortgage and how but for his use of his mortgage rather than 0% rate credit cards he would comfortably have been able to fund the remaining 30% plus 13% vat and fees from his mortgage account, borrowing up to 125% of the value of his Aberdeen home… I find the pursuer to be entirely truthful and reliable”. 

 

It is submitted that the absurdity of both the Inner House and Supreme Court rulings has defeated the interests of justice, leaving Mr Durkin and the public without a remedy after having been maliciously prevented from buying a family home in a rising market.  The note of argument continues:

“The UK Supreme Court admitted that they did not have jurisdiction to look at the evidence that the Inner House claimed falsely not to exist.  On that basis that court was clearly not of competent jurisdiction. “

 

[42]      A DVD showing excerpts of the hearing before the UK Supreme Court was lodged and the court invited to view it (which it has done).  It is claimed that the Inner House judges acted dishonestly in claiming that evidence referred to by the trial sheriff did not exist, failed in their duty to protect the innocent party from injustice, and ought not to be considered as competent.  It follows that the sheriffs ought not to have held that the prior determination had been made by a competent tribunal.  It is suggested that the sheriffs may have had little choice in the matter given the damage a contrary decision might cause to their career prospects.  The cause ought not to have been considered as res judicata. 

[43]      Turning to the question of prescription, the sheriffs failed to acknowledge the appellant’s proposal that limitation periods should not obstruct justice and that in any case matters were far from prescribed.  The new cause is based on fraud and continuing intentional harm.  The limitation clock cannot start ticking until the intentional harm ceases.  In any event the sheriffs below ought to have exercised their power of discretion to allow the appellant a long awaited remedy.  The appellant has been asking the bank to put matters right continuously since 1998.  Its refusal to do so should not deny the appellant a remedy.  Reference was made to a letter to the banks CEO dated 10 April 2015.  The prior litigation began in 2004 following a small claim in 2002 which attempted to persuade the respondent to remove defamatory information from the appellant’s credit files.  The prior litigation continued until March 2015.  This cause began in June 2015.  Given that the cause stems from fraud, it should not be limited by prescription.  Matters have not prescribed, and where they are perceived to have prescribed should nonetheless be allowed in order to provide a remedy for the appellant.  The prior litigation involved dishonest judges leaving the appellant and his family in a “financial jail” for the rest of their days.  It is in the public interest that judicial discretion be exercised as necessary to ensure that justice is achieved. 

[44]      Mr Durkin addresses the sheriff’s decision that the cause has no real prospects of success.  Reference is made to certain oral comments of the justices in the UK Supreme Court.  Clearly there are excellent prospects of success for this action.  In conclusion, amongst other things, it is stated that this appeal represents an opportunity for the court to correct past mistakes.  No law prevents the court from allowing the appeal. 

 

The Bank’s Note of Argument
[45]      For the bank it is submitted that the current proceedings are res judicata because the issues in controversy between the parties were determined in the prior litigation.  Reference is made to a number of cases, including Grahame v Secretary of State for Scotland 1951 SC 368, Lord President Cooper at 387, and to passages in McPhail, Sheriff Court Practice, 3rd edition.  The subject matter of the two actions is the same.  Both relate to the same factual circumstances, including intimation of default notice to credit agencies and loss suffered by the appellant as a result.  By determining that Mr Durkin had been entitled to rescind the credit agreement, the court in the original action concluded that the information provided by the bank to the credit agencies was inaccurate.  The Supreme Court decided that the bank was in breach of various duties as a result of which the appellant had suffered loss.  Ultimately damages were fixed at £8,000, plus interest.  In essence and reality, a claim for damages for defamation or intentional harm requires the court to consider a matter which was decided in the prior litigation. 

[46]      The argument that there should not have been a credit agreement therefore there was fraudulent conduct is misconceived.  The question of whether or not there was a contract between the parties was determined in the prior litigation.  In the present action Mr Durkin is seeking to recover damages which he failed to obtain in the first action, plus the cost of pursuing that action so far as not covered by awards of judicial expenses.  His pleadings provide no specification as to what is intended by phrases such as causing loss by unlawful means, fraudulent misrepresentation, and conspiracy to defraud, other than a reformulation of the basic claim, namely that the bank provided inaccurate information to credit reference agencies. 

[47]      In any event, if and to the extent that the current proceedings are not res judicata, which is denied, any such claim is time barred.  The action relates to events which occurred in 1998 and 1999.  The entries were removed from the registers in 2005 or 2006. 

 

Mr Durkin’s Written Response to the Bank’s Note of Argument
[48]      In response to the bank’s note of argument Mr Durkin returns to the issue of the timing of the processing of the credit agreement.  He states that it was agreed that it would not be processed if the laptop was returned on the morning of 29 December.  Reference is made to the credit agreement form and to the sales receipt.  It is stated that video evidence is lodged revealing that the agreement had been processed fraudulently in early 1999.  (The only video evidence lodged is that relating to the hearing before the UK Supreme Court.)  The above is a new fact and is key to the cause.  PC World continued to process the finance agreement, signed the previous day, despite advice from him that it would be unlawful to do so.  The sale did not proceed, so the credit agreement relating to it ought not to have been processed. 

[49]      With regard to the figure of £8,000, if he had known that the judges were going to make false statements about the evidence, Mr Durkin would have spent more time arguing that the damage to his credit rating should be set at a much higher figure.  Damages would not have been confined to £8,000 had the Inner House not acted unlawfully and the Supreme Court ignored submissions that the alteration of facts by the Inner House was unlawful. 

[50]      Damages for the continuing and deepening intentional harm inflicted upon Mr Durkin since 1998 are yet to be determined.  In essence and reality the current action is very different from the first.  It deals with even more serious matters than mere negligence.  It is based on fraud and the sustained intentional harm stemming from that which persists until the present day and beyond.  Fraud is not res judicata.  The credit agreement was fraudulently processed.  The prior litigation dealt only with negligence up until 2006.  In the interests of justice, quantum ought to be revisited.  Damages in defamation and intentional harm have not been determined.  The appellant seeks much more now,  since the intentional harm persists into 2016.  House prices continue to rise.  Legal costs, together with interest from the prior litigation, prevent the appellant from planning for retirement and seriously impact upon his ability to provide for his family and give them the lifestyle to which they ought to be accustomed.  The bank conspired with credit reference agencies to cause intentional harm, following on from fraud.  It appears that there may also have been some conspiracy with the judiciary which has so far denied the appellant a remedy.  The time bar clock does not start until harm has ceased.  In any event the cause having stemmed from fraud ought not to be the subject of prescription.  Lengthy litigation proceedings have interrupted any period of prescription. 

 

The Oral Hearing
[51]      The above arguments were ventilated at the oral hearing by Mr Durkin on his own behalf and Ms Roxburgh on behalf of the bank.  Ms Roxburgh made reference to paragraph 11 of the original sheriff’s findings in fact (not interfered with by the Inner House) which explains that documentation was completed the next day due to the lateness of the hour on 28 December.  The issue of fraud comes to be whether there was a contract, however it is res judicata that there was a contract.  It is not a new fact that Mr Durkin attended at PC World on 28 December 1998 and the contracts are dated 29 December.  In any event it matters not whether there was no contract or the contract was rescinded.  In either scenario the communication of the default notice to the credit reference agencies was wrongful.  Before the Supreme Court senior counsel for Mr Durkin was keen to have another possible basis for submitting that the default notice was inaccurate given the adverse decision in this context by the Inner House.  However, all that matters is that ultimately there was a finding that the default notice was inaccurate. 

[52]      In the Supreme Court it was argued that there had been an error of law in respect of the changes to the findings in fact, but the Supreme Court applied section 32 of the Court of Session Act and said that there had been no error of law.  The award of damages has been paid.  The expenses of the Supreme Court awarded in favour of the appellant have been paid and the bank has waived entitlement to the Inner House expenses.  An account is awaited in respect of the original sheriff court expenses following on the award in favour of Mr Durkin. 

[53]      Allegations of fraud cannot be made on a vague basis, and in any event the conduct complained of is that of PC World.  Reference was made to paragraph 21 of the findings in fact as revised by the Inner House that: 

“at all material times, including throughout the proof, the second defenders accepted without question the position adopted by the first defenders, namely that on 29 December 1998 the pursuer had not been entitled to rescind his contract of sale with the first offenders”. 

 

It is clear that the bank was relying upon PC World’s position in this regard.  There are no relevant averments of fraud on the part of the bank. 

[54]      With regard to the current damages sought, the expenses incurred in relation to the first action is not a relevant head of claim.  Regarding the purchase of a house, that is a matter which was dealt with in the first action and is res judicata

[55]      In response Mr Durkin stated that, but for the fraud, there would have been no contract.  The fraud was carried out by an agent for the bank processing a credit agreement for a sale which he knew not to exist.  The time stamp on the VAT receipt is 16.48 on 29 December 1998.  This is after he rejected the sale, therefore it is not possible for PC World to have processed the credit agreement apart from fraud.  The laptop was returned – there was no sale.  Mr Taylor’s position (Mr Taylor being an employee of PC World) was that there was no arrangement that the laptop could be returned if it did not have a modem.  Mr Durkin’s original legal representative decided the best way ahead, thus no allegation of fraud was made at the time.  His solicitor wanted to concentrate on his own way of dealing with the case.  When asked by the court, Mr Durkin indicated that he could not remember which day of the week it was when he first visited the store and took away the laptop. 

[56]      It was not acceptable that the Inner House had interfered with the sheriff’s findings in fact.  It was absurd for the Supreme Court to say that blacklisting does not prevent someone from obtaining a mortgage.  Through operation of statute the bad debt fell away in early 2006.  Thereafter he was suddenly able to borrow lots of money.  However credit card companies doubled APR overnight.  He is “stuck” in the mid‑terrace house in Aberdeen which he bought in 1996.  Injury to credit is a branch of defamation.  That word first appears in the current initial writ.  The defamation continued to 2006.  There is a conspiracy to defraud.  It is terrible that the banks can defame people under reference to credit agencies.  They conspire to inflict harm on people who do not owe them money.  Consumers have no power to clear their names.  Judges “love” protecting the banks.  The underlying idea of the current action is to gain justice given the injustice in the previous proceedings. 

[57]      In a short response Ms Roxburgh stated that, however the claim is formulated, the matter remains one of res judicata since the remedy sought is the same, namely damages for the inaccurate statement to the credit references agencies.  Clear averments and evidence is required for serious allegations of criminal conduct.  No facts have been specified such as would allow the alleged assertions and inferences to be drawn. 

[58]      In a short response Mr Durkin referred to mention of “intentional harm” in the DVD.  Senior counsel for the bank had accepted that there would have been good prospects of success on the merits if the case had been argued differently.  Lord Sumption said that defamation cannot be defended.  Lord Reid agreed with that and wondered why it was not specifically raised in the writ.  Judges should see that justice is done, not simply protect the banks.  Intentional harm goes on and therefore prescription does not arise.  The bank has refused to help him to move into a family home.  Fraud is a more serious matter than negligence.  If it wanted to, the Supreme Court could have interfered.  Finally, Mr Durkin stated that he wished to remove his first plea in law, namely a plea that “having suffered loss and damage as a result of the fault and breach of duty of the defender (ratified by the Supreme Court), the pursuer is entitled to reparation as previously determined by this court.”