Judge orders RBS to pay customer £200,000 after overdraft wrangle

The Royal Bank of Scotland has been ordered by a judge to pay £200,000 to an aggrieved customer who won a court case against it “by default”.

Restaurateur Nigel Matheson, 63, had sued the bank in a dispute about an overdraft extension. But, due to “oversights” by the bank and its lawyers, the action was not defended and he was granted a decree.

RBS asked Lord Glennie at the Court of Session in Edinburgh to set aside the decree and deny Mr Matheson what it described as a “massive and wholly unjustified windfall”. Mr Matheson argued he had met “mind-boggling inefficiency” in his litigation and should receive the award.

Yesterday, Lord Glennie ruled the errors were inexcusable, and the bank would have to pay up.

Mr Matheson welcomed the judgment, although he expected an appeal by the bank would keep him waiting for his money.

He said: “I am very pleased with Lord Glennie’s decision and his interpretation of the evidence he heard. This is a significant milestone for me in what has been a very long saga.”

Mr Matheson runs The Conservatory restaurant at Ballachallan, Cambusmore, Perthshire. He claims that, in 2005, RBS granted a £5,000 extension to his company’s overdraft but then unilaterally withdrew it. As a result, he alleges, the business suffered and he was caused psychiatric injury.

In 2008, he raised an action at Perth Sheriff Court, seeking £200,000 damages. The bank has lodged defences and the case is continuing.

Last year, he also served a Court of Session summons on RBS, asking for £200,000 damages for the business. At that stage, he had solicitors, but they later withdrew from acting for him.

As a party litigant, Mr Matheson lodged the summons for “calling” – a crucial procedural step in litigation which should trigger action by the other side – and it was published on the Court of Session’s calling list in February this year. However, there was no response from RBS, and next month Mr Matheson was granted a decree in absence, in light of the lack of any indication the case was to be contested. RBS subsequently learned of the decree and immediately raised the current case to have it declared null and void.

Lord Glennie said Katherine Allan, who worked in the bank’s legal department, and David Eynon, a senior solicitor at McGrigors, the law firm acting for RBS, “candidly” owned up to the mistakes they made.

Among a “considerable volume of correspondence”, Mr Matheson had mentioned he intended to lodge the summons to have it called and, later, that it had called. Neither Ms Allan nor Mr Eynon picked up on this. A trainee in McGrigors’ office had also failed to spot the case on the Court of Session’s calling list.

Lord Glennie said: “The appearance of the case on the list was overlooked. It should not have happened. In addition, the bank was told both that the action was going to be lodged for calling and that it had called. The bank did nothing about it.

“Once the fact that the summons had called was overlooked, it might be said that the die was cast. I do not think that is necessarily so. Mr Eynon told Mr Matheson that he would get back to him in response to his suggestion of transferring the case to Perth. He did not do so, even after he had taken the bank’s instructions on the point.”

In evidence, Mr Eynon had said that the expression “we will get back to you” was “no more than a turn of phrase”. He accepted that he should have got back to Mr Matheson and could not explain why he had not.

Lord Glennie added: “[Mr Eynon’s] failure to do so was discourteous. More importantly, if he had gone back to Mr Matheson … it is likely that any correspondence would have flushed out … that the summons had called and action was required.”