When an apartment project hit the rocks an investor who had taken out a $500,000 loan to get the scheme up-and-running discovered his ?safety net? agreement with the developers had apparently been nullified by his own bank.

It was only after three years and a civil case trial that Geoffrey Bird managed to recoup $387,000 of his lost money from the Bank of Butterfield.

An attempt by Bank of Butterfield to appeal that decision was this week dismissed by three Court of Appeal judges.

According to court documents Mr. Bird had been ?presented with a business opportunity he found too good to resist? in 2001 after hearing about plans to create four apartments at Ordnance Island, St. George?s.

He made an agreement with Bank of Butterfield to personally make $500,000 available to the developers so they could clear some debts and get started on the project at Tabernius House.

To safeguard against things going wrong he signed a ?letter of intent? with developers Magzone (Bda) Ltd. that stated his loan was guaranteed against one of the proposed apartments which could not be sold, pledged or mortgaged until Mr. Bird had been given all his owed money back.

That letter was lodged with his bank at the time of his loan being made.

Had things gone to plan Mr. Bird would have had his loan repaid within three months and been given an additional $100,000 fee for his assistance.

Bank of Butterfield itself became involved in the scheme as a direct lender, alongside Mr. Bird, but despite this extra financing the project faltered and Magzone was unable to pay back any part of Mr. Bird?s $500,000.

In an attempt to keep the project from grinding to a halt Mr. Bird extended his bank overdraft and increased it by $27,000 to pay workmen and contractors.

But it was not enough to save the project and Magzone, who had subsequently been advanced more than $2 million from Bank of Butterfield, became insolvent.

Despite the earlier letter of intent to safeguard Mr. Bird?s investment in the project by ensuring ?apartment 4? could not be sold or pledged to anyone else until all his owed money was recovered, Bank of Butterfield had gone ahead and secured a security ?albeit reluctantly? from Magzone, giving it control of all the company?s assets including the four apartments at St. George?s.

The Bank appointed receivers to sell the apartments in January 2003 and raised $2m from the sale which, after expenses, reduced its loss on the project by $1.7m.

Mr. Bird meanwhile found a way to repay his bank debt but ?complained to the Bank about what he considered to be their disgraceful behaviour.?

At the heart of the matter were the two conflicting securities, one obtained by Mr. Bird and one later obtained by the Bank of Butterfield, over the project assets should the development company collapse.

In considering all the matters from the four-day November 2005 trial, Court of Appeal President Mr. Justice Edward Zacca and fellow appeal judges Sir Austin Ward and Sir Charles Mantell agreed with the trial judge?s decision that ?the Bank, in obtaining security that competed with Mr. Bird?s interest in ?apartment 4? the Bank had brought about a breach of contract and as a result was liable for the legally recoverable loss suffered by Mr. Bird.?

The trial judge concluded that Bank of Butterfield should pay damages of $387,000 being ?the same proportion of Mr. Bird?s loss as the balance represented to that of the Bank?.

The Court of Appeal judges dismissed the Bank?s three appeal grounds, namely that Mr. Bird?s letter of intent did not give him a property interest in the development, that by creating its own all-encompassing security contract it had not caused a breach in the earlier contract between Magzone and Mr. Bird, and that the trial judge?s approach to the assessment of damages had been flawed.