Binder v Alachouzos
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE PHILLIMORE,LORD JUSTICE ROSKILL |
| Judgment Date | 01 February 1972 |
| Judgment citation (vLex) | [1972] EWCA Civ J0201-2 |
| Court | Court of Appeal (Civil Division) |
| Date | 01 February 1972 |
[1972] EWCA Civ J0201-2
The Master of the Rolls (Lord Denning)
Lord Justice Phillimore and
Lord Justice Roskill.
In The Supreme Court of Judicature
Court of Appeal
Appeal of defendant from order of Mr. Justice Geoffrey Lane dated 16th November, 1971.
Mr. JOSEPH JACKSON, Q.C., and Mr. DAVID GRAHAM (instructed by Messrs. M.A. Jacobs & Sons) appeared on behalf of the Appellant Defendant.
Mr. LESLIE JOSEPH and Mr. ALISTAIR MacDUFF (instructed by Messrs. Bernard Elliston Sandier & Co.) appeared on behalf of the Respondent Plaintiff.
In 1969 Mr. Alschouzos, who has been engaged in shipping transactions - he controls a company called Helmville Ltd.-sought to find money for the construction of an ocean-going ship. He hoped to make a profit of £500,000. In order to obtain the finance, he ased his persuasive power on Mrs. Arnold Binder. From 1969 to January 1970 Mr. Binder made large loans to Mr. Alachouzos. He did it by means of companies with which he and his wife were closely associated, such as A. & R. Binder Ltd.: Lucille (Boxes) Ltd.; and Shennkins (Edmonton) Ltd. They made loans week by of £500 or £600, to £5,000 or £6,000. In all, some £65,000 was advanced. Mr. Alachouzos gave cheques by way of payment, but they were not met. So the lenders, in February 1970, brought actions against Mr. Alachouzos on the cheques. Four actions were pearled, and a fifth was contemplated. Pleadings were delivered. Mr. Alachouzos pleaded in his defences that these were moneylending transactions, and that the lenders were moneylenders who ought to have been registered. Interrogate ories were administed in the usual form, and the plaintiffs answered then. There was a good deal to be said on each side. Mr. Binder had good evidence to show that he was not a moneylender, but was only helping Mr. Alachouzos to finance this big shipping transaction. Mr. Alachouzos had several points to show that Mr. Binder or some of his companies were moneylenders.
The actions were set down for trial. They were all prepared ready to come into the list for trial on Monday, 28th April. Briefs were delivered. Mr. Alachouzos employed leading Counsel and Junior Counsel. Mr. Binder had a Junior of good standing. At the very last moment - on the Friday before the Monday - the actions were settled. An agreement of compromise was made, dated 28th April, 1971. It recited the pending actions. It alsorecited a nuaber of cheques which were not to be proceeded upon and were to be delivered up. Then there were these two important recitals:
"(5) The Plaintiffs and the Defendant and Helmville Limited having each respectively been advised by Solicitors and Counsel as to the matters here in dealt with have agreed to resolve their differences as hereinafter set out
"(6) The Defendant and Helmville Limited admit and recognise that the transactions the subject of the said actions were not transactions to which any provision of the Moneylenders Acts applied and that none of tho Plaintiffs was at any material time carrying on business as a moneylender."
The agreement then set out the operative clause:
".the defendant shall pay to the plaintiff Arnold Binder the sub of eighty six thousand five hundred and sixty five pounds (£86,565). by instalments of Ten thousand pounds (£10,000) per month on the Twenty first day of every month, the first instalment to be paid on the 2lst June, 1971.
There is a clause providing that in the event of default being made in any instalment, the full amount would become due. Finally there was this clause providing that if Mr. Binder should bring an action for the money due under the agreement-
"…it shall not be open or competent to the defendant to plead or raise in any such action or proceeding any Defence other than a Defence only as to the quantum of the moneys that shall have been paid."
Mr. Alachouzos paid the first two or three instalments, amounting to £25,000. Then he failed to pay any more: so Mr. Binder brings this action for the balance due under the agreement.
Now Mr. Alachouzos, in defiance of the agreement pleads once again the Moneylenders Act. He says that the Binder companies were a consortium of moneylenders; they ought to have been registered, and they were not; and that the agreement of compromise is not binding. He says the policy of the Moneylenders Acts could be defeated if agreements of compromise were sanctioned by the Courts.
There are here two competing considerations. On the one hand the Moneylenders Acts are for tbe protection of borrowers. The Judges will, therefore, not allow a moneylender to use a compromise as a means of getting round the Act. They will enquire into the circumstances giving rise to the compromise They will not allow tbe moneylender to take unfair advantage of the borrower. Even the borrower consents to Judgment being entered against bin, the Courts will go behind that consent, if the Justice of the case so requires. For instance, where tbe interest charged was so high that it was presumed to be harsh and unconscionable, the Court refused to enforce a consent to Judgment, see Mills Conduit Investment. Ltd, v. Leslie (1932) 1 K.B. 233.
On the other hand. it is important that the Courts should enforce compromises which are agreed in good faith between lender and borrower. If the Court is satisfied that the terms are fair and reasonable, then the compromise should be held binding. For instance, if there is a genuine difference as to whether the lender is a moneylender or not, then it is open to the parties to enter into a bona fide agreement of compromise. Otherwise, there could never be a compromise of such an action. Every case would have to go to the Court for final determination and decision. That cannot be right. There is nothing in the books except for some observations either way in Re Campbell (1911) 2 K.B. 992. Lord Justice Farwell at page 997 sald: "I am not prepared to hold that a moneylender can avoid the Act by obtaining Judgment and then making terms for repayment of the Judgment debt." But...
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