Nuray Houssein v London Credit Ltd

Hearing dates: 3–5 September 2025

Richard Farnhill (sitting as a Deputy High Court Judge of the Chancery Division):

This judgment arises out of the earlier judgment I gave on 12 June 2023 following the trial of these proceedings ( [2023] EWHC 1428 (Ch), my First Judgment). Aspects of my First Judgment were reversed by the Court of Appeal ( [2024] EWCA Civ 721, the Court of Appeal Judgment), necessitating a further hearing to determine certain issues of fact. This is the judgment arising out of that hearing.

I recognise that this hearing was a continuation of the trial, and that rules as to such things as trial witness statements continue to apply. It will be necessary in the course of this judgment to refer back to events as they were at the original trial. Simply for ease of reference I will therefore refer to the original trial as “the trial” and the hearing that gave rise to this judgment as “this hearing”.

This is a somewhat lengthy, and at times unavoidably involved, judgment, and it seems to me most convenient to summarise my findings at the outset:

i) The express provisions of the Facility Letter (defined below) do not require LCL to accept an offer of repayment that seeks to impose conditions, delays the receipt of funds beyond the defined Repayment Date or in some other way departs from the obligation to repay set out in the Facility Letter.

ii) Similarly, the Facility Letter does not include an implied term requiring LCL to accept offers of payment on any terms other than those set out in the Facility Letter.

iii) Equity may have a somewhat broader jurisdiction to intervene but that jurisdiction would not respond on the facts of this case in any event.

iv) With the exception of the repayment of £1.2 million in May 2021, the Claimants have not made an effective tender of or otherwise repaid any sums due under the terms of the Facility Letter, and in so far as they have made offers, those offers were not offers of payment but were, at most, contractual offers intended to vary the parties' existing rights and obligations or to create new rights and obligations. In many cases they seemed to me to fall short even of that, not being intended to be capable of immediate acceptance. Accordingly, the balance of the Loan (again, defined below) of a little over £629,000 due on the Repayment Date provided in the Facility Letter remains outstanding and nothing the Claimants have done has stopped interest from accruing.

v) Non-payment by the contractual repayment date is a default under the terms of the Facility Letter and, again under the terms of the Facility Letter, attracts default interest at a rate of 4% compounded monthly (the Default Rate). The Default Rate is not a penalty and so is enforceable, by LCL, from the contractual Repayment Date.

vi) In the circumstances, no claim arises for the payment of interest under section 35A of the Senior Courts Act 1981.

Factual Background to the Dispute

Aspects of my First Judgment were not touched by the Court of Appeal Judgment, including much of the factual background. Those matters, obviously, are no longer in dispute, but in the interests of making this judgment easier to follow as a free-standing decision I summarise them here.

Over a number of years Ali Houssein ( Mr Houssein) had built up a portfolio of residential properties. One of those properties was the family home ( 71 Hamilton Road); the others were held as investments (the Downhills Way Properties). While Mr Houssein had been the driving force in building and managing the portfolio, some of the Downhills Way Properties were held in the name of his wife, Nuray Houssein ( Mrs Houssein), or in their joint names. 71 Hamilton Road was also held jointly.

The Downhills Way Properties, but not 71 Hamilton Road, were used as security for various loans. In June 2020 one of those loans (the Bridge Loan) needed to be refinanced. Mr Houssein and his son, Houssein Houssein, asked a relative if they could recommend anyone to assist in the process; they were referred to Andreas Liondaris of Premier Finance Ltd ( Premier).

Andreas Liondaris in turn introduced Mr and Mrs Houssein and Houssein Houssein to Chris Stylianides ( Mr Stylianides), a Business Development Manager at the First Defendant ( LCL). Ultimately, LCL and the Claimants entered into the following agreements:

i) A facility letter (the Facility Letter) granting a loan of £1.881 million (the Loan), entered into between the third Claimant ( CEK), a company owned by Mr and Mrs Houssein who were also its directors, as borrower and LCL as lender.

ii) Personal guarantees from Mr and Mrs Houssein of CEK's obligations under the Facility Letter.

iii) Charges over the Downhills Way Properties and 71 Hamilton Road.

As an unregulated moneylender LCL was not authorised to make loans to individuals secured by way of mortgage over the property where they resided. To address this, two steps were taken:

i) As I have noted, the Loan was taken out by CEK rather than by Mr and Mrs Houssein personally.

ii) The Facility Letter specified that the Borrower was not to reside at any secured property, which, again as I have noted, included the family home of 71 Hamilton Road.

I found that Houssein Houssein had taken over the day-to-day running of the property portfolio and largely took the lead on the refinancing with LCL. I further found that at all materially relevant times he was aware of the non-residence requirement but that he did not communicate it to his parents, on whose behalf he was acting.

On 29 July 2020 an inspection of 71 Hamilton Road was carried out by Mr Stylianides on behalf of LCL. The purpose of the inspection was to confirm that 71 Hamilton Road was vacant prior to drawdown on the Loan. I found that the inspection was a sham, concocted to create the impression that renovation works were ongoing when in fact the Housseins still resided there. I further found that Mr Stylianides, Andreas Liondaris and Houssein Houssein (but not Mr or Mrs Houssein) were fully aware of the true position. Mr Stylianides' knowledge was imputed to LCL such that it, too, was aware of the true position when drawdown under the Facility Letter occurred on 7 August 2020.

Very shortly after drawdown LCL was informed by one of its investors that the Housseins continued to reside at 71 Hamilton Road. LCL's solicitors, Gunnercooke, wrote to the Housseins requiring them to vacate the property, relying on the non-residency provision of the Facility Letter. When the Housseins refused to do so LCL appointed the Second Defendants.

The default on which LCL relied in taking enforcement action was the alleged breach of the non-residency obligation. The effect of my finding as to Mr Stylianides' knowledge was that the default on which LCL had purported to rely had in fact been waived when it permitted drawdown with the knowledge, imputed from Mr Stylianides, that at the date of drawdown the Housseins were still in residence at 71 Hamilton Road. The enforcement steps taken in respect of that alleged breach were accordingly void and of no effect.

At the same time, by trial sums remained outstanding under the Facility Letter. The defined Repayment Date under the Facility Letter was 12 months after drawdown. There was some debate as to when that was. The Loan ran for 12 months, so elapsed on 7 August 2021, but that was a Saturday which I believe may be why the parties had concluded that the Repayment Date was the next business day, 9 August 2021. Before me it was, I think, agreed that 7 August 2021 should be treated as the correct date.

Of the capital, £1.2 million had been repaid on 28 May 2021. Interest was more complex. There are two rates of interest under the Facility Letter, the standard rate of 1% per month (the Standard Rate) and the Default Rate, which as I have noted is 4% compounded monthly. The total amount outstanding therefore depended on which rate applied and for which period.

I found that the Default Rate was a penalty, and so would have been unenforceable in any event. However, I further found that the Standard Rate continued to apply if the Loan was not repaid on the Repayment Date. The Court of Appeal Judgment reversed both findings. Only the first has been remitted back to me for further determination.

For completeness, I also made the following findings that were not the subject of the appeal:

i) The use of CEK as borrower was not a sham designed to disguise the “true” nature of the transaction as a loan to Mr and Mrs Houssein. LCL was entirely transparent in its use of a loan to a corporate borrower with security from Mr and Mrs Houssein. Moreover, it had no incentive to conceal the true nature of the Loan because, had the non-residence requirement of 71 Hamilton Road been met, a direct loan to Mr and Mrs Houssein would equally not have constituted a regulated loan.

ii) Mrs Houssein's consent to the transaction was not procured through undue influence on the part of Mr Houssein and no other vitiating factor was alleged.

iii) A claim under section 62 of the Consumer Rights Act 2015 was abandoned by the Claimants on the last day of trial.

iv) A claim under section 140A of...