Wood v Capital Bridging Finance Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Briggs,Lady Justice King,Lord Justice Patten |
| Judgment Date | 07 March 2015 |
| Neutral Citation | [2015] EWCA Civ 451 |
| Date | 07 March 2015 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B5/2013/2936 |
[2015] EWCA Civ 451
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM NOTTINGHAM COUNTY COURT
HIS HONOUR JUDGE GODSMARK QC
2PA97976
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Patten
Lord Justice Briggs
and
Lady Justice King
Case No: B5/2013/2936
Mr Soofi P.I. Din (instructed under the Direct Access Scheme) for the APPELLANT
Mr Turlough Stone (instructed by BRECHER SOLICITORS) for the RESPONDENT
Hearing dates: Thursday 23rd April 2015
Introduction
This is an application for permission to appeal, with appeal to follow if granted, against the Order of HHJ Godsmark QC, made on 18 th October 2013 in the Nottingham County Court at the conclusion of mortgage possession proceedings, whereby he gave judgment to the claimant Capital Bridging Finance Limited against the defendant Mrs. Bernice Wood in the sum of £151,883.34, together with contractual interest at 3% per month, pursuant to the terms of a written Loan Facility Agreement (the "Facility") made between the parties on or about 21 st November 2011.
It is not in dispute on this appeal that the sum for which judgment was given was a correct reflection of the amount of the defendant's then contractual liability to the claimant under the Facility. Rather, the main point taken by Mr. Soofi Din, direct access counsel for the defendant, was that the judge had been wrong in law to enforce that contractual liability by a simple money judgment, because the Facility was a regulated agreement under Section 8(3) of the Consumer Credit Act 1974 ("the CCA") and, since its form and content were not as prescribed by the CCA and regulations made thereunder, it could only be enforced by an enforcement order under Section 127, for which the claimant had not applied. By contrast with a simple contractual claim, an application for enforcement of a regulated agreement under Section 127 gives the court a range of powers either to refuse to enforce at all, to reduce or discharge a sum payable, to give the debtor time to pay, to impose conditions, and to suspend operation of the order.
The unusual feature of this litigation is that, although the question whether the Facility was a regulated agreement was formally in issue on the pleadings, both the parties and the judge appear to have lost sight of that issue by the time that the claim for a money judgment first became the subject of submissions. Mr. Din very properly acknowledged to us a share of the responsibility for that omission and was at pains to absolve the judge from any blame at all. Although, by the time of submissions about a money judgment, the primary facts relevant to the question whether the Facility was a regulated agreement had been found by the judge, in a careful extempore judgment at an earlier stage in the litigation (albeit for an entirely different forensic purpose), the main reason why this question had disappeared from view was because the litigation had, until that time, been entirely concerned with the question whether the loan made pursuant to the Facility had been secured by a legal or equitable mortgage. Although a money judgment had always been sought in the proceedings, it was until their very end little more than a formal back-stop, in proceedings designed mainly to enforce the security rights which the claimant asserted and assumed that it had.
Having invited Mr. Din to make all the submissions which he wished to advance, both for obtaining permission to appeal and on the merits of such an appeal if permission be granted, we gave him permission at the conclusion of his submissions. This judgment sets out the reasons why I have concluded, notwithstanding the concise submissions of Mr. Stone for the claimant, that the appeal should indeed be allowed.
The facts
I can take the relevant facts largely from the judge's excellent extempore judgment given at the conclusion of the first stage of the trial, on 2 nd August 2013. Subject to one point to which I shall return, they are not significantly in dispute on the appeal.
The defendant Mrs. Wood was, at the time of the Facility, a 75-year old lady, who had lived for most of her life, and continued to live, at 4 Hardwicke Road, Beeston. Her son-in-law Mark Johnson wanted to obtain money for the purposes of a business of his, and persuaded the defendant to apply for a business bridging loan from the claimant, on the security of a mortgage over her home. The amount sought, and lent, was £64,000, for a period of six months. The claimant company was in the business of making unregulated loans, unregulated that is under the CCA or under the separate regime regulating lending on the security of residential properties in the occupation (or partial occupation) of the borrower, under the Financial Markets and Services Act 2000 (Regulated Activities) Order 2001. Section 16B of the CCA excludes from regulation under that Act consumer credit agreements for the provision of credit exceeding £25,000 (and comparable consumer hire agreements) if the agreement is entered into by the debtor (or hirer) wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him. As I shall in due course describe, Section 16B(2) creates a presumption to that effect if the relevant agreement contains a declaration by the debtor (or hirer) to that effect, but sub-section (3) disapplies that presumption if the creditor, or anyone acting on his behalf, knows or has reasonable cause to suspect that the agreement was not entered into wholly or predominantly for the qualifying business purpose.
The Facility did indeed contain such a declaration, signed by the defendant. It was in the following terms:
"I am entering this agreement wholly or predominantly for the purposes of a business carried on by me or intended to be carried on by me.
I understand that I will not have the benefit of the protection and remedies that would be available to me under the Consumer Credit Act 1974 if this agreement were a regulated agreement under that Act.
I understand that this declaration does not affect the powers of the court to make an order under section 140B of the Consumer Credit Act 1974 in relation to a credit agreement where it determines that the relationship between the creditor and debtor is unfair to the debtor.
I am aware that, if I am in any doubt as to the consequences of the agreement not being regulated by the Consumer Credit Act 1974 I should seek independent legal advice."
In fact of course the defendant's real purpose in making the loan agreement was to obtain loan finance for her son-in-law to use in connection with his business, rather than in connection with any business of hers. Furthermore, and perhaps surprisingly, neither she, her son-in-law nor the broker acting on her behalf, a Mr. Esqulant, made any secret of her real purpose. Mr. Esqulant told a Mr. Philip Dabbs (who handled the transaction for the claimant) that the loan was for the purpose of assisting a family member, by email on 24 th October 2011. When Mr. Dabbs met the defendant and her son-in-law on 21 st November, he was told that the defendant was keen to help her son-in-law in connection with his business, and that this was the purpose of her application to the claimant for a loan. The judge's conclusion that this was what Mr. Dabbs had been informed, immediately prior to the making of the Facility, was derived from the unambiguous terms of his witness statement, the relevant part of which was not challenged. Thus, although the declaration which I have recited was clearly false, the claimant was not misled, still less deceived, by it.
The position was very different in relation to the occupation of 4 Hardwicke Road, which was being offered as mortgage security. The defendant could not expect to obtain a loan from the claimant if it appreciated, as was the case, that she was living there. The judge found that, at her son-in-law's instigation, she dishonestly participated in a deception of the claimant, to the effect that she was living elsewhere, which included providing to her solicitors, for onward transmission to the claimant, a doctored version of a bank statement of hers, putting forward a false residential address. By this fraud, the claimant was indeed deceived.
Unfortunately for the claimant, the mortgage deed signed by the defendant in relation to Hardwicke Road was defective, because it was not properly witnessed. This omission went unnoticed when the claimant advanced the loan of £64,000 to the defendant, who passed it on, as planned, to her son-in-law.
Unfortunately for the defendant, her son-in-law's promise to her to repay in due time went unfulfilled. Further, he decamped to North Cyprus, along with the defendant's daughter and her grandchildren, leaving her to face the music.
The proceedings
The claimant issued mortgage possession proceedings in the Nottingham County Court in August 2012 using the standard form N120. Paragraph 4(b) of the Particulars of Claim pleaded that:
"The agreement for the loan secured by the mortgage is not (or none of them is) a regulated consumer credit agreement."
By paragraph 11, the claimant sought that the defendant:
"(a) give the claimant possession of the premises;
(b) pay to the claimant the total amount outstanding under the mortgage."
By an Amended Defence, the defendant denied having borrowed anything from the claimant or having signed any of the relevant documents, other than purely as a witness. More to the point for present purposes, she did...
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Dannielle Victoria Campbell v Joseph Tyrrell
...Civ 688, [2021] Bus LR 1407 Wisniewski v Central Manchester Health Authority [1998] PIQR 324 Wood v Capital Bridging Finance Limited [2015] EWCA Civ 451 Consumer Credit Act 1974, ss. 16B, 140A, 140B — Whether loan agreement regulated — Whether business exemption applies — Burden of proof ......