U - Unfair relationships
19/3/24
FAROL HOLDINGS LTD v CLYDESDALE BANK PLC [2024] EWHC 593 (Ch)
The court dismissed claims relating to so-called tailored business loans. Under the loans the lender hedged its interest rate risk in the market and the customers’ interest liabilities were capped at fixed rates but increased if market rates fell. The customers were liable for break costs incurred by the lender when the loans and hedges terminated. Claims that the lender had no liability to pay break costs were rejected and the lender’s terms were held to have entitled it to recover loss arising from break costs. The court summarised principles of deceit and misrepresentation [206] but found that none of the representations about break costs were false and allegations of deceit were not made out. Claims that the lender misrepresented that its profit was limited to the interest rate margin also failed because a reasonable person in the position of the customers would not have understood any such representation was being made. Although the primary limitation periods for the claims had expired, the limitation periods for a number of the claims would have been extended under s.14A and/or s.32 Limitation Act 1980 by reason of the customers’ lack of knowledge. The court also reviewed principles for finding an unfair relationship [751] but rejected the claim made on this basis.
15/11/23
CANADA SQUARE OPERATIONS LTD v POTTER [2023] UKSC 41
A lender’s failure to disclose in 2006 a commission in connection with a PPI policy had been unfair within the unfair relationship provisions of CCA 1974 ss.140A-D. A claim by the borrower in 2018 to recover policy payments was not time-barred. The commission had been deliberately concealed because the lender had consciously decided not to disclose its existence and amount. Once ss.140A-D came into force, those facts were relevant to the claimant’s right of action but the claimant had not discovered them and could not have done so with reasonable diligence until 2018. Concealment can be by taking positive steps or by withholding relevant information, but need not be in breach of a legal duty. It must be deliberate, in the sense that the defendant must have considered whether to inform the claimant of the relevant fact and decided not to. Actual knowledge or intention is required. Recklessness does not suffice.
20/3/20
CANADA SQUARE OPERATIONS LTD v POTTER [2020] EWHC 672 (QB)
A lender’s failure to disclose in 2006 a commission in connection with a PPI policy had been unfair and amounted to wrongdoing within the unfair relationship provisions of CCA 1974 ss 140A-D. The lender was to be taken to have deliberately concealed the wrongdoing for the purpose of s 32 Limitation Act 1980 so that time did not run for the borrower to bring a claim to recover the premium until the borrower discovered the commission payment in November 2016.
3/9/19
PROMONTORIA (HENRICO) LTD v SAMRA [2019] EWHC 2327 (Ch)
In determining whether an effective assignment had taken place, the court is entitled to have regard to the totality of the evidence before it and is not limited to the assignment document. Having regard to the notice of assignment given by the assignor and the assignee and the fact that the authenticity of the copy of the assignment disclosed by the claimant had not been put in issue, the court was satisfied that the debt under a specific facility letter had been assigned. An allegation that the lender had given an assurance that the loan would be extended for a further ten years failed on the facts. The court reviewed the principles for assessing whether there had been an unfair relationship [25] but found that the relationship between the lender and borrower had not been unfair.
12/11/14
PLEVIN v PARAGON PERSONAL FINANCE LTD [2014] UKSC 61
Non-disclosure of the amount of commissions paid in respect of a PPI policy made the creditor’s relationship with the debtor unfair and justified reopening the transaction under s 140A CCA 1974. The decision in Harrison v Black Horse Ltd (2012) that the relationship could not be unfair if the creditor had not breached duties imposed by the ICOB regulatory regime, was wrong. A wider range of considerations may be relevant to the fairness of the relationship including the characteristics of the borrower. It is a question of degree. Here the commissions were so large that the customer should not have been kept in ignorance. The creditor was responsible for making the relationship unfair by failing to disclose the size of the commissions. The creditor had no regulatory or other duty to assess the borrower’s needs. Although s 140A also covered things done on behalf of the creditor, this requires agency to be established and the independent broker could not be regarded as the creditor’s agent.
25/3/13
DEUTSCHE BANK (SUISSE) SA v KHAN [2013] EWHC 482 (Comm)
A bank had acted reasonably in rejecting a valuation of security as unsatisfactory in view of the hope value included which was uncertain and speculative. A satisfactory valuation was a condition precedent to the obligation to make facilities available, so the bank had been entitled not to make advances on the terms of the facility and to make partial advances on different terms. Claims against the bank of misrepresentation and mistake failed on the facts. The bank had not known of any mistake by the defendants, had not given any warranty as to returns available from investment products sold with the facility, and had not failed to advise of the adverse consequences of selling the products prior to maturity. Set-off of counterclaims was excluded by the facility agreement and such claims could not be a defence to the bank’s claim for possession of security. The exclusion of set-off was not unreasonable contrary to the Unfair Contract Terms Act 1977 nor did it, or a provision for payment of default interest, cause the relationship between the parties to be unfair within s 140A Consumer Credit Act 1974. The agreed terms did not create a significant imbalance within the Unfair Terms in Consumer Contracts Regs 1999.