“This guarantee is a continuing guarantee and will extend to the ultimate balance of all of the debt … PROVIDED ALWAYS THAT the maximum amount recoverable under this Deed from the Guarantor shall not exceed the sum of£3,500,000 … plus all interest and costs thereon properly payable by the Borrower in accordance with the terms of the Facility Agreement.”
“a regulated consumer credit agreement— (a) to finance a transaction between the debtor and the creditor, whether forming part of that agreement or not, or (b) to finance a transaction between the debtor and a person (the ‘supplier’) other than the creditor, or (c) to refinance any existing indebtedness of the debtor’s, whether to the creditor or another person, and ‘restricted-use credit’ shall be construed accordingly”. “Finance” is defined in section 189 to mean “to finance wholly or partly”, and an example of a restricted-use credit agreement is given as example 13 in schedule 2, which section 188 stipulates is to have effect for illustrating the use of terminology employed in the Act. Example 13 reads as follows: “Facts. Q, a debt-adjuster, agrees to pay off debts owed by R (an individual) to various moneylenders. For this purpose the agreement provides for the making of a loan by Q to R in return for R’s agreeing to repay the loan by instalments with interest. The loan money is not paid over to R but retained by Q and used to pay off the moneylenders. Analysis. This is an agreement to refinance existing indebtedness of the debtor’s, and if the loan by Q does not exceed£5,000 is a restricted-use credit agreement falling within section 11(1)(c).” “Facts. Q, a debt-adjuster, agrees to pay off debts owed by R (an individual) to various moneylenders. For this purpose the agreement provides for the making of a loan by Q to R in return for R’s agreeing to repay the loan by instalments with interest. The loan money is not paid over to R but retained by Q and used to pay off the moneylenders. Analysis.
“A debtor-creditor agreement is a regulated consumer credit agreement being— (a) a restricted-use credit agreement which falls within section 11(1)(b) but is not made by the creditor under pre-existing arrangements, or in contemplation of future arrangements, between himself and the supplier, or (b) a restricted-use credit agreement which falls within section 11(1)(c), or (c) an unrestricted-use credit agreement which is not made by the creditor under pre-existing arrangements between himself and a person (the ‘supplier’) other than the debtor in the knowledge that the credit is to be used to finance a transaction between the debtor and the supplier.”
“(1) First, [Judge Briggs] held that there was no ‘provision of credit’ so as to bring the Settlement Agreement within the scope of the Consumer Credit Act. (2) Secondly, he held that because the Settlement Agreement was a compromise of differences, as a matter of public policy, it should not be gone behind. Related to this was a question as to whether – because the Settlement Agreement formed a part of the Tomlin Order – it was not an agreement within the meaning of the Consumer Credit Act.”
“65. The Consumer Credit Act applies to agreements and it appears to have been accepted by Mr Gertner before me that the Act would not apply to an order of the Court. However, Mr Gertner did not accept that because a compromise was attached to a Tomlin order that fact alone would cause a settlement otherwise subject to the Consumer Credit Act to cease to be so. In this, I consider Mr Gertner to be right. 66. Whilst a Tomlin order causes the proceedings between the parties to remain live for the purposes of enforcement of the settlement, the fact that a contractual settlement is appended to an order staying proceedings save for the purpose of carrying the terms of the settlement into effect does nothing to change the contractual nature of the compromise between the parties. The scheduled terms to a Tomlin order form, notwithstanding the related order of the court, a contractual agreement. I can see no reason why the fact that a contractual agreement is scheduled to a Tomlin order would cause the Consumer Credit Act to cease to apply if it otherwise did apply.”
“In this case, the effect of the Settlement Agreement was to dispose of CFL’s claims against Mr Gertner under the guarantee and to replace them with a new (primary) obligation to pay the various sums set out in paragraph 7(3) above. There is nothing in the Settlement Agreement that involves the provision of any kind of credit or financial accommodation. All that has happened is that the parties have agreed to end the dispute between them on Mr Gertner’s promise to pay money to CFL. In no sense has the obligation to pay under the guarantee (to the extent it existed) been deferred. Rather, that obligation has been extinguished, and replaced by another.” 24. Marcus Smith J added the following in a footnote to the last sentence of this passage: “The position is exactly the same irrespective of the strength or weakness of CFL’s claim under the guarantee. The Judge sought to draw certain inferences as to the parties’ states of mind from the fact of the compromise (e.g., at [28] ‘…I infer it was expedient for [Mr Gertner] to seek a compromise…’; at [30]: ‘…I infer that CFL was confident that it would succeed in its claim…I also infer that CFL had good reason to be confident…’). I do not consider the parties’ states of mind to be relevant at all. What matters is the effect of the compromise between them. In this case, this was to dispose of CFL’s claims under the guarantee and replace them with a fresh promise under the Settlement Agreement.”
“For this reason, the Judge was quite right to conclude that ‘no credit was extended beyond the due date for payment’. That is exactly the case: there was simply a promise by Mr Gertner to pay money to CFL.”
“In summary, I see the essential nature of this contract to be one where payment is made in advance of services to be rendered and that does not involve the notion of giving credit. In any event it is impossible to say at the time when the contract is made whether [the defendant] would be the debtor or the creditor at the time when the calculation came to be made and thus one simply does not know whether at the moment the parties’ obligations were crystallised she would in fact have been provided with credit.”
“Even if there is deferment of debt, the agreement is not one for the provision of credit where the deferment is not by way of financial accommodation and merely arises incidentally from the parties’ accounting arrangements. It is well established that a transaction is not a loan transaction where the credit given is but a normal incident of a wider transaction not involving the lending of money. In the words of Lord MacDermott: ‘For example, a rent agent may have to pay rates and a solicitor may have to pay stamp duties for clients whose accounts are not in credit at the time of payment. But in the ordinary course of events I do not think it would occur to anyone, or be a correct use of language, to say that such disbursements were loans or made by way of loan.’ The same reasoning would seem applicable in determining whether an agreement is for the provision of credit.” ‘For example, a rent agent may have to pay rates and a solicitor may have to pay stamp duties for clients whose accounts are not in credit at the time of payment. But in the ordinary course of events I do not think it would occur to anyone, or be a correct use of language, to say that such disbursements were loans or made by way of loan.’ 31. Having quoted from this passage, Judge Briggs said in paragraph 37 of his judgment: “The proceedings gave rise to a settlement. The settlement included the payment of an acknowledged debt. The payment of that debt was to be made by a date certain. It was, in my view, incidental to the settlement that the payment of the debt was structured over time certain.”
“Many commercial agreements contain provisions which could be said to postpone (or advance) the time at which payment has to be made. Frequently, there will be reasons for this other than the provision of credit. Payment may be postponed as security for the performance of some other obligation by the creditor. Payments may be made in advance of performance in order to tie the paying party into the commercial venture. Payment provisions may like any other aspect of the transaction be part of its commercial structure for the division of risk, for the provision of security or simply the distribution of the commercial interest in the outcome of the transaction.”
“In my opinion there was no misuse of language when the contract described clause 5(i) as a credit facility. The only obligation of 1st Automotive [i.e. the hire company] under the agreement was to provide the vehicle. In the absence of credit, it would have been entitled to payment during or at the end of the hire. All the provisions about the pursuit of the claim were express or implied conditions that deferred the right to recover the hire and therefore constituted a granting of credit.”
“[I]f a person allows delay in settlement of a debt without binding himself to grant time to the debtor, there is no agreement for credit. This is so whether the delay in the demand for payment arises from inadvertence or inactivity – as where the supplier is simply dilatory in sending out his accounts – or is an intentional indulgence, as where the supplier agrees to allow further time to pay or to accept payment by instalments. Only where this deferment is not just an indulgence but contractual is there an agreement for credit; and, again, to establish a contract it is necessary to show that the supplier received some consideration for agreeing to the delay.”
“Every day a compromise is effected on the ground that the party making it has a chance of succeeding in it, and if he bonâ fide believes he has a fair chance of success, he has a reasonable ground for suing, and his forbearance to sue will constitute a good consideration.”
“Where it is completely uncertain whether the arrangements between parties will give rise to a debt at all, there is no ‘credit’ merely because those arrangements postpone any obligation to pay until such time as the future possible indebtedness has crystallised.”
“There is an obvious danger in holding that any agreement settling CCA claims is effective to oust the Court’s powers under ss. 140A-C of the CCA, as it would open the way to lenders routinely requiring borrowers to settle any possible CCA claims, which would run the risk … of driving the proverbial coach and horses through the protection afforded by the CCA.”
“There are here two competing considerations. On the one hand the Moneylenders Acts are for the 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 inquire into the circumstances giving rise to the compromise. They will not allow the moneylender to take unfair advantage of the borrower. Even if the borrower consents to judgment being entered against him, the courts will go behind that consent, if the justice of the case so requires. For instance, where the 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…. In my judgment, a bona fide agreement of compromise such as we have in the present case (where the dispute is as to whether the plaintiff is a moneylender or not) is binding. It cannot be reopened unless there is evidence that the lender has taken undue advantage of the situation of the borrower. In this case no undue advantage was taken. Both sides were advised by competent lawyers on each side. There was a fair arguable case for each. The agreement they reached was fair and reasonable. It should not be reopened. I agree with the judge below that this agreement of compromise was binding and I would dismiss the appeal.”
“Speaking for myself, I think it is entirely plain that this was a bona fide compromise, and that there is nothing in the evidence here which could make this court say with any confidence that these were money lending transactions, illegal transactions; and accordingly, as it seems to me, here the court is faced with a bona fide compromise of what was a question of fact. The terms of the agreement are not to be described as colorable. The court ought to be very slow to look behind an agreement reached in such circumstances as these.”
“In my judgment it is the law of this country, as Lord Denning M.R. has said, where there is a bona fide compromise of an existing dispute and that compromise includes a compromise of what … is basically an issue of fact, namely, whether or not there had in fact been unlawful moneylending, especially where the compromise has been reached under the advice of counsel and solicitors, that that compromise is enforceable against the party seeking subsequently to repudiate it. Any other course would cause very great difficulty in the administration of justice.”
“Moreover, in Binder the Court of Appeal appears to have laid emphasis on the fact that what was involved was a bona fide compromise of a genuine issue of fact as to whether the Moneylenders Acts applied at all. That principle has been applied to other statutory provisions: cf Foskett on Compromise (8th edn) at §7-32 (although parties cannot contract out of the protection of the Rent Acts, that does not prevent a bona fide compromise of a genuine dispute of fact as to whether a statutory provision applies); A-G v Trustees of the British Museum[2005] EWHC 1089 (Ch) at [28] per Morritt V-C (a bona fide compromise could be made of the question whether a statutory prohibition on disposal of objects vested in the trustees as part of the museum’s collection applied); and FPH Law v Brown[2016] EWHC 1681 (QB) at [29] per Slade J (a bona fide compromise of an issue as to the enforceability of a CFA). But if that is the principle, it does not directly assist CPC. There was no issue, or none at any rate that has been identified, as to whether the agreements preceding the Settlement Deed were credit agreements such that the CCA applied. What was compromised was not any genuine issue of fact which went to the applicability of the CCA. What was compromised was any claim that Mr Holyoake had under the CCA.”
“In my opinion a [winding-up] petition founded on a debt which is disputed in good faith and on substantial grounds is demurrable for the reason that the petitioner is not a creditor of the company within the meaning of section 224 (1) [of theCompanies Act 1948 ] at all, and the question whether he is or is not a creditor of the company is not appropriate for adjudication in winding up proceedings.”