Trevor Anthony Howard & Anor v GE Money Mortgages Limited & Anor [2025] EWCC 18

CLAIM NO. K01SQ045APPEAL 427/24[2025] EWCC 18
IN THE COUNTY COURT AT BIRMINGHAM
Date 25 April 2025
On appeal from the County Court at Telford
Order of District Judge Longworth dated 23 July 2024
Before
Her Honour Judge Saira Singh
Between
Trevor Anthony Howard (1)Claimants/AppellantsAnita Margaret Howard (2)AppellantGE Money Mortgages Limited (1)Defendants/RespondentsPromontoria (Vantage) Limited (2)Respondent
Mr Andrew Clark, counsel for Claimants/AppellantsMr George Mallet, counsel for First Defendant/RespondentMr Jack Castle, counsel for Second Defendant/RespondentHearing Hearing date: 17 January 2025
APPROVED JUDGMENT
[1]This is an appeal against the Order of District Judge Longworth dated 23 July 2024 and made in the County Court at Telford. By that Order, the District Judge dismissed, among other claims, the Appellants’ claim for orders under section 140B of the Consumer Credit Act 1974 (CCA 1974) and ordered the Appellants to pay the Second Respondent’s costs pursuant to CPR 27.14(2)(g), summarily assessed in the sum of £9,600.[2]In this judgment, when I refer to the Appellants individually, I refer to them as Mr Howard or Mrs Howard, as appropriate. Likewise, when I refer to the Respondents individually, I refer to the First Respondent as “GE” and the Second Respondent as “Promontoria”.[3]The Appellants are represented on this appeal by Mr Clark of counsel (who did not appear below), GE by Mr Mallet of counsel and Promontoria by Mr Castle of counsel.[4]I had the benefit of skeleton arguments from counsel and I also heard comprehensive oral submissions from them, for which I am grateful. There was also a PDF Appeal bundle before the court and two bundles of authorities. Where I make reference to documents in the Appeal Bundle, the PDF page numbers are in square brackets.[5]I am not going to rehearse all of the submissions or refer to every document or piece of evidence to which I was taken, but I have taken them all into account in giving this judgment. Similarly, I was referred to a number of authorities. The fact that I do not mention a particular submission, written or oral, or any particular piece of evidence, or a particular authority, or passage or paragraph cited, does not mean I have ignored it, but simply that I have not mentioned it in an attempt to be as concise as possible.[6]HHJ Truman granted permission to appeal on the papers on 28 October 2024. There were originally eight grounds of appeal [9 to 14], which were reduced to six after sight of the transcript. At the hearing, Mr Clark’s submissions appeared to centre on the following four arguments:a. The District Judge was wrong to dismiss the unfair relationship claim on the basis of limitation because the limitation period in respect of unfair relationship claims is six years from the end of the relationship and the relationship between “debtor” and “creditor” in this case did not conclude until September or October 2019. This is said to be the primary basis for the appeal. I shall refer to this argument as the “Limitation” argument.b. If the District Judge dismissed the unfair relationship claim because she considered that, in the assessment of fairness, matters that would have been time-barred if brought as a separate cause of action should be disregarded, then she was wrong. I shall refer to this as the “Carney” argument, as it is based on the decision of HHJ Waksman QC (as he then was) in Carney v NM Rothschild & Sons Limited [2018] EWHC 958 (Comm).c. If the appeal court considers that the District Judge made a finding that Mrs Howard did not repose trust and confidence in the Broker and that the Broker was not in a fiduciary relationship to the Appellants, the District Judge was wrong.d. The District Judge’s decision awarding Promontoria its costs pursuant to CPR 27.14(2)(g) was wrong because: i. If the appeal against the dismissal of the unfair relationship claim against Promontoria succeeds and/or if, following such appeal, relief under section 140B CCA 1974 should be granted against Promontoria, then the Appellants would not have acted unreasonably in bringing the claim against Promontoria. ii. The District Judge’s decision awarding Promontoria its costs pursuant to CPR 27.14(2)(g) was wrong because the Appellants did not behave unreasonably in proceeding against Promontoria.[7]GE filed a Respondent’s Notice on 6 December 2024 by which it seeks to uphold the District Judge’s decision for the reasons given and for various additional reasons. At the hearing, Mr Mallet’s arguments focused on the following additional reasons:a. Had it been necessary, the District Judge would have refused to grant relief under section 140B CCA 1974 due to the unjustified delay in bringing the action. I shall refer to this as the Delay argument.b. Had it been necessary, the District Judge would also have dismissed the unfair relationship claim on the basis of the “exclusionary rule” set out in Barnes v Black Horse Limited [2011] EWHC 1416 (QB).[8]Promontoria filed a Respondent’s Notice on 2 December 2024, seeking to uphold the District Judge’s Order for the following additional reasons:a. No facts were pleaded or established against Promontoria to establish an unfair relationship within the meaning of section 140A CCA 1974.b. Having made the findings that she did regarding the Appellants’ knowledge of the commission, the District Judge was correct to find that there was no unfairness, alternatively would have been justified in refusing relief on a discretionary basis due to the Appellants’ inaction for around 20 years and taking into account the same matters that supported her findings on limitation.c. The unfair relationship provisions in the CCA 1974 are not available to the Appellants due to the “exclusionary rule”.d. In relation to the costs order in Promontoria’s favour, the Appellants went to trial against it without pleading any (or any sensical) claim against it.e. Rescission as a remedy was never available to the Appellants as against Promontoria because it would harm its rights as an innocent third party (Society of Lloyd’s v Leighs and others [1997] CLC 1398 at 1404).

Background

[9]On 6 October 2004, the Appellants entered into a fixed sum secured credit agreement with GE (then known as iGroup Mortgages Limited) pursuant to which credit of £121,750 was advanced to them (the Credit Agreement). The loan was secured by a charge on their home. The Credit Agreement was obtained through a registered credit broker, The Loan Company Limited (the Broker), whom the Appellants had retained to assist them in obtaining a mortgage and to whom the Appellants paid a broker’s fee of £1,250. GE paid commission of £4,261.25 to the Broker. GE commenced possession proceedings against the Appellants in 2007 due to the monthly payments under the Credit Agreement not being maintained. Those proceedings culminated in a suspended possession order being made in February 2008.[10]On 11 September 2015, the Credit Agreement was transferred by GE to Promontoria and thereafter, the Appellants made payments under the Credit Agreement to Promontoria. The Credit Agreement was completed by the final repayment by the Appellants on 13 September 2019 and the charge over their home was removed on or about 16 October 2019.[11]On 17 August 2023, the Appellants commenced proceedings against GE and Promontoria, which included claims that the commission paid to the Broker was a secret commission, that GE was an accessory to the Broker’s breach of fiduciary duty through the non-disclosure of the amount of the commission, and that the relationship between the Appellants and each of the Respondents arising from the Credit Agreement was unfair to them within the meaning of section 140A CCA 1974. A copy of the Claim Form and Particulars of Claim is at [191-205]. The Respondents defended the claims on various grounds. GE’s Defence is at [206-271] and Promontoria’s Defence is at [284-296]. The Appellants’ Reply to GE’s Defence is at [272-283] and its Reply to Promontoria’s Defence is at [297-308].[12]The claim was allocated to the Small Claims Track on 17 May 2024 and the final hearing took place before District Judge Longworth on 23 July 2024. By an ex tempore judgment [183-190], the District Judge(i) dismissed the claim based on secret commission, having found that the commission was not wholly secret;(ii) dismissed the claim based on breach of fiduciary duty on the basis that it was time-barred;(iii) dismissed the claim based on unfair relationship on the basis that it was a repetition of all of the previous unsuccessful arguments. In a separate costs judgment at [177-178], the District Judge ordered the Appellants to pay Promontoria’s costs pursuant to CPR 27.14(2)(g) on the basis that the Appellants had behaved unreasonably by pursuing a claim against Promontoria. The District Judge summarily assessed those costs in the sum of £9,600. On 12 September 2024, HHJ Najib refused the Appellants’ application for a stay of execution of the costs order [100-101].

The District Judge’s judgment

[13]The District Judge’s judgment runs to 50 paragraphs [183-190]. At paragraph 1, the District Judge identifies the claims brought as being a claim for rescission of a mortgage agreement; for damages for allegedly secret commission or half-secret commission; and/or an action pursuant to section 140A CCA 1974. At paragraph 3, she records that she heard oral evidence from both Appellants and had also read the trial bundle. At paragraph 4, the District Judge reminds herself of the burden and standard of proof. She summarises the factual background at paragraphs 5 to 7 and then moves on to consider the various claims. The District Judge starts with the question whether the commission paid by GE to the Broker was secret or half-secret (paragraphs 8-25).[14]At paragraph 19, she notes that, if the court finds that a commission was fully secret, then it is not necessary for there to have been a fiduciary relationship between the Broker and the borrowers. However, where a finding is made that the commission was half secret, the claimants must prove a fiduciary relationship existed, i.e. that the Broker owed them a single-minded duty of loyalty and that GE knew of those duties.[15]Following a summary and her analysis of the evidence and the relevant legal principles (having considered the authorities of Hurstanger Ltd v Wilson [2007] EWCA Civ 299 and Wood v Commercial First Business Limited and Business Mortgage Finance 4 Plc v Pengelly [2021] EWCA Civ 471), the District Judge makes a finding that “the documents relied upon by the defendant were likely to have been given to the claimants and that the documents properly put the claimants on notice of the existence of a commission payment.” (paragraph 20 [186]). She notes that the Appellants confirmed that they had read the mortgage terms and that they signed the documents (paragraph 21 [120]) and that they knew that commission would be paid but did not know how much it would be (paragraph 22 [186]).[16]At paragraph 25, she observes that whether or not a commission is secret is a question of fact. She concludes that “I am satisfied on the evidence that this is a “half-way house” category of case as in Hurstanger where the disclosure of payments to a broker by way of the mortgage terms was sufficient so that payment was not a secret commission but insufficient to support a finding of full disclosure.” [187]. There is no appeal against that finding.[17]The District Judge then moves on to consider whether the case was time-barred. Although she does not say so in terms, it is clear from what follows in paragraphs 26-38 that she is dealing there with the question whether the half-secret commission claim is time-barred. She notes at paragraph 26 that the claimants accepted that primary limitation had expired because the claim was not issued until 19 years after the credit agreement was entered into. Accordingly, the discussion centres around section 32 of the Limitation Act 1980, which has the effect of extending the commencement of the limitation period in cases where any fact relevant to the claimant’s right of action has been deliberately concealed by the defendant. In such a case, limitation does not start to run until the claimant has discovered the concealment or could have discovered it with reasonable diligence.[18]The District Judge finds that it was only the amount of the commission that was not communicated to the Appellants, not the fact of commission itself (paragraph 29 [187]); that the monetary amount of the commission was not a fact necessary for pleading the cause of action (paragraph 30 [187]); that the existence of commission was not withheld or concealed from the Appellants – they were told that commission may be paid and confirmed in oral evidence that they knew at the time commission would be paid (paragraph 32 [188]); and that, had it been necessary to consider whether there had been deliberate concealment, there was no evidence that GE had chosen to withhold the information or intended to conceal the facts (paragraph 33 [188]).[19]At paragraph 36 [188], the District Judge finds that sufficient information was provided to the Appellants at the time the agreement was entered into to enable them with reasonable diligence to have discovered the details relating to the amount of the commission that had been or was going to be paid.[20]The District Judge concludes at paragraph 38 [188] that the claim (which must mean the half-secret commission claim) was time-barred. Again, there is no appeal against that finding.[21]The District Judge then observes that, even if she had not found that the claim was time-barred, she “would have been likely to make a finding that there was no fiduciary duty owed to the claimants by the broker.” She continued:
“Indeed Mr Howard confirmed the same to me in oral evidence. He said that he did not repose trust or confidence in the broker. He sought somewhat in re-examination to try and recover that position, but I accept his initial evidence and I find it likely to be correct.” (paragraph 39 [189]). At paragraph 40, she said “I do not consider that the simple payment of the fee to the broker is sufficient in and of itself to identify that a fiduciary relationship existed as the claimants ask me to. … I do not see sufficient evidence in this case to establish that a fiduciary relationship existed.”
[22]The District Judge then considers the unfair relationship claim (paragraphs 41-48). She notes that “The alleged unfairness here arises out of the payment of commission and its amount. The facts, of course, are the same as those I have already referred to above.”[23]She reminds herself of the reversal of the burden of proof under section 140B(9) CCA 1974, the unfair relationship test in section 140A and the guidance in Lord Sumption’s judgment in Plevin v Paragon Personal Finance Ltd [2014] UKSC 61. She notes that in this case, the only complaints were that there was a payment of commission and that it was either fully or half secret. At paragraph 46, the District Judge refers to the submission by Mr Mallet, relying on paragraph 50 of Carney v NM Rothschild & Sons Ltd [2018] EWHC 958 (Comm), that an unfairness claim cannot be used to rectify or complete an otherwise flawed cause of action, and notes that Carney is binding in her.[24]The District Judge then concludes that “there is nothing essentially different contained within [the way in which this claim has been brought and the particulars of claim] than has been alleged within the earlier secret commission/half secret commission claim. The unfair relationship claim consists of a repetition of all of the previous unsuccessful arguments. On that basis therefore, I consider that the claim for unfair relationship must also fail.” (paragraphs 47 and 48 [189-190]).[25]At paragraph 49, the District

Judge concludes:

“I am not going to deal with every part of the evidence that I have heard, nor indeed every aspect with regard to the claims. I have taken all issues and evidence into consideration. … Of course, it means that the claim having failed so far as the first defendant is concerned, that of course it must also fail with regard to the second defendant. I shall therefore dismiss the claim.”
[26]Having given her judgment, the District Judge then heard submissions on the issue of costs, which focused on whether the pursuit of a claim against Promontoria amounted to “unreasonable conduct” for the purposes of CPR 27.14(2)(g). She concluded that “taking into account the factual circumstances of this matter, I do not consider it was reasonable or appropriate that the claimant pursued or proceeded against [Promontoria], particularly once information had been provided by way of disclosure etc.” [177]. The District Judge notes that CPR 27.14(2)(g) sets a very high bar and says that she took into consideration that Promontoria was not involved in the Credit Agreement at its inception, in the payment of commission or otherwise and had become involved at a much later date, having purchased the debt in a totally normal way. [177-178][27]The District Judge summarily assessed Promontoria’s costs at £9,600.

Permission to appeal

[28]HHJ Truman’s reasons for granting permission to appeal are at [96-98].[29]HHJ Truman considered that it was arguable that the District Judge’s approach (in dismissing the unfair relationship claim on the basis that it was a repetition of all the previous unsuccessful arguments) was wrong because an unfair relationship claim is decided on a different basis from a claim for rescission/damages and whilst the two types of claim may be based on the same factual background, the statute requires consideration of, e.g. things done (or not done) by or on behalf of the creditor, and those actions/inactions may relate to matters before or after the making of the agreement. It was also arguable that the District Judge failed to consider limitation correctly as there was no separate consideration with regard to an unfair relationship claim and, unlike a rescission claim, limitation does not run from the date of the agreement but the end of the relationship.[30]It was also arguable that, in the absence of a formal decision as to whether or not there was a fiduciary relationship, the District Judge did not take all relevant matters into consideration when deciding whether the relationship was unfair. It was also arguable that her informal view, that there was no fiduciary relationship, might be wrong when the same type of relationship has been found to be a fiduciary one in earlier cases, such as Hurstanger and McWilliam v Norton Finance (UK) Ltd [2015] EWCA Civ 186.[31]In relation to the costs award, it was arguable that the Appellants were correct to join Promontoria as a party as, if successful in obtaining rescission of the Credit Agreement, they could also have sought repayment of payments to Promontoria, such that they had an interest in the claim, even though the claim was first and foremost against GE. It was arguable that the District Judge had exceeded the reasonable bounds of her discretion in circumstances where Promontoria had not apparently said to the Appellants that they should not require them to attend court and that request had been refused, and Promontoria as assignee of the Credit Agreement might have had some interest in the matter.

Applicable legal principles

[32]I remind myself that this appeal is limited to a review of the decision of the lower court (CPR 52.21(1)) and that the appeal should only be allowed where the decision of the lower court was(a) wrong or(b) unjust because of a serious procedural or other irregularity (CPR 52.21(3)).[33]Where the application of a legal standard such as negligence or obviousness involves no question of principle, but is simply a matter of degree, an appellate court should be very cautious in differing from the judge’s evaluation (Lifestyle Equities CV v Amazon UK Services Ltd [2024] UKSC 8 at paragraph 47).[34]On a challenge to an evaluative decision of a first instance judge, the appeal court does not carry out a fresh balancing exercise, but must ask whether the decision of the judge was wrong by reason of some identifiable flaw in the judge’s treatment of the question to be decided, such as a gap in logic, lack of consistency or failure to take into account material factors, which undermines the cogency of the conclusion (Lifestyle Equities at paragraph 49).[35]Any error of law must be material to the outcome. Errors of law of which it can be said that they would have made no difference to the outcome do not matter (R (Iran) v Secretary of State for the Home Department [2005] EWCA Civ 982 at paragraph 10).[36]Before the appeal court can interfere in a costs decision, it must be satisfied that the judge has either erred in principle in their approach or has left out of account some factor that they should have considered, or taken into account some feature that they should not have considered, or that their decision is wholly wrong because the court is forced to conclude that they have not balanced the various factors in the scale. In other words, that the discretion was exercised in a manner that yielded an unjust result. The appeal court should only interfere where the judge’s exercise of discretion has exceeded the generous ambit within which reasonable disagreement is possible (White Book paragraph 52.1.14).

Limitation and Carney

[37]The primary limitation period for a claim of breach of fiduciary duty starts to run from when the breach occurred. In this case, that was when the Credit Agreement was entered into, namely 6 October 2004. It was accepted by the Appellants at the hearing below that primary limitation in respect of the breach of fiduciary duty claim had expired. The District Judge found that section 32 was not satisfied and dismissed the claim of breach of fiduciary duty for time-bar.[38]The primary limitation period for an unfair relationship claim starts to run from the date when the credit relationship ends and expires after six years (Smith v Royal Bank of Scotland [2024] UKSC 34).[39]In Carney, the claimants brought unfair relationship claims under sections 140A and 140B CCA 1974 against the defendant bank arising out of loan agreements. The basis of the alleged unfairness was that incorrect advice was given to the claimants and misrepresentations were made by or on behalf of the bank. At paragraph 50, HHJ Waksman QC (as he then was) noted that the bad advice and misrepresentation allegations could have been separate causes of action in themselves and, but for the expiry of the limitation period, would no doubt have been alleged separately as well. He said:
“That gives rise to the question whether, in such cases, for such matters to be "made out" it must be shown that in the case of advice, for example, not only was advice given but there should have been an accompanying duty of care. Or in the case of misrepresentation, that the representation made was material and relied upon, and matters of that kind. It seems to me that generally speaking, and subject to the burden of proof which is of course on the creditor here, the same elements as are required by the cause of action should be shown when such matters are raised as constituting an unfair relationship. Otherwise, there is a danger that the analysis of their significance or otherwise becomes blurred and uncertain.”
[40]At paragraph 52 of Carney, HHJ Waksman QC noted that:
“On the other hand, the Court is not constrained in its unfair relationship analysis by the fact that the particular feature relied upon eg misrepresentation, would itself have been time-barred if claimed as a standalone cause of action.”
[41]Mr Clark’s primary submission was that the District Judge was wrong to dismiss the unfair relationship claim on the basis that it must fail because it was based on the same facts as the claim for breach of fiduciary duty and was therefore also time-barred. The claims had different limitation periods. In the case of a claim for breach of fiduciary duty, the cause of action arose when the breach occurred, which was at the date of the Credit Agreement. In the case of an unfair relationship claim, the cause of action did not arise until the relationship ended, which he submitted was September or October 2019.[42]Insofar as the District Judge relied on Carney in dismissing the unfair relationship claim, Mr Clark submitted that what was being described by HHJ Waksman QC at paragraph 50 of that decisionwas a general principle, rather than an absolute rule; each decision would be based on the facts of the particular case as to whether there was an unfair relationship in that case. Furthermore, HHJ Waksman QC was clear that what he was saying did not apply in the context of limitation. So if the District Judge dismissed the unfair relationship claim because she considered that, in the assessment of fairness, matters that would have been time-barred if brought as a separate cause of action should be disregarded, then she was wrong.[43]Mr Mallet submitted that the relationship between the Appellants and GE ended in 2015, when the Credit Agreement was assigned to Promontoria. Accordingly, the primary limitation period as against GE expired in 2021, that is six years after the assignment. He submitted that it was accepted at trial that primary limitation had expired and the argument that assignment did not end the relationship was a new point which was not argued below and was not in the grounds of appeal. But in any event, he submitted that assignment ended the relationship. From that date, GE was no longer involved with the Credit Agreement and the Appellants’ relationship was with a different lender. He submitted that GE did not fall within the definition of creditor in section 189 CCA 1974 once the debt had been assigned. Furthermore, there was nothing payable to GE after assignment, so the Credit Agreement was a completed agreement.[44]Mr Castle submitted that the unfair relationship claim did not fail because the breach of fiduciary duty claim was time-barred. Rather, it failed because the reasons why section 32 Limitation Act 1980 did not assist were taken into account in assessing whether to award a remedy under section 140A CCA 1974 and were not such as to warrant a finding of unfairness in all the circumstances. Those reasons were that the fact of the commission was known to the Appellants; they could have found out the amount of the commission if they had so wished; Mr Howard did not repose trust in the broker; GE did not conceal anything; and all of this occurred on or around 6 October 2004, when the credit agreement was entered into.[45]In my judgment, that interpretation by Mr Castle is reading something into the District Judge’s judgment which is not there. Having referred to paragraph 50 of Carney, and Mr Mallet’s submission that the unfair relationship claim lived or died with the secret/half secret commission claim, she noted that the unfair relationship claim consisted of a repetition of all of the previous unsuccessful arguments. She continued, at paragraph 48 [190]:
“On that basis, therefore, I consider that the claim for unfair relationships must also fail.”
[46]I agree with Mr Clark that the District Judge must be understood to have been saying that the unfair relationship claim should be dismissed for the same reasons that the other claims were dismissed. The breach of fiduciary duty claim was dismissed because it was time-barred. While the District Judge indicated that she would likely have found that the broker owed no fiduciary duty to the Appellants (judgment, paragraph 39 [122]), she did not actually make a finding to that effect. Accordingly, if the unfair relationship claim fell to be dismissed for the same reasons that the other claims were dismissed, it follows that the District Judge must have dismissed the unfair relationship claim on the basis that it too was time-barred.[47]In my judgment, there is nothing in paragraphs 41 to 49 of the judgment to suggest that the District Judge was dismissing the unfair relationship claim for anything other than the same reason that she dismissed the breach of fiduciary duty claim (namely, limitation). Had she dismissed the unfair relationship claim because of the matters which she considered in relation to the section 32 argument, in my judgment, she would have made that clear in her reasoning.[48]My reading of paragraphs 41 to 49 of the judgment is that, having dismissed the breach of fiduciary duty claim and found that the factual basis for the unfair relationship claim was the same, the District Judge dismissed the latter claim relying on paragraph 50 of Carney. In my judgment, she was wrong to do so, for the following reasons.[49]First, because in effectively importing the time-bar of the breach of fiduciary duty claim into the unfair relationship claim, she does not appear to have taken into account paragraph 52 of Carney. That makes clear that the general principle in paragraph 50 does not apply where the separate cause of action is not made out because of time-bar. In this case, the District Judge did not make findings that the ingredients of the breach of fiduciary duty claim had not been made out. She did not need to do so, given her finding that the claim was time-barred.[50]Second, she gave no separate consideration to the limitation period for unfair relationship claims, which does not start running until the end of the relationship. That was either September 2015 (on GE’s case) or September or October 2019 (when the credit agreement was fully paid off and the charge removed). (I will return to this issue shortly.) Third, although she correctly identified that an assessment of fairness relies on a broad factual enquiry (judgment, paragraph 43), there is no indication that she undertook such an enquiry in the context of considering the effect of the non-disclosure of the amount of the commission on the fairness of the relationship.[51]Mr Mallet submitted that it was conceded on behalf of the Appellants that primary limitation in respect of the unfair relationship claim had expired and that Mr Clark’s submission that limitation did not start to run until September or October 2019 in relation to GE as well as Promontoria was a new point not argued below.[52]As to the concession, I was referred to paragraph 21 of the skeleton argument of Mr Torkian, who appeared for the Appellants at the small claims hearing. Under the heading “Unfair Relationship and Half Secret Commission”, at paragraph 21(d) it is stated “Noting the likely otherwise expired limitation date and section 32(1)(b) Limitation Act 1980 …” with certain submissions then following on. I am not satisfied that that somewhat equivocal statement amounts to a concession that primary limitation had expired in respect of the unfair relationship claim.[53]In any event, a review of the transcript of the hearing suggests that, although there was such a concession in respect of the breach of fiduciary duty claim (page 59 of the hearing transcript [166]), there was no concession that primary limitation had expired in respect of the unfair relationship claim as against either GE or Promontoria. Towards the bottom of page 60 of the transcript [167], Mr Torkian said, albeit in the context of submissions on the “exclusionary rule”, that “the [credit] agreement did not end until on or around 13 September 2019 …” Then, on page 62 of the transcript [169], Mr Torkian submits that the nature of the relationship related to the credit agreement did not change just because the ownership of the agreement changed hands, that that relationship was tainted with unfairness when Promontoria took ownership and that the court could make any orders against GE and Promontoria that it considered just and equitable. He went on to submit:
“Patel v Patel states that the limitation [period] does not apply to D2”
. That is a reference to the decision of Leggatt J (as he then was) in Patel v Patel [2009] EWHC 3264 (QB) holding that time started to run for limitation purposes from the date when the debtor-creditor relationship ended.[54]Therefore, I am satisfied that this is not a new point that has been raised by Mr Clark.[55]The question then arises as to whether the unfair relationship claim was, in fact, time-barred as against GE, Promontoria or both. GE’s case is quite simple: the relationship between the Appellants and GE ended upon assignment of the credit agreement to Promontoria in September 2015. I am bound to say that I agree. I am not persuaded by Mr Clark’s submissions that GE remained a creditor along with Promontoria following the assignment.[56]In my judgment, applying the ordinary and natural meaning of “relationship”, the assignment to Promontoria brought the relationship between the Appellants and GE to an end. Instead, from the date of the assignment, the Appellant’s relationship arising out of the credit agreement was with Promontoria. That is consistent with the definition of creditor in section 189 CCA 1974 as “the person providing credit under a consumer credit agreement or the person to whom his rights and duties under the agreement have passed by assignment or operation of law”. GE was the “person providing credit” until their rights and duties under the agreement passed by assignment to Promontoria.[57]That definition is carried through to section 140C, which provides that references in that section and in sections 140A and 140B to the creditor or to the debtor under a credit agreement include references to “the person to whom his rights and duties under the agreement have passed by assignment or operation of law”.[58]The editors of Guest & Lloyd, Encyclopaedia of Consumer Credit Law, referred to at paragraph 22 of Link Financial Ltd v Jones [2012] EWHC 2402 (QB), suggest that where notice of the assignment has been given (as in the present case), the assignee may be a “creditor” for the purposes of the CCA 1974.[59]The authors of Goode, Consumer Credit Law and Practice, referred to at paragraph 24 of Link Financial, state that:
“Under the CCA 1974, the assignment of a regulated agreement puts the assignee willy-nilly into precisely the same position as the original creditor or owner – there are no limitations on the obligations transferred with the agreement – once the assignment is completed by notice being given to the debtor or hirer, the assignee becomes the creditor or owner for all purposes.”
[60]For those reasons, in my judgment, primary limitation for the unfair relationship claim as against GE expired in September 2021. It was not argued before the District Judge that section 32 Limitation Act 1980 applied to extend limitation for the unfair relationship claim. But it seems to me that the District Judge’s reasons for finding that section 32 Limitation Act 1980 was not made out for the breach of fiduciary duty claim apply equally to the unfair relationship claim.[61]It follows that the appeal against the District Judge’s decision dismissing the claim against GE as time-barred must fail.[62]The position is different in respect of Promontoria. In my judgment, the relationship between the Appellants and Promontoria for the purposes of the unfair relationship claim commenced upon assignment of the credit agreement and ended in September 2019, when the agreement was paid off, or at the latest in October 2019, when the charge was removed. Therefore, the limitation period would not expire until six years later, namely September/October 2025. It follows that the unfair relationship claim as against Promontoria was not time-barred. In my judgment, the District Judge erred when she dismissed the claim on that basis.[63]Therefore, I would allow the appeal in respect of the dismissal of the unfair relationship claim against Promontoria.[64]It would not be appropriate for this court to embark upon consideration of that claim, given that the court at first instance did not make any relevant findings of fact. Therefore, the unfair relationship claim against Promontoria will be remitted to the County Court at Telford, to be heard by District Judge Longworth if practicable. That will be the proper forum for the arguments regarding the merits of the unfair relationship claim against Promontoria, including arguments about the nature of the pleaded case.

Was there a finding of breach of fiduciary duty?

[65]It was submitted by Mr Clark that if the District Judge made a finding that Mrs Howard did not repose trust and confidence in the Broker and that the Broker was not in a fiduciary relationship to the Appellants, the District Judge was wrong. My understanding is that both GE and Promontoria accept that the District Judge made no such finding. It seems to me that that is borne out by what the District Judge says at paragraph 39 of her judgment, namely that even if she had not determined that the breach of fiduciary duty claim was time-barred she “would have been likely to make a finding that there was no fiduciary duty owed to the claimants by the broker.”[66]In those circumstances, I need say no more about that ground of appeal.

Delay

[67]I can deal quite shortly with this point. By their Respondent’s Notices, GE and Promontoria sought for the District Judge’s decision to be upheld for the additional reason that the unfair relationship claim must in any event be barred due to delay. Mr Mallet submitted that, given the delay in bringing this claim, even if the court found that the relationship was unfair to the Appellants, it was inconceivable that it would consider it just to make an order under section 140B. He relied on paragraph 57 of Smith v RBS [2023] UKSC 34.[68]It is clear that the issue of delay in this context only becomes relevant if the court makes a finding that there was unfairness and moves on to consider whether to exercise its discretion to make an order under section 140B. There has been no finding of unfairness and the claim against GE stands dismissed for time bar. It will of course be open to Promontoria to rely on the issue of delay if there is a finding of unfairness upon remission of the claim against it.

Exclusionary rule

[69]It was submitted on behalf of GE and Promontoria that the District Judge’s decision should be upheld for the additional reason that the unfair relationship provisions in sections 140A-140C were not available to the Appellants because of the “exclusionary rule” set out in Barnes v Black Horse Limited [2011] EWHC 1416 (QB).[70]Barnes is a decision of HHJ Waksman QC sitting as a High Court Judge. The case concerned three PPI policies sold in relation to three loans made by Black Horse to the claimants in 2002, 2003 and 2004. In 2008, Black Horse brought a claim, against Mr Barnes only, to recover monies due under the third loan agreement. The claim was brought during the transitional period between the former extortionate credit bargain provisions and the unfair relationship provisions introduced in sections 140A-D CCA 1974. The transitional period was 6 April 2007 to 5 April 2008. Mr Barnes did not seek to reopen the loan agreement as an extortionate credit bargain in those proceedings. Black Horse’s claim was subsequently consolidated with a later claim brought by both Mr and Mrs Barnes against Black Horse under the unfair relationship provisions in sections 140A-D CCA 1974, which had by then come into force.[71]It was argued on behalf of Black Horse that the court had no jurisdiction to entertain the unfair relationship claim. That was because, properly interpreted, paragraphs 14 and 15 of Schedule 3 to CCA 1974 excluded the making of a separate unfair relationship claim by the debtor where one or both of them had the opportunity to make that claim in the context of the proceedings brought by Black Horse to enforce the loan before the end of the transitional period. HHJ Waksman QC referred to that effect as the “exclusionary rule” at paragraph 51 of his judgment.[72]As noted at paragraph 54, it was accepted by counsel for the claimants that if both claimants had been defendants to the original Black Horse claim, the exclusionary rule would apply. However, he argued that although Mr Barnes could not bring a fresh unfair relationship claim after 6 April 2008, Mrs Barnes was not subject to the exclusionary rule because she was not a defendant to the Black Horse claim. HHJ Waksman QC agreed with that argument.[73]In the present case, both Appellants were defendants to the possession proceedings brought by GE in 2007. They did not raise any issue regarding unfairness (or make any allegation as to an extortionate credit bargain) in those proceedings. It was submitted on behalf of GE and Promontoria that that excluded them from subsequently making an unfair relationship claim in respect of the credit agreement.[74]Mr Clark submitted that Barnes was not authority for the proposition that there was an exclusionary rule, because in that case it was conceded that the rule existed and the case was tried on the basis of that concession. He submitted that paragraphs 14 and 15 of Schedule 3 to CCA 1974 did not say anywhere that a claim for an order under section 140B could not be brought if a claim under the extortionate credit bargain provisions could have been, but was not, brought in proceedings to enforce the credit agreement.[75]I have some sympathy with Mr Clark’s submissions. It does seem surprising that, because the Appellants did not raise a claim under the (more difficult) extortionate credit bargain regime in the possession proceedings, they should be precluded from bringing a freestanding unfair relationship claim under the newer and more generous regime. It might be thought that their focus in the possession proceedings would have been on keeping their property, rather than attacking the credit agreement itself.[76]That being said, in my view, this court is bound by the decision in Barnes in the absence of any higher authority to the contrary. While the existence of the so-called exclusionary rule was agreed in Barnes, on my reading of paragraphs 51 to 63 of HHJ Waksman QC’s judgment there is nothing to indicate any reservation on his part about that interpretation of paragraphs 14 and 15 of Schedule 3.[77]Applying Barnes to this case, the Appellants were both parties to the earlier possession proceedings and, in my judgment, they are therefore caught by the exclusionary rule, at least in respect of the unfair relationship claim against GE. Therefore, I would uphold the District Judge’s decision dismissing that claim against GE for the additional reason that such a claim was precluded due to the exclusionary rule set out in Barnes.[78]Because I have allowed the appeal as against Promontoria, its arguments regarding the exclusionary rule will fall to be considered upon remission.

The District Judge’s costs order in favour of Promontoria

[79]Given my conclusion that the order dismissing the unfair relationship claim against Promontoria should be set aside, it follows in my judgment that the order for costs under CPR 27.14(2) must also be set aside.

Conclusion

[80]The District Judge gave a reasoned, ex tempore judgment shortly after hearing evidence and submissions. Unfortunately, with the benefit of lengthy written and oral submissions, I have concluded that she made errors of law in dismissing the unfair relationship claim against Promontoria.[81]For the reasons set out above:a. The appeal of the Order of District Judge Longworth dismissing the unfair relationship claim against GE is dismissed.b. District Judge Longworth’s decision dismissing the unfair relationship claim against GE is upheld for the additional reason that the claim is precluded by the exclusionary rule set out in Barnes.c. The appeal of the Order of District Judge Longworth dismissing the unfair relationship claim against Promontoria is allowed. The unfair relationship claim against Promontoria shall be remitted to the County Court at Telford, to be heard by District Judge Longworth if practicable.d. The appeal of the costs order made by District Judge Longworth in favour of Promontoria under CPR 27.14(2)(g) is allowed and the order is set aside.