Ephraim Wartenburg & Anor v Rahim Uddin & Anor [2026] EWCC 46

[2026] EWCC 46Case No M30BM038Date 23/07/2026
IN THE COUNTY COURT AT BIRMINGHAM
Before
HER HONOUR JUDGE SAIRA SINGH
Between
EPHRAIM WARTENBURG (1)CLAIMANTSSHLOMIT WARTENBURG (2)ClaimantRAHIM UDDIN (1)DEFENDANTSRUHUL AMIN (2)Defendant
Mr Sam Madge-Wyld (instructed by Brachers Solicitors) for Claimants for The First Defendant represented himself on 10 March 2026 and did not attend and was not represented on 14 April 2026 for The Second Defendant did not attend and was not representedHearing Hearing dates: 10 March and 14 April 2026
APPROVED JUDGMENT(subject to editorial corrections)This judgment was handed down remotely at 09.45am on 23 July 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
[1]This is a claim for enforcement of a regulated mortgage contract under section 28(3) Financial Services and Markets Act 2000 (FSMA).[2]By a legal charge dated 14 October 2009 (“the Legal Charge”), the Claimants, Mr Ephraim Wartenburg and his daughter, Ms Shlomit Wartenburg, advanced a loan of £196,000 to the Defendants, Mr Rahim Uddin and Mr Ruhul Amin. The loan was secured on 33 Shipley Common Lane, Ilkeston, Derbyshire (“number 33”), which was Mr Uddin’s family home.[3]It is common ground that the Legal Charge is a regulated mortgage contract, which is a regulated activity under the FSMA. It is also common ground that the Claimants are not “authorised persons” and, therefore, fall within the “general prohibition” on unauthorised persons carrying on a regulated activity in section 19(1) FSMA.[4]As a consequence, the Legal Charge is unenforceable against the Defendants, unless the court makes an order allowing the charge to be enforced (sections 26(1) and 28(3) FSMA).[5]The Claimants therefore seek an order that it is just and equitable for the Legal Charge to be enforced, under section 28(3) FSMA. Alternatively, the Claimants seek repayment of the outstanding capital advance under the Legal Charge (namely £160,000) under section 28(7) FSMA.

The trial

[6]The matter was originally listed before me for a 2-day trial on 10 and 11 March 2026. However, for reasons which I will explain shortly, day 2 did not, in fact, proceed until 14 April 2026.[7]The Claimants were represented throughout by Mr Madge-Wyld of counsel. Mr Uddin attended and represented himself on day 1 but he did not attend and was not represented on day 2. Mr Amin did not attend and was not represented at any stage of the trial. His position appears to be that he has no interest in the proceedings and should not have been made a party to them. He purported to make an application to strike out the claim against him, which he sent to court with Mr Uddin on 10 March. Given that he did not attend to pursue his application, I dismissed it.[8]At the start of the trial on 10 March 2026, I refused Mr Uddin’s oral application for an adjournment on medical grounds as it was not supported by satisfactory medical evidence of the sort identified by Norris J at paragraph 36 of his judgment in Levy v Ellis-Carr [2012] EWHC 63 (Ch). In fact, the evidence on which Mr Uddin relied fell very far short of that. It comprised a very short letter dated 9 March 2026 from a Mr Paul Collins, who described himself as “non-medical prescriber to Dr Ramji, Consultant Psychiatrist”, saying that Mr Uddin was “open to” the Erewash Psychiatry Outpatient’s Clinic with a diagnosis of anxiety and depression, and a fit note from his GP dated 3 December 2025 saying Mr Uddin was unfit to work due to “RTA/anxiety/depression/Lt thumb pain” and signing him off until 2 June 2026.[9]Neither of those documents came even close to providing an independent, expert opinion on Mr Uddin’s condition and how it could affect his participation in the trial, his treatment regime, the prognosis and/or what measures short of an adjournment could be taken to accommodate any difficulties he might have.[10]The trial proceeded and at the end of day 1, Mr Uddin was doing a creditable job of cross-examining Mr Wartenburg, who was giving evidence by videolink from Tel Aviv. I gave permission for Mr Uddin also to attend by videolink from home on day 2, if he wished to do so, and he was to inform my clerk of his intentions in the morning.[11]The trial was due to resume on 11 March 2026, with the completion of Mr Wartenburg’s evidence, followed by cross-examination of Mr Uddin and then closing submissions. However, before court started that day, I was informed by my clerk that Mr Uddin had been unwell after court the previous day. He had been assisted by my clerk and security staff but had refused medical attention.[12]The court was also in receipt of an email from Mr Uddin’s daughter, sent that morning, who said that Mr Uddin was unwell and would not be attending the trial either in person or by videolink. By that email, she made an informal application for an adjournment on Mr Uddin’s behalf. Reluctantly, I adjourned the trial part-heard and relisted day 2 on 14 April 2026, but ordered Mr Uddin to file medical evidence that complied with the Levy v Ellis-Carr requirements (which were clearly set out in the recitals to my Order) by 25 March 2026. I also directed that any further application (e.g. to adjourn the trial) must be made no later than 8 April 2026 by way of form N244, supported by any additional evidence on which Mr Uddin wished to rely.[13]Mr Uddin failed to file and serve any further medical evidence, let alone Levy v Ellis-Carr compliant evidence. He made no application for an extension of time. On 8 April 2026, his daughter emailed to inform the Court that Mr Uddin remained unwell and could not attend the adjourned trial, whether in person or by videolink. She sought, on his behalf, an adjournment for 8 weeks. There was no N244 application for an adjournment, nor was there any evidence attached to her email. In the absence of an application and/or any evidence in support, I directed that the trial would proceed at 10.30am on 14 April 2026.[14]On 14 April 2026, Mr Wartenburg duly joined the videolink from Tel Aviv to resume his evidence. Mr Madge-Wyld was in attendance at court. However, Mr Uddin did not attend and was not represented. There had been no request by him to attend by videolink and no formal application to adjourn. I determined (in a separate short, reasoned, oral judgment) that it was appropriate to proceed with day 2 of the trial in Mr Uddin’s absence. Mr Wartenburg concluded his evidence, Mr Madge-Wyld made his closing submissions and I reserved judgment.[15]After the trial, it transpired that Mr Uddin’s daughter had sent several emails to the court at 10.55am, 11.00am and 12.04pm, attaching various documents. Those documents included a Form N244 seeking an adjournment on medical grounds and to enable Mr Uddin to investigate various matters further. There was also a witness statement by Mr Uddin and various exhibits, but no further medical evidence. Given the timing, the application was far too late. In any event, I am satisfied that, even if the application had been made in time, the reasons I gave for my decision to proceed with day 2 of the trial in Mr Uddin’s absence would have applied equally.

Bankruptcy order

[16]A further matter that arose at the start of day 2 was the revelation that Mr Uddin had been made bankrupt by a bankruptcy order made in the County Court at Derby on 10 November 2025. Inexplicably, Mr Uddin had not informed the Claimants’ solicitors of his bankruptcy, despite the ongoing proceedings. They only became aware of the bankruptcy when Mr Uddin’s Trustee in Bankruptcy’s solicitors, Wilkin Chapman Rollits, contacted them. Nor did Mr Uddin inform this Court of his bankruptcy, either at the start of the trial or in any of the emails or applications that followed.[17]I am satisfied that, by virtue of section 285(4) Insolvency Act 1986, Mr Uddin’s bankruptcy does not affect the Claimants’ rights as a secured creditor to seek to enforce their security (namely, the Legal Charge). Furthermore, I note that Wilkins Chapman Rollits have confirmed to the Claimants’ solicitors by email dated 24 March 2026 that the Trustee does not wish to participate in the current proceedings and merely wishes to be kept up to date with the proceedings. However, I will return to the fact of the bankruptcy, and more specifically Mr Uddin’s failure to inform the Claimants and the Court of it, later in this judgment.

Factual background and chronology

[18]There is remarkably little dispute about the relevant factual background. However, it is rather convoluted and it is useful to set it out in some detail in order to put the claim into context.[19]Mr Wartenburg and Mr Uddin were introduced to each other in 2008 by Mr Wartenburg’s friend, Mr Yehuda Marer. Mr Uddin was living with his family at number 33 under a tenancy agreement and Mr Marer was his landlord. Mr Wartenburg says that, at the time, Mr Uddin told him that his name was Ruhul Amin. He says that was also the name by which Mr Marer knew Mr Uddin. In fact, Mr Ruhul Amin is Mr Uddin’s cousin. Mr Wartenburg says that Mr Uddin did not confess his true identity until some 10 years later. It is unclear why Mr Uddin pretended to be his cousin but Mr Uddin has not disputed that he did “swap” identities.[20]Mr Marer wished to sell number 33 and it was agreed that the Claimants would lend Mr Uddin (albeit purporting to be Mr Amin) the money to buy the property from Mr Marer. The purchase was completed on 27 November 2008 using funds advanced by the Claimants, which were secured against the property by a charge. That is reflected in the office copy entry for 7 January 2009, which shows Mr Amin as the sole registered proprietor and a charge in favour of the Claimants dated 27 November 2008.[21]On 14 October 2009, the November 2008 original charge was replaced by the Legal Charge. The parties to the Legal Charge were the Claimants (defined as the “Lender”) and the Defendants (defined as the “Borrower”). The Legal Charge defines the “Advance” as “£196,000 … relating to monies owed to the lenders arising out of business arrangements between the parties”. The term of the Legal Charge was 10 years. The Defendants agreed to repay the Advance on or before the Repayment Date (as defined) and to pay the Claimants(a) £300 per month interest free for 10 years (totalling £36,000) and(b) £900 per month at an annual rate of 6.75% fixed for 10 years, being payments of interest only on the sum of £160,000.[22]It was also an express term of the Legal Charge that the total monthly payment would be £1,200 and that, after 10 years, the outstanding sum (assuming all interest payments were made) would be £160,000.[23]On or around the same time, the Defendants became the joint registered proprietors of number 33. There was a further change to the ownership of number 33 on 30 January 2020, when registered ownership was transferred to Mr Uddin’s sole name, subject to the Legal Charge. Mr Amin remained a party to the Legal Charge.[24]It is accepted that the £36,000, i.e. the interest free part of the Advance, was repaid in June 2019.[25]Mr Wartenburg also made other loans to Mr Uddin and/or his family. In 2009, Mr Wartenburg and his other daughter, Naama, advanced £150,000 to Mr Uddin to enable him to purchase 32 Shipley Common Lane, Ilkeston (number 32). The purchase price was recorded in the office copy entry to be £149,000. That loan was secured by way of a legal charge dated 14 October 2009 over number 32.[26]On 21 August 2021, Mr Wartenburg, Shlomit and Naama agreed to release the charge over number 32 and transfer the outstanding balance under that charge to the Legal Charge. That increased the outstanding capital balance under the Legal Charge to £203,000.[27]Mr Wartenburg and Naama also made a loan to Mr Uddin’s wife, secured on 123 and 125 Bath Street, Ilkeston, DE7 8AP. That property, which comprised mixed commercial and residential use, was subject to a possession order granted by HHJ Coe KC in the County Court at Nottingham on 21 October 2025. HHJ Coe KC’s order is currently being appealed in the Birmingham District Registry (KA-2026-BHM-000005).

Claimant’s case

[28]The Claimants say that the capital advanced became repayable in 2019, in accordance with the 10-year term, but the time for repayment was extended by agreement. At Mr Uddin’s request, the Claimants agreed not to seek a possession order in respect of number 33 or number 32, because they believed that Mr Uddin intended to repay both loans.[29]In August 2021, the Claimants agreed to formally extend the term for repayment of the sums secured by the Legal Charge to 31 December 2022. This was on condition that the charge against number 32 would be discharged, Mr Uddin would pay the Claimants £77,000 (obtained from a mortgage from Santander to be secured against number 32) and the balance of £43,000 (due under the charge secured against number 32) would be secured against 33.[30]Then in July 2023, in exchange for the Claimants’ continued forbearance, Mr Uddin promised to use funds he expected to raise from the sale of another property (151, Bath Street, Ilkeston) and remortgaging number 33 to discharge the sums owed to the Claimants. However, although Mr Uddin did sell 151 Bath Street on 4 September 2023 (for £170,000), he did not pay any of the proceeds to the Claimants.[31]The Claimants say that in November 2023, Mr Uddin stopped paying the interest payments under the Legal Charge. He recommenced paying for a short time after the Claimants issued this claim (he says that he was intimidated by an unknown person into doing so), but stopped again in March 2025.[32]The Claimants say that as of February 2026, the sum of £226,203.50 remained outstanding (capital of £203,000 from the loans in respect of 32 and 33, plus arrears of interest in the sum of £23,203.50).

Mr Uddin’s case

[33]Mr Uddin does not appear to dispute the Claimants’ calculation of the sum outstanding. Indeed, he refers to it in correspondence with the Claimants in 2021 and 2022. However, he denies the claim, his primary case being that the Legal Charge is void under section 26 FSMA. He asserts that the purchase price for 33 was in fact £160,000, with the additional £36,000 being a “hidden fee”. He also asserts that an interest rate of 6.1% was exploitative as compared with market rates in 2009. He says that the Defendants were subject to undue influence; they were vulnerable as first-time buyers and they were pressured into refinancing after cancelling what they say was the original agreement of 2.5% interest.[34]Mr Uddin also intimates a counterclaim, whereby he seeks restitution (repayment of all sums paid under the Legal Charge), as well as damages for mental distress for “illegal harassment” and “credit damage” caused by “predatory lending”.[35]The counterclaim is wholly unparticularised, with no details of the alleged harassment and/or credit damage, or the basis on which restitution is sought. Furthermore, Mr Uddin did not pay a fee for the counterclaim. In those circumstances, the counterclaim must be struck out.

Legal framework

[36]Section 19 FSMA prohibits anyone but an “authorised person” or an “exempt person” from carrying on a “regulated activity” in the United Kingdom. This is referred to as the “general prohibition”.[37]Section 22(1) provides that an activity is a “regulated activity” if it is an activity of a specified kind which is carried on by way of business and(a) relates to an investment of a specified kind or(b) in the case of an activity of a kind which is also specified for the purposes of section 22(1), is carried on in relation to property of any kind. Article 4 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (FSMA Regulations) specifies kinds of activity for the purposes of section 22 FSMA. The activities specified include certain activities in respect of “regulated mortgage contracts”, including “entering into a regulated mortgage contract as a lender” (Article 61(1) FSMA Regulations).[38]Section 26(1) FSMA provides that an agreement made by a person in the course of carrying on a regulated activity in contravention of the general prohibition is unenforceable against the other party. However, if the court is satisfied that it is just and equitable in the circumstances of the case, it may allow the agreement to be enforced or money and property paid or transferred under the agreement to be retained (section 28(3) FSMA).[39]If the person against whom the agreement is unenforceable elects not to perform the agreement, they must repay any money received by them under the agreement (section 28(7) FSMA).[40]In considering whether to allow the agreement to be enforced or the money or property paid or transferred under the agreement to be retained, the court must have regard to “whether the person carrying on the regulated activity concerned reasonably believed that he was not contravening the general prohibition by making the agreement” (sections 28(4) and 28(5) FSMA).[41]In Re Whiteley Insurance Consultants (a firm) [2008] EWHC 1782 (Ch), David Richards J held, at paragraph 37:
“… WIC through Mr Whiteley in many cases knew, and in all cases should have known, that it was contravening the general prohibition and while the issue mentioned in section 28(5) is not conclusive against the exercise of discretion (as it was under sections 5(3) and 132(3) of the Financial Services Act 1986), it is none the less a weighty factor against the grant of relief.”
[42]In Helden v Strathmore Ltd [2010] EWHC 2012 (Ch), Newey J (as he then was) found that it was reasonable for Strathmore to have failed to realise that the FSMA was relevant for various reasons, including that their solicitors did not inform them that the FSMA was, or could be, applicable and they did not usually enter into transactions to which the FSMA applied. Newey J’s approach to the “reasonable belief” issue was doubted by the Court of Appeal ([2022] EWCA Civ 542), in which Lord Neuberger observed (at paragraph 46) that there was “a powerful argument for saying that a person cannot contend that he “reasonably believed that he was not contravening the general prohibition by making [an] agreement” if he was wholly unaware of the existence of the prohibition at the time of the agreement.” However, Lord Neuberger held that it was unnecessary to resolve that “difficult” issue, because even if Newey J’s interpretation of section 28(5) was wrong, it was just and equitable to permit Strathmore to enforce the relevant agreement.[43]Chief ICC Judge Briggs took the same view, obiter, in Jackson v Ayles and another [2021] EWHC 995 (Ch). At paragraph 54 of his judgment, he observed that “There can be no belief if a person is ignorant of the relevant provisions.” He considered that if section 28(5) was not satisfied, a party seeking permission to enforce must demonstrate circumstances that outweigh the “weighty factor” and that it is just and equitable to enforce (paragraph 55).[44]In Helden, Newey J concluded that it was just and equitable to permit enforcement as: i) Mr Helden had benefited from the use of the property which Strathmore’s loans enabled him to buy without making any interest payments or paying any rent. ii) The property had increased substantially in value, meaning that the loan from Strathmore had enabled Mr Helden to achieve a large profit. iii) Strathmore would not have been willing to make the loan on an unsecured basis. iv) If it had not lent the money to Mr Helden, Strathmore could be expected to have generated a return on the £1m loan by investing it elsewhere. v) There was no question of Mr Helden being taken advantage of; he had been a mortgage broker and was experienced in property maters. vi) Mr Helden preferred not to pursue alternative funding because of his concern that he should be able to make lump sum repayments without penalty. vii) Mr Helden failed to identify respects in which he would have been better placed if Strathmore had been an “authorised person” for FSMA purposes. viii) Strathmore did not realise that the FSMA could apply and it was reasonable for them not to do so.[45]His decision was upheld by the Court of Appeal.[46]In Jackson, the claimant was the trustee in bankruptcy of Mr Ayles who, together with his wife, borrowed money from Mr Pumphrey to engage in property development. The loan was secured on their family home. The trustee sought a declaration that the security held by Mr Pumphrey was unenforceable under the FSMA.[47]Chief ICC Judge Briggs concluded that it was apparent from the indicators relied on by Newey J in Helden, that the court “was weighing the respective sophistication and experience of the parties, whether the borrower was taken advantage of, motivation for borrowing and if he benefited from the transaction”.[48]He held that it was not just and equitable for the charge to be enforced. At paragraphs 39, 40 and 49 of his judgment, he set out the following factors as pointing against it being just and equitable for enforcement to be permitted: i) There was no evidence that Mr and Mrs Ayles would have received different or better treatment if Mr Pumphrey had been regulated. ii) Weighing the respective sophistication and experience of the parties from a financial perspective, Mr Pumphrey was sophisticated and experienced. iii) There was no evidence that Mr Ayles was experienced or had special insights into the world of finance. iv) As a sophisticated and experienced businessman, Mr Pumphrey calculated his risk and charged interest accordingly. v) Mr Pumphrey chose not to seek enforcement at the end of the initial period of the loan and was content to allow interest to accrue. vi) He received high returns in respect of the performing loans. vii) Mr Pumphrey had not employed a solicitor to advise on lending so could not claim that he had relied on professional advice.

The issues

[49]As I have said, it is common ground that the Legal Charge is a regulated mortgage contract and that the Claimants are neither authorised to carry on a regulated activity in the United Kingdom, nor exempt persons. The Claimants have effectively conceded that the making of the Legal Charge was an activity “carried on by way of business”, within section 22(1) FSMA (they are not seeking a declaration that it was not such an activity).[50]Accordingly, the general prohibition in section 19 FSMA applies. Therefore, the questions before the court are: i) Whether it is just and equitable in the circumstances of the case to allow the Legal Charge to be enforced. This includes consideration of whether the Claimants reasonably believed that they were not contravening the general prohibition. ii) If so, whether the court should exercise its discretion to permit enforcement. iii) If not satisfied that it is just and equitable to permit enforcement, have the Defendants elected not to perform the Legal Charge for the purposes of section 28(7) FSMA? iv) If so, should the court make an order under section 28(7) FSMA requiring the Defendants to repay any money received by them under the Legal Charge?

The evidence before the court

[51]There was before the court a trial bundle running to 193 pages. This included witness statements by both Claimants, that of Ms Wartenburg being accompanied by a Civil Evidence Act Notice, and a document by Mr Uddin dated 6 February 2025 which was entitled “Consideration for court/judges”. I treated Mr Uddin’s document as a witness statement, given that it was signed, dated and contained a statement of truth. There was also a witness statement of Mr Amin, dated 20 January 2025.[52]I only heard oral evidence from Mr Wartenburg, who was cross-examined for an hour and a half by Mr Uddin.[53]There were matters on which Mr Madge-Wyld told me he would have wished to cross-examine Mr Uddin, but that was not possible given Mr Uddin’s non-attendance on day 2. That clearly affects the weight to be attached to Mr Uddin’s statement.[54]As for Mr Amin, he makes various assertions in his witness statement, including that his interest in number 33 was as a trustee for Mr Uddin’s children. None of those assertions is supported by any cogent corroborative evidence and Mr Amin did not attend for cross-examination. I disregard his evidence in its entirety.[55]With the court’s permission, the Claimants rely on the expert report of Simon M Jaquiss dated 11 November 2025. Mr Jaquiss is an expert in banking and financial products. Neither party put any Part 35 questions to Mr Jaquiss and his evidence is unchallenged.[56]I was also referred to various documents in the bundle, including the Legal Charge, office copy entries in respect of number 33 and other properties with which Mr Uddin is or has been involved, and correspondence.[57]In addition, I had the benefit of a bundle of authorities relied on by the Claimants.[58]I am not going to repeat all of the evidence and submissions I have read and heard but have taken them all into account when reaching my decision. If I do not refer to a particular document, piece of witness evidence or submission, it is not because I have ignored it, but merely in an attempt to be as concise as possible.

The witness evidence

[59]Mr Wartenburg gave evidence in a straightforward manner and his oral evidence was largely consistent with his witness statement. He had a good recollection of events. He made appropriate concessions, including regarding his own actions in being too trusting and for lending substantial sums to people he had never met (namely Mr Amin and Mr Uddin’s wife). I am satisfied that he was doing his best to assist the court and that his evidence was honest and reliable.[60]Mr Wartenburg told the court that he now knew Mr Uddin by his correct name but had previously known him as Mr Amin, as that was how Mr Uddin had introduced himself when they first met. He had been renting number 33 from Mr Marer, who also knew him as Mr Amin. Mr Marer had needed to sell number 33 and Mr Wartenburg had offered to lend Mr Uddin (or Mr Amin, as he knew him then) £196,000 to buy it. He said that the purchase price was £196,000 so the loan was for 100% of the purchase price.[61]Mr Wartenburg’s told the Court that he originally offered Mr Uddin 2.75% above base rate, but Mr Uddin had refused and so Mr Wartenburg had offered around 6% fixed for the term, which Mr Uddin had accepted.[62]He confirmed that he had used Mr Simon Lazarus, Mr Marer’s solicitor, to deal with the Legal Charge, because he was dealing with the sale of number 33 to Mr Amin/Mr Uddin. He also confirmed that Mr Lazarus had not advised him, and he was not aware himself, that this was a regulated mortgage contract and potentially unenforceable. He said that Mr Lazarus had passed away and so could not confirm that.[63]Mr Wartenburg accepted that he made 3 loans to Mr Uddin and/or his family at commercial rates, but he denied that making loans was his business. He said that he had wanted to help Mr Uddin, whom he saw as a hardworking person. He had thought he would get his money back. He said he “stupidly believed” that if the loan was not paid off, the property would be repossessed. However, he had had no idea it would be such a long procedure.[64]He also said that neither he nor his daughters had previously lent money to anyone else. He told the court he doubted he would do it again.[65]When the Defendants failed to pay off the remaining balance by the end of the term, i.e. by 30 June 2019, Mr Wartenburg said that he had agreed to extend the deadline 7 times in 4 years. In August 2021, he, Shlomit and Naama had agreed to let Mr Uddin remortgage number 32 with Santander for £77,000 and transfer the balance of £43,000 to number 33, thereby discharging the legal charge over number 32.[66]In October 2022, Mr Wartenburg began having further discussions with Mr Uddin regarding the options for repayment of the sums due under the Legal Charge and the charge secured against the Bath Street property (which was in Mrs Uddin’s name). At that point, Shlomit and Naama became involved in the communications with Mr Uddin and his wife, via email and WhatsApp.[67]Mr Wartenburg said that in 2023, Mr Uddin had said that he would use the proceeds of sale of another property to put towards the sum due under the Legal Charge. However, although he had sold a property, he had not paid a penny to the Claimants.[68]None of the evidence that Mr Wartenburg gave was seriously challenged by Mr Uddin in cross-examination.[69]The weight that can be attached to Mr Uddin’s statement is limited, given that he did not make himself available for cross-examination. To the extent that there are inconsistencies between his witness statement and Mr Wartenburg’s evidence, I prefer Mr Wartenburg’s evidence, which Mr Uddin at least had the opportunity to challenge. Mr Wartenburg’s evidence regarding negotiations for repayment are also corroborated by the correspondence in the bundle.[70]I also have serious doubts as to Mr Uddin’s credibility and honesty for the following reasons. First, it is noteworthy that he did not actually dispute pretending to be someone else. He had the opportunity to suggest to Mr Wartenburg that he was lying about that, but he did not do so. I infer from that that Mr Uddin did indeed mislead Mr Wartenburg as to his true identity. Second, it is significant that Mr Uddin failed to inform this Court or the Claimants/their solicitors that he had been made bankrupt in November 2025. In my view, he must have made a conscious decision not to disclose that development; he could hardly have forgotten about it. That is hardly the mark of someone trying to assist the Court.[71]I also note the frankly far-fetched story in his witness statement about threats, burner phones and intimidation, none of which is supported by any credible evidence and can only be seen as an attempt to muddy the waters and delay matters. Even he accepted on day 1 of the trial that he did not hold Mr Wartenburg responsible for the alleged threats and intimidation.[72]Of the relevant matters in his witness statement, Mr Uddin asserts that the loan was for £160,000 with £36,000 being a mortgage arrangement fee. That does not accord with Mr Wartenburg’s evidence or the office copy entry for number 33, which records that “The price stated to have been paid on 27 November 2008 was £196,000.” The statement of the price would have been taken from the form TR1. Accordingly, I am satisfied that the loan was for £196,000, the full purchase price.[73]Mr Uddin also says in his witness statement that he had applied to Santander for a mortgage for number 33, but his application was declined because the property had been converted into 3 flats. It was after that that Mr Uddin took the loan from Mr Wartenburg and Shlomit.[74]I have already said that I disregard Mr Amin’s evidence, due to his failure to attend the trial and in the absence of a Civil Evidence Act Notice.[75]Ms Shlomit Wartenburg similarly did not attend to give oral evidence, the reasons given in the Civil Evidence Act Notice being that she resides abroad and would be receiving medical treatment at and around the trial date. In any event, her evidence added little to that of Mr Wartenburg and was limited to the situation from October 2022, when attempts were being made to obtain repayment of the Legal Charge. What she says in her witness statement is largely corroborated by the correspondence in the bundle.

The expert evidence on mortgage terms available in July 2009

[76]The Claimants rely on the expert evidence of Simon Jaquiss, who was instructed to provide an opinion on whether 100% loan to value (LTV) mortgages were available at the time of the Legal Charge and on the levels of fixed interest rates for 10-year mortgages available in the mortgage market for mortgages of 10 years in July 2009. The purpose of obtaining this expert evidence was to address the question of whether the Defendants could have obtained the same terms in the market and whether they had been taken advantage of.[77]In his expert report dated 11 November 2025, Mr Jaquiss opined at paragraph 22 to 30 that 100% LTV mortgages that were widely available until the 2008 financial crisis effectively disappeared from the mainstream market between 2008 and 2009. By March 2009, there were no 100% mortgages available except through one-to-one, localised, less formal (non-regulated) mortgages, such as guarantor mortgages, family deposit scheme, shared ownership and credit union secured loans. Accordingly, in Mr Jaquiss’ opinion, there would not have been any mainstream lenders of mortgages that would, in July 2009, have advanced a mortgage loan with LTV of 100%. Typical LTVs at that time were 75% to 80%.[78]As to 10-year fixed term rates, Mr Jaquiss’ opinion was that 10-year fixed mortgages were relatively rare in the UK in 2009. Most banks were only offering terms of 2 and 5 years because of the uncertainty caused by the financial crisis. He said that data and evidence from the relevant time period had 10-year fixed rates provided by High Street banks at between 5.50% and 6.50%. Building societies and other specialist lenders offered 10-year fixed rates at between 6.50% and 7.50%. In Mr Jaquiss’ opinion, the rate under the Legal Charge, equating to around 6.1% fixed for 10 years, was “comfortably within the range”.[79]As I have already said, neither party put any Part 35 questions to Mr Jaquiss. His evidence is therefore unchallenged. His report is on point, within the scope of his expertise, clear, reasoned and supported by data. I see no reason not to accept it.

Is it just and equitable to permit enforcement of the Legal Charge?

[80]In determining whether it is just and equitable to permit enforcement, the Court’s task is to consider all the circumstances of the case and, specifically, whether the Claimants reasonably believed that they were not contravening the general prohibition by making the Legal Charge.[81]I will deal first with the “reasonable belief” issue. The starting point is that I am satisfied on the balance of probabilities that the Claimants did not realise that they were carrying on a regulated activity and that the FSMA applied. In my view, it was reasonable for them to be unaware that the FSMA could apply. I accept Mr Wartenburg’s evidence that neither he nor Shlomit had experience of lending and neither of them had any idea about the rules, including the FSMA. I also accept his evidence that the solicitor, Mr Lazarus, did not advise them of the general prohibition and that, by entering into the Legal Charge, they would be carrying on a regulated activity in breach of the general prohibition.[82]However, in my judgment, their ignorance of the general prohibition and its application to them means that the Claimants cannot rely on section 28(5) FSMA on a proper construction of that provision. In this regard, I respectfully agree with the obiter observations of Lord Neuberger in Helden and Chief ICC Judge Briggs in Jackson that, for a person to have a belief as to whether or not they are contravening a rule, there must be some knowledge of the existence of that rule. As a matter of logic and semantics, it is difficult to see how a person can believe they are not contravening the general prohibition if they are completely unaware of its existence.[83]The fact that the Claimants cannot rely on section 28(5) FSMA is a “weighty factor against the grant of relief”. The question is whether other circumstances outweigh that “weighty factor”.[84]Mr Madge-Wyld submitted that the extent to which the making of an unregulated loan forms part of a person’s wider business activities is a relevant factor to be weighed into the balance when determining whether it is just and equitable to enforce the charge. This is because the purpose of the general prohibition is to protect the public from loans being made by unregulated persons. If the making of unregulated loans forms a large part of a person’s business, there is a greater need for the FSMA to be enforced strictly, as such persons are more of a danger to the public.[85]In his submission, the loans in this case were limited in number and isolated to one individual. As such, there was no danger to the public generally and such wider policy considerations ought to carry less weight than in other cases. He submitted that the court should approach the issue as Newey J did in Helden: weigh the respective sophistication and experience of the parties, whether the lender took advantage of the borrower, the motivation for the borrowing and if the Defendants benefited from the transaction.[86]In the absence of oral or written submissions from Mr Uddin, the following arguments against permitting enforcement can be taken from his statement dated 6 February 2025: i) He was pressured by the Claimants and Mr Marer to purchase number 33. ii) This was Mr Uddin’s first mortgage and he did not know anything about mortgages. iii) The Claimants took advantage of him due to his lack of knowledge.[87]On the evidence before the Court, and taking the approach in Helden, I have concluded that it is just and equitable to permit enforcement of the Legal Charge. I have reached that conclusion taking into account the following factors: i) Although the Legal Charge was made “by way of business”, the Claimants were not experienced money lenders and had not lent money before making the first loan to the Defendants. This was not their main business. ii) There is no evidence that Mr Uddin or the Defendants collectively were pressured by the Claimants into purchasing number 33. In any event, they purchased it from Mr Marer. iii) The Claimants instructed a solicitor to represent them in connection with the Legal Charge and reasonably expected their solicitor to advise them as to any relevant regulatory requirements. However, I am satisfied on the balance of probabilities that their solicitor, Mr Lazarus, did not so advise them. iv) The opinion of Mr Jaquiss, which I accept, is that the interest rate under the Legal Charge, which equated to 6.1% over 10 years, payable as simple interest, was comparable to the rates charged by regulated commercial lenders. v) Furthermore, the unchallenged expert evidence of Mr Jaquiss is that a loan such as that obtained by the Defendants to purchase number 33, with a 100% LTV ratio at a fixed rate for 10 years, was not generally available on the open market in 2008/2009. vi) Accordingly, on the evidence, the Defendants obtained a loan on more favourable terms than would have been on offer at the time from a regulated lender. In other words, the Claimants did not take advantage of or exploit the Defendants or their lack of knowledge about mortgages. vii) On Mr Uddin’s own evidence, his application for a mortgage to purchase number 33 had been refused by Santander. Therefore, it is fair to infer that he would not have been able to buy number 33 without the loan from the Claimants. He would have remained as a tenant, paying rent, and without the benefit of owning a capital asset. Although there was no valuation evidence before the Court, in my view, it is likely that number 33 has increased in value since 2009. viii) There is no evidence that Mr Uddin could not afford the loan repayments. Although he was refused a mortgage by Santander, that was due to the nature of the property, not affordability. In any event, Mr Uddin did, in fact, pay the agreed monthly instalments until September 2023. ix) The Claimants agreed to extend the time for repayment of the loan on many occasions. This included the agreement on 21 August 2021, by which they deferred payment to 31 December 2022, lifted the charge on number 32 and added the outstanding balance on that property to the Legal Charge. This arrangement was disadvantageous to the Claimants because the charge on number 32 was not regulated as number 32 was not Mr Uddin’s residence and, therefore, would have been enforceable. x) In July 2023, Mr Uddin proposed using the proceeds of the sale of another property, 151 Bath Street, Ilkeston, to put towards the outstanding balance under the Legal Charge. However, although he sold that property on 4 September 2023 for £170,000, he did not pay any of the proceeds to the Claimants. At the same time, Mr Uddin stopped paying the interest due on under the Legal Charge.[88]In my judgment, those factors weigh heavily in favour of enforcement, and they outweigh the Claimants’ inability to rely on section 28(5).[89]While conscious of the policy considerations underlying the general prohibition, in my judgment, this is not a case of an unregulated person lending money at exorbitant rates or on otherwise unfair terms. There is no evidence that the Claimants took advantage of the Defendants, either collectively or individually. On the contrary, the Defendants benefited from terms which would not have been available to them on the open market and received more favourable treatment than would have been the case with some regulated lenders. If anything, it is the Defendants, or at least Mr Uddin, who have taken advantage of the Claimants by receiving the benefit of the loan, purchasing a property and refusing to repay the outstanding balance.[90]For the reasons set out above, in my judgment it is just and equitable to permit the Legal Charge to be enforced under section 28(3) FSMA. In the circumstances, I am satisfied that this is a case where it is appropriate for the Court to exercise its discretion to permit enforcement. Accordingly, the Claimants are entitled to recover the outstanding capital balance of £203,000 plus the outstanding arrears of interest payments.[91]If I am wrong in my conclusions in respect of the claim under section 28(3), I would have found that, by failing to make repayments under the Legal Charge, the Defendants have elected not to perform the Legal Charge under section 28(7). Accordingly, I would have ordered them to repay the money received by them under the Legal Charge, which is claimed at £160,000.

Conclusion

[92]In summary, for all the above reasons, I would give judgment for the Claimants in the sum of £203,000 plus the outstanding arrears of interest to date. I would ask Counsel to draft an order giving effect to my conclusions in this judgment, which I will consider at a hearing to discussion any consequential matters.