Clydesdale Bank Plc v Gough (t/a JC Gough & Sons) [2017] EWHC 2230 (Ch)

Case No C30BM281[2017] EWHC 2230 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue BIRMINGHAM DISTRICT REGISTRY
Priory Courts
33 Bull Street
Venue BirminghamDate 5 th September, 2017
B4 6DS
Before
DEPUTY HIGH COURT JUDGE LANCE ASHWORTH QC
Between
CLYDESDALE BANK PLCClaimant-v-
Between
R GOUGH T/A JC GOUGH & SONSDefendantANNE MICHELLE GOUGHDefendant
MR ALEC McCLUSKEY (instructed by Eversheds Sutherland) for ClaimantMR GUY ADAMS (instructed by Michelmores LLP) for DefendantAnne Michelle Gough in person for in person
JUDGMENTIntroduction
[1]This is a claim brought by Clydesdale Bank plc (trading as Yorkshire Bank and Clydesdale Bank) (the “Bank”) against(1) Roger Gough (trading as J C Gough and Son) and(2) Anne Michelle Gough (known as Michelle Gough) as well as against their sons, William and Edward Gough. The sons, who were joined to ensure that they were bound by the result, have taken no part in the proceedings and I do not need to consider their positions in any detail.[2]By this claim, the Bank seeks(1) possession of 2 properties, namely Hilltop Farm (title number WR90492) and the Chestnuts (title number WR131413) at Rochford, Tenbury Wells, Worcestershire, and seeks that possession be given up to Mr Simon Thomas and Mr Nicholas O’Reilly (the “Receivers’),(2) an order that Mr Gough pay the sums advanced by the Bank to him totalling approximately £7 million inclusive of interest, secured by charges over those properties, and(3) an order that Mrs Gough pay the sums of £4,910,000 plus accrued interest, being part of the advances made by the Bank to Mr Gough, repayment of which Mrs Gough guaranteed.[3]Mr Gough had brought a counterclaim for damages against the Bank, but that was abandoned in his counsel’s skeleton argument served the evening before trial and not pursued at trial. No formal notice of discontinuance has been served, so the Counterclaim will formally be dismissed, albeit that I will hear further argument on the precise terms of the order as set out below.[4]At the pre-trial review in this matter on 4th April, 2017, His Honour Judge McCahill QC extended the listing for this trial to 4 days with ½ day pre-reading and set a trial timetable, which envisaged the evidence being finished by the luncheon adjournment on day 3 with the rest of that day to be set aside for preparation of closing submissions and the parties to deliver their closing submissions on day 4.[5]The Bank has throughout been represented by Mr Alec McCluskey of Counsel. Mrs Gough has throughout acted in person, although in practice she has adopted those parts of the defence being advanced by Mr Gough as her own where relevant. At trial Mr Gough was represented by Mr Guy Adams of Counsel. Mr Adams had not been instructed until shortly before trial. When he became involved the shape of the case changed dramatically. An agreed list of issues had been filed, but in the event the vast majority of these have fallen away. Mr Adams indicated in his Skeleton Argument served the evening before the trial commenced that many of these would not be pursued. On the morning of day 4 of the trial, before Mrs Gough had been called to give evidence by Mr Gough but after all other witnesses had been called and cross-examined, Mr Adams sought to introduce very substantial amendments to Mr Gough’s pleaded case, which included for the first time a claim under the Consumer Credit Act 1974. I declined to grant permission for those amendments, coming as they did so very late in the day. That application is the subject of my earlier judgment in this matter, the contents of which are not repeated here. I understand that permission to appeal that earlier judgment was sought from the Court of Appeal (I having refused permission) and that Mr Gough sought a stay on me handing down this judgment. That application for permission to appeal was refused on 31st August, 2017 by Henderson LJ and therefore the question of the stay did not arise.[6]The trial bundles prepared for this matter include 12 lever arch files of chronological documents. Relatively few of these have been referred to in the course of the evidence and submissions. It is regrettable that greater thought was not given to what actually needed to be included in the bundles in particular by Mr Gough and his solicitors, whom I understand required (almost) every disclosed document to be included.

Background

[7]Mr Gough is and has been for many years a farmer. In particular, he grows potatoes. He farms at Hilltop Farm, which extends to approximately 530 acres. Hilltop Farm itself includes an 8 bedroom farmhouse and 5 other dwellings, at least 2 of which are run as holiday lets by Mrs Gough. The Chestnuts is registered as a separate title, but sits in the middle of Hilltop Farm, and is let under an assured shorthold tenancy.[8]Mr Gough banked with Barclays Bank (“Barclays”). In 2007 and 2008, the business suffered from 2 floods, each of which was said at the time to be a 100 year event. This was extremely unfortunate for Mr Gough. Substantial quantities of potatoes which were in the ground were lost. It appears, although Mr Gough chose not to make any substantial disclosure of documentation evidencing his relationship with Barclays, that these losses caused the business considerable financial strain so that in around 2012 Barclays handed the management of Mr Gough’s account to its “Business Support” department.[9]In 2011, Mr Emyr Saer, the Agricultural Business Development Manager for the Bank based in the Gloucester branch, began to court Mr Gough’s business. He understood from Mr Gough that Mr Gough was not happy with the banking arrangements he had with Barclays. At one point Mr Gough appears to have threatened litigation against Barclays or at least taking them to the Banking Ombudsman.[10]This courtship by Mr Saer was a lengthy process. The first note of a meeting between Mr Saer and Mr Gough to discuss Mr Gough moving from Barclays to the Bank was in March, 2012, although it appears consideration had been given by the Bank in 2011 to offering banking facilities. However, it was not until late 2012 that the Bank became the bankers to Mr Gough. I will revert below to the details of the discussions which took place and on which Mr Gough founds his Defence in this matter.

The Banking Documentation

[11]In November and December, 2012 the following loans, charges and guarantee were entered into between the Bank and Mr Gough and/or Mrs Gough:(a) On 9th November, 2012 the Bank and Mr Gough agreed a variable rate loan in the sum of £2,000,000 for a period of 2 years, subject to a number of preconditions;(b) On 9th November, 2012 the Bank and Mr Gough agreed a part variable rate loan facility, part fixed rate loan facility in the sum of £2,250,000, repayable in instalments over a 15 year period, again subject to a number of preconditions;(c) On 9th November, 2012 the Bank granted Mr Gough an overdraft facility of £650,000 and a business card in the amount of £10,000 each with an expiry date of 31st July, 2013, again subject to a number of preconditions. As with most overdrafts, all amounts outstanding were repayable on demand;(d) On 23rd November, 2012 Mrs Gough executed a personal guarantee in favour of the Bank, guaranteeing the indebtedness of Mr Gough to the Bank up to the sum of £4,910,000 plus interest. On the same date, she executed a Certificate of Independent Legal Advice, which was also executed by Justin Parker, a partner at mfg solicitors, confirming that he had given the appropriate advice to Mrs Gough in respect of execution of the personal guarantee;(e) On 7th December, 2012 Mr Gough executed a legal charge in favour of the Bank over Hilltop Farm. This charge is in standard form, entitling the Bank or Receivers appointed by it to take possession of and sell the property;(f) On 7th December, 2012 Mr and Mrs Gough executed a legal charge in favour of the Bank over The Chestnuts. This charge is also in standard form, entitling the Bank or Receivers appointed by it to take possession of and sell the property;(g) On 7th December, 2012 each of Mrs Gough and the 2 sons executed a Consent and Postponement of Interest in respect of Hilltop Farm in favour of the Bank.[12]The overdraft was never quite enough and there were subsequent formal extensions to the overdraft on 30th November, 2012 in the sum of £800,000, on 6th February, 2013 in the sum of £875,000, on 21st June, 2013 in the sum of £1,000,000 and on 26th June, 2014 in the sum of £1,762,867, expiring on 30th September, 2014. Save as to the amount, each of these overdraft letters was in the same form as the original overdraft of 9th November, 2012. There were also informal increases in the overdraft limit from time to time between the dates of these formal extensions, evidenced by emails between the Bank and Mr and Mrs Gough. By November, 2014 Mr Gough had therefore been granted overdraft facilities of more than £1 million more than the original overdraft had been for.[13]Each of the documents from the Bank granting loan or overdraft facilities included warnings highlighted in boxes in the documents: (a) Each had on its front:
“This is an important document. You should take independent advice before signing and sign only if you want to be legally bound.” (b) Each of the loan documents had on its signature page: “THIS IS AN IMPORTANT LEGAL DOCUMENT. ONCE YOU HAVE SIGNED IT YOU WILL BECOME LEGALLY BOUND BY ITS TERMS. IN PROVIDING FACILITIES WE DO NOT GIVE ANY INVESTMENT, FINANCIAL, TAXATION, LEGAL OR OTHER ADVICE. YOU MUST SATISFY YOURSELF THAT A FACILITY IS SUITABLE FOR YOUR CIRCUMSTANCES AND PURPOSES. YOU SHOULD NOT ENTER INTO ANY LOAN DOCUMENTS IF YOU DO NOT UNDERSTAND THE RISKS (INCLUDING THE CONDITIONS AND, IN PARTICULAR, CONDITION 8 RELATING TO BREAK COSTS). WE STRONGLY RECOMMEND THAT YOU TAKE INDEPENDENT LEGAL AND FINANCIAL ADVICE BEFORE YOU SIGN THIS DOCUMENT.” (c) Each of the overdraft facility letters had on its signature page: “IMPORTANT INFORMATION This letter includes details of the information we require to monitor your facility/facilities and any financial covenants we require you to meet. Please note that these requirements do not affect in any way our overriding right to require repayment of your facility/facilities on demand, as stated in this letter. Please take time to read this letter carefully and please do not hesitate to discuss with us anything you are not sure about. You should only sign this letter when you fully understand the consequences of doing this. We strongly recommend that you take independent advice before accepting the facility/facilities and signing any documents.”
[14]The Bank eventually had had enough of supporting Mr Gough, whose business required more and more cash. On 25th November, 2014 the Bank made lawful demand on Mr Gough for repayment of all sums outstanding in the then total sum of £5,809,660.44.[15]Also on 25th November, 2014 the Bank made lawful demand on Mrs Gough under the personal guarantee for the sum of £4,910,000.[16]Mr Gough having failed to make repayment of the sums due, or any sums, Receivers were appointed on 27th November, 2014.

The Bank’s case

[17]The Bank’s case is straightforward:(a) Mr Gough is indebted to it in a sum which now totals approximately £7 million. Despite demand being made in November, 2014 he has not paid anything in reduction of the sums owing. He has abandoned his counterclaim;(b) Mrs Gough is indebted to it in a sum which now exceeds £5 million. Despite demand being made in November, 2014 under the guarantee, she has not paid anything in reduction of the sums owing. She now admits to having signed the guarantee and to having had independent legal advice before doing so. She has no counterclaim against the Bank;(c) Mr and Mrs Gough (and their 2 sons) continue to live at Hilltop Farm. They have not given up possession of Hilltop Farm or The Chestnuts to the Receivers or the Bank, rather they have continued to earn income from the farming business and the letting of the properties at the farm, for none of which either of Mr or Mrs Gough has accounted to the Bank or the Receivers;(d) The Bank is entitled to possession of these properties and seeks an order that it be given up to the Receivers.

Mr Gough’s case

[18]Despite the large number of issues which had been raised on the pleadings by Mr Gough, which included an allegation, abandoned in his Skeleton Argument for trial, that the Bank (through Mr Saer) had given him advice as to Mr Gough’s business plan being “sound and acceptable”, ultimately Mr Gough’s complaint is that the appointment of Receivers was inconsistent with what he claims was agreed at the outset with the Bank, namely that Mr Gough would have the opportunity to reduce his indebtedness to a sustainable level by the sale of assets, if the bank was not prepared to continue to support the business. The final form of the pleading in this respect is to be found in paragraphs 18 and 19 of the Amended Defence, namely:
“18. Mr Gough agreed with Mr Saer that if his business had not established a satisfactory financial stability, then Mr Gough would sell some of his assets to reduce his debt to the Bank. “19. Mr Saer agreed that if that position emerged, then the Bank would allow Mr Gough to dispose of assets in order to reduce the Debt.”
[19]Mr Gough says (in Mr Adams’ closing submissions on his behalf) that this “gave rise to a promissory estoppel, which made it unconscionable in all the circumstances for the Bank to purport to exercise its powers to appoint Receivers in November 2014 and to now seek possession so as to defeat his legitimate expectations. This is a defence to possession by the Bank.” The way this is pleaded in the Amended Defence is in paragraph 24, namely:
“24. The Bank is estopped by its breach of agreement and/or representations and/or equitable duties, from enforcing its security before Mr Gough has had the opportunity to conduct a sale of assets to reduce the Debt to the Bank.”
This is further fleshed out in paragraph 28 of the Amended Defence, which makes an allegation of estoppel by conduct and/or representation. It does not allege that there was an estoppel by convention.[20]Mr Adams, on Mr Gough’s behalf, in the alternative invites the Court:(a) To adjourn the proceedings under its powers under section 36 of the Administration of Justice Act 1970 (“AJA 1970”) (i) to give Mr Gough an opportunity to sell parts of the farm in order to reduce his indebtedness and to obtain re-financing in order to discharge the secured indebtedness to the Bank and/or (ii) in order to determine the “sums due under the mortgage” for the purpose of the exercise of that jurisdiction; and/or(b) To adjourn the proceedings in order to inquire further into the way the creditor has exercised or enforced its rights under the mortgage and related agreements in order to determine whether or not there are grounds for exercising its powers under section 140B Consumer Credit Act 1974 and/or its inherent power to do justice in the case by the exercise of its equitable jurisdiction. This claim is very similar to the one which had been sought to be advanced by the very late amendment on day 4 of the trial, permission for which I refused as set out above.[21]While Mr Adams suggests that in calculating the sums due from Mr Gough under the mortgage, it may be necessary for inquiries to be undertaken, there is no challenge to the amounts claimed by the Bank as being due from him to them. Given that Mr Gough has abandoned his counterclaim, there can be no dispute as to the entering of a money judgment against him in the sum claimed, albeit that up to date figures will be required.

Mrs Gough’s case

[22]Mrs Gough’s pleaded case was that she had no recollection of signing the personal guarantee or of receiving any independent legal advice in connection with it. She also claimed that the guarantee was a credit agreement or linked transaction within section 140C(1) of the Consumer Credit Act 1974 and that the relationship between her and the Bank is unfair. She identified 3 grounds for saying that the relationship was unfair being(i) that the Bank did not advise her to obtain separate legal advice prior to entering into it;(ii) the Bank did not point out the key onerous features of the guarantee to her, or indeed any features;(iii) the Bank is seeking to enforce the agreement against her in the circumstances where it has breached the representations made to her husband and to her at the time it was entered into. The representations she said had been made to her and her husband were not expressly identified. In so far as she was referring back to her husband’s pleading, these were representations as to being given a period of time in which to get the new jacket potatoes business up and running and as to supporting the business. These are not representations that Mr Gough has persisted in asserting. It is also difficult to see how Mrs Gough can have been relying on any representations when entering into the guarantee if she could not recollect having entered into the guarantee.[23]In her very brief oral closing to me, Mrs Gough accepted, having had her recollection prompted by the documents, that she had signed the guarantee and that she had been advised to seek and she had received independent legal advice. She did not identify any further representations which she claims to have relied upon.[24]In these circumstances, it is difficult to understand what her defence could be to the Bank’s claim for the sums claimed under the guarantee.[25]Mrs Gough is a party to the charge over the Chestnuts but not Hilltop Farm. While she has not sought expressly to assert a promissory estoppel in respect of enforcement of that charge, I will assume in her favour that if her husband succeeds in making out his case of promissory estoppel in respect of this charge, she can rely on the same promissory estoppel.

The law on estoppel

[26]I can take the law on this from Mr Adams’ closing written submissions.[27]The elements of estoppel by convention are taken from the summary of Briggs J in Revenue and Customs Commrs v Benchdollar Ltd [2009] EWHC 1310 (Ch), [2010] 1 All ER 174 at [52] as qualified by the Court of Appeal in Dixon and another v Blindley Heath Investments Ltd and others [2017] 1 All ER (Comm) 319 at [91]-[92]:(a) It is not enough that the common assumption upon which the estoppel is based is merely understood by the parties in the same way – something must be shown to have “crossed the line” sufficient to manifest an assent to the assumption;(b) The expression of the common assumption by the party alleged to be estopped must be such that he may properly be said to have assumed some element of responsibility for it, in the sense of conveying to the other party an understanding that he expected the other party to rely upon it;(c) The person alleging the estoppel must in fact have relied upon the common assumption, to a sufficient extent, rather than merely upon his own independent view of the matter.(d) That reliance must have occurred in connection with some subsequent mutual dealing between the parties.(e) Some detriment must thereby have been suffered by the person alleging the estoppel, or benefit thereby have been conferred upon the person alleged to be estopped, sufficient to make it unjust or unconscionable for the latter to assert the true legal (or factual) position.[28]By contrast, the elements of a promissory estoppel are taken from the judgment of Peter Gibson LJ in Emery and another v UCB Corporate Services Ltd [2001] EWCA Civ 675 at [27]. A promissory estoppel arises where:(a) there is a clear and unequivocal promise that strict legal rights will not be insisted upon;(b) the promisee has acted in reliance on the promise; and(c) it would be inequitable for the promisor to go back on his promise.[29]Some commentators express the second condition in terms of the promisee altering his position to his detriment, but that it is controversial. However, the fact that the promisee has not altered his position to his detriment is plainly most material to whether it would be inequitable for the promisor to be permitted to act inconsistently with his promise - see per Peter Gibson LJ in Emery and another v UCB Corporate Services Ltd at [28].[30]It is to be noted that Mr Adams puts Mr Gough’s case in his closing submissions as being a case of promissory estoppel.

Witnesses

[31]I heard from 5 witnesses, Mr Saer and Mr Powell from the Bank, Mr and Mrs Gough and their business adviser Mr Smith. It is necessary to say a little more about each of them.[32]Mr Emyr Saer had been born on a farm and grew up in rural Wales. He had specialised in agricultural banking in 1997. He joined the Bank in 2005 and left in May 2014. He is currently employed by Santander in a similar role. It is important to recall that his witness statement was prepared at a time when the allegations being made against the Bank by Mr Gough were much more far reaching than those which he finally pursued. It was clear from his evidence that he liked Mr and Mrs Gough and that he courted their business. It is also clear that he was supportive of their plans, but I would have rejected the suggestion, had it been pursued, that he acted as an adviser to Mr and/or Mrs Gough. He was more akin to what might be described as an old fashioned bank manager, who got to know his customers rather than being a faceless voice on the other end of a telephone. He gave his evidence carefully and without any exaggeration. He struck me as a plainly truthful witness. Despite suggestions in the witness statement of Mrs Gough that he was not happy at the Bank, he denied this. He has no axe to grind and does not stand to benefit or lose anything whatever the outcome of this litigation. I accept his evidence in preference to that of Mr and/or Mrs Gough where there is a conflict of evidence.[33]Mr Jonathan Powell was Mr Saer’s replacement as Agricultural Business Development Manager for the Bank. He became involved in this matter in May 2014 following Mr Saer’s departure. By this stage Mr Gough’s account was being managed by the Strategic Business Services team (“SBS”) of the Bank and therefore Mr Powell had very little contact with either Mr or Mrs Gough. Rather he dealt with administrative functions in connection with Mr Gough’s account, once SBS had given the necessary approvals for example for an increase in the overdraft. Mr Powell began some direct involvement in the middle of October 2014 about 6 weeks prior to the demands being made. He gave his evidence in a considered way and I accept his evidence, preferring it again in so far as there is any conflict with the evidence of Mr and/or Mrs Gough.[34]It is right that I note here that I did not receive any witness evidence from any other individual from the Bank, in particular anyone from SBS, such as Nick Britten who took over control of Mr Gough’s account in April 2014 when the account was moved to SBS. Given the way in which this case was pleaded and pursued by Mr Gough, this is not surprising. Indeed, one of the reasons why I refused to grant the amendment application made on day 4 of the trial was that it would have required evidence from Mr Britten and others from the Bank which it had not been necessary to adduce on the unamended pleaded case. I mention this only to make it clear that no adverse inference can be drawn from the fact that the Bank did not seek to adduce evidence from anyone from SBS.[35]Mr Roger Gough is the First Defendant. He is a farmer who trades under the name J C Gough & Son. He has lived at Hilltop Farm since 1967 when his father purchased the farm. Mr Gough is a fourth generation farmer. His income has historically been primarily from the substantial production of potatoes. His case in this matter has changed very radically over time. Until the evening before the trial, when Mr Adams filed his Skeleton Argument, Mr Gough’s case had primarily been advanced on 2 bases:(a) The first basis was that the Bank (through Mr Saer) had acted as his adviser, had advised him that his business plans were “sound and acceptable”, on which advice he had relied in deciding to refinance with the Bank and to seek to develop the jacket potato business of Juniper Hill Potatoes Ltd (“JHP”). In fact, so it was said, his business plans were unsound, as a result of which he had unquantified damages claims which fell to be set off against his liability to the Bank, thereby reducing (or possibly extinguishing) his indebtedness secured under the charges;(b) The second basis was that the Bank (again through Mr Saer) had agreed not to exercise its rights as mortgagee for a period of 3 years, extended subsequently to 4 years, during which the Bank was to continue to support Mr Gough’s business financially lending more and more money, indeed as much as was necessary to support it, even though it might be loss making. If asset sales were necessary, it was said, the Bank agreed that it would provide banking facilities for Mr Gough on a continuing basis for a “pared down” business following asset sales. Each of these, including the Counterclaim, was abandoned the evening before trial. However, they had been advanced in pleadings (both the Defence and Counterclaim and the Further Information) which bore a statement of truth signed by Mr Gough personally and were supported by Mr Gough’s own witness statement, as well as to some extent by Mrs Gough’s.[36]Despite abandoning very large parts of his case, Mr Gough confirmed the truth of his witness statement and did not wish to correct anything. He gave his evidence in a measured way, but soon began to backtrack on a number of the claims he had made in his witness statement. For example, he accepted that there was no obligation at any stage on the Bank to carry on lending him ever increasing sums of money, that the Bank was not his business partner and that he was the one who had to decide if the business was a good idea, not the Bank. He accepted that despite his insistence that Mr Saer had agreed that the Bank would support him for 3 years, the documents including emails addressed to him showed that 18 months was the period being discussed and he was unable to point to any documents supporting an agreement that the Bank would support him for 3 years. He denied that his farm business consultant, David Smith, provided any advice claiming his role was limited to the input of numbers into forecasts and the like, in contrast to the way that Mr Smith described his own role. Despite making only passing mention of being represented by Peter Copsey of mfg solicitors in paragraph 57 of his witness statement and having asserted at paragraph 53 of his statement that he simply agreed on what Mr Saer advised about the structure of the borrowing saying “I had no other advice”, he accepted that Mr Copsey did give him advice. Indeed, in answer to a question from me, he confirmed that he would have read all of the bank documents before he signed them, he had legal advice on those documents and he was aware of the words in the boxes (which I have highlighted above) before signing those documents. These are but a few examples of how Mr Gough’s evidence vacillated. There were many more such occasions. While I have no doubt that Mr Gough has a very genuine desire to be able to keep his farm and to continue to carry on with the business, I regret that I found him evasive and unreliable in his evidence. I formed the firm impression, and accept the Bank’s submission to this effect, that Mr Gough was prepared to say whatever he thought might now provide him with a defence to the Bank’s claims. I therefore reject his evidence to the extent that it conflicts with the evidence of Mr Saer and/or the contemporaneous documents.[37]Mr David Smith is a Farm Business Consultant, who since 2007 has acted from time to time for Mr and Mrs Gough as he says in paragraph 1 of his witness statement. He quite properly disclosed that he has a complaint against the Bank in a personal matter. He did not let that affect his evidence in any way. He explained that he did not just plug numbers into spreadsheets to make them look nice. He was doing more than that, getting information about the business and forecasting how it might grow, assisting with business plans, including changing the contents of the business plans. In so far as it is relevant to the defence now advanced by Mr Gough, I accept Mr Smith’s evidence in general terms.[38]Mrs Michelle Gough has been married to Mr Gough for in excess of 26 years. She is undoubtedly fiercely loyal to him. She sought to play down her involvement in the farming business, saying the holiday lets business was hers, and she merely helped Mr Gough out with the administration of the farming business. She denied being closely involved in arranging the financing for the farming business, rather she simply followed and carried into effect her husband’s instructions. She explained that she wrote most of the emails to the Bank, to Mr Smith and to Moorfields at the instruction of her husband, because he cannot type. She said that Mr Gough would go through the outstanding creditors and would, in effect, dictate the list to her for her to type up. However, a number of the emails are signed by her alone (sometimes with an “x”) and a number by her and her husband. I did not find Mrs Gough’s evidence on her role within the business at all convincing.[39]Mrs Gough was the one ostensibly negotiating with the Bank for funds to be released to pay extremely pressing creditors. She was the one who was in discussion with David Smith about how to present the figures to the Bank and how much to include in the lists of creditors. While the farming part of the family business might, as a matter of law be her husband’s, she was the sole director and shareholder of JHP and was the person running the holiday lets business. At one stage she said that the correspondence with the Bank was about the family’s debts supporting the family business, before seeking to distance herself from the business and its debts. I find that she sought deliberately to underplay her role in the business, no doubt in the belief that it would help her position and possibly that of her husband. I reject her evidence that she was merely assisting her husband. I find that she and Mr Gough treated the farming business as part of the family business and, while her husband may have been the one doing more of the day to day farming, she was very heavily involved in the financial aspects of the business.[40]Mrs Gough’s evidence about signing the guarantee was also very unsatisfactory. Her initial position as set out in a letter to the Court dated 4th December, 2015 was that she had no recollection of being asked to sign a personal guarantee. She claimed to have been surprised to have heard it mentioned at the hearing on 16th November, 2015 and on learning it was in the sum of almost £5 million. She said in that letter that she had no recollection of receiving any independent advice in relation to a guarantee. She repeated this in her evidence before me. However, when pressed she then said that she does remember being told by Mr Saer or someone at the Bank saying she needed to give a guarantee, but did not realise she would be securing £5 million of debt with no net worth. She then seemed to backtrack to say that she only recalled signing 2 documents and that she understood the “guarantee” she was being asked to sign was a waiver of occupation rights. But subsequently, she said that she remembered being puzzled as to why she was required to sign the guarantee. She claimed that she was under pressure to sign it. She was shown the Certificate of Independent Legal Advice and accepted that she had signed that too. She also accepted that Mr Parker, the partner at mfg, must have explained the guarantee to her as he had certified to having done so in that Certificate. She also accepted that she must have read through all 4 documents, namely the charge, the waiver of occupation rights, the personal guarantee and the Certificate of Independent Legal Advice before she signed them.[41]I find it incredible that Mrs Gough could really have no recollection of having signed the personal guarantee as she claimed in her letter to the Court of 4th December 2015 and as she from time to time claimed in her evidence to the Court. It is noticeable that although the demand was served on her dated 25th November, 2014 she did not write back to the Bank and say “what guarantee are you referring to?” In my judgment, she knew full well what she had signed up to, having been fully and properly advised about it by mfg solicitors. Her evidence on this topic is not believable. It infects her evidence generally. In so far as her evidence is contradicted by that of Mr Saer and/or the contemporaneous documents, I therefore reject it.

The Issues

[42]The issues which remain for me to decide appear to me to be:(a) Was there a clear and unequivocal promise that strict legal rights would not be insisted upon by the Bank? This comes down to whether there was any representation or agreement made by, or common understanding with, the Bank to the effect that if Mr Gough’s business had not established a satisfactory financial stability, then Mr Gough would sell some of his assets to reduce his debt to the Bank and that the Bank would allow Mr Gough to dispose of assets in order to reduce the debt, rather than enforcing its rights under the charges. I shall refer to this as the representation issue;(b) If there was any such representation, agreement or common understanding, did Mr Gough rely on such? I shall refer to this as the reliance issue;(c) If there was reliance on any such representation, agreement or common understanding, was that reliance to Mr Gough’s detriment (to the extent that detriment needs, if at all, to be established)? I shall refer to this as the detriment issue;(d) If there was reliance on any such representation, agreement or common understanding and that reliance was detrimental (if detriment needs to be established), has the Bank in fact resiled from the same by exercising its strict legal rights under the charges and appointing Receivers? I shall refer to this as the compliance issue.(e) If there was reliance on any such representation, agreement or common understanding and that reliance was detrimental (if detriment needs to be established), was it unconscionable of the Bank to have resiled from the same by exercising its strict legal rights under the charges and appointing Receivers? I shall refer to this as the conscionability issue;(f) Was the relationship between the Bank and Mrs Gough subject to the Consumer Credit Act 1974 and in some manner unfair, such that I should exercise some power to adjust the transaction? I shall refer to this as the Consumer Credit Act issue.[43]Having considered these, I will then consider so far as may be appropriate Mr Adams’ invitations to adjourn the matter under section 36 AJA 1970 and/or under section 140B Consumer Credit Act 1974 and/or the court’s inherent power to do justice in the case.

The representation issue

[44]By the end of his closing submissions on behalf of Mr Gough, Mr Adams said that he was not suggesting that the Bank ever said it would not enforce its rights under the agreements in explicit terms, but rather he says there was a common understanding that if JHP did not make the business sustainable (within 2 or 3 years), Mr Gough would have to sell assets to reduce indebtedness. He says it was implicit within that common understanding that the Bank would not enforce its charges unless Mr Gough had had a reasonable period within which to sell the assets. This way of putting it seems to me to be a long way from asserting a clear and unequivocal promise that strict legal rights will not be insisted upon as was stated by Peter Gibson LJ in the Emery case (supra) to be a necessary foundation for a promissory estoppel. This is more akin to the foundation for an estoppel by convention (which is not the pleaded basis of the defence, nor the way in which it is put in the written closing of Mr Adams).[45]In paragraph 63.7 of his witness statement, Mr Saer addressed the allegation made by Mr Gough that Mr Saer had agreed that Mr Gough would have sole conduct of the disposal of any assets charged to the Bank. He said: “In relation to the question of responsibility for conduct of asset sales, I expect that I might have said that, in the event that it was needed, any asset sales would most likely be done on a consensual basis (consensual in the sense of agreed between the [Bank] and [Mr Gough]) and that he could be presented as the seller of the assets if it proved necessary; so as to avoid the perception of a forced or distressed asset sale, which would likely have resulted in a lower price being obtained for the assets. I might also have said that a sensible and reasonable proposal presented by [Mr Gough] to the [Bank] would be unlikely to be rejected. I do not, however, believe that I would have said that [Mr Gough] would have sole conduct of any asset sale; the [Bank’s] involvement and agreement would have been necessary as it held a charge over the assets”.[46]This is wholly inconsistent in my judgment with the position sought to be advanced by Mr Adams on behalf of Mr Gough, it being plain from the above that the Bank would be relying on its charges. Mr Saer was not cross-examined on this paragraph of his witness statement. Nor was it put to him that he understood that the Bank would not enforce its charges unless Mr Gough had had a reasonable period within which to sell assets, let alone that he implied this in any of the discussions he had with Mr Gough. Rather as he said (in paragraph 63.9 of his witness statement), whatever discussions he had with Mr Gough in the run up to the lending “ultimately the terms of such lending would be governed by the terms and conditions applicable to the underlying contractual documentation pursuant to which it was made available to [Mr Gough]”.[47]Despite Mr Saer not being challenged on this, it is said on behalf of Mr Gough that there was such a common understanding based on one or more representations by the Bank and that there is plenty of evidence to support this in the Bank’s own documents. I fail to understand how Mr Gough can properly advance this case without having put the matter to the principal counterparty with whom he dealt. It may be because the attempted amendment when the case came more sharply into focus was only sought to be made after Mr Saer had completed giving his evidence, but there was no request on behalf of Mr Gough to recall him.[48]Mr Gough’s initial evidence on this topic was set out in his witness statement at paragraphs 48, 49 (each dealing with a period of time in about April 2012, 7 months prior to the facilities being entered into) and 171. He said there:
“48. It was further agreed with [Mr Saer] that if my business had not developed in the manner envisaged by [Mr Saer] by the end of the three year period, to have established satisfactory serviceability, then it was understood that I would sell some assets to reduce my debt to [the Bank] and improve my serviceability.” “49. [Mr Saer] agreed that if that position emerged at the end of the three year period then [the Bank] would: (1) allow me to have sole conduct of the disposal of any assets charged to [the Bank] in order to reduce my debt; and (2) provide banking facilities on a continuing basis for the ‘pared down’ business.” “171. As agreed with [Mr Saer], should it appear that serviceability of my debt was becoming an issue after the initial grace period, then I would be allowed to examine potential asset sales to reduce my overall level of debt to [the Bank].”
[49]This does not accord with the case now advanced by him, in that Mr Gough was alleging in this statement a 3 year period with an obligation to provide banking facilities on a continuing basis for the ‘pared down’ business. Further at paragraph 171, he effectively waters down any obligation on him merely to examine potential asset sales to reduce his overall level of debt to the Bank.[50]Mrs Gough deals with this very briefly in her witness statement where at paragraph 22 she said:
“[Mr Gough] was very clear that [the Bank] was willing to allow a period of 3 years for us to develop JHP into an income generating business and to allow [Mr Gough’s] farming business to recover following the negative impact on the business of the poor weather and flooding. [Mr Saer] told us that it was only after this period of three years, if the level of debt was an issue, then asset sales would be considered. However, even then it was to be agreed.”
While this was in the context of 3 years, the last 2 sentences are telling in my judgment. Mrs Gough does not say that if the level of debt was an issue, her husband would be given a reasonable time to sell assets to reduce the debt, rather that “asset sales would be considered”. This suggests that it was the Bank who would consider asset sales. That is confirmed by the last sentence that even then, it was to be agreed. If Mr Gough had the ability to sell assets, there would be no need for any agreement from the Bank. Accordingly, as I read this evidence, this is wholly inconsistent with any understanding that the Bank would not enforce its charges.[51]As to the contemporaneous documents, reliance is placed by Mr Gough on a number of these to support his case. Because of the way in which the case was argued by Mr Adams, I will have to deal with these in some detail.[52]The first document he relies upon are the Bank’s internal notes which reflect that some consideration was given to Mr Gough’s banking requirements in May 2011 at a time when Mr Gough’s banking was under the control of Barclays’ Business Support. This was rejected by the Bank at that stage. Within the notes which remained on the Bank’s system a year later, whoever wrote the notes recorded:
“I do not believe they can reduce debt sufficiently from trading. They could reduce from sale of surplus assets and if we are to take this forward it must be on an eyes open basis and have in place, before sanction, an agreed asset disposal plan. We could ring fence a proportion of the debt against the assets being disposed and agree a realistic trading structure for the residual debt.”
In my judgment this is envisaging something totally different to what Mr Gough claims was subsequently agreed or understood. This is saying that there would have to be an agreement for the sale of surplus assets before any financing would be agreed, rather than some agreement to sell assets in the event of Mr Gough’s business not having developed sufficiently within a period of time after financing had been put in place.[53]The next contact of substance was at a meeting on 7th March 2012 between Mr Gough and Mr Saer (the first meeting) to discuss the possibility of the Bank offering facilities to replace those from Barclays. On 2nd April 2012 Mr Saer followed up from that meeting and emailed Mr Gough with a possible basis for lending:
“I think a structure of £2.5m on the farm and £1.5m to be repaid from asset sales within 3 years and an overdraft of £200,000, assuming Lloyds are happy to keep £640,000 on a loan arrangement”
. If this and the other matters set out in the email were right, Mr Saer said he would prepare something for the underwriter to get something back to Mr Gough before he met with Barclays. Mr Gough responded the same day saying:
“All looks to be correct with the exception of asset sales within 3 years. It was my understanding that asset sales would only need to be brought into play if serviceability becomes an issue after 3 years.”
[54]It is clear that Mr Saer discussed this with Ian Hyett, the underwriter, as he wrote to him on 4th April 2012 saying that they had “discussed a revised structure that might be acceptable. [Mr Gough] is now on board with the need for asset sales in the long-term stabilisation of the business as it stands” before going on to describe the JHP business which had been recently revived. The structure being proposed by Mr Saer was:
“Total £4.2m - £2.5m against farm on C&I basis and £1.5m against property portfolio on interest only with covenant that if he is not in a position at 3 years (to the bank's satisfaction) to make repayments to this portion, assets will be sold to repay. Assets linked would have a value of £1.66m.”
Mr Saer was asking Mr Hyett if what was being suggested was a structure that could be developed into a workable take on from Barclays. “[Mr Gough’s] aim is to get to 40t per annum within 2 years, which will remove the need for asset sales but I have already stressed that if [JHP] does not deliver then he will have to sell.”[55]Mr Hyett responded on 10th April 2012 making it clear that this did not work for him. In connection with the proposed structure he said:
“This suggests we park the element of debt that they cannot fully service on a C&I basis for a period of time to allow them to retain the property whereas I had understood from our earlier discussion that they had bought into the idea of reducing debt by asset sale. This is a difficult point for me as they are not currently banked and I would normally be looking to take on a good business without significant baggage. Clearly there is still baggage as there is not the desire to reduce the debt from asset disposal but they are looking for time to generate income streams to retain the assets i.e. support them through a turnaround of the business when the income streams are not much further than embryonic with significant further work before any income stream is generated. On that basis, it does not work for me. I would reconsider if there was a clear disposal plan in place supported by an agents recommendations and a clear timeframe that we could monitor with the debt reduced to core serviceable levels within a 12-18 month period.”
This is directly the opposite of the case advanced by Mr Gough now as to what the Bank agreed.[56]There were further discussions between Mr Saer and Mr Hyett, in which Mr Saer reached agreement with Mr Hyett as to a suitable structure. Mr Saer told Mr Gough this in an email of 27th April 2012 in which he suggested a meeting so that Mr Saer could go through their thoughts. That meeting took place on 1st May 2012 and was followed by an email dated 2nd May, 2012 from Mr Saer to Mr Gough, copied to Mr Smith, setting out an indication of how Mr Saer saw the possible structure forward:
“Total funding requirement £4.9m I would suggest £2m set against the property portfolio on interest only; £2.5m on long-term debt, 3 years interest only and repaid over 15-year term £400,000 overdraft. As mentioned at the meeting yesterday, the £2m will be either serviced from the growing sales from Juniper Hill Potatoes, with progress critically reviewed at 18 months to ensure sufficient progress is being made to see that business be in a position to service that portion of debt, or a realisation programme will need to be set to reduce the debt to what can realistically be serviced by JHP.”
[57]When asked about this and the reference to the critical review at 18 months, Mr Gough accepted that is what it said in black and white and that there was nothing back from him questioning why it was 18 months and not 3 years. Notwithstanding this, Mr Gough continued to insist that his understanding was that the Bank was going to support him for 3 years.[58]Having asked for and received forecasts for the year ending March 2013, an internal credit request was submitted by Mr Saer at the end of June 2012. This is a 13 page document, which contains a number of pertinent entries. These include:
“This new venture [JHP] needs to succeed or a reduction of £2m will be sought in two years. … “There will be a [Management Information] requirement on JHP on quarterly basis with critical review by Oct 2013 to assess whether it is felt marketing of properties will be required and have all ready for 2014.” … “[David Smith] figures above show the business can support interest payments whilst the new venture is given time to establish. Long-term view is based on these sales and a critical review covenanted for 31/10/13. Second exit revolves around stock sales and our security. This is very strong, when assessed that there are 6 main dwellings (ex main house) that are not integral to the running of the farm that could sell for over £3m. “The business has options on debt reduction without compromise (with these assets now identified and debt linked segregated) to output in the event that circumstances provide for poor conditions in the future … JHP has to perform in next 12 months if these assets are not to be marketed in Spring 2014 and this has been accepted by the family – [Mrs Gough] and boys are aware of the strategy.”
[59]Mr Gough said in relation to this last comment, which was repeated in the Bank’s internal notes in which approval was ultimately granted for the funding to Mr Gough, that it was not the case that he, Mrs Gough and the boys knew that they only had about 18 months before sales of assets would have to take place. He claimed that this did not reflect what had been discussed with him. Likewise Mrs Gough said this did not reflect what she understood to be the agreement with Mr Saer. This is very surprising and would mean that Mr Saer must have either invented this or falsely recollected what had been said. This was not put to Mr Saer. I am satisfied that Mr Saer’s note is accurate in this respect and that both Mr and Mrs Gough are wrong to deny that this was understood by them at the time. At the very least, it is difficult to see how there can have been a common understanding which was relied upon by Mr Gough, given these very different positions.[60]The Bank did not accept Mr Saer’s application initially, but on 4th July 2012 deferred the decision and sought further information as to JHP and crop sales. Mr Saer sought further information from Mr and Mrs Gough on JHP on 10th July 2012 enclosing what he had written. Mrs Gough forwarded this to Mr Smith for his input on the same day. Mr Smith sent back an amended version the same day. The suggestion that Mr Smith was merely inputting figures is completely undermined by this document.[61]On 13th July 2012 Mr Saer emailed Ian Hyett saying that Mr Gough was under pressure from Barclays to provide confirmation of refinance and asking if there was any possibility that the Bank could make a decision on Mr Gough’s application that day. The Bank’s internal notes show that a decision was made that day to approve the offer of refinancing. It is not entirely clear which notes were added when, but in the notes for 13th July (although they also appear against the entry for 4th July when the decision was deferred) it is recorded by Mr Hyett:
“With the support of the consultant [Mr Smith] I can accept the current forecasts as providing serviceability for the revised structure with an element of the debt now ringfenced on the understanding that if the projections are not sustainable then this is a portion of the debt that must be repaid from non core asset sales within a given period. My preference would be for asset sales to be achieved no[w] with the farm debt reduced to core levels that are capable of being fully serviced from farming enterprises but also accept the family desire to retain whilst they prove the sustainability of the cropping rotation and the “baked potato” enterprise.”
[62]This required approval from a second underwriter and that was provided by Simon Harrison who wrote:
“… thank you for the additional commentary re [JHP] and am happy to add second sign off against the tight viability schedule built into the proposal, with the option to sell assets if cash flow does not prove as strong as suggested.”
[63]In my judgment none of these comments reflect an agreement or understanding between the Bank and Mr Gough that in the event of Mr Gough’s business not having established satisfactory financial stability, then Mr Gough would sell some of his assets to reduce his debt to the Bank, such that it was implicit that the Bank would not enforce its charges unless the Goughs had had a reasonable period within which to sell the assets. To the contrary, this is all in accordance with Mr Saer’s evidence set out above, that the Bank would be relying on its charges. The basis on which the Bank were prepared to lend the monies was because there were assets which could be sold, over which the Bank had its charges. There is nothing to imply that the Bank would not enforce its charges until Mr Gough had a reasonable period within which to sell assets.[64]On 16th July 2012 Mr Saer sent an email to Mr Gough saying that he now had formal approval for his facilities, which would allow repayment of Barclays, saying he would send out the offer letter. The offer letters were dated 17th July 2012 and comprised the 2 loans of £2 million and £2.25 million respectively, and the overdraft of £650,000. These were in essentially the same form as those signed off in November 2012 and included pre-conditions as to the granting of a charge over Hilltop Farm, although not a guarantee from Mrs Gough at this point. The term of the £2 million loan was 2 years, the term of the £2.25 million loan was 15 years, the overdraft was repayable on demand.[65]Mr Gough’s response (in an email dated 27th July sent from both him and Mrs Gough) was to say that there were a few details that “we” will need to talk about and asked for a meeting to discuss these. On 29th July, 2012 Mr Saer made it clear that the Bank insisted that because of the size of advance, the Bank have its own solicitors. He said he would ring that evening to iron out any queries. There was no evidence as to whether there was a discussion that evening, there being nothing in Mr Gough’s witness statement about it, but Mr Gough accepts that he did not write to the Bank to say the documents were wrong and the loan should be for 3 years because that is what had been agreed with Mr Saer. Nor did he write to say that this was all subject to an understanding that the Bank would not seek to enforce the charge over Hilltop Farm until he had had a reasonable opportunity to sell assets to reduce his indebtedness to the Bank.[66]On 6th August 2012 Mrs Gough emailed copies of the offer letters from the Bank to Mr Smith. Mr Smith explained that clients will often send him their offer letters simply to ask whether the rate of interest being offered looked like a sensible rate and whether the costs were reasonable in the market place. In his witness statement at paragraphs 19 and 20, Mr Smith said that he recalled from discussion with Mr Gough that Mr Saer “on behalf of the Bank, agreed that there would be a period of grace whereby the Bank would let Roger attempt to grow [JHL] into the profitable business. After that there would be a review. If after the period of grace, the serviceability was becoming harder and harder for [Mr Gough] to reach, the review might involve a debt reduction through some land sales.” In cross-examination he said he did not know when this discussion with Mr Gough was. He did not know how long the original review period was and was not involved in any discussion with Mr Saer. What he did not say is that Mr Gough told him that he understood the Bank to be saying that if he was struggling to service the loans, the Bank would allow him a reasonable time to sell properties and would not enforce the charges until such a reasonable period had elapsed. Having seen Mr Smith give evidence, I have no doubt that he would have remembered if there had ever been such a discussion and that he would at least have recommended to Mr Gough that something was recorded in writing to reflect that. The fact that he did not is telling.[67]Despite the apparent urgency to satisfy Barclays as to Mr Gough re-banking, the documents were not executed until November, 2012. In the meantime, the Bank had written to Mrs Gough on 26th September 2012 about her providing a guarantee in the sum of £4,910,000. This letter requested details of solicitors that she wanted to instruct to give her independent legal advice. She signed and sent this back on 28th September, 2012 nominating mfg solicitors.[68]On 27th September, 2012 RG & RB Williams produced a valuation report of the farm and various properties which were to be charged to the Bank. This gave a total value of £7,910,000.[69]Mr Gough referred to a meeting on 28th September 2012 with Mr Saer, but was unable to recall what was said at that meeting.[70]Further drafts of the facility letters were sent to Mr Gough on 22nd October, 2012. These included the provision of a guarantee by Mrs Gough as a precondition to the lending and also the charge relating to the Chestnuts (in addition to that in relation to Hilltop Farm). The letter relating to the £2.25 million loan referred to a critical review of progress having to be undertaken by 31st December, 2013. This was consistent with the Bank’s approval notes talking about a critical review being undertaken after about 12 months. Mr Gough accepted that this was at odds with his claim that the Bank had agreed to give him a period of grace for a period of 3 years. He also accepted that he did not respond to the Bank saying that this was not what had been agreed.[71]As set out above, on 9th November, 2012 the overdraft letter, the £2 million loan offer and the £2.25 million loan were all sent again to Mr Gough. The £2.25 million offer continued to contain the requirement for a critical review to take place by 31st December, 2013.[72]Mr Gough said that he was advised by his solicitor before signing these agreements, which he did on 9th November, 2012. He has not disclosed any documents passing between him and his solicitor (and he is not obliged to do so) but he did not suggest that at any time he told his solicitor that the loan offer and overdraft documents did not accurately reflect what had been agreed with the Bank or his understanding of what he had agreed with Mr Saer. If he had done so, it would have been expected that a firm of the standing of mfg solicitors would have raised this with the Bank and pointed out this was not what had been agreed or at the very least would have ensured some sort of side letter was entered into to reflect the agreement that Mr Gough now claims had been reached, albeit impliedly. These Bank documents make it abundantly clear that the Bank has the power to appoint Receivers in the event of a demand for repayment not being met. They are wholly inconsistent with any understanding that the Bank would not enforce its charges until Mr Gough had had a reasonable time within which to sell assets.[73]On 23rd November, 2012 Mrs Gough saw Mr Parker and received the independent legal advice I have referred to above. She executed the guarantee on that date having received that legal advice.[74]Mr Saer emailed Mr Gough on 28th November, 2012 as he had concluded that Mr Gough needed more funding than originally thought, which he noted was “disappointing”. Ian Hyett approved additional funding on 29th November, 2012. His note includes:
“[Mr] Gough needs to understand that we are supporting to this level to provide him time to deliver on [JHP] but he must not lose sight of farm performance and we expect asset sales to materialise if he cannot deliver on his projected model. A restructure and further time is unlikely to be supportable.”
[75]Mr Adams submitted that this email puts matters beyond doubt. I do not accept that submission. In my judgment, this is not a recognition that the Bank would not enforce its charges until Mr Gough had a reasonable period within which to sell assets. To the contrary, it is making it clear that “further time” is unlikely to be supportable if he cannot deliver on his projected model. The logical consequence of that is that the Bank would enforce its rights under the charges.[76]As a result of this approval, the overdraft limit was raised to £800,000 and a new overdraft facility document dated 30th November, 2012 was sent to Mr Gough which he signed and returned the same day.[77]The Bank disclosed an internal document dated 5th December, 2012 prepared by Sue Fielding who was an associate at the Bank showing that in relation to the £2 million loan, the term of the drawdown was recorded as 3 years. Mr Saer said that he believes this was an error and the loan should only have been booked for 2 years. The approval from the Bank had been for 2 years and he says he had not been discussing a 3 year term with Mr Gough for many months. As indicated above, I accept Mr Saer’s evidence generally and do so on this as well. I accept that this was an error made by Mr Saer’s assistant on an internal document and is at odds with all of the offer letters including that finally executed by Mr Gough on 9th November, 2012. It does not assist Mr Gough’s case.[78]The charges were executed on 7th December and the funds were released to enable Barclays to be paid off.[79]There is, in my judgment, nothing in the contemporaneous documents to throw doubt on Mr Saer’s evidence or to support Mr Gough’s claim as now put that there was a common understanding that if JHP did not make the business sustainable (within 2 or 3 years), Mr Gough would have to sell assets to reduce indebtedness and that it was implicit within that common understanding that the Bank would not enforce its charges unless Mr Gough had had a reasonable period within which to sell the assets. When asked by me in closing submissions when it was said that this understanding was reached, Mr Adams could only say some time at the end of June/beginning of July, 2012. This is contrary to the contemporaneous documents and I reject this.[80]Mr Adams sought to rely on documents post-dating the granting of the facilities and the drawdown of the monies to support an ongoing continuing understanding as set out above. I do not intend to go through these in the same level of detail as I have the documents leading up to the granting of the facilities. They are along much the same lines as those I have set out above. They do not, in my judgment, support the claim made by Mr Gough. Some of them are expressly to the contrary, for example in the Bank’s internal notes on 6th February, 2013 (when the overdraft had been temporarily increased because of a fire at the farm which had damaged substantial amounts of potato crops) Julia Harrison noted:
“Customers are fully aware that an asset disposal programme will need to be enforced if [JHP] fails to prove viable.”
The language is that of enforcement of asset disposals, not one of holding off exercising the powers under the charges.[81]It is also of significance, in my judgment, that when Mr Gough’s account had been transferred to SBS in April 2014 and when Mr Saer had left the Bank, there was no mention to anyone at SBS by Mr Gough at any stage prior to demand being made that the Bank could not enforce its strict legal rights under the charge because of the agreement or understanding Mr Gough had had with Mr Saer. When asked in cross-examination why he did not, for instance, raise this when he received the email of 3rd June 2014 from Vicki Kennedy from Moorfields who had been appointed to undertake an independent investigation into the finances of the business and was pointing out that there was a risk that the Bank would issue a demand for repayment in full, he said that:
“I did not do so because I knew full well the bank was entitled to demand. I knew full well that the Bank was entitled to take possession of my property if they wanted to. That is the law.”
Given this, it is difficult to follow how Mr Gough can claim to have understood that the Bank could not take possession of his property, let alone have relied on any alleged common understanding that it could not.[82]Through 2013 and 2014 there were frequent email communications as well as meetings between the Bank and Mr Gough as he asked for ever greater funding, as his farming business carried on haemorrhaging cash and JHP did not take off as swiftly as he had hoped. It is apparent that in those communications, the Bank time and again raised the issue of asset sales to reduce the funding. Mr Gough is recorded in some communications as being prepared to consider this. However, there is nothing in those communications, in my judgment, which evidences any understanding that the Bank would not enforce its charges until Mr Gough had had an opportunity to sell assets himself.[83]The first time that the alleged understanding appears evidenced in writing is in an email dated 1st December, 2014 from Mr and Mrs Gough to Mr Britten of SBS, copied to Simon Thomas who was one of the Receivers who had been appointed on 27th November, 2014. In that email, Mr and Mrs Gough said:
“Having had the experience of the impact of the flooding and the lack of understanding on the part of Barclays in relation to that (as they put the account into Business Support and gave it no agricultural support whatsoever), we did not ever want to have a repetition. [Mr Saer] told us if for any reason the business did not succeed then the Bank would give us the opportunity to realise assets to reduce the borrowing and to deal with matters ourselves.”
[84]However, in my judgment, this document which is effectively a complaint against the Bank does not represent what had been agreed. Rather, it is an attempt to carry on stalling the Bank (something that in an email of 24th September, 2014 to Mr Saer, who by that time was at Santander Bank, they said they had been doing for as long as they could), by coming up with a reason why the Bank should not be selling their assets.[85]Having reviewed all of the relevant evidence on this issue, it is clear in my judgment that there was no clear and unequivocal promise by the Bank that its strict legal rights would not be insisted upon. Nor was there any common understanding as that alleged by Mr Gough in which it was implicit that the Bank would not enforce its charges unless Mr Gough had had a reasonable period within which to sell the assets. Rather, as Mr Saer said in his witness statement, ultimately the terms on which the Bank was prepared to lend would be governed by the terms and conditions applicable to the underlying contractual documentation pursuant to which it was made available to Mr Gough. Further, (while he may well have convinced himself of this now) I do not accept that Mr Gough believed at the time that there was any such common understanding as is now advanced on his behalf.[86]Accordingly, Mr Gough’s claim that the Bank is estopped from enforcing its security before Mr Gough has had the opportunity to conduct a sale of assets to reduce the debt to the Bank must fail at the first hurdle.[87]In light of my finding on the representation issue, the other issues do not arise. However, I will deal with them albeit more briefly than I might otherwise have done.

The reliance issue

[88]Mr Gough’s pleaded case on reliance is set out at paragraph 28(2) and (3):
“(2) Mr Gough altered his position and incurred expenditure and effort in reliance upon the representations. “(3) Further, Mr Gough relied upon the representations to move his banking from Barclays to the Bank”
[89]This is the sum total of the pleading on reliance. No particulars have been provided of what expenditure and effort is said to have been incurred by Mr Gough in reliance on the alleged representations. Mr Gough gave no evidence to establish any such expenditure and effort.[90]While it is true that Mr Gough did move his banking from Barclays to the Bank, no counterfactual is posited as to what he would have done had there not been the alleged representations. Mr Gough confirmed in his evidence that Barclays were threatening to enforce against him if he did not re-bank elsewhere. He suggested at one stage that he had 12 months to re-bank, although given the lack of any disclosure of documents dealing with Barclays I am not able to determine if this is correct or not. In real terms Mr Gough had no choice. If he wanted to carry on his farming business, he had to re-bank. There is no evidence at all of any other bank offering facilities or the terms on which those facilities were being offered. In my judgment, even if (contrary to my findings above) there had been some representation or common understanding of the nature asserted by Mr Gough, he would not have relied upon that as the reason for moving his banking to the Bank from Barclays. Accordingly, had I found the necessary representation or common understanding, I would have rejected Mr Gough’s claim that he had established the requisite reliance to have made out a claim in promissory estoppel (or even in estoppel by convention).[91]Further, on this point as the Bank points out, what Mr Gough was really relying upon when entering into the financial arrangements with the Bank was the advice from Mr Smith, his farm business consultant, as to the prospects for the business and whether Mr Gough could repay the interest payable on the loans (Mr Smith confirming in his evidence that this all looked do-able to him) and from his solicitor, who had advised him on the finance documents.

The detriment issue

[92]As to detriment, Mr Gough does not expressly plead that he suffered any detriment by relying on the alleged representation or common understanding. He does plead that he had incurred expenditure and effort in reliance on the representations, but as set out above, he failed to provide any particulars of this or any evidence to establish the same. He deleted by amendment the allegation that this was “in particular, in the Juniper Hills Potatoes project.”[93]Given that Barclays were threatening to enforce their charges, the moving of his banking to the Bank in itself cannot have caused Mr Gough detriment. He has produced no evidence that he would have been able to stay with Barclays (which he plainly would not have been able to do) or to have moved to a different bank and that had he done either, he would have been able to obtain finance on better terms, so that he is in a worse position than he would have been. To the contrary, the evidence demonstrates that the Bank lent to Mr Gough sufficient initially to pay off Barclays and thereafter (by way of the ever increasing overdraft) just enough to keep his business going. He has remained able to run the farming business, to seek to develop JHP, to continue to receive the rents on the properties let out under assured shorthold tenancies and to take the benefit of the income earned by his wife from the holiday lets.[94]Further, Mr Smith confirmed in his evidence that the Bank’s rates were reasonable. Had there been anything wrong or odd in the loans, he would have brought that to the attention of Mr Gough in terms of rates and costs and affordability.[95]In my judgment, even if (contrary to my findings above) there had been representations or a common understanding of the sort alleged, on which Mr Gough had relied in entering into the financial agreements with the Bank, Mr Gough has not established that he has suffered any detriment in so relying. I do not need to decide whether that would have been a bar on its own to a claim based on promissory estoppel and do not do so.

The compliance issue

[96]Between December, 2012 and November, 2014 the Bank loaned Mr Gough ever increasing sums of money, in excess of £1 million more than it had originally agreed to do so in order to support his failing business. There are a substantial number of emails (which I do not need to go through individually), especially in the period from January 2014 onwards where the Bank was being asked to provide funds urgently in order that the most pressing creditors could be paid, on occasion to stave off legal proceedings being brought against Mr Gough. At one point it got so bad that Mr Gough could not afford to put diesel into the tractor.[97]Throughout this period, the Bank was encouraging Mr Gough to explore the question of asset sales. There are express references to this in meetings in January 2014, April 2014, June 2014 as well as references to this in emails in this period. The Bank had required Mr Gough to appoint a firm of accountants, Moorfields, to undertake an independent bank review in April 2014 to examine the prospects for the business. The Bank also required Mr Gough to appoint Savills to undertake an up to date valuation (the previous valuers, Williams, by then no longer being on the Bank’s panel) to value all of the properties as well as to highlight non-core assets that could be sold. Mr Gough resisted this for a considerable period of time.[98]In his evidence, Mr Gough accepted that there was never anything stopping him putting assets on the market should he have wanted to. He also accepted that at no stage when he sought increases in the overdraft did he make any proposals to put assets on the market. Throughout the time he banked with the Bank, he knew that neither the pure farming business nor JHP was performing sufficiently well to achieve financial sustainability. While this was down in part to the fire suffered in January 2013 which damaged the potato stock, the Bank extended temporary facilities to him in order to help him over this period.[99]Even after what Mr Gough accepted was a very robust conversation with Mr Britten of SBS in June 2014 in the course of which Mr Britten warned of the dangers of bankruptcy as a result of actions of creditors, Mr Gough did not take any steps to put assets on the market. While he claimed in cross-examination that he did not recollect having had a conversation with Mr Britten about putting assets on the market, when shown his own witness statement at paragraph 105 he was forced to accept that there had been such conversations. At no stage did Mr Gough present any options to the Bank, although there was nothing to stop him from doing so. He accepted in his cross-examination that he had “every opportunity” to sell assets if he wanted to do so.[100]Mr Gough’s attitude at this time, however, is evidenced by an email dated 24th September, 2014 from him and Mrs Gough to Mr Saer who had by then moved to Santander:
“The [Bank] are starting to romp all over us, pushing for the further Savills valuation at £4,500. They say they cannot use Richard Williams original or even his spring update as he is no longer one of their panel valuers. They are also looking for repayment plans by 6th October. Whilst we have stalled as long as we can, we are starting to run out of options. How is your end looking please? We are very hopeful that you can put something together for us, even with provisos for non core asset disposal within a time frame.”
[101]It is evident from this that despite their denials of this in cross-examination, Mr Gough (along with Mrs Gough) had been stalling the Bank, hoping that they might be able to re-bank yet again with someone else, but with no intention of an immediate sale of any assets, not even non-core ones.[102]In light of Mr Gough’s evidence as to having had every opportunity to sell assets, but not having come up with any proposals to the Bank, in my judgment the Bank had complied with the alleged representation or common understanding. Mr Gough’s own evidence demonstrates that he had the opportunity to conduct a sale of assets to reduce his indebtedness to the Bank (as per his pleaded case in paragraph 24 of the Amended Defence). Even on the slightly broader basis asserted by Mr Adams in closing, in my judgment Mr Gough had had a reasonable period within which to sell the assets. He chose not to do so. There was therefore no impediment, even on the assumed representation or common understanding, to the Bank enforcing its rights under the charges. It was not resiling from any such alleged representation or common understanding in appointing Receivers on 27th November, 2014.[103]Accordingly, Mr Gough’s defence would fail on this basis too.

The conscionability issue

[104]If there had been some representation or common understanding of the nature alleged on which Mr Gough relied, and the Bank has resiled from it (contrary to my findings above), the next issue would have been whether it would have been unconscionable for the Bank to have resiled from it.[105]In this regard, as Peter Gibson LJ said in the Emery case (supra), the fact that I have found that Mr Gough did not alter his position to his detriment is plainly most material to whether it would be inequitable for the Bank to be permitted to act inconsistently with its promise.[106]In the circumstances where Mr Gough had not suffered any detriment in relying on the alleged representations, the Bank continued to extend an ever increasing overdraft such that it had lent him in excess of £1 million more than had been envisaged at the time of the alleged representations, neither the farming business nor JHP appeared to be showing signs of achieving financial stability, Mr Gough was not co-operating fully with Moorfields (he having accepted that he could have been more co-operative), Mr Gough had been aware for many months that the Bank had been pressing him to come up with a plan to sell assets, Mr Gough had every opportunity to sell assets if he wanted to, but had chosen not to present any proposals to the Bank to do so, Mr Gough was resisting the instruction of Savills, and in which he was stalling the Bank in the hope that he might be able to re-bank again elsewhere without the need for any immediate sale of assets, it would not in my judgment have been unconscionable for the Bank to have resiled from the alleged representation or common understanding (had I found there had been any such). The Bank’s position was very different to that which had pertained at the beginning of the relationship and it would not be right to hold it to the alleged representation or common understanding.[107]In passing, I should mention the agricultural charge which was taken by the Bank on 7th June, 2014 as there was a suggestion from Mr Adams that the taking of this somehow impinged on the conscionability of the Bank being allowed to resile from the alleged representation or common understanding. I do not follow how this can be right. Mr Gough did not suggest that he granted this to the Bank because of the alleged representation or common understanding. He certainly did not communicate this to the Bank as he accepted that at no stage after Mr Saer’s departure (which this was) but prior to the appointment of the Receivers, did he tell anyone else in the Bank about the alleged representation or common understanding. In my judgment the Bank was entitled to ask for further security in circumstances where its exposure had increased very substantially. The fact it did so does not go the issue of conscionability.

The Consumer Credit Act issue

[108]It is Mrs Gough’s pleaded defence that the guarantee is a credit agreement or a linked transaction within the meaning of section 140C(1) of the Consumer Credit Act 1974 and the relationship between her and the Bank is unfair. Section 140C provides:
“(1) In this section and in sections 140A and 140B ‘credit agreement’ means any agreement between an individual (the ‘debtor’) and any other person (the ‘creditor’) by which the creditor provides the debtor with credit of any amount.” (4) References in sections 140A and 140B to an agreement related to a credit agreement (the ‘main agreement’) are references to – (b) a linked transaction in relation to the main agreement … (c) a security provided in relation to the main agreement …”
[109]In my judgment, the guarantee is not a “credit agreement” as the Bank did not provide Mrs Gough with any credit therefore it does not fall within section 140C(1). However, it falls within section 140C(4)(c) as an agreement related to the credit agreement(s) between the Bank and Mr Gough.[110]Under section 140A, the Court is given power to make an order under section 140B:
“… if it determines that the relationship between the creditor [the Bank] and the debtor [Mr Gough] arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor [Mr Gough] because of one or more of the following – (a) any of the terms of the agreement or of any related agreement; (b) the way in which the creditor [the Bank] has exercised or enforced any of his rights under the agreement or any related agreement; (c) any other thing done (or not done) by, or on behalf of, the creditor [the Bank] (either before or after the making of the agreement or any related agreement. (2) In deciding whether to make a determination under this section the court shall have regard to all matters it thinks relevant (including matters relating to the creditor [the Bank] and matters relating to the debtor [Mr Gough]).”
[111]Section 140B sets out the powers available to the court, which include:
“(c) reduce or discharge any sum payable by the debtor [Mr Gough] or by a surety [Mrs Gough] by virtue of the agreement or any related agreement; … (e) otherwise set aside (in whole or in part) any duty imposed on the debtor [Mr Gough] or on a surety [Mrs Gough] by virtue of the agreement or any related agreement; … (g) direct accounts to be taken between any persons.”
[112]Section 140B(9) also provides that if a debtor or surety alleges that the relationship between the creditor and the debtor is unfair, it is for the creditor to prove to the contrary.[113]Accordingly, before I would have power to do any of the things in section 140B, I would have to determine that the relationship between the Bank and Mr Gough arising out of the financing agreements or those agreements taken with the personal guarantee of Mrs Gough is unfair. There is no power in the court to interfere were I to come to the conclusion that the relationship between the Bank and Mrs Gough (rather than Mr Gough) is unfair. What is determinative is the relationship between the Bank and Mr Gough.[114]Mrs Gough’s pleaded case is that the relationship between the Bank and her is unfair, not that the relationship between the Bank and Mr Gough is unfair. Accordingly, her defence on this basis must fail, even if I were satisfied that the relationship between her and the Bank was or is unfair.[115]However, in case I am wrong about that, I would not make a determination that the relationship between the Bank and Mrs Gough was or is unfair in any event. The 3 matters she relies upon in her pleaded case are as set out above, namely(i) that the Bank did not advise her to obtain separate legal advice prior to entering into it;(ii) the Bank did not point out the key onerous features of the guarantee to her, or indeed any features;(iii) the Bank is seeking to enforce the agreement against her in the circumstances where it has breached the representations made to her husband and to her at the time it was entered into.[116]As to each of these,(i) it is clear that not only did the Bank advise her to obtain separate legal advice, she did in fact obtain such legal advice as evidenced by the Certificate of Independent Legal Advice;(ii) there was no obligation, in my judgment, in the circumstances where she had independent legal advice for the Bank to have pointed out to her the key onerous features (which she has not identified) or any features – that was the role of her solicitor which he certified he had performed;(iii) I have found that the Bank has not breached any representations made to Mr or Mrs Gough at the time the guarantee was entered into.[117]In the circumstances, I do not find that the relationship between Mrs Gough and the Bank is unfair. While she was not a party to the finance agreements with the Bank, she was an indirect beneficiary of them. The Bank lent millions of pounds to Mr Gough for the purposes of the family business. I accept the submission made by Mr McCluskey on behalf of the Bank that this is a situation where Mrs Gough’s affection and self-interest run hand in hand (for an analogous situation see the speech of Lord Nicholls in Royal Bank of Scotland Plc v Etridge (No 2) [2002] 2 AC 773 at [28]).[118]Accordingly, Mrs Gough’s defence to the claim under the guarantee and the claim to possession must fail.

Invitation to adjourn

[119]Given my findings above, I am minded to grant the relief sought by the Bank, both the monetary relief and the orders for possession. As to the amounts due and owing, the Bank will need to serve updated evidence as at the date of handing down of this judgment as the most recent figures only cover the period to 31st May 2017. At that date the amount due from Mr Gough amounted to £6,613,435.21 and the amount due from Mrs Gough amounted to £5,701,754.32.[120]I would hear further argument on whether the order should be for possession to be given up to the Bank or to the Receivers, it being suggested (but not developed in argument) by Mr Adams that I have no power to direct that possession be given up to the Receivers, notwithstanding the powers under the charges for them to take possession.[121]I decline the invitation to adjourn before giving judgment. That does not prevent Mr Gough making an application under section 36 AJA 1970 to give Mr Gough an opportunity to sell parts of the farm in order to reduce his indebtedness and to obtain re-financing in order to discharge the secured indebtedness to the Bank. If such an application is made it should be made on the date set for the handing down of this judgment and I will consider it on its merits. I would expect any such application to be supported by evidence from Mr Gough together with full disclosure by Mr Gough of all efforts made to sell any part of the farm and the price which it is said will be obtained on any such sale. I would, of course, bear in mind that Mr and Mrs Gough have remained in possession of the properties for in excess of 2¾ years since the Receivers were appointed and there will have been a period of months since the conclusion of the evidence in this case. In the absence of fully worked out proposals which will discharge the sums due to the Bank in relatively short order, Mr Gough should not get his hopes up.[122]If, and in so far, as Mr Adams was suggesting in his closing submissions that in the application under section 36 AJA 1970, in order to determine the “sums due under the mortgage” for the purpose of the exercise of that jurisdiction, more needs to be done than providing up to date figures for the sums outstanding, I reject such submission.[123]As to the application to adjourn “the proceedings in order to inquire further into the way the creditor has exercised or enforced its rights under the mortgage and related agreements in order to determine whether or not there are grounds for exercising its powers under section 140B Consumer Credit Act 1974 and/or its inherent power to do justice in the case by the exercise of its equitable jurisdiction”, as stated above this is very similar to the relief sought in the application to amend, which I refused. It is therefore not a pleaded matter before me.[124]It will be clear, nonetheless, from the matters set out above which I have considered both in relationship to the Bank and to Mr Gough that there is nothing improper, in my judgment, in the way the Bank has behaved in exercising or enforcing its rights under the credit agreement and related agreements i.e. the charges. Mr Gough throughout had independent advisers both business and legal. He was not forced to enter into the finance agreements. There was no representation or common assumption which the Bank has failed to observe. The Bank has acted entirely properly throughout. Indeed, it appears to have shown great forbearance towards Mr Gough, extending him additional credit when he suffered the fire in January 2013 and on numerous occasions thereafter in order to allow him to continue his business, when but for the Bank doing so, he would have faced liabilities to other creditors he simply could not have met with the result that his business would have been shut down. Despite his initial pleaded case, Mr Gough accepted in cross-examination that the Bank was not obliged to lend him any more money at any stage. But it did so.[125]There is no evidence, in my judgment, of any impropriety on the part of the Bank in deciding to make demand and appoint Receivers when they did so. The Bank held off for a long time and continued to increase the funds available to Mr Gough. It is clear from the documents I have referred to above that Mr and Mrs Gough were stalling the Bank. The Bank was owed very significant sums of money, which Mr Gough was showing no ability or willingness to pay off. There was a pleaded allegation of bad faith on the part of the Bank, but that has properly not been pursued. There is no basis for such an allegation to have been made and it should never have been raised on the available evidence.[126]It is noticeable that despite the appointment of Receivers in November, 2014 Mr Gough has continued his business, apparently through a bank account operated by Lloyds Bank although he has given no disclosure of that. He has not accounted to the Bank for any income received by the farming business or JHP or for the rents from the assured shorthold tenancies or from the holiday lets. He has kept all of these monies and the Single Business Payments which come from the government. While no evidence has been provided as to the size of these, they will have been considerable given the acreage of the farm. In all of this time, he has made no payment whatsoever to the Bank in respect of interest or capital outstanding. In my judgment, in the circumstances it cannot be said that there is anything unfair in the way in which the Bank has exercised its rights to enforce. The Bank appears to date to have been wholly unsuccessful in its enforcement efforts.[127]There can, in my judgment, be no question of making a determination that the relationship between the Bank and Mr Gough was unfair so as to trigger the powers of the Court under section 140B.[128]Nor, in my judgment, is the equitable jurisdiction any wider on the facts of this case. If Mr Gough cannot succeed on his claim for estoppel or in a claim based on the very wide powers under the Consumer Credit Act 1974, there is no basis, in my judgment for equity to interfere at this stage. Cases such as Quennell v. Maltby [1979] 1 WLR 318 do not assist Mr Gough as there is no evidence at all that the Bank is not seeking possession bona fide and for the purpose of enforcing the security. That is precisely what it is seeking to do.[129]Clearly, if the Bank or Receivers take possession and sell the properties, they will be obliged to account for the monies they actually receive on the sale. Further, the Court would be bound to consider at that stage what the Bank as mortgagee in possession, or the Receivers if they take possession and sell, should have received on the sale, as the mortgagee in possession is bound to account for the proceeds received by him “or which without his wilful default might have been so received” (Mayer v. Murray [1878] 8 Ch Civ 424). The same rule applies to a Receiver. However, that point has not yet been reached.

Conclusion

[130]In my judgment, the defences raised by Mr Gough and by Mrs Gough to the money claims and to the claims for possession fail. No defence has been raised by the 2 sons. Accordingly, judgment will be entered for the Bank against each of them in the sums due under the financing agreements in the case of Mr Gough and the guarantee in the case of Mrs Gough. Further, subject to the matters set out above, a possession order in respect of Hilltop Farm and in respect of the Chestnuts should be made. Mr Gough’s counterclaim will be dismissed.[131]I invite the parties to seek to agree an order, but in the event that they cannot I will hear further submissions on the form of the order. At the hand down of this judgment, I will also hear any application under section 36 AJA 1970.