Gowling WLG’s finance litigation experts bring you the
\nlatest on the cases and issues affecting the lending industry<\/p>\n
THE COURT OF APPEAL CONSIDERS ‘REASONABLE ADJUSTMENT’
\nIN THE CONTEXT OF POSSESSION PROCEEDINGS<\/h3>\n
The first case in which the Equalities legislation has been
\nraised as a defence to a mortgagee’s claim for possession has
\nrecently been before the Court of Appeal.<\/p>\n
In Southern
Green had entered into a fixed term repayment mortgage with the
It was the lender’s refusal to accede to her request that
The Court of Appeal, upholding the decision at first instance,
The court also found that, in any event, the claimant’s
Further, the court held that it would not have been reasonable
Although this case was argued by reference to the provisions of
The High Court has recently considered whether basis clauses,
In Carney and others v N M Rothschild & Sons
The investments underperformed and the claimants issued
The High Court found there had been no unfair relationship or
The language of the basis clauses in this case made them
It is understood that this is the first time the issue of basis
The Court of Appeal has upheld a High Court decision to set
In Loson v Stack and another<\/em><\/a>,<\/em>
The defendant applied to set aside the instalment order\u00a0as
The Court of Appeal dismissed the appeal. It held that the
Judgment sums are generally payable within 14 days. For a debtor
The Court of Appeal has found that a debtor’s fears of
In Khrapunov v JSC BTA Bank<\/em><\/a>, Khrapunov
K had been ordered to attend the High Court to be cross-examined
At first instance, the court refused the application. K had
Fresh evidence then came to light that K had been placed on the
The Court of Appeal refused. The earlier decision was a case
The bank had made out a strong case against K that he had been
This judgment has significant ramifications for all contracts
In our update this month we take a look at some of the recent
\n<\/ul>\n
Where parties find themselves litigating a dispute arising under
Here we look at some
It is not unusual for parties to include clauses in a contract
Here we look at
The content of this article is intended to provide a general
Gowling WLG’s finance litigation experts bring you the
latest on the cases and issues affecting the lending industry THE COURT OF APPEAL CONSIDERS ‘REASONABLE ADJUSTMENT’
IN THE CONTEXT OF POSSESSION PROCEEDINGS The first case in which the Equalities legislation has been
raised as a defence to a mortgagee’s claim for possession has
recently been before … <\/p>\n
\nPacific Mortgage Ltd v Green<\/em><\/a>, Green appealed against a
\npossession order on the basis that the claimant lender had
\ndiscriminated against her under s19(1)(b) and s21(1) of the
\nDisability Discrimination Act 1995 (DDA). She asserted that by
\nfailing to make reasonable adjustments to its practice or policy in
\nproviding its services, the claimant had made it impossible or
\nunreasonably difficult for her as a disabled person (a person
\nsuffering from depression) to use the claimant’s financial
\nservices which it provided to other members of the public.<\/p>\n
\nclaimant but having got into repayment difficulties requested it be
\nconverted to an interest-only mortgage which the claimant refused
\nto agree to. Green’s insurance policy and then DWP payments had
\nbeen sufficient to cover the monthly interest. However, it was the
\nclaimant’s policy not to allow any borrowers to convert
\nrepayment mortgages to interest-only accounts whether on a
\ntemporary or permanent basis (the no-conversion policy).<\/p>\n
\nGreen alleged was in breach of the DDA. She argued that the request
\nto change to an interest-only mortgage was a reasonable adjustment
\nto the claimant’s policy which the claimant should have made.
\nIts refusal to do so made it impossible or unreasonably difficult
\nfor disabled persons to make use of the (mortgage) service.<\/p>\n
\ndisagreed. It held that the service to which the provisions of the
\nDDA applied should not be broadly defined as ‘the provision of
\nall possible kinds of mortgage’ but should be defined more
\nnarrowly as ‘the provision of a particular type of mortgage,
\nnamely a repayment mortgage’. Green had been able to access
\nthat service. The provision of an interest-only mortgage would have
\nbeen a different service, with a different loan and a different and
\nuncertain security. The two types of lending had different
\ncommercial and regulatory considerations.<\/p>\n
\nno-conversion policy applied to existing repayment mortgagors,
\nwhoever they were, whether disabled or not, and so it was no more
\nimpossible or unreasonably difficult for disabled people to access
\nit when compared to the access offered to other members of the
\npublic. There was therefore no need to make any adjustment to bring
\nabout an equality of result as the policy applied to all.<\/p>\n
\nto require the claimant to adjust the no-conversion policy to offer
\ndisabled persons an interest-only mortgage. This would impose a
\nriskier, more unsatisfactory repayment vehicle and a lesser form of
\nsecurity in circumstances where that was not the way in which the
\nclaimant conducted its business. It would have fundamentally
\naltered the nature of the service provided.<\/p>\nThings to consider<\/h3>\n
\nthe DDA, there is no meaningful difference between the relevant
\nprovisions of the DDA and those of the Equality Act 2010. It is a
\nuseful case for lenders as it provides some clarification as to the
\nextent of the steps that need to be taken to make a ‘reasonable
\nadjustment’.<\/p>\nBASIS CLAUSES AND UNFAIR RELATIONSHIP CLAIMS<\/h3>\n
\ni.e. those defining the scope of the contractual relationship
\nbetween the parties, were exclusion clauses or gave rise to an
\nunfair relationship.<\/p>\n
\nLtd<\/em><\/a>, the defendant bank entered into loan agreements with
\nthe claimants to enable them to invest in a fund designed to avoid
\nthe Spanish equivalent of inheritance tax. The claimants engaged an
\nindependent financial adviser (IFA) who advised on the fund. The
\nloan agreements were headed with an ‘important notice’
\nadvising the claimants to seek independent legal and tax advice.
\nThe agreements also provided that the offer was being made on the
\nbasis that the bank made no recommendations as to the suitability,
\nquality or future performance of the investments, that the lender
\nacted as provider of finance only, had not provided any advice as
\nto legal, investment or tax matters and that no reliance had been
\nplaced on any representations made by either party (the basis
\nclauses).<\/p>\n
\nproceedings under ss140 A and 140 B of the Consumer Credit Act 1974
\n(CCA) claiming an unfair relationship had arisen out of the loan
\nagreements. They alleged that the bank had given negligent advice
\nas to the suitability and risks of the investment and made serious
\nmisrepresentations about the investments and their tax
\nimplications. They also argued that the basis clauses also gave
\nrise to an unfair relationship and so could not be relied on by the
\nbank. They sought to be released from the loans and for the
\nsecurity they had given to be discharged.<\/p>\n
\nactionable representations. The court found that the bank had given
\nno material advice, had not assumed the role of adviser and had not
\nbeen paid any commission for any advice. The claimants had had an
\nIFA whose role it had been to advise on the scheme and who had
\nreceived commission. The basis clauses delineated the scope, or
\nbasis, of the parties’ relationship and gave rise to
\ncontractual estoppels as the parties had agreed that no advice had
\nbeen given or representations made.<\/p>\n
\ndistinguishable from exclusion clauses as they were not seeking to
\nexclude liability that may exist but were providing that no advice
\nwas being given that could give rise to any liability. They were
\nnot, therefore, subject to the test of reasonableness under the
\nUnfair Contract Terms Act 1977 (UCTA) (now replaced by the Consumer
\nRights Act 2015 (CRA) as far as consumers are concerned). The court
\nconsidered\u00a0that, even had the clauses been exclusion clauses,
\nthey would have been manifestly reasonable. Even though the clauses
\nwere outside UCTA, they could still be considered under s140 CCA
\nand give rise to an unfair relationship but there was no reason to
\nconclude that they were unfair in this instance.<\/p>\nThings to consider<\/h3>\n
\nclauses has been considered in the context of an unfair
\nrelationship claim. The ability to distinguish between a basis
\nclause and an exclusion clause (and so whether it is caught by UCTA
\nor the CRA) may not always be easy and will depend on the wording
\nused and other evidence available to show the true contractual
\nrelationship.<\/p>\nJUDGMENT CREDITOR’S RIGHT TO ENFORCE HELD TO BE
\nPARAMOUNT<\/h3>\n
\naside an order to pay a judgment creditor’s costs by
\ninstalments. The\u00a0debtor had not provided a realistic repayment
\nschedule and the creditor could not expect to recover the principal
\nand any interest within a reasonable period of time.<\/p>\n
\nfollowing a dispute over a parking ticket, the claimant was ordered
\nto pay legal costs. The defendant sought to enforce that order by
\nissuing a statutory demand and then a bankruptcy petition which the
\nclaimant unsuccessfully applied to set aside. The claimant applied
\nfor an order under Rule 40.9A of the Civil Procedure Rules (CPR
\n40.9A), that she pay the costs ordered against her (by this stage
\n\u00a38,000) by instalments of \u00a350 per month. The district
\njudge, in granting the order, erroneously considered that that
\norder would not prevent the defendant from continuing bankruptcy
\nproceedings.<\/p>\n
\npayments at the level ordered would not discharge the statutory
\ninterest accruing on the costs, let alone the costs themselves, and
\nthe order had effectively rendered the bankruptcy petition debt no
\nlonger due and payable. The High Court considered that the district
\njudge had failed to properly balance the interests of the judgment
\ncreditor against those of the judgment debtor. The instalment order
\nwas set aside. The claimant appealed.<\/p>\n
\neffect of the instalment order (if kept to) was that the petition
\ndebt was no longer due and payable which meant a bankruptcy order
\non the existing petition would not be made. The district judge had
\nexercised his discretion incorrectly under CPR 40.9A. The
\ncreditor’s rights had to be respected where the debtor could
\nnot really pay anything and the creditor could not therefore expect
\nto receive repayment of the principal and interest within a
\nreasonable time. The creditor’s right to seek enforcement by
\nwhatever means available to it should not be interfered with in
\nsuch circumstances.<\/p>\nThings to consider<\/h3>\n
\nto obtain the benefit of an instalment order the\u00a0court must be
\npresented with a realistic repayment schedule backed up by evidence
\nthat the creditor can be expected to receive the principal amount
\nand interest within a reasonable time. To that extent, the
\ninterests of the creditor are paramount. What is a reasonable time
\nwill depend on the circumstances of the particular case. In a
\ncommercial context that time may be shorter, particularly if the
\ncreditor has its own cash-flow requirements to consider.<\/p>\nRISK OF EXTRADITION TAKES SECOND PLACE TO NEED TO GIVE
\nPRACTICAL EFFECT TO A FREEZING ORDER<\/h3>\n
\nextradition did not obviate the need for him to be cross-examined
\nin person as to his assets under a worldwide freezing
\ninjunction.<\/p>\n
\n(K) was subject to a worldwide freezing order obliging him to
\nprovide full information about his assets and assets controlled by
\nhim in accordance with his father-in-law’s instruction. His
\nfather-in-law, Ablayzov, had been the bank’s former manager and
\nthe bank had obtained judgments against him exceeding US$4 billion
\nin respect of his fraud. The freezing injunction had been obtained
\nagainst K as part of that litigation.<\/p>\n
\nas to his assets. K resided in Switzerland and unsuccessfully
\napplied to either adjourn the cross-examination or to be
\ncross-examined via video link on the basis there was a real risk he
\nwould be arrested and\/or extradited to face criminal proceedings in
\nKazakhstan and elsewhere if he travelled to England.<\/p>\n
\nunreasonably and unjustifiably failed to comply with his
\nobligations under the asset disclosure order and had delayed,
\nwithout good reason, in making the current application which was
\nissued only three days before the date of the originally scheduled
\ncross-examination. The court considered that the bank would not be
\nable to question K effectively through video link. It also
\nconsidered the likelihood of arrest was non-existent. K
\nunsuccessfully appealed.<\/p>\n
\nUkraine’s and Interpol’s ‘wanted’ list and that the
\nUkraine could now make a request to the UK to arrest and extradite
\nhim. On the basis of this fresh evidence, K sought to re-open the
\nappeal and vary the order to permit him to give evidence from
\nSwitzerland.<\/p>\n
\nmanagement decision that the court had properly made and was
\nneither irregular, wrong nor unjust. The fresh evidence showed
\nthere was an increased risk of extradition proceedings but that did
\nnot undermine the judge’s primary reasoning for refusing the
\napplication being the unwarranted and unexplained delay. It was of
\nparamount importance for the court to give practical effect to the
\nfreezing order which had been made. The just result was to continue
\nto require K to attend for cross-examination at the High Court. The
\nalternative proposed in Switzerland, conducted under Swiss law,
\nwould differ radically from cross-examination in front of a High
\nCourt judge, and was unlikely to be an effective means of obtaining
\nuseful information to assist with the enforcement of the freezing
\norder.<\/p>\nThings to consider<\/h3>\n
\ninvolved in a massive international fraud and was concealing
\nevidence about relevant assets. The public interest in the court
\ngiving maximum practical effect to the freezing order it had
\ngranted was strong.<\/p>\nIN CASE YOU MISSED THEM:<\/h3>\n
Supreme Court rules that a contractual term that requires
\nmodifications to be in writing is binding<\/h3>\n
\nwhich are governed by English law.<\/p>\n
\nIn this article, we report on this pivotal decision and its
\ncommercial consequences<\/a>.<\/p>\nInsolvency Litigation: recent cases and issues in May 2018<\/h3>\n
\ncases that will be of interest to those involved in insolvency
\nlitigation. These include:<\/p>\n\n
\nwhich confirms the rule against contractual penalties will not
\napply to the terms of a company’s own voluntary
\narrangement;<\/li>\n
\n
<\/p>\n
\npayments in insolvency, in a case where administrators’
\nremuneration was paid out of the company’s accounts; or<\/li>\n
\n
<\/p>\n
\nas to the correct approach to determining liability for breach of
\ntrust involving avoided transactions.<\/li>\n
\nOur insolvency experts have reviewed the decisions and tell you
\nwhat you need to know.<\/a><\/p>\nThe Basics: What to consider when negotiating governing law and
\njurisdiction clauses<\/h3>\n
\na contract, failure to have considered and agreed a governing law
\nand jurisdiction clause when negotiating the contract can mean that
\nthe dispute is litigated in a jurisdiction a party may not have
\nchosen and under a law that restricts its rights and remedies.<\/p>\n
\nbasic considerations for contracting parties<\/a> when negotiating
\nand drafting such clauses so as to avoid the cost and delay of
\nlitigating over where and under what law a dispute is to be
\ndetermined.<\/p>\nThe Basics: Limiting and excluding liability for breach of
\ncontract<\/h3>\n
\nthat attempt to limit or exclude damages that may be claimed if a
\nbreach of contract occurs.\u00a0 However, successfully excluding or
\nlimiting liability is not without its challenges.<\/p>\n
\nthe basics of limitation and exclusion of liability clauses, the
\ndifferent types of clauses that could be used and how best to try
\nto ensure they do what they say they will<\/a>, which will result in
\nfewer opportunities for challenge.<\/p>\n
\nRead the original article on GowlingWLG.com<\/a><\/p>\n
\nguide to the subject matter. Specialist advice should be sought
\nabout your specific circumstances.<\/em><\/p>\n<\/div>\n
\n
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