Category: Court decision

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High Court hands down judgment on unfair relationship provisions involving a business borrower and the burden of proof

On 3 September 2019, the High Court handed down judgment in Promontoria (Henrico) Limited v Samra [2019] EWHC 2327 (Ch). The customer challenged the relationship arising out of the agreement as being unfair under the unfair relationship provisions in Sections 140A to 140C of the Consumer Credit Act 1974 (the CCA) because of (a) the assignment of the agreement from Clydesdale Bank plc to Promontoria (Henrico) Limited and (b) a claim that the lender gave a positive indication about future lending to the customer. It also considered the impact of the reversed burden of proof under Section 140B(9) of the CCA.

The Court decided the relationship arising out of the agreement between the lender and the customer was not unfair. The Court had real concerns over the customer’s evidence (see, for example, paragraph [24] of the judgment). But ultimately it did not consider the issues raised, after deciding “it was not necessary to go through the list of factors [set out in Deutsche Bank (Suisse) SA v Khan [2013] EWHC 482 (Comm)] in every case, or particularly useful to do so in a case such as this where the allegations of unfairness are somewhat diffuse” (see paragraph [94] of the judgment), meant there was any unfairness in the relationship.

The Court’s decision on the burden of proof is, however, important. It decided (see paragraph [26]) that:

“This … does not however mean, in my judgment (and Mr Hill did not contend) that where Mr Samra makes allegations of fact on which he relies he does not have the burden of proving them to the normal civil standard. The onus placed on the creditor is as to the relationship between it and the debtor, and does not have the effect that factual allegations made by Mr Samra must be accepted unless they can be positively disproved by contrary evidence.”

Now the High Court has given such a clear view on the burden of proof, it must now follow that the position is clear: a customer must prove the facts he says create unfairness arising out of the relationship and (once proven) the burden then shifts onto the lender to prove those facts (as proven) do not mean the relationship is unfair to the customer.

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Employment Tribunal decides adverse credibility findings by a judge are enough to justify dismissal of an employee subject to the FCA’s approved person regime

On 30 November 2018, the Employment Appeals Tribunal decided in Radia v Jefferies International Limited [2018] UKEAT 0123_18_3011 that a firm regulated by the UK Financial Conduct Authority (the FCA) was entitled to dismiss an equity research analyst for not being a “fit and proper person” under the FCA’s approved persons regime after an employment tribunal expressed the view the analyst lacked credibility as a witness.

The Employment Tribunal “made adverse findings about the Claimant’s credibility” and “found that the Claimant’s evidence was “not credible in many respects” and “on lots of occasions evasive” and that he had not told the truth or had misled the” Tribunal.  These findings were enough, the Employment Appeals Tribunal said, to justify the analyst’s dismissal (and it was not necessary to prove dishonesty).

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Midnight deadline? The Court of Appeal has just confirmed your cause of action accrues at midnight and not on the next day.

Matthew and others v Sedman and others [2019] EWCA Civ 475 (20 March 2019)

The appeal concerned the calculation of the limitation period for a negligence claim against trustees under a scheme of arrangement.  The scheme allowed claims to be submitted before the ‘bar date’. Claims could be made up until midnight on the ‘bar date’.  

The Court of Appeal decided the cause of action accrues at midnight, not after.

Irwin LJ noted, and Underhill LJ agreed, midnight deadline cases differed from others because a midnight deadline provides a categorical indication of when the cause of action accrues (ie midnight). There were no questions of fractions of a day which, there may have been if the deadline stipulated, say 9am or 3pm. 

The Court of Appeal’s decision is a must read for anyone dealing with litigation issued at or near the expiry of the limitation period.  

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ECJ decides an employer offering a loan to an employee is a supplier for the purposes of the Unfair Contract Terms Directive

On 21 March 2019, the European Court of Justice gave its decision in Pouvin v Electricité de France (Case C 590/17) on whether a French electricity provider (EDF) was a supplier for the purposes of the Unfair Contract Terms Directive (93/13/EEC) (the UCTD).  EDF provided a loan to one of its employees and his spouse to buy a house.  The ECJ decided EDF was acting for purposes relating to its “trade, business or profession” and was therefore a supplier for the purposes of the UCTD.  

Because the employee was classed as a consumer, the French court must therefore consider if the terms of the loan are fair under France’s laws implementing the UCTD.  The broad interpretation of the definition of “supplier” helped achieve the UCTD’s objective of protecting the consumer (as a weaker party) and making sure there was balance in the relationship.