CCA Unfair Relationships Ruling

 In the case of Promontoria (Henrico) Ltd v Jeavons and another [2019], the defendants ran a holiday let business in Cornwall.  Clydesdale Bank issued them with a tailored business loan, which they then assigned to the claimant together with the underlying security instruments.  Following a default under the terms of the loan, the claimant raised a possession action to enforce its security.  The defendants argued that the loan had been mis-sold to them.  They challenged the break costs that applied to the loan and alleged an unfair relationship within the meaning of s140A CCA 1974.

 Applying guidance from Deutsche Bank (Suisse) SA v Khan & Ors [2013], the judge held that the circumstances in this case did not give rise to an unfair relationship.  He ruled that the terms and conditions referred to in the loan offer clearly stated that the defendants had to satisfy themselves that the facilities were suitable for them and that they understood the risks.  The judge noted that the defendants had received numerous warnings as to the nature of the loan and found no evidence to show they had misunderstood those warnings.  In fact, they had ignored them ‘at their peril’.  The judge also found no evidence that the defendants were the kind of borrowers that were so ‘financially unsophisticated as to have put the lender on inquiry’.  

The ruling set the probability of a claim succeeding under s140A CCA 1974 as very low; in order to establish unfairness, the circumstances must be unquestionably unfair.




Caroline Stevenson