Conroy v Kenny

Whether a lender is a money-lender under section 6 of the Money-Lenders Act 1900 depends principally on whether money-lending was a business of the lender when the relevant loan was made. The court must also consider the statutory alternative of advertising, announcing or holding oneself out as carrying on that business.

Repetition and continuity are relevant evidence, but several transactions over a prescribed period are not essential. A person who has established a money-lending business may fall within section 6 upon making the first loan. Money-lending need not be the lender’s sole or principal business.

The respondent sought to enforce a 1971 mortgage securing a £6,000 loan made to the first appellant by Lancashire Acceptances. The defence alleged that the lender was an unregistered money-lender under the Money-Lenders Acts, with the result that neither the loan nor its security was enforceable.

The High Court held that the defence had not been proved. It declared the mortgage enforceable as an equitable charge and ordered the property to be sold. The first appellant challenged both that conclusion and the refusal of a late adjournment.

The central issue was whether, when the loan was made, the business of Lancashire Acceptances was money-lending or it held itself out as carrying on that business within section 6 of the Money-Lenders Act 1900.

1. The appeal was allowed unanimously and the action dismissed. Kennedy LJ delivered the leading judgment. Schiemann LJ and Sir Patrick Russell agreed.

2. The trial judge had applied the wrong legal approach by requiring several transactions within a relatively short period and treating repetition and regularity as indispensable. The correct primary question under section 6 of the Money-Lenders Act 1900 was whether, on the date of the relevant loan, a business of the lender was money-lending. If that question was answered affirmatively, no further inquiry was required. Otherwise, the court had to consider whether the lender advertised, announced or held itself out as carrying on that business.

3. A prescribed number or pattern of earlier loans was not essential. Repetition, system and continuity could provide evidence that a money-lending business existed, but a person who had established such a business could fall within section 6 upon making the first loan. Nor did money-lending have to be the lender’s only or predominant business.

4. The contemporary documents and undisputed facts established that Lancashire Acceptances regularly made loans before and after the appellant’s loan. The Prudent Finance transactions were loans rather than purchases of mortgages under a block-discounting arrangement. The lender had previously obtained a money-lender’s licence, had participated in other lending, and entered into the appellant’s transaction at arm’s length upon a solicitor’s introduction. These matters showed that money-lending was a business of Lancashire Acceptances. They also indicated, if the alternative limb were material, that the firm held itself out as carrying on that business.

5. The Court of Appeal could intervene because the trial judge had misunderstood the law and the decisive conclusions depended on documentary and undisputed evidence rather than witness credibility. The court reached its conclusion without admitting the proposed further evidence.

6. The refusal of an adjournment was an exercise of judicial discretion and had not been shown to be plainly wrong. That issue did not affect the disposition because the substantive appeal succeeded.

1. Court of Appeal: The first defendant’s appeal was allowed unanimously. The High Court’s orders were displaced and the action was dismissed, with costs.

2. High Court, Chancery Division: Judge Howarth held that the first defendant had not proved that Lancashire Acceptances was an unlicensed money-lender. He declared the mortgage valid and enforceable as an equitable charge and ordered the property to be sold.

3. Court of Appeal, permission stage: Beldam and Ward LJJ extended time for appealing and stayed execution of the High Court order.